Fwd: S. 132 search reasons are not for assessee: Bombay High Court

Genom Biotech vs. DIT (Bombay High Court)

Reasons for search action u/s 132 need not be given to the assessee

Search & seizure action u/s 132 was undertaken at the assessee's
premises. Thereafter an order of provisional attachment u/s 281B was
passed. The assessee filed a writ petition challenging the validity of
the search and the provisional attachment. HELD dismissing the
Petition:

(1) Search action u/s 132 can be initiated only if the designated
authority forms a reasonable belief on the basis of information that
one of the three conditions of s. 132 exist. However, it is not the
mandate of s. 132 that the reasonable belief recorded by the
designated authority must be disclosed to the assessee.

(2) On facts, the search was justified as the information received
showed that the assessee had evaded tax by claiming deduction of
business expenditure of Rs.170 allegedly paid to Cyprus / UK based
companies towards marketing and advertisement expenses, but which were
in fact credited by the said Cyprus & U.K. based companies in the
private bank account of the assessee's CMD in Cyprus.

(3) Attaching the properties of an assessee u/s 281B even before
crystallization of the demand is a drastic step and has to be
exercised only in extreme circumstances. On facts, as the
incriminating documents prima facie established large scale tax fraud
and as the assessee and as the assessee had failed to explain the
same, the provisional attachment to protect the revenue's interests
was justified.

(4) Provisional attachment u/s 281B can be levied even where
proceedings are yet to be initiated. Accordingly, the fact that notice
u/s 153A and the order u/s 281B were issued on the same date did not
affect the validity of the provisional attachment.