UNION OF INDIA & ORS. versus M/S. AGARWAL IRON INDUSTRIES

Citation: [2014] 11 S.C.R. 181 · Decided: 12-11-2014 · Supreme Court of India · Bench: DIPAK MISRA · Disposal: Appeal(s) allowed
Cited by 1 judgment(s) · see the full citation network in Lexace
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

• 
[2014] 11 S.C.R. 181 
UNION OF INDIA & ORS. 
v. 
M/S. AGARWAL IRON INDUSTRIES 
(Civil Appeal No. 7499 of 2004) 
NOVEMBER 12, 2014 
[DIPAK MISRA AND UDAY UMESH LAUT, JJ.] 
A 
B 
Income Tax Act, 1961 - s. 132(1) - Search and seizure 
under - Quashed by High Courl - On appeal, held: Search 
and seizure is done by way of an interim measure - The 
C 
attic/es seized are subject matter of enquiry - High Court 
wrongly quashed the search and seizure without looking into 
the reasons for forming the opinion for conducting search and 
seizure - Matters remanded to High Courl for disposal afresh. 
Allowing the appeals and remanding the matters to 
High Court for fresh disposal, the Court 
HELD: 1. The provision contained in Section 132(1) 
of the Income Tax Act enables the competent authority 
D 
to direct for issue of search and seizure on the basis of E 
formation of an opinion which a reasonable and prudent 
man would form for arriving at a conclusion to issue a 
warrant. It is done by way of an interim measure. The 
search and seizure is not confiscation. The articles that 
are seized are the subject of enquiry by the competent 
F 
authority after affording an opportunity of being heard to 
the person whose custody it has been seized. The terms 
used are 'reason to believe'. Whether the competent 
authority had formed the opinion on the basis of any 
acceptable material or not, the High Court has not even 
G 
remotely tried to see the reasons. Reasons can be 
recorded on the file and the Court can scrutinize the file 
and find out whether the authority has appropriately 
recorded the reasons for forming of an opinion that there 
181 
H 
182 
SUPREME COURT REPORTS 
[2014] 11 S.C.R. 
A are reasons to believe to conduct search and seizure. As 
is evincible, the High Court has totally misdirected itself 
in quashing the search and seizure on the basis of the 
principles of non-traverse. [Para 8] [189-E-G; 190-A-B] 
8 
Pooran Mal v. The Director of Inspection (Investigation), 
New Delhi and others 1974 (2) SCR 704 =1974 (1) SCC 345 
- followed. 
District Registrar and Collector, Hyderabad and Another 
v. Canara Bank and Others 2004 (5) Suppl. SCR 833 = 2005 
c (1) sec 496 - relied on. 
Commissioner of Income-Tax v. 
Vindhya Metal 
Corporation (1997) 5 SCC 321; Dr. N.L. Tahiliani v. 
Commissioner of Income Tax (1988) 170 ITR 592; 
0 (Allahabad), L.R. Gupta v. Union of India v. Union of India 
(1992) 194 ITR 32 (Delhi); Ajit Jain v. Union of India (2000) 
242 ITR 302 (Delhi) - referred to. 
2. High Court could not have appointed Advocate 
Commissioner to take inventory of the goods in respect 
E of which the restraint order was passed by the revenue 
. under the Income Tax Act. That apart, the denial in the 
counter affidavit filed by the revenue also could not have 
been treated as an admission by implication to come to 
a conclusion that no reason was ascribed for search and 
F seizure and, therefore, action taken under Section 132 of 
the Act was illegal. The relevant confidential file, if 
required and necessary could have been called for and 
examined. Revenue in the counter affidavit was not 
required to elucidate and reproduce the information and 
G details that formed the foundation. [Para 5] [186-E-G] 
Case Law Reference: 
(1997) s sec 321 
referred to 
para 4 
H 
• 
• 
UNION OF INDIA v. AGARWAL IRON INDUSTRIES 
183 
(1988) 170 ITR 592 
referred to 
para 4 
(Allahabad) 
(1992) 194 ITR 32 (Delhi) 
referred to 
para 4 
(2000) 242 ITR 302 (Delhi) 
referred to 
para 4 
1974 (2) SCR 704 
followed 
para 6 
2004 (5) Suppl. SCR 833 
relied on 
para 7 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 
7499 of 2004. 
From the Judgment & Order dated 22.09.2003 of the High 
Court of Judicature at Allahabad in Civil Misc. Writ Petition No. 
276 of 2000. 
WITH 
C.A. No 7502 of 2004. 
A 
B 
c 
D· 
Guru Krishna Kumar, Madhurima Tatia, Rashmi Malhotra, 
Vikas Malhotra, Anil Katiyar, B.V. Balaram Das for the 
Appellants. 
E 
Vinay Kr. Garg, Rajendra Singh, K.L. Gautam, lmran 
Ahmad Abbasi, Ashok Kumar Singh for the Respondent. 
The Judgment of the Court was delivered by 
F 
DIPAK MISRA, J. 1. In these appeals the assail is to the 
legal tenability of the order dated 3.9.2003 passed by the 
Division Bench of the High Court of Judicature at Allahabad in 
Civil Writ Petition No. 275 of 2000 whereby the High Court has 
quashed the search and seizure conducted on 16.2.2000 in the 
G 
factory premises of the 1st respondent. 
'2. Filtering the
Excerpt shown. Read the full judgment & AI analysis in Lexace.