Explanations protecting disclosure of reason to believe of search to any person are constitutionally valid: HC

Case Details: SRS Mining v. Union of India - [2022] 141 taxmann.com 272 (Madras)

Judiciary and Counsel Details

• • Munishwar Nath Bhandari, CJ. & Mrs N.Mala, J.
  • Mukul Rohatgi, A. Shankar, Sr. Counsels, Nithyaesh Natraj & Vaibhav R. Venkatesh for the Petitioner.
  • R. Sankaranarayanan, Avinash Krishnan Ravi, CGSC, A.P. Srinivas, SPC & A.N.R. Jayaprathap, St. Counsel for the Respondent.

Facts of the Case

The instant writ petition was filed by the assessee seeking a declaration of Explanations to sections 132(1), 132(1A), and 132A as illegal, arbitrary, unreasonable, unfair, and violative of various articles of the Constitution.

Said Explanations provide that “reason to believe” in relation to search & seizure need not be disclosed to any person or any authority or the Appellate Tribunal.

It was submitted that the non-disclosure of “reason to believe” or “reason to suspect” to any person or any authority or the Appellate Tribunal would be nothing but to deprive the assessee or even the appellate authority to know the “reason to believe” or “reason to suspect”. Thus, it violates the principles of natural justice.

High Court Held

The Madras High Court has held that action to record “reason to believe” or “reason to suspect” is an administrative action and it does not form part of the assessment itself. The addition of the explanations is to serve the object for which the amendment was made and it is not offending any of the constitutional provisions, including Articles 14, 19, and 21 of the Constitution of India.

It is also added that the CIT(A) cannot go into the adequacy of the “reason to believe”, since it is an administrative action. Owing to their nature, the Apex Court has from time immemorial held that the sufficiency or adequacy of the reasons cannot be gone into and the only aspect to be seen is whether the reasons have a rational connection or have a bearing on the formation of the belief.

Thus, the challenge to the addition of Explanations to Sections 132(1), 132(1A), and 132A(1) of the Income-tax Act of 1961 was summarily rejected.