Supreme Court sets principles for hearing investigation of search and seizure cases under Income Tax Act

In a significant ruling, the Supreme Court on Wednesday laid down principles for high courts to hear cases related to search and seizure under the Income Tax Act. The top court said that forming an opinion or relying on the documents of the Revenue Department is not a judicial or quasi-judicial act but of administrative character.

The top court said, "We find that the High Court's quashing of the warrant of leave of search on August 7, 2018 is not justified. Therefore, the appeal is allowed and the order passed by the High Court is set aside. Along with this, the revenue department is allowed to take action against the income tax payer as per law.

The high court had passed the order on a plea by an Ahmedabad-based businessman who had invested in an entertainment company in Goa and the revenue department conducted search and seizure of its premises. The apex court said that while considering the validity of the authorization of search and seizure in the light of earlier judgments, the suitability or unsuitability of the reasons recorded cannot be considered.

"The officers must have information on the basis of which a reasonable belief can be formed that the person has suppressed or failed to produce the account or other document in respect of which notice has been issued or summoned," the bench said.