R.R. Yadav, J.
1. Instant writ petition is confined against the warrant of authorisation dated 7.5.96, Anx. 5 to the writ petition, issued by respondent No. 2 in exercise of his power under Section 132A of the Income Tax Act while rest of the reliefs sought by the petitioners have been withdrawn.
2. Brief facts leading upto filing of the present writ petition are that on 2.5.96 the petitioners No. 2 and 3 who are relatives of petitioner No. 1 being brother-in-laws and the petitioner No. 2 is also working an Munim of his firm were returning with cash amounting to Rs. 9,80,000/- from Amrawati, Maharashtra where they had gone to purchase goods but said transaction could not be finalised. When they reached Shahpura on the aforesaid date in early hours, the vehicle in which petitioners No. 2 and 3 were travelling was intercepted by the police authorities and the cash of Rs. 9,80,000/- was seized under Section 102 Cr.P.C. on the ground of suspicion.
3. Explanations given by petitioners No. 2 and 3 were not accepted by the police authorities and they informed the Income Tax Department. On the information of the police, the Income Tax authority namely Assistant Director of Income Tax (Investigation), Kota issued notices under Section 131(1A) of the Income Tax Act to the petitioners and recorded their statements on 3.5.96 and 4.5.96.
4. It is also averred in the writ petition that while the proceedings were pending before the learned Additional Chief Judicial Magistrate, Shahpura district Bhilwara, the Income Tax authorities moved an application on 4.5.96 to the effect that the possession of the said cash should not be handed over to the petitioners. It is further alleged by the petitioners that although warrant of authorisation issued under Section 132A of the Income Tax Act by respondent No. 2 was illegal and without jurisdiction yet the learned Chief Judicial Magistrate, Shahpura district Bhilwara vide his order dated 24.5.96 has directed the said cash to be handed over to the Income Tax authorities under Section 457 Cr.P.C.
5. After service of show cause notice return has been filed on behalf of respondents No. 1, 2, 4 and 5 asserting therein that the impugned authorisation issued by the respondent No. 2 under Section 132A of the Income Tax Act is absolutely legal and within the jurisdiction of the Commissioner of Income Tax. The petitioner have also filed a rejoinder to the reply filed on behalf of the aforesaid respondents.
6. It is pertinent to mention that vide order dated. 4.7.96, Additional Chief Judicial Magistrate was found to be neither a necessary nor proper party, therefore, it was directed to delete him from the array of the respondents.
7. After exchange of counter and rejoinder between the parties the case is ripe for final disposal, therefore, with the consent of the learned Counsel for the parties I propose to decided the case finally at admission stage.
8. I have heard the learned Counsel for the parties at length and critically perused the materials available on record.
9. It is streneously urged before me by learned Counsel for the petitioners Shri Vineet Kothari that the warrant of authorisation under Section 132A of the Income Tax Act issued by respondent No. 2 on 7.5.96, is illegal and without jurisdiction and respondent No. 2 cannot be said to have reason to believe much less reasonable belief as required under Section 132A of the Income Tax Act on the basis of information made available to him to the effect that the cash of Rs. 9,80,000/- was undisclosed income of the petitioners.
10. Aforesaid argument advanced by the learned Counsel for the petitioners is although attractive but fallacious and as such not acceptable to me. It is true that the expression 'reason to believe' used under Section 132A of the Income Tax Act must be something more than a mere rumour or a gossip or a intuitive feelings of the authority. According to me there must be some material which can be regarded as information which must exist on the file on the basis of which the authorising officer can have reason to believe that action under Section 132A of the Income Tax Act is called for, for any of the reasons mentioned in Clauses (a), (b) or (c) of the aforesaid section.
11. It is further true that When issuance of an authorisation under Section 132A of the Income Tax is challenged in a court of law, it will be opened to the petitioners to contend that on the facts or information disclosed no reasonable man could have arrived to the conclusion that the action under Section 132A was called for although formation of opinion under the said section is subjective. It is well to remember that jurisdiction under Article 226 of the Constitution of India of this Court is very limited. In fact this Court cannot afford to act as an appellate or revisional Court and as such has no justification to examine meticulously the information in order to decide for itself as to whether action under Section 132A was called for or not Suffice it to say that in exercise of extra-ordinary jurisdiction this Court can examine whether the act of issuance of an authorisation under Section 132A is arbitrary or malafide or whether the subjective satisfaction which is recorded is such that it indicates lack of application of mind of the appropriate authority. According to me the reason to believe must be based on definable material or materials and if the information or the reason to believe has no nexus with the belief or there is no definable materials or tangible information for formation of such belief then in such a case action taken under Section 132A of the Income Tax Act would be treated as illegal.
12. In the present case on behalf of answering respondents the original record regarding information is produced before me and on careful scrutiny of the original file, on basis of which warrant of authorisation has been issued under Section 132A of the Income Tax Act I am satisfied that there were definable materials available before the respondent No. 2 to issue warrant of authorisation under the aforesaid section and an argument contrary to it is not acceptable.
13. From scrutiny of the original file it is evident that on the basis of definable materials available before the respondent No. 2 such belief is entertainable by a prudent man. To my mind, while the sufficiency or otherwise of the information cannot be examined by the court yet existence of information and its relevance to the formation of the belief can be considered. In the present case from perusal of original file, the existence of information and its relevance to the formation of belief by the respondent No. 2 is successfully demonstrated before me, therefore, in such a situation I refrain to examine the sufficiency or otherwise of the information produced before the respondent No. 2 before issuing warrant of authorisation under Section 132A of the Income Tax Act.
14. It is next contended by learned Counsel for the petitioners Shri Vineet Kothari that before issuing warrant of authorisation under Section 132A of the Income Tax Act the petitioners were entitled to be given an opportunity of hearing. According to Shri Kothari indisputably in the present case before issuing warrant of authorisation under the aforesaid section the respondent No. 2 has afforded an opportunity of hearing to the petitioners, therefore, it amounts violation of principle of natural justice.
15. I am not impressed with the aforesaid argument of the learned Counsel for the petitioners inasmuch as in an emergent condition respondent No. 2 has to exercise his power under Section 132A of the Income Tax Act which is based on his subjective satisfaction is not final but it results in initiation of proceedings leaving room for giving an opportunity of hearing to the petitioners before an order adversely affecting to the petitioners is actually passed. Thus, in my considered opinion, opportunity of hearing is excluded before issuing warrant of authorisation within the meaning of Section 132A of the Income Tax Act to achieve the avowed object for which the said section has been enacted. By issuing warrant of authorisation the petitioners are not prejudiced. They are at liberty to show cause and after giving opportunity of hearing the appropriate authority has to pass appropriate order as envisaged under newly inserted chapter XIV-B of the Income Tax Act which has been made enforceable with effect from 1.7.1995.
16. It is important to notice that no foundations were laid in the writ petition regarding newly inserted Section 113 as well as newly inserted Chapter XIV-B of the Income Tax Act consisting of Section 158-B to Section 158-BH by the Finance Act 1995 which has been made enforceable w.e.f. 1.7.1995. According to Section 113 of Income Tax Act the total undisclosed income of the block period determined under Section 158BC of the Income Tax Act shall be chargeable to tax at the rate of sixty percent only. It is also made clear under Section 158BF that no interest under the provisions of Section 234A, 234B or 234C or penalty under the provisions of Clause (c) of Sub-section (1) of Section 271 or Section 271A or Section 271B shall be levied or imposed upon the assessee in respect of the undisclosed income determined in the block assessment.
17. In peculiar facts and circumstances of the present case I thought it proper to ensure that the answering respondents should not be taken by surprise, therefore, I passed the following order on 9.7.96. The relevant portion of the order dated 9.7.96 is reproduced below:
xxx xxx xxx xxx xxx xxx
xxx xxx xxx xxx xxx xxx
xxx xxx xxx xxx xxx xxx
XXX XXX XXX XXX XXX XXX
The learned Counsel for the respondents is further called upon to explain that out of total amount, only 60% tax is recoverable then why remaining amount should not be refunded to the petitioners.
18. Irrespective of several opportunities aforeded to the answering respondents to explain as to under what circumstances they are entitled to keep in their possession the total amount of Rs. 9,80,000/- while at the most within the meaning of Section 113 of the Income Tax Act they are entitled to charge tax on the aforesaid amount @ 60% only but they failed to justify to withold total amount of Rs. 9,80,000/- of the petitioners.
19. In view of the facts and circumstances stated in preceding paragraphs I am of the view that worst against the petitioners which can be assumed is that the answering respondents are, entitled to charge 60% maximum within the meaning of mandatory provisions contained under Section 113 of the Income Tax Act, therefore, they are not entitled to withold the entire amount of the petitioners subject to and without prejudice to their rights to show cause and explain before the appropriate Income Tax authority that no part of Rs. 9,80,000/- is their undisclosed income the balance of 40% amounting to Rs. 3,92,000/- deserves to be released to the petitioners forthwith.
20. As a result of the aforementioned discussion the instant writ petition is partly allowed with a direction to the respondents to refund Rs. 3,92,000/- to the petitioners out of total amount of Rs. 9,80,000/-forthwith subject to and without prejudice to their rights to show cause and explain before the Income Tax authorities that no part of Rs. 9,80,000/- is their undisclosed income.
No costs.