Tax/Income Tax : S.132 of Income-tax Act, 1961, Conducting Search by Tax Authorities and the Pre-Requisites to Exercise that Power

Tax/Income Tax : S.132 of Income-tax Act, 1961, Conducting Search by Tax Authorities and the Pre-Requisites to Exercise that Power 

In Ameeta Mehra Vs. Additional Director of Income-tax (Inv)-Unit [2017] GCtR 6451 (Delhi) a locker key belonging to Ameeta Mehra was found in the residential and business premises of the person searched. Consequential search warrant was issued after recording the satisfaction note. Consequential search was struck down observing that the satisfaction note must contain credible information to trigger search action. 

Mere recovery of a locker's key by itself would not be sufficient justification for such search unless the person searched had some link in the business or otherwise connected activities of the person searched. Secondly, the opinion recorded in the satisfaction note must show nexus to the formation of the belief that Ameeta Mehra was in possession of money, jewellery or valuables representing her income which had not been disclosed. The decision upholds that the courts in a limited way can examine whether the belief formed was devoid of any basis and irrational in the extreme sense to fall foul of the Clapham Omnibus test.