Reason to believe to conduct a search, etc. not to be disclosed
Sub-section (1) and (1A) of section 132 provide that where an authority mentioned therein, based on the information in his possession, has ‘reason to believe’ or ‘reason to suspect’ of circumstances referred to in the said sub-sections, he may authorize an authority specified therein to carry out search & seizure.
Similarly, sub-section (1) of section 132A provides that the specified income-tax authority based on ‘reason to believe’ can authorise other income-tax authority mentioned therein to requisition from some other officer or authority to deliver books of account, documents or assets of the assessee to the income-tax authority so authorised.
Confidentiality and sensitivity are the hallmarks of proceedings under section 132 and section 132A. However, certain judicial pronouncements have created ambiguity in respect of the disclosure of ‘reason to believe’ or ‘reason to suspect’ recorded by the income-tax authority to conduct a search under section 132 or to make requisition under section 132A. It is therefore proposed to insert an Explanation to sub-section (1) and to sub-section (1A) of section 132 and to sub-section (1) of section 132A to declare that the ‘reason to believe’ or ‘reason to suspect’, as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal.
These amendments will take effect retrospectively from the date of enactment of the said provisions viz. to sub-section (1) of section 132 from 1st day of April, 1962 and to sub-section (1A) of section 132 and to sub-section (1) of section 132A from 1st day of October, 1975.
[Clauses 50 & 51]
Extract of relevant clause from Finance Bill, 2017
Amendment of section 132.
50. In section 132 of the Income-tax Act,—
(i) in sub-section (1), after the fourth proviso, the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1962, namely:—
“Explanation.––For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal.”;
(ii) in sub-section (1A), the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of October, 1975, namely:—
“Explanation.––For the removal of doubts, it is hereby declared that the reason to suspect, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal.”;
(iii) after sub-section (9A), the following sub-sections shall be inserted, namely:—
“(9B) Where, during the course of the search or seizure or within a period of sixty days from the date on which the last of the authorisations for search was executed, the authorised officer, for the reasons to be recorded in writing, is satisfied that for the purpose of protecting the interest of revenue, it is necessary so to do, he may with the previous approval of the Principal Director General or Director General or the Principal Director or Director, by order in writing, attach provisionally any property belonging to the assessee, and for the said purpose the provisions of the Second Schedule shall, mutatis mutandis, apply.
(9C) Every provisional attachment made under sub-section (9B) shall cease to have effect after the expiry of a period of six months from the date of the order referred to in sub-section (9B).
(9D) The authorised officer may, during the course of the search or seizure or within a period of sixty days from the date on which the last of the authorisations for search was executed, make a reference to a Valuation Officer referred to in section 142A, who shall estimate the fair market value of the property in the manner provided under that section and submit a report of the estimate to the said officer within a period of sixty days from the date of receipt of such reference.”;
(iv) for Explanation 1, the following Explanation shall be substituted, namely:—
‘Explanation 1.––For the purposes of sub-sections (9A), (9B) and (9D), with respect to “execution of an authorisation for search”, the provisions of sub-section (2) of section 153B shall apply.’.
Amendment of section 132A.
51. In section 132A of the Income-tax Act, in sub-section (1), the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of October, 1975, namely:—
“Explanation.––For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal.”.
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