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Authorities need not disclose the ‘reason to believe’ or ‘reason to suspect’ for conducting search

In M/s N. K. Jewellers vs. CIT, in the year 2000, one of the assessee’s employee was found in possession of Rs.30 lacs cash pursuant to search carried by Railway Police (‘GRP’) while returning by train. The cash was requisitioned and seized u/s 132A of the Income Tax Act. Consequently,  block assessment proceeding was initiated against assessee u/s. 158BD treating the same as assessee’s concealed income. The assessees’ main contention was that the search proceedings initiated u/s 132 are invalid and that the block assessment proceedings are without jurisdiction since it cannot be based on a search conducted on a train by the police authorities. 

The order was confirmed by the Appellate Tribunal and the High Court later. 

The Supreme Court held that the plea that the search proceedings initiated u/s 132 are invalid and that the block assessment proceedings are without jurisdiction cannot be entertained because s. 132A provides 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 as recorded by Income Tax Authority u/s 132 or 132A in view of the recent amendment to the provision vide the Finance Act, 2017. 

Article referred: http://www.taxscan.in/sc-confirms-block-assessment-since-reasons-believe-shall-not-disclosed-search-proceedings/11506/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+Taxscan+%28Top+Stories+%E2%80%93+Taxscan+%7C+Simplifying+Tax+Laws%29

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