The pivotal ruling in Justice K.S. Puttaswamy vs Union of India, 2017, established the fundamental right to privacy in India. Despite this, apprehensions have arisen regarding the implications of Section 132 of the Income-Tax Act, 1961, which appears to confer extra-constitutional powers. These powers, aimed at income tax searches and seizures, raise concerns as they may encroach upon the fundamental rights of citizens, sparking a debate on the balance between privacy rights and statutory authority.
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Dimensions of the Article:
- Section 132 of the Income Tax Act, 1961: Overview
- Challenges Surrounding Section 132 of the Income Tax Act, 1961
Section 132 of the Income Tax Act, 1961: Overview
Historical Context and Replacement
- Introduction in 1961: Section 132 was introduced as part of the Income Tax Act, 1961, replacing the Taxation on Income (Investigation Commission) Act, 1947. The latter was invalidated by the Supreme Court in Suraj Mall Mohta vs A.V. Visvanatha Sastri (1954) for unequal treatment, violating Article 14 of the Constitution.
- Origin of Search and Seizure Powers: The original income-tax law in 1922 lacked search and seizure powers.
Empowering Tax Authorities
- Purpose: Section 132 empowers tax authorities to conduct searches and seizures without a prior judicial warrant if there is a “reason to believe” that a person has concealed or evaded income.
- Scope of Search Powers: It grants authorities the power to search buildings, places, vehicles, or aircraft based on suspicion of hiding financial assets.
- Seizure Provisions: The section allows for the seizure of books of account, money, bullion, jewelry, or other valuable items discovered during the search. Additionally, tax officials can seize such items found in the possession of any person during a search or survey under the Act.
Case Related to Section 132
Pooran Mal vs Director of Inspection (1973):
- Constitutionality Challenge: The constitutionality of Section 132 was challenged in this case.
- Supreme Court’s Upholding: The Supreme Court upheld the law, referring to its earlier judgment in M.P. Sharma vs Satish Chandra (1954), emphasizing the essential nature of search and seizure powers for social security, regulated by law.
- Privacy Rights Consideration: The court noted that the Constitution does not recognize a fundamental right to privacy akin to the American Fourth Amendment, which protects against unreasonable searches and seizures by the government.
- Evolution of Judicial Perspective: While M.P. Sharma was initially relied upon, the Court’s perspective has changed, formally overruling M.P. Sharma. The right to privacy is now deemed intrinsic to the right to personal liberty guaranteed by Article 21 of the Constitution.
Challenges Surrounding Section 132 of the Income Tax Act, 1961
Proportionality and Doctrine of Proportionality Principle
- Potential Breach of Doctrine of Proportionality: Section 132, while not formally challenged, raises concerns about a potential breach of the doctrine of proportionality principle.
- Evolution of State Power: The state’s power to search and seize is no longer seen as a simple tool of social security but is now subject to the doctrine of proportionality. This requires that its use must align with a legitimate aim, be rationally connected to its objective, have no less intrusive alternatives, and strike a balance between means chosen and rights violated.
- Wednesbury Principle Reliance: The Supreme Court, in the case of Principal Director of Income Tax vs Laljibhai Kanjibhai Mandalia, 2022, indicated reliance on the “Wednesbury” principle, treating search opinions as administrative rather than judicial. The Wednesbury principle allows quashing decisions deemed so unreasonable that no sensible authority could ever make them.
- Post-Puttaswamy Critique: Critics argue that, post-Puttaswamy (a case emphasizing the right to privacy), the Wednesbury rule should have no place, especially when fundamental rights are involved, and executive action should strictly conform to statutory law.
Right to Privacy Concerns
- Fundamental Right to Privacy: The right to privacy, a fundamental right under Article 21 of the Indian Constitution, includes protection from unreasonable searches and seizures, along with confidentiality of personal information.
- Intrusion without Consent: Income Tax searches, without individual consent, often based on vague grounds, pose a potential for abuse and intrude on individuals’ privacy.
- Lack of Safeguards and Oversight: Inadequate safeguards and oversight mechanisms contribute to potential misuse, lacking stringent protections for individuals subjected to Income Tax searches.
- Duration and Conditions of Searches: The Gujarat High Court’s scrutiny of a raid, where individuals were allegedly held in virtual detention for days without proper safeguards, underscores concerns regarding the duration and conditions of such searches.
-Source: The Hindu