New Delhi, March 9 The Supreme Court on Monday refused to entertain a public interest litigation (PIL) challenging the scope of search and seizure powers under Section 132 of the Income Tax Act, arguing that it has the potential for misuse by authorities.
"We cannot second-guess a provision to the extent that it provides a remedy. The remedy is sufficient for us," said a bench comprising Chief Justice Surya Kant and Justice Joymalya Bagchi, adding that such provisions were enacted to deal with large-scale tax evasion.
The bench said that while the provision may initially appear innocuous, it is designed to target major tax evaders.
"This is an initial apprehension. There are provisions that may appear innocuous but can be misused... so, courts may need to examine them later.
"There are provisions that can be misused but are streamlined over time. These provisions are often used for large-scale tax evasion, etc.," said the Chief Justice.
The bench disagreed with the submission of senior advocate Sanjay Hegde that the provision was unconstitutional.
The main concern raised by the senior advocate regarding the provision was that it exempted tax officers from disclosing the reasons for the search to the taxpayer or the Income Tax Appellate Tribunal.
The bench refused to entertain the plea, leading to its withdrawal.
However, the bench granted the PIL petitioner Vishwaprasad Alva to approach the Centre with a representation seeking modifications or clarifications regarding the provision.
The Supreme Court was hearing a PIL challenging the scope of search and seizure powers under Section 132 of the Income Tax Act, arguing that it has the potential for misuse by authorities.
Section 132 of the Income Tax Act empowers Income Tax officials to conduct a search and seizure when they have "reason to believe" that a person has undisclosed income, assets, or documents.
During the hearing, Justice Bagchi highlighted the practical challenges of issuing prior notice in search and seizure cases, particularly in the digital era.
Justice Bagchi said that giving advance notice could defeat the very purpose of an investigation, as electronic evidence can be easily destroyed.
"If notice is given for a search and seizure, there is a potential for destroying evidence. The best way to prevent such an investigation against digital records is to destroy the device itself," he said.
Hegde said that the impugned provision provides excessive power to tax authorities and exposes not only the alleged tax evader but also third parties to coercive action.
"Suppose you go after the lawyer, then you go after the clerk's phone. Please see, it is not only the evasive taxpayer who is at risk. Anyone in contact is at risk, and the power is kept with the Joint Commissioner," the senior lawyer said.
The Chief Justice said that the statutory powers were neither uncontrolled nor unlimited.
"This is not an uncontrolled or unwieldy power. Your concerns will be addressed," the Chief Justice said.