Page 1 of 20

IN THE HIGH COURT AT CALCUTTA

CONSTITUTIONAL WRIT JURISDICTION

APPELLATE SIDE

Before:

The Hon’ble Justice Om Narayan Rai

WPA 25602 of 2025

Shri Miraj Digvijay Shah

Vs.

The Assistant Commissioner of Income Tax, Central

Circle I (1), Kolkata & Ors.

For the Petitioner : Mr. J. P. Khaitan, Sr. Adv.

Mr. Abhratosh Majumdar, Sr. Adv.

Mr. Avra Mazumder, Adv.

Mr. Pratyush Jhunjhunwala, Adv.

Ms. Alisa Das, Adv.

Ms. Shruti Dutta, Adv.

Ms. Sakshi Singhi, Adv.

For the Respondents : Mr. Dhiraj Kumar Trivedi, Ld. DSGI.

Mr. Aryak Dutt, Adv.

Mr. Prithu Dudhoria, Adv.

Mr. Amit Sharma, Adv.

Mr. Abhishek Kr. Agrahari, Adv.

Hearing Concluded on : 08.01.2026

Judgment on : 28.01.2026

Om Narayan Rai, J.:-

1. This writ petition assails three notices dated October 24, 2025, October 29,

2025 and November 07, 2025 w hereby the respondent revenue authorities

have intimated the petitioner about their intent to inspect the jewellery, gold

bars etc., seized during a search and seizure operation conducted on June

21, 2022 under Section 132 of the Income Tax Act, 1961 (hereafter “the said

Act of 1961”).

Page 2 of 20

FACTS OF THE CASE:

2. Briefly summed up, the relevant facts gathered from the writ petition are as

follows:-

a) On June 21, 2022 and on other dates subsequent th ereto a search

operation under Section 132 of the said Act of 1961 was conducted at the

residence and office of the petitioner as well as at the bank lockers of the

petitioner and the petitioner’s family members.

b) In course of the search and seizure operation, the entire jewellery/bullion

(hereafter “the seized assets”) were seized upon being inspected,

measured, serially numbered and valued by the valuers approved by the

Income Tax Department in accordance with the prescribed search and

seizure procedure and the Search and Seizure Manual issued by the

Central Board of Direct Taxes.

c) Subsequently, the petitioner filed its Return of Income (hereafter “ITR”) for

the assessment year 2023-24. The same was processed under Section

143(1) of the said Act of 1961 on September 17, 2023.

d) The said ITR was thereafter selected for compulsory assessment and

notices dated October 04, 2023 were issued under Sections 143 (2) and

142(1) of the said Act of 1961 thereby calling upon the petitioner to

reconcile the seized assets with his books of accounts and wealth tax

return, if applicable.

e) The petitioner filed his reply thereto on January 03, 2024 along with

reconciliation and a master list explaining the sources of the seized

assets. It was submitted by the petitioner that the same belonged to him

and his family members. It was the petitioner’s case that a bulk of the

Page 3 of 20

seized assets belonged to the petitioner’s father-in-law who had kept the

same in the custody of the petitioner’s wife, owing to a family dispute

between the petitioner’s father-in-law and the petitioner’s brother-in-law.

f) After considering the petitioner’s reply, the Assessing Officer passed the

assessment order on March 30, 2024 thereby partly accepting the

petitioner’s explanation and reducing the unexplained value of the seized

assets from Rs.14,00,31,943/- to Rs.12,33,34,445/-. The petitioner has

carried the said assessment order in appeal before the appellate authority

under Section 246A of the said Act of 1961. The said appeal is pending

and it is the petitioner’s contention that the entire issue of addition of

jewellery and bullion seized in course of the search operation is subject

matter of the said appeal.

g) During pendency of the appellate proceedings, a notice dated March 07,

2025 was issued to the petitioner under Section 263(1) of the said Act of

1961 by the Principal Commissioner of Income Tax (hereafter “PCIT”)

thereby asserting that the assessment order dated March 30, 2024 had

been passed without inquiring/verifying the issue of the source of the

seized assets and that such aspect rendered the assessment order

erroneous insofar as it was prejudicial to the interest of the revenue

within the meaning of Section 263 of the said Act of 1961. By the said

notice, the petitioner was asked to show cause as to why the order passed

by the Assessing Officer should not be revised under Section 263 of the

said Act of 1961.

h) The petitioner furnished a detailed reply to the said notice to show cause

on March 07, 2025.

Page 4 of 20

i) Subsequently a notice dated October 24, 2025 was served upon the

petitioner thereby informing the petitioner that inspection of the seized

assets had been scheduled to be taken on October 29, 2025. The

petitioner was requested to be present personally or through his

authorised person along with two independent witnesses at the strong

room of Aayakar Bhawan, Annex Building, 1

st

Floor, P-7, Chowringee

Square, Kolkata-700069, at 12 P.M. on the said date.

j) The petitioner replied to the said notice by a letter October 28, 2025

thereby indicating his inability to be present during the inspection on

account of “a medical condition” as result whereof the petitioner was

“bleeding from his legs, arms and other parts of the body”.

k) On October 29, 2025 another letter was issued to the petitioner thereby

re-fixing the date of inspection on November 04, 2025. By the said letter

two more alternative dates i.e. November 06, 2025 and November 07,

2025 were suggested to the petitioner with a request to be present for

inspection either personally or through authorised representative.

l) On November 04, 2025 the petitioner once again pleaded inability to

attend inspection on any of the scheduled dates for medical reasons and

reminded the department that the seized assets had been lying in the

custody of the Income Tax Department for thirty eight months by then

and that in such view of the matter there was no such urgency that could

not await the petitioner’s recovery and ability to participate in the process

meaningfully. The petitioner further indicated that “in matters of this

nature”, the petitioner’s presence could not be substituted by the

presence of an authorised representative since the authorised

Page 5 of 20

representative should not be acquainted with factual aspects of the seized

items. The petitioner further asserted thereby that his “inability to comply

is purely on account of genuine medical reasons and not an attempt to

delay or avoid proceedings in any manner”. The petitioner undertook to

inform the office of the revenue authorities once he was medically fit as

advised by his attending physicians.

m) On the same date i.e. November 04, 2025 itself, the petitioner wrote

another letter through e-mail to the respondent revenue authorities

objecting to the proposed inspection of the seized assets. It was also

asserted that since the issue of “source/ownership of seized jewellery,

mapping to the owners, their explanation and addition u/s 69A” of the said

Act of 1961 was pending consideration in appeal before the Commissioner

of Income Tax (Appeals), therefore the PCIT could not exercise powers of

revision on the said issues in view of the bar contained in Explanation 1(c)

to Section 263 of the said Act of 1961.

n) The said letter also referred to Rule 112(13) of the Income Tax Rules,

1962 (hereafter “the said Rules”) and contended that the notice of

inspection dated October 24, 2025 and October 29, 2025 neither

disclosed any statutory basis nor any specific purpose for the said

inspection and that the said notice was not referable to any pending

proceeding before the Assessing Officer. The petitioner further averred

that the inspection was an attempt to revisit the seized assets that had

already been inventoried and valued in terms of the departmental

procedure. The petitioner claimed that the inspection put to risk the

chain-of-custody inasmuch as the same would entail needless handling of

Page 6 of 20

valuable articles that had already been valued, sealed and deposited as

per procedure.

o) In response thereto, the respondent Income Tax authorities issued an e-

mail dated November 07, 2025 thereby informing the petitioner that since

the assessment order was erroneous insofar as it was prejudicial interest

of the revenue, therefore, proceedings under Section 263 of the said Act of

1961 had been initiated and that such error in the assessment order was

independent of the subject matter of appeal. It was further put across to

the petitioner that the PCIT was “competent to make or cause to be made

any inquiry as it deemed necessary” before passing an order under

Section 263 of the said Act of 1961 and that the department was in

possession of certain information for which inspection of the seized assets

kept in the strong room was required. It was further asserted that such

exercise was relevant and useful for the purpose of Income Tax Act.

p) Feeling aggrieved by the aforesaid notices the petitioner has approached

this Court by filing the instant writ petition.

3. On the first day when the matter was taken up, Mr. Dudhoria, learned

Advocate appearing for the revenue had submitted that the inspection was

sought to be conducted on the basis of certain confidential information that

had been obtained by the revenue and that such inspection was relevant for

the purpose of a proceeding under Section 263 of the said Act of 1961. This

Court had then directed the respondent revenue authorities to file a report

bringing on record the reason/purpose of the inspection sought to be

conducted.

Page 7 of 20

4. During the next hearing, a report was sought to be tendered to Court in a

sealed cover. The same was, however, vehemently objected to by Mr. Khatian

learned Senior Advocate, appearing for the petitioner by citing the judgment

of the Hon’ble Supreme Court in the case of Madhyamam Broadcasting

Ltd. vs. Union of India & Ors.

1

Relying on the said judgment it was

submitted by Mr. Khaitan that accepting a report in a sealed cover would

lead to negation of the principles of natural justice as well as open justice.

5. In the wake of such objection, the Court did not open the sealed cover and

returned the same to the learned Advocates representing the respondent

revenue authorities. The Court then proceeded to hear the parties on the

issue as to whether or not the petitioner was required to be supplied the

information and reasons wherefor inspection of the seized assets was sought

to be conducted by the revenue authorities.

SUBMISSIONS ON BEHALF OF THE PETITIONER:

6. Mr. J. P. Khaitan, learned Senior Advocate appearing for the petitioner made

the following submissions: -

a) The notice for inspection lacks statutory basis as no purpose in terms of

Rule 112(13) of the said Rules has been stated in any of the notices

impugned. The purpose of the Act for which such inspection was needed

was required to be established before any inspection could be done and

without it, no inspection of seized articles could be permitted.

b) The notice/e-mail dated November 07, 2025 indicated that there was

some information in possession of the respondent Income Tax authorities

on the basis whereof the seized assets were sought to be inspected but no

1

(2023) 13 SCC 401

Page 8 of 20

such information was furnished to the petitioner. The information that

has catalysed the inspection must be supplied to the petitioner.

c) The inspection would disturb the chain of custody and the same should

not be permitted.

d) The inspection was not referable to the proceeding under Section 263 of

the said Act of 1961 since the same was only limited to enquiring or

verifying the source of the seized assets.

SUBMISSIONS ON BEHALF OF THE RESPONDENTS:

7. Mr. Trivedi, learned Deputy Solicitor General of India (hereafter “DSGI”)

appearing for the revenue authorities, submitted as follows:-

a) In terms of the provisions of Section 263 of the said Act of 1961 the PCIT

or the revising authority is competent to make or cause to be made any

inquiry that he deems necessary and pass such order thereon as the

circumstances of the case may justify.

b) For the purpose of passing an order the revising authority has power to

examine the record of any proceeding under the Act.

c) The articles that had been seized during the course of search and seizure

operation also form part of the records and that for the purpose of

inspection of the record, it is not incumbent on the revenue authorities to

indicate any reason. In support of the contention that reasons for

inspection are not required to be supplied prior to inspection a judgment

of the Hon’ble Supreme Court in the case of Commissioner of Income

Tax, Mumbai vs. Amitabh Bachchan

2

was pressed into service.

2

(2016) 11 SCC 748

Page 9 of 20

d) Another judgement of the Hon’ble Supreme Court in the case of

Commissioner of Income Tax, Bangalore vs. Shree Majunatheaware

Packing Products & Camphor Works

3

and a judgment of the Hon’ble

High Court of Gujarat in the case of Commissioner of Income -Tax vs.

Vallabhdas Vithaldas & Anr.

4

were cited for to demonstrate that seized

assets also form the part of the records.

e) It was next submitted that affording an opportunity to the petitioner to be

present during the inspection fully satisfies the requirement of the

provisions of the said Act of 1961 and the said Rules.

f) It was further argued that the revenue had the authority to inspect the

seized assets and such authority could not be fettered.

REJOINDER BY THE PETITIONER:

8. Mr. Khaitan, learned Senior Advocate appearing for the petitioner re-joined

by making the following submissions: -

a) The petitioner must be made aware of the information that has tipped off

the inspection. It was submitted that the same would be necessary for the

petitioner to attend the inspection well-prepared and that the petitioner

must know what steps the petitioner must take.

b) The articles had been seized upon following a proper procedure and after

making proper valuation thereof. It was reiterated that inspection of

articles which have been seized and put under the custody of an Officer

could not be inspected without stating the purpose therefor and doing so

would violate the provisions of Rule 112(13) of the said Rules.

3

(1998) 1 SCC 598

4

(2002) 253 ITR 543

Page 10 of 20

c) It was contended that the content of the e-mail dated November 07, 2025

clearly indicated that the inspection is not intended to be done on the

basis of any query in the mind of the PCIT but on the basis of something

extraneous and that being so the information must be supplied to the

petitioner.

d) It was asserted that the inventory and Panchnama that records the seized

articles/ seized assets would form part of the records and the expression

“records” would not include the seized articles.

e) It was contended that an element of surprise is involved when the search

and seizure operation is conducted but when an inspection of seized

assets is sought to be carried out or conducted in terms of Rule 112(13) of

the said Rules, there is no room for any surprise anymore and that being

so the information in possession of the revenue authorities must be made

over to the petitioner as well.

f) The notices impugned have left the petitioner puzzled as to the purpose of

the inspection.

g) Mr. Khaitan invited the attention of this Court to Rule 112(10) and Rule

112(11) of the said Rules to indicate the meticulousness with which an

article is seized and sealed in packages. The Court was also taken

through Rule 112(13) of the said Rules and it was submitted that

inspection should not be made a regular affair.

h) It was further submitted that if the information and reasons are not

indicated in the notice, the same would be rendered arbitrary.

Page 11 of 20

ANALYSIS & DECISION:

9. Two questions fall for consideration by this Court. Firstly, as to whether the

information or the reason that have prompted the inspection of seized assets

should be supplied to the petitioner and secondly whether the impugned

notices informing the petitioner about the inspection intended to be

conducted have been issued for “any of the purposes of the Act”.

10. It is the petitioner’s case that the information and reasons that have

induced the inspection must be supplied to the petitioner. It was submitted

that while non-furnishing of information at the stage of search and seizure

is understandable since the same involves an element of surprise, the same

cannot be justified in the present case where the revenue seeks to inspect

the seized assets kept inside sealed packages. The argument is attractive

but its appeal gets tempered by the clear statutory provisions.

11. A search under Section 132 of the said Act of 1961 must be based on

"information" that gives rise to “reason to believe” that either all or any of the

conditions mentioned in clauses (a), (b) and (c) of Section 132 (1) of the said

Act of 1961 exist. Such aspect would be clear from a bare perusal of Section

132 (1) of the said Act of 1961 itself. Constitutional Courts consistently held

that search and seizure operations are invasive acts. The Courts have

therefore ruled that such act(s) must be based on some material or

information in possession of the revenue that justifies the operation.

12. If any jewellery, bullion or other valuable article is seized during the search

operation, the same is required to be inventoried/inventorised and secured

in sealed packages in the manner prescribed in Rule 112(10) of the said

Rules. The said Rule reads thus:-

Page 12 of 20

“(10) The authorised officer shall place or cause to be placed the bullion, jewellery

and other valuable articles and things seized during the search in a package or

packages which shall be listed with details of the bullion, jewellery and other valuable

articles and things placed therein; every such package shall bear an identification

mark and the seal of the authorised officer or any other income-tax authority not below

the rank of Income-tax Officer and the occupant of the building, place, vessel, vehicle or

aircraft, including the person in charge of such vessel, vehicle or aircraft, searched or

any other person in his behalf shall also be permitted to place his seal on them. A copy

of the list prepared shall be delivered to such occupant or person. A copy shall be

forwarded to the Chief Commissioner or Commissioner and where the authorisation

has been issued by any officer other than the Chief Commissioner or Commissioner,

also to that officer.”

13. The manner, in which a sealed package containing seized jewellery, bullion

and other valuable article may be reopened, is provided in Rule 112(13) of

the said Rules. The same is extracted hereinbelow:-

“(13)(i) Whenever any sealed package is required to be opened for any of the

purposes of the Act, the authorised officer may, unless he is himself the Custodian,

requisition the same from the Custodian and on receipt of the requisition, such package

or packages, as the case may be, shall be delivered to him by the Custodian. The

authorised officer may break any seal and open such package in the presence of two

respectable witnesses after giving a reasonable notice to the person from whose

custody the contents were seized to be present.

(ii) Such person shall be permitted to be present till all or any of the contents of such

package are placed in a fresh package or packages and sealed in the manner specified

in sub-rule (1) or delivered to such person or the Custodian, as the case may be.”

14. A meaningful reading of Rule 112(13) of the said Rules would indicate that a

sealed package can always be reopened “for any of the purposes of the Act”

and that the same can be done “in the presence of two respectable witnesses

after giving a reasonable notice to the person from whose custody the contents

were seized to be present”. Evidently, the power of reopening a sealed

package is not predicated on any information in possession of the revenue

and/or any “reason to believe” that might trigger an inspection. Such power

Page 13 of 20

can be exercised even in absence of any information provided the same is

required “for any of the purposes of the Act”.

15. Indeed, while the surprise element that is there at the stage of search and

seizure is not there at the stage of a subsequent inspection of the seized

assets but that by itself would not entitle the person from whose custody the

assets were seized to the information and reasons that might have induced

an inspection.

16. Such information or reason to take inspection of the seized assets is not a

piece of evidence. It is only a trigger for inspection. Inspection of a seized

article is not an invasive act like search since it does not constitute any

intrusion into someone’s private and untainted space. Inspection is usually

verificatory in nature and the power to inspect a seized article can therefore

be exercised even without “information” and “reason to believe” which are

the sine qua non for a search operation. Accordingly unlike in a search

operation, in cases of inspection of a seized asset “information” and “reason

to believe” cannot be said to be jurisdictional facts for undertaking the

exercise of inspection.

17. If an inspection is done for “any of the purposes of the Act”, the statutory

criterion is met; once the statutory criterion gets fulfilled there can be no

warrant for interference. Likewise if a notice is issued in terms of the

statutory provisions, the same cannot be termed arbitrary. In such view of

the matter there is nothing that may persuade the Court to direct the

revenue to part with the information and reason that might have induced

the inspection.

Page 14 of 20

18. It was submitted on behalf of the petitioner that supply of the information

and reason would enable the petitioner to attend the inspection well-

prepared. Here again, this Court is unable to agree with such submission.

The information and reason whatever they may be are only prompts for the

inspection. The petitioner would have to be ready to meet the points that

would require consideration/determination by the relevant authorities post

the inspection. Such points would definitely have to be communicated to the

petitioner and the petitioner’s response thereto would have to be sought by

the revenue authorities. As would be evident from the Rules quoted

hereinabove the petitioner’s participation in the inspection is only to ensure

transparency of the process and to weed out any apprehension of tampering

with the valuables sealed in packages.

19. It is, therefore, little wonder that there is no requirement indicated anywhere

either in the said Rules or in any of the provisions of the said Act of 1961

that any information and/or reason based on which the requirement for

reopening the sealed package may have been felt or may have arisen would

be required to be communicated to the person “from whose custody the

contents were seized” (hereafter “the person concerned”). All that the person

concerned is required to be communicated is a “reasonable notice………. to

be present”.

20. It is true that none of the notices has stated, with the desired specificity,

that the inspection of the seized assets is required for the purpose of the

pending proceeding under Section 263 of the said Act of 1961 but on a

careful reading of the notice dated November 07, 2025 issued by the revenue

in the light of the pleadings in the writ petition (i.e. paragraphs 26 and 30

Page 15 of 20

thereof) and the submissions made on behalf of the respective parties it is

almost clear that the impugned inspection is sought to be conducted for the

purpose of pending Section 263 proceeding only. This Court is cognizant of

the fact that the petitioner has questioned the nexus of the proposed

inspection with the pending 263 proceeding in the writ petition especially in

the pleadings in paragraphs 26 and 30 thereof but the very assertion that

the proposed inspection has no nexus of with the said proceeding indicates

that the petitioner has understood the notice have been issued in respect of

or for the purpose of the said proceeding itself.

21. Before proceeding further, the relevant provisions of Section 263 of the said

Act of 1961 may be noticed.

“263. (1) The Principal Commissioner or Commissioner may call for and examine

the record of any proceeding under this Act, and if he considers that any order passed

therein by the Assessing Officer is erroneous in so far as it is prejudicial to the

interests of the revenue, he may, after giving the assessee an opportunity of being

heard and after making or causing to be made such inquiry as he deems necessary,

pass such order thereon as the circumstances of the case justify, including an order

enhancing or modifying the assessment, or cancelling the assessment and directing a

fresh assessment;……”

22. Thus in a proceeding under Section 263 of the said Act of 1961, the PCIT is

empowered to make such inquiry as he deems necessary and inspection of

seized assets may very well form part of such inquiry.

23. Now the next question that would arise is whether a notice issued to the

person concerned indicating that the same has been issued in connection

with a pending 263 proceeding would satisfy the requirement of the notice

contemplated under Rule 112(13) of the said Rules?

Page 16 of 20

24. Rule 112(13) of the said Rules requires a “reasonable notice to the person

from whose custody the contents were seized to be present”. The expression

“reasonable notice” to the person concerned would thus mean such a notice

to the person concerned which to enable the person to arrange his affairs

and remain present at all times right from the moment the seized articles

would be inspected upon de-sealing the packages till the time the packages

would be resealed upon the inspection being complete. If any query is

required to be raised or any decision based on such inspection is required to

be taken, the person concerned would have to be put on notice and heard.

The notice dated November 07, 2025 clearly indicates about an inquiry to be

done by the PCIT under Section 263 of the said Act of 1961 and requests for

the petitioner’s attendance. In such view of the matter, the notice cannot be

said to be in violation of Rule 112(13) of the said Rules.

25. In this context the observations of the Hon’ble Supreme Court in the

judgment in the case of Amitabh Bachchan (supra) at paragraph 12 thereof

deserve notice:-

“12. It may be that in a given case and in most cases it is so done a notice

proposing the revisional exercise is given to the assessee indicating therein broadly or

even specifically the grounds on which the exercise is felt necessary. But there is

nothing in the section (Section 263) to raise the said notice to the status of a mandatory

show-cause notice affecting the initiation of the exercise in the absence thereof or to

require CIT to confine himself to the terms of the notice and foreclosing consideration of

any other issue or question of fact. This is not the purport of Section 263. Of course,

there can be no dispute that while CIT i s free to exercise his jurisdiction on

consideration of all relevant facts, a full opportunity to controvert the same and to

explain the circumstances surrounding such facts, as may be considered relevant by

the assessee, must be afforded to him by CIT prior to the finalisation of the decision.”

Page 17 of 20

26. In the light of the said observations a notice of inspection like the one at

hand cannot be impeached on the ground of it lacking reasons or

information. The said observations of the Hon’ble Supreme Court also take

care of the petitioner’s submission that the notice has no nexus with the

pending Section 263 proceeding. While it may appear, (a primary reading of

the show cause notice issued in the said Section 263 proceeding) that the

proposed inspection is not relevant, the result of the inspection may very

well lead to something important and relevant for the purpose of the said

Section 263 proceeding. As observed by the Hon’ble Supreme Court in the

case of Amitabh Bachchan (supra), the PCIT in exercise of its power under

Section 263 of the said Act of 1961 is not fettered and tethered to the points

raised in the show cause notice only. Therefore, at this stage it cannot be

said that the inspection is not referable to the Section 263 proceeding.

27. While dealing with the said judgment, it was pointed out by Mr. Khaitan

that in the said case the assessee was given full opportunity to be present at

all stages and contest the proceedings. Paragraph 15 of the said report is

relevant for the present purpose. The same is extracted hereinbelow:-

“15. To determine the above question we have read and considered the order of the

assessing officer dated 30-3-2004; as well as the order of the learned CIT dated 20-3-

2006. From the above consideration, it appears that the learned CIT in the course of

the revisional proceedings had scrutinised the record of the proceedings before the

assessing officer and noted the various dates on which opportunities to produce the

books of account and other relevant documents were afforded to the assessee which

requirement was not complied with by the assessee. In these circumstances, the

revisional authority took the view that the assessing officer, after being compelled to

adjourn the matter from time to time, had to hurriedly complete the assessment

proceedings to avoid the same from becoming time-barred. In the course of the

revisional exercise relevant facts, documents, and books of account which were

overlooked in the assessment proceedings were considered. On such re-scrutiny it was

Page 18 of 20

revealed that the original assessment order on several heads was erroneous and had

the potential of causing loss of revenue to the State. It is on the aforesaid basis that the

necessary satisfaction that the assessment order dated 30-3-2004 was erroneous and

prejudicial to the interests of the Revenue was recorded by the learned CIT. At each

stage of the revisional proceeding the authorised representative of the assessee had

appeared and had full opportunity to contest the basis on which the revisional

authority was proceeding/had proceeded in the matter. If the revisional authority had

come to its conclusions in the matter on the basis of the record of the assessment

proceedings which was open for scrutiny by the assessee and available to his

authorised representative at all times it is difficult to see as to how the requirement of

giving of a reasonable opportunity of being heard as contemplated by Section 263 of

the Act had been breached in the present case. The order of the learned Tribunal

insofar as the first issue i.e. the revisional order going beyond the show-cause notice is

concerned, therefore, cannot have our acceptance. The High Court having failed to fully

deal with the matter in its cryptic order dated 7-8-2008 [CIT v. Amitabh Bachchan,

2008 SCC OnLine Bom 1544] we are of the view that the said orders are not tenable

and are liable to be interfered with.”

28. In the case at hand also, the petitioner is being given full opportunity to

appear and be present during the inspection. The petitioner would definitely

have to be given an opportunity to meet the queries that might arise or may

be raised by the revenue upon inspection of the seized assets. The

inspection would be conducted and concluded in his presence. The result of

the inspection would have to be laid bare before him and would have to be

made available to him. It would then be open to him to either accept the

same or contest it.

29. The argument of the petitioner that the chain of custody will be disturbed

does not appeal. It is the common case of the parties that the seized articles

have been kept in sealed covers in the strong room. The same are to be

inspected there only, in the presence of the petitioner. There is no reason to

apprehend that there would be a disturbance in the chain of custody as the

Page 19 of 20

custodian is not getting changed at all. In any case if an inspection is being

conducted in terms of the said Rule 112(13) of the said Rules, there is no

reason to derail the same on the plea of disturbance of chain of custody.

30. Inspection or inquiry conducted by statutory authorities can seldom be

interfered with in situations where the person against whom such inspection

or inquiry is directed or to whom the same is relevant, has opportunity to

state his case before the appropriate authority prior to the final decision

being taken. A notice calling upon a person to attend an inspection of a

seized article cannot be treated as a decision and made justiciable. It may be

remembered that what is required to be issued in terms of Rule 112(13) of

the said Rules is a “reasonable notice to the person from whose custody the

contents were seized to be present” and not a reasoned notice. Of course if a

statutory authority acts arbitrarily or in contravention of the law, the same

would certainly be liable to be dealt with by the Courts but not otherwise.

31. In the case at hand there is a pending proceeding under Section 263 of the

said Act of 1961 and a notice of inspection issued for such purpose has to

be seen as one for “any of the purposes of the Act”. If there had been no

proceeding pending or the revenue could not connect the notice to “any of

the purposes of the Act” even otherwise, the notice could certainly be

interfered with on the ground of arbitrariness.

32. For all the reasons aforesaid, this Court does not find any reason to hold

that the notices impugned have been issued dehors the law. The writ

petition being WPA 25602 of 2025 therefore stands dismissed. However,

since the notices impugned have lost their shelf life (i.e. the dates of

inspection indicated therein have long lapsed), the respondents shall be at

Page 20 of 20

liberty to issue fresh notice of inspection strictly in accordance with law if

they deem it necessary. No costs.

33. Since the impugned notices have been found to be valid on the grounds and

for reasons detailed hereinabove the additional grounds raised by the

revenue as regards the “seized assets” forming part of the records and the

judgments in support thereof, are not being dealt with.

34. Urgent photostat certified copy of this judgment, if applied for, be supplied

to the parties upon compliance of all formalities.

(Om Narayan Rai, J.)

Later:-

35. After delivery of the judgment and order today, Mr. Mazumd ar, learned

Advocate appearing for the petitioner seeks stay of operation of this order.

The same is opposed by Mr. Dutt, learned Advocate appearing for the

respondent revenue authorities. Considering the facts of the case, operation

of this order is stayed for a period of seven days from date.

(Om Narayan Rai, J.)