Even if search held invalid, information or material gathered may be relied upon by revenue only in a proceeding which is not illegal
In a recent judgment, Hon’ble Supreme Court has declined to interfere with the judgment of High Court holding that even if the search is held to be invalid, the information or material gathered during the course thereof may be relied upon by revenue by making adjustment to the assessee’s income in a proceeding permissible in law not otherwise.
ABCAUS Case Law Citation:
4809 (2025) (10) abcaus.in SC
In the instant case, the ITAT had quashed the re-assessment against the assessee and held the search under section 132 as invalid on the ground of non production of satisfaction note for the search action.
Not satisfied with ITAT judgment, the Revenue challenged it before the High Court and relied upon the judgment of the High Court in which it was held that even assuming that the search is to be held invalid the information or material gathered during the course thereof may be relied upon by them for making adjustment to the assessee’s income in an appropriate proceeding has merit.…. this order does not preclude the Revenue from taking any such proceedings as they may be so advised and to utilise the information or material in such proceeding against the assessee as is permissible in law.
Placing reliance on the observation made by the High Court, it contended that situation will be similar to that covered by the order passed by the High Court
However, the Hon’ble High Court clarified the observation made by the Co-ordinate Bench that even if the search is held to be invalid, the information or material gathered during the course thereof may be relied upon by revenue by making adjustment to the assessee’s income in an appropriate proceeding, if so advised and revenue may utilise the information and material in such proceeding as is permissible in law.
Not satisfied with the judgment of the High Court, the Revenue challenged it before the Hon’ble Supreme Court by way of filing a Special Leave Petition. However, the Apex Court dismissed the SLP with the following observations,
“There is a gross delay of …… days in filing the Special Leave Petition which has not been satisfactorily explained by the petitioner. 2. Even otherwise, we see no good ground to interfere with the impugned order passed by the High Court. 3. The Special Leave Petition is, therefore, dismissed on the ground of delay as well as merits.”
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