High Court Upholds Income Tax Search; Condemns Misconduct

Heading 1: Validity of Income Tax Search Upheld

The Gujarat High Court has upheld the validity of search and seizure operations conducted by the Income Tax (I-T) department at the residence and office of lawyer Maulik Sheth. The search, carried out between November 3 and 7 last year, was challenged by Sheth, who argued that documents related to his professional activities were seized, violating his fundamental rights, including privacy.

Heading 2: Court’s Ruling on Incriminating Material

A division bench comprising Justices Bhargav Karia and Niral Mehta ruled that the incriminating material seized from Sheth’s premises could be used by the department against third parties, particularly his clients, under specific conditions. The court found no grounds to interfere with the search proceedings initiated under section 132 of the IT Act, dismissing Sheth’s challenge.

Heading 3: Criticism of Official Misconduct

However, the bench criticized the misconduct observed during the search operation, especially concerning a female colleague of Sheth. The court condemned the manner in which the movement of Sheth and his family members, including children, was restricted during the search. It particularly highlighted the behavior of Inspector Amit Kumar, who served summons to Sheth’s associate at her residence accompanied by two armed policemen at 6:30 am.

Heading 4: Court’s Clarification on Attorney-Client Privilege

The court clarified the application of attorney-client privilege, stating that incriminating material can be used against third parties if a lawyer becomes aware of fraudulent or illegal activities committed by their clients after being engaged. However, if documents belong to clients before being hired by alleged tax evaders, the Income Tax department cannot take action based on such documents, even if they are incriminating.

Title: High Court Upholds Validity of Income Tax Search; Condemns Official Misconduct

Validity of Income Tax Search Upheld:

The Gujarat High Court has upheld the validity of search and seizure operations conducted by the Income Tax (I-T) department at the residence and office of lawyer Maulik Sheth. The search, carried out between November 3 and 7 last year, was challenged by Sheth, who argued that documents related to his professional activities were seized, violating his fundamental rights, including privacy.

 Court’s Ruling on Incriminating Material:

A division bench comprising Justices Bhargav Karia and Niral Mehta ruled that the incriminating material seized from Sheth’s premises could be used by the department against third parties, particularly his clients, under specific conditions. The court found no grounds to interfere with the search proceedings initiated under section 132 of the IT Act, dismissing Sheth’s challenge.

 Criticism of Official Misconduct:

However, the bench criticized the misconduct observed during the search operation, especially concerning a female colleague of Sheth. The court condemned the manner in which the movement of Sheth and his family members, including children, was restricted during the search. It particularly highlighted the behavior of Inspector Amit Kumar, who served summons to Sheth’s associate at her residence accompanied by two armed policemen at 6:30 am.

 Court’s Clarification on Attorney-Client Privilege:

The court clarified the application of attorney-client privilege, stating that incriminating material can be used against third parties if a lawyer becomes aware of fraudulent or illegal activities committed by their clients after being engaged. However, if documents belong to clients before being hired by alleged tax evaders, the Income Tax department cannot take action based on such documents, even if they are incriminating.

Call for Formal Apology:

The court emphasized the need for a formal apology to advocate Ms./Mrs. Patel for the authorities’ actions, which were deemed a violation of basic human decency. It called for a citizen-centric and amicable approach from the authorities, highlighting the inconsistency between their behavior and their professed commitment to conducting searches respectfully.