In Brief
The Supreme Court allowed the Revenue's appeal against the High Court's order quashing a search warrant issued under Section 132 of the Income Tax Act. The assessee had challenged the authorization claiming it was a fishing enquiry. The Court held that while the sufficiency of reasons to believe cannot be examined, their existence, relevance, and bona fides are open to scrutiny under the Wednesbury Principle of Reasonableness. The Revenue's belief that the assessee's Rs. 10-crore short-term unsecured loan to a newly incorporated casino company was an accommodation entry (a common money-laundering technique) was reasonable and grounded in credible information. The High Court erred in quashing the search warrant; accordingly, the authorization was upheld and Revenue proceedings were permitted to continue.
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