Search is ‘person-centric’, not ‘premises-centric’, under I-T Act: Karnataka High Court

The High Court of Karnataka has ruled that a “search operation” under the Income Tax Act (I-T Act) is fundamentally “person-centric”, not “premises-centric”, and the identity of the “searched person” is to be determined with reference to the person against whom satisfaction for “search” is recorded, and not with reference to the ownership of the premises searched.

A Division Bench comprising Justice S.G. Pandit and Justice K.V. Aravind gave this finding while allowing an appeal filed by the Income Tax Department against a 2025 judgement of a single judge, who had held that when a premises belonging to a person is searched, that person should be treated as a “searched person” under Section 153A instead of an “other person” under Section 153C.

The case originated from a search conducted in September 2017 at the residence of one Ram Mohan Raju, based on a warrant of authorisation issued in the name of one K. Narayan Raju. The tax authorities had reason to suspect that documents belonging to Mr. Narayan Raju were kept on Mr. Ram Mohan Raju’s premises. Since documents belonging to the former were found on the premises of the latter, the department had proceeded under Section 153C, which governs the assessment of a person whose assets or documents were found during a search of “another person”.

Mr. Ram Mohan Raju challenged the notice issued under Section 153C, arguing that since his own house was physically searched, he should be treated as the “searched person” and proceedings should have been initiated under Section 153A, which would offer him different procedural advantages. The single judge had agreed with this contention while quashing the notices.

Overturning the single judge’s order, the Bench, upon a detailed analysis of various provisions of the I-T Act, said that the expression “searched person” refers only to the individual against whom authorities recorded “reason to believe” under Section 132(1)(a) to (c) to conduct the search. Merely because a third party’s premises were searched as part of a search operation would not make that person a “searched person” under the Act, the Bench clarified.

“The procedure under Section 153A of the Act is confined to the person against whom a search is initiated within the meaning of Section 132. Proceedings against any other person (connected to searched person) on whose premises a search is conducted or from whom material is seized, can be initiated only under Section 153C, subject to satisfaction of the statutory conditions,” the Bench further clarified.