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Third-Party Search Under Section 132 Upheld by Delhi HC
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Delhi High Courttax

Third-Party Search Under Section 132 Upheld by Delhi HC

October 9, 2026

Delhi High Court upheld separate search warrants under Section 132 for a couple’s premises and bank locker located at a third party’s address, affirming reasonable belief and jurisdictional compliance.

Validity of Third-Party Searches Under Section 132

Delhi High Court upheld search operations conducted under Section 132 of the Income Tax Act at a private residence and bank locker belonging to a third party but used by the assessee couple. The challenge was based on lack of territorial jurisdiction and insufficient ‘reason to believe’.

The Court held that so long as the AO records cogent material to form belief under Section 132(1), searches at third-party premises are permissible. The locker and residence were found to be storing incriminating material linked to undisclosed income.

“Possession, not ownership, is key when assets are concealed at third-party locations”
, the HC observed.

This reinforces investigative powers under the Act. Practitioners must ensure clients do not shelter assets at third-party locations under assumption of protection. The ruling expands operational flexibility for tax authorities in tracing black money.

Citations

  • Section 132, Income Tax Act, 1961
Practice Areas:tax

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