K. SHIVASHANKAR BHAT, J. ( 1 ). The petitioners basically question the restraint order dated 2-4-1991 issued under Section 132 (2) of the Income Tax Act, 1961 (the Act), as modified by the order dated 25-4-1991. The other reliefs are consequential to this basic relief sought by the petitioners. By the impugned order dated 25-4-1991 the third respondent clarified that the earlier order dated 2-4-1991 was confined to an amount lying with the 5th respondent company as on the said date of 2-4-1991 and there was no bar against the party (the petitioner company) from carrying out further business transactions with the 5th respondent company. According to the petitioners, the first petitioner is a company engaged in the business of manufacture and sale of non-ferrous metals, alloys etc. and the company owns a factory in Okhla Industrial Area. The second petitioner is a Director of the said company. The petitioner company has been subjected to assessment under the Income Tax Act and assessments upto the years 1988-89 have been completed while for the subsequent years they were pending at the time of the writ petition. For the purpose of the petitioner s manufacturing activity the Commissioner of Industries fixes and allots the quota of Copper wire bars which is the raw material used by the petitioner company. The raw material is bng supplied by the 5th respondent company which is a public sector undertaking. On fixation of the allotment of the quota the petitioner gets itself registered with the 5th respondent company for the requirements, and the petitioner company had to make payment of the price in advance at the rates stipulated by the 5th respondent. As and when the material is made available petitioner company takes the same. In March, 1991 the price of the Copper wire bars was Rs. 1 lac per M. T. The petitioner sought release of the quota of 32 M. T. of Copper wire bar for the said month and paid a sum of Rs. 31,36,925 by way of bank pay order. The 5th respondent issued an appropriate receipt for the same. Another 412 Sum of Rs. 9,80,289 was paid by way of by order dated 30-3-1991 towards 10 M. T. of the raw material. However, 14 M. T. of Copper wire bars were directed to be delivered though in fact only 12. 720 M. T. was delivered. A balance of 29. The 5th respondent issued an appropriate receipt for the same. Another 412 Sum of Rs. 9,80,289 was paid by way of by order dated 30-3-1991 towards 10 M. T. of the raw material. However, 14 M. T. of Copper wire bars were directed to be delivered though in fact only 12. 720 M. T. was delivered. A balance of 29. 280 M. T. of the raw material had to be delivered by the 5th respondent out of 42 M. T. Since the petitioner had paid the full price, the 5th respondent had with it a substantial balance amount to the credit of the petitioner company. This amount was restrained under Section 132 (3 ). ( 2 ) THE petitioner asserts that the petitioner company usually receives advance payments from its customers for supply of finished products and accordingly in March, 1991 the petitioner company received a sum of Rs. 31,35,000 from M/s. Gandhi Metals by way of account payee crossed cheque. Similarly it received Rs. 8,80,000 by way of cheque dated 27-3-1991 and another sum of Rs. 35,000 by way of cheque and these were from M/s. R. A. International, New Delhi, as. advance payments. These amounts were used by the petitioner company for making payments to the 5th respondent company. The impugned restraint order restrained the 5th respondent from releasing 29. 280 MT raw material to the petitioner by the 5th respondent. Future releases were also restrained. This other was subsequently modified by confining the restraint order to the amount as on 2-4-1991 with the 5th respondent company to the credit of the petitioner company. ( 3 ) ON 3-4-1991, the 2nd petitioner was asked to attend the enquiry with the books of account etc. On 16-4-1991 petitioner company wrote explaining the nature of the transactions and the circumstances under which this company made payment to 5th respondent company. On 25-4-1991, the restraint order was modified by permitting future business between the petitioner and the 5th respondent. On 13-5-1991, petitioner wrote, again, explaining in detail the nature of its business, advances received by the petitioner from the customers and payment made to the 5th respondent for supply of the raw materials. On 25-4-1991, the restraint order was modified by permitting future business between the petitioner and the 5th respondent. On 13-5-1991, petitioner wrote, again, explaining in detail the nature of its business, advances received by the petitioner from the customers and payment made to the 5th respondent for supply of the raw materials. ( 4 ) THE case of the Revenue is that M/s. Ganesh Enterprises which purported to have paid huge sums to the petitioner company while placing order for the supply of goods had unexplained money and this was the reason for the impugned restraint orders. The relevant statements made on behalf of the Revenue are as follows : " (iv) Perusal of account of M/s. Shri Ganesh Enterprises Pvt. Ltd. with M/s. Hindustan Copper Ltd. showed that an amount of Rs. 28,44,846 remained with M/s. Hindustan Copper Ltd. pending execution of supply. 413 (v) Perusal of the books of M/s. Hindustan Copper Ltd. showed that M/s. Shri Ganesh Enterprises Pvt. Lid. had deposited a sum of Rs. 3,77,32,721 with M/s. Hindustan Copper Ltd. in the month of March, 1991. (vi) Efforts were made to determine the source of funds out of which such amounts were deposited by Shri Ganesh Enterprises (P) Ltd. and to find out whether the sources were out of explained or unexplained sources. (vii) In the course of enquiries M/s. Shri Ganesh Enterprises Pvt. Ltd. submitted that amounts deposited with M/s. Hindustan Copper Ltd. was out of amounts received in March, 1991 to the tune of Rs. 3,30,30,000 on different dates from M/s. Gandhi Metal owned by Shri Pradeep Grover and a sum of Rs. 48,75,000 from M/s. R. A. International received in the period 26-3-91 to 30-3-1991. (viii) The petitioner had also filed a Miscellaneous Petition C. M. No. 2761 of 1991 requesting for staying the operation of the restraint order u/s. 132 (3) dated 2-4-1991. On 10-6-1991 the Hon ble Court ordered as under: (a) 50 per cent of the stock may be released on applicant furnishing security to the satisfaction of the Department. (b) Enquiry by the Department be completed within two weeks. The petitioner was directed to cooperate in such enquiries. " ( 5 ) THEREAFTER the various notices and enquiries held in connection with the source of money paid by Ganesh Enterprises are stated. (b) Enquiry by the Department be completed within two weeks. The petitioner was directed to cooperate in such enquiries. " ( 5 ) THEREAFTER the various notices and enquiries held in connection with the source of money paid by Ganesh Enterprises are stated. The counter affidavit states thereafter :- " (xii) Show cause notice dated 18-6-1991 was served on M/s. Ganesh Enterprises Pvt. Ltd. calling upon them to show cause why the credits introduced in their books in the name of M/s. Gandhi Metals and M/s. R. A. International should no; be treated as unexplained, since M/s. Gandhi Metal and M/s. R. A. International have not been able to furnish proof of the source out of which advance were made to M/s. Shri Ganesh Enterprises. The onus of proving the identify of the creditor, credit worthiness of the creditor and genuineness of the transaction was on M/s. Shri Ganesh Enterprises (P) Ltd. (Sreelakha Banerjee Vs. CIT (1963) 49 ITR (SC) 414 112, 117 ). M/s. Shri Ganesh Enterprises filed a reply dated 20th June, 1991. " The Revenue therefore assists:- " (xiii) From the enquiries made following facts emerge:- (a) M/s. Ganesh Enterprises has not been able to establish the credit worthiness of. the creditors alleged to be M[s. Gandhi Metal and M/s. R. A. International. (b) The claim of Shri Ganesh Enterprises as to its genuineness of the transaction is also not acceptable because of the following: (i) The amounts allegedly deposited by M/s. Gandhi Metal in its bank account from January, 1991 to March, 1991 is of the order of Rs. 10,63,77,000 approximately, yet no income tax returns are being filed. (ii) He has not been able to prove the source of deposits in his account or to even give the names and addresses of the party with whom he entered into such large transactions. (iii) M/s. Gandhi Metals does not maintain books of account. (iv) His capital is only Rs. 10,000. (v) He was also found to be in possession of Vehicle No. DNJ 0224 which has a mobile telephone installed which was stated by him to be registered in the name of M[s. Shri Ganesh Enterprises. (vi) Source of amounts deposited by showing cash sales in books of R. A. International are also not explained as even the names of such parties to whom sales have been made have not been furnished. (vi) Source of amounts deposited by showing cash sales in books of R. A. International are also not explained as even the names of such parties to whom sales have been made have not been furnished. " Again in another counter, the case of the Revenue is stated as follows:- "income tax Department further found that pay orders were purchased by the said two parties, namely M/s. Gandhi Metals and M/s. R. A. International, from the banks on tendering cash. As the source of the deposits by the petitioner, Shri Ganesh Enterprises P. Ltd. with Hindustan Copper Ltd. was not proved, therefore, 415 restraint order u/s. 132 (3) of the I. T. Act was issued to Hindustan Copper Ltd. restraining the amounts which were lying deposited with them which at that time was Rs. 28,44,846. M/s. Ganesh Enterprises P. Ltd, is assessed by Assistant Commissioner of Income Tax. Company Cir. 1 (3 ). New Delhi. He has completed the assessment for Assistant year 1989-90 on 31-3-1992 on an income of Rs. 1,70,890 with the remark in office note that the advances made by Shri Pradeep Grover Prop. of Mis. Gandhi Metals to the above concern and source thereof will be considered in :he hands of Shri Pradeep Grover. In the Assessment of Shri Pradeep Grover, the assessment was completed for Assistant year 1989-90 on 30-3-1992 at an income of Rs, 82,63,374 which includes unexplained investment of Rs. 44. 50 lacs deposited with M. M. T. C. and further unexplained investment of Rs. 27,25,874. A copy of the assessment order is enclosed as Ann. R-1. It is learnt that assessment for Assistant year 1990-91 is still pending with the said Assessing Officer. " "the said Asscssing Officer has issued provisional attachment U/s. 281-B of She I. T. Act,. 1961 on 17-12-1992 to the Manager (Marketing) Hindustan Copper Ltd. after obtaining approval of Commissioner of Income Tax, Delhi-1. New Delhi. Said order u/s. 281-B of the I. T. Act attaching Rs. 28 lakhs is annexed us Annexure R. II to this reply. " "the petitioner has enclosed alongwith the captioned CMP, copy of the assessment order of M/s. Gandhi Metals for Asst. year 1988-89 wherein the income of the Gandhi Metals for the Assistant Year 1988-89 has been assessed at Rs. 20. 20 lakhs by assessment order dated 30-3-1992. 28 lakhs is annexed us Annexure R. II to this reply. " "the petitioner has enclosed alongwith the captioned CMP, copy of the assessment order of M/s. Gandhi Metals for Asst. year 1988-89 wherein the income of the Gandhi Metals for the Assistant Year 1988-89 has been assessed at Rs. 20. 20 lakhs by assessment order dated 30-3-1992. As already submitted, Gandhi Metals claimed that it did not maintain, any account books, though its purchases were of Rs. 9. 48 crores during the said year and the sales were of Rs. 11. 70 crores. " "m/s. Gandhi Metals was assessed for the Assistant year 1989-90 on income of Rs. 82,63,374 and it had shown purchases of Rs. 11. 94 crores in that year. The said assessment order is enclosed as Annexure R. III. " "it is reported by the Assessing Officer of Gandhi Metals that no returns for the Assistant Year 1990-91 and onwards have been filed by M/s. Gandhi Metals. " 416 "m/s. R. A. International claimed to have come into existence as 3. partnership firm in the account, year 1990-91 relevant for the Assistant year 1991-92. Its income for the Asstt. year 1991-92 has been assessed at Rs. 1,91,91,464 by the Assistant Commissioner of Income Tax, Cir. 21 (2), New Delhi. Copy of the assessment order is enclosed as Annexure R-IV. " "in view of the foregoing, it is submitted that the petitioner M/s. Shri Ganesh Enterprises P. Ltd. has failed to explain the source of its deposit with Hindustan Copper Ltd. and therefore, the restraint order u/s. 132 (3) was validly issue to Hindustan Copper Ltd. by my Directorate. However, in view of the fact that provisional attachment order u/s. 281-B of I. T. Act has since been issued by the Assessing Officer, namely Assistant Commissioner of Income Tax, Coy. Cir. 1 (3), New Delhi, the said restraint order has become infructuous. " ( 6 ) FROM the above it is clear that failure of Gandhi Metals to establish its source of income from which payments were made lo the petitioner company was the ultimate reason for the impugned action. Further, an order was later made lifting the restraint order during the pendency of the writ petition in view of the provisional order of attachment made under Section 218-B of the Act attaching a sum of Rs. Further, an order was later made lifting the restraint order during the pendency of the writ petition in view of the provisional order of attachment made under Section 218-B of the Act attaching a sum of Rs. 28 lakhs with the 5th respondent for which the Commission issued the directive to the concerned officer of the Income Tax Department on 15-12-1992. ( 7 ) TECHNICALLY, the writ petition became infructuous, since the restraint order ceased to operate after 15-12-1992. However, the learned counsel for the petitioner contended that respondents 1 to 4 acted arbitrarily in issuing the restraint order under Section 132 (2) resulting in harassment of the petitioner company and its officers and that the business of the petitioner adversely affected by the said order. In the circumstances, petitioners seek costs to be awarded against the respondents 1 to 4. ( 8 ) THE learned counsel for the petitioners relied on a few decisions explaining the scope of the power under Section 132. In particular, a decision of this court in L. R. Gupta and others Vs. Union of India and others ; 194 ITR 32 (1) was relied upon. ( 9 ) I do not think I should go into the question of examining the validity of the exercise of the power under Section 132 (3) in the instant case, as the impugned orders ceased to operate. I had an occasion to consider the scope of Section 132 (1) in Southern Herbals Ltd. Vs. Director of Income Tax (Investigation) and others; (Writ 417 Petition No. 39381/1993 decided on 22-12-1993, in (2) Karnataka High Court ). It was a case of search authorised under Section 132 (1) (c ). Following observations are found in the said order : "it is not for the court to examine the sufficiency of the material leading to the belief of the authority that search shall have to be conducted ; the court has to see that the belief was reasonable, in the sense it was formed on the basis of relevant material (information) court cannot substitute its own opinion as to the reasonableness of the belief. Court has to examine to see whether the belief is an irrational or blind belief, formed out of prejudicial or the result of relying on wild gossip or bassless rumours etc. Court has to examine to see whether the belief is an irrational or blind belief, formed out of prejudicial or the result of relying on wild gossip or bassless rumours etc. In this regard, the relevant principles enunciated by the Supreme Court in this regard will be referred to in due course, hereinafter. Suffice if I state here, that, it is not permissible for the court to sit in appeal over the belief formed by the officer issuing the authorisation and the court cannot venture to reappreciate the materials available to the said officer, to see whether, the belief formed was correct or erroneous. There is a difference in law, between an incorrect inference drawn from certain basic facts and the relevancy of those basic facts to the inference drawn. In the former case, incorectness of the inference drawn can be rectified or nullified by a superior authority or court, provided law permits it to be rectified. Said rectification or nullification is part of the appellate or revisional power, which the law should specifically provide for. The writ jurisdiction is not so comprehensive, as to comprise within it such an appellate or revisional power. It is essentially a supervisory jurisdiction to see that statutory authorities function within their bounds and that their decisions are not arbitrary, fanciful or based on irrelevant considerations. Scope of the writ jurisdiction while examining the validity of the authorisation under Section 132 (1) is clearly limited to see whether the reasonable belief formed by theauthority issuing the authorisation was a reasonable belief, in the sense whether the said belief was formed only on the basis of relevant material information. " After a few more observations, the order proceeded to say : "the power vested in State is to see that rights and liberties vested in individuals are not misused to the detriment of the public. Menace of tax evasion has to be curbed by the State, so that the vast revenue, needed by the State to expend on its welfare activities, beneficial to the law 418 abiding people in the State, could be preserved and collected. Rights and liberties of a vast number of the citizens could be meaningful and properly enjoyable, only if the State is able to create proper opportunities for the same, through its welfare activities. Rights and liberties of a vast number of the citizens could be meaningful and properly enjoyable, only if the State is able to create proper opportunities for the same, through its welfare activities. Therefore, when prevention of tax evasion measures are taken and unearthing of hidden wealth is aimed at by recourse to the power of search and seizure, all hat the court can examine is to find out whether there is a relevant basis for the exercise of the said power by the State or its officers. An arbitrary invasion of the rights or liberties of the citizen is not permissible and the court s role as the guardian of the fundamental rights is to see whether the State s action is arbitrary or unauthorised. To form a particular opinion and take a decision to act under a given set of circumstances as provided under law is the. exclusive function of the administrators. The process of arriving at the decision should not be vitiated by irrationality or irrelevancy, because, in such a case, the resultant decision will become arbitrary. There is a vast and qualitative difference between an administrative act and a judicial act. in spite of the recent dillution of the concept of an administrative action. Assuming that power to order search and seizure is a quasi-judicial power (though I do not think so), the scope for judicial scrutiny of the exercise of the said power is very much limited, bearing in mind he respective roles assigned to the executives and the judicial departments of the State. Disclosure of the materials or the information to the persons against whom the action under Section 132 (1) is taken, is not mandatory, because, the very disclosure would affect or hamper the investigation, further, many a times, source of information could easily be inferred from the said material and it is not in the interest of public to reveal the source through which the authority received the information relevant to the action under Section 132 (1 ). information would have been collected by the promise of confidentiality ; even otherwise, to avoid embarrassment to the persons conveying the information, source cannot be revealed. information would have been collected by the promise of confidentiality ; even otherwise, to avoid embarrassment to the persons conveying the information, source cannot be revealed. When investigation is in progress and in the meanwhile, persons against whom action, is proposed comes to know of the material on which the investigation is based, there is every likelihood of further manipulative devices being adopted by such persons to give a different orientation to the relevant facts. The person against whom the action is to be taken will be given all the 419 vant tacts and materials on which, further action is proposed, after investigation is completed. search and seizure is only an initial step in the enquiry to be held regarding tax evasion. At this stage, its purpose is to get hold of evidence bearing on the tax liability of a person, which the said person is suspected to have been as withholding from the assessing authority and to get hold of the assets representing income believed to be undisclosed income. The stage for disclosure of the materials is reached only when, the revenue resolves, to proceed to make an appropriate order imposing tax liability or penalty, etc. , and at that stage, all relevant materials from which liability of the tax payer is sought to be inferred, shall have to be disclosed. At the initial stage of search and seizure, it is sufficient if the revenue places the material before the court to examine whether the said material on which search and seizure is ordered, was relevant to the exercise of the power under Section 132 (1); the material placed for court s perusal cannot be disclosed to the petitioner". After quoting the decision of the Supreme Court in Seth Brothers case (74 ITR 836), it was said in the order of Karnataka High Court : "it is therefore, clear that before issuing authorisation, the authority should record reasons for his reasonable belief and court cannot be asked to substitute its own opinion whether an order authorising search should have been issued. When the power is exercised bona fide and in furtherance of the statutory duties of the tax officers any error of judgment on their part will not vitiate the exercise of the power. When the power is exercised bona fide and in furtherance of the statutory duties of the tax officers any error of judgment on their part will not vitiate the exercise of the power. " ( 10 ) THE court also pointed out that reasons recorded for authorising the search need not be disclosed to the petitioner, though court may examine the file to satisfy itself whether the reasons were relevant or not. ( 11 ) HOWEVER, search and issuance of a restraint order invade the rights of the petitioner, Though the said invasion may be of a temporary duration. Therefore, utmost care shall have to be taken by the authorities before exercising the powers under Section 132. Even after the search the subsequent enquiries and investigations shall have to be concluded expeditiously, so that the innocent person who is affected by the actions orders of the authorities may be relieved of the hardship caused to the said person by this exceedingly harsh measure. 420 ( 12 ) NO doubt, measures to unearth undisclosed income, are to be resorted in the larger interest of the public. At the same time, the measures taken should be expeditiously concluded to minimise the Injury to the person against whom the measures are taken on the basis of the suspicion (though the suspicion was based on relevant material or information ). Safeguards to the trade and industry are as much necessary as the prevention of black money. A balance shali have to be struck between the exercise of the statutory powers by the officers of the State and those against whom the powers are exercised, so that genuine income earners may not get suffocated in the coarse of investigations. The injury to the entrepreneurs should be as minimum as possible. ( 13 ) IN the instant case, the impugned action, took place on 2-4-1991 ; restraint order continued to operate till about middle of December, 1992. Petitioner fully cooperated with "he respondent in all the enquiries. The fault, if any, was with the customer of the petitioner company. The source of the money shall have to be investigated in the hands of Pradeep Grover, of M/s. Gandhi Metals, and not in the hands of the petitioner company. If only the investigation/enquiry had been expedited and concluded, the relevant order affecting the petitioner company could have been lifted far earlier to December, 1992. The source of the money shall have to be investigated in the hands of Pradeep Grover, of M/s. Gandhi Metals, and not in the hands of the petitioner company. If only the investigation/enquiry had been expedited and concluded, the relevant order affecting the petitioner company could have been lifted far earlier to December, 1992. ( 14 ) A division bench of this court had made an order on 10-6-1991, as follows :- "the petitioner is calling in question the action of respondent 2 and 3 in restraining respondent No. 5 from supplying Copper Wire Bars to the petitioner for which the money has already been paid to the said respondent. Learned counsel for the petitioner says that his whole business has come to a grinding halt because of the restraint order passed by respondents 2 and 3. the satisfaction of respondents 2 and 3. We order released to the petitioner on his furnishing security to the satisfaction of respondents 2 and 3. We order accordingly. List the matter on 11th July, 1991. In the meanwhile, respondents 2 and 3 will complete the enquiry and also file their answer to the writ petition. Learned counsel seeks leave to file reply to the C. M. in Court. The same be taken on record. " ( 15 ) FROM Ihe above order, it is clear that respondents 2 and 3 had to complete the enquiry by 11-7-1991. Instead, the enquiry got prolonged till middle of December, 1992. Respondents 2 and 3 did not even seek extension of time to complete the enquiry. 421 ( 16 ) IN the circumstances, I am constrained to hold that there has been an unexplained and unreasonable delay in concluding the enquiry by respondents 2 and 3. The need to expeditiously conclude the enquiry after an order of restraint under Section 132, is implicit in the very provision, to dilute its harsh implications. ( 17 ) I am of the view that the petitioners are entitled to their costs, though otherwise, writ petition has become infructous. Consequently, I dismiss the writ petition as infructuous. However, the respondents 2 to 4 shall pay the petitioner a sum of Rs. 3,500 as costs. Writ petition is disposed of accordingly.