2008 (4) TMI 275 - HC - Income Tax

Sessions Judge, directing the department to deposit seized silver items in the treasury and consequent to the decision of the case to be handed over to the appropriate person petitioner (dept.) urged that such an order was contrary to the provisions of law - neither the police nor the CIT had gathered any information on record as to arrive to a conclusion that the silver pertains to undisclosed assets of the assessee order of session court is correct

Summary

Issues Involved:
1. Legality of the order directing the custody of seized silver.
2. Application of Section 132A of the Income-tax Act.
3. Jurisdiction of the Chief Judicial Magistrate in handling the seized property.
4. Conflict between the provisions of the Criminal Procedure Code and the Income-tax Act.
5. Validity of the requisition under Section 132A of the Income-tax Act.

Detailed Analysis:

1. Legality of the Order Directing Custody of Seized Silver:
The criminal revision was filed under sections 397/401 of the Criminal Procedure Code challenging the order dated July 7, 2004, by the Sessions Judge, Neemuch. The order directed the custody of 123.233 kgs. of silver seized by the police to be produced before the Chief Judicial Magistrate and deposited in the treasury. The Chief Judicial Magistrate was to determine the appropriate person entitled to the silver after the case's conclusion.

2. Application of Section 132A of the Income-tax Act:
The petitioner, the Director of Income-tax, argued that under Section 132A of the Income-tax Act, the authorized officer could requisition the seized property. The Chief Judicial Magistrate had initially ordered the silver to be handed over to the Income-tax Department. However, the Sessions Judge's order remanded the case to the Chief Judicial Magistrate, directing the silver to be placed in the treasury. The petitioner contended that the Income-tax Act, being a special law, overrides the general law, and the requisition under Section 132A should be honored.

3. Jurisdiction of the Chief Judicial Magistrate in Handling the Seized Property:
The respondent-company argued that the seizure was conducted under Section 102 of the Criminal Procedure Code, suspecting the silver to be stolen property. The Chief Judicial Magistrate initially rejected the respondent's application for the return of goods and ordered the custody to the Income-tax Department. The respondent contended that the Chief Judicial Magistrate should have conducted an inquiry regarding the ownership and rights of the authority claiming custody of the goods.

4. Conflict between the Provisions of the Criminal Procedure Code and the Income-tax Act:
The petitioner cited several cases to support the argument that the requisition under Section 132A of the Income-tax Act should prevail over the Criminal Procedure Code. However, the respondent argued that the requisition was uncalled for since the silver was not an undeclared asset. The court noted the importance of considering whether the proceedings under Section 102 of the Criminal Procedure Code would bar the application under Section 132A of the Income-tax Act.

5. Validity of the Requisition under Section 132A of the Income-tax Act:
The court examined various precedents, including CIT v. Balbir Singh and Sadruddin Javeri v. Government of Andhra Pradesh, to determine whether the requisition under Section 132A was valid. The court found that the requisition could only be issued to an "officer" or "authority" and not to a "court." The court also noted that the Commissioner of Income-tax did not possess sufficient information to conclude that the silver was an undisclosed asset.

Conclusion:
The court concluded that the order of the Sessions Judge was in accordance with the law and did not require interference. The petition was dismissed as meritless, and the stay granted earlier was vacated. The petitioner was directed to hand over the silver to the Chief Judicial Magistrate to comply with the directions issued by the sessions court, depositing the same in the treasury.