2017 (2) TMI 158 - HC - Benami Property

Seizure of Cash in transit - remedy under the Pradhan Mantri Garib Kalyan Yojana, 2016 - adjustment from cash account seized by the department, tax, charge and penalty - Held that - Writ petition can be disposed of with a direction to respondents not to take any coercive action against the petitioner and he may be granted a permission to take the assistance of a lawyer to be present at visible but not audible distance during his interrogation and recording of statement in connection with said seizure in the instant case or any proceedings consequential thereto. However, prayer of the petitioner for directing unconditional return of the seize amount is hereby rejected. In case, the petitioner submits any application to the Income Tax Department, the authorities can look into matter for the purpose of declaration of undisclosed income by availing the remedy under the PMGKY Scheme. They shall consider the same and pass an appropriate order thereon as it enables the Government to earn straightway 50% of the amount, 25% for depositing of the bonds and 25% to be deposited in the account which shall be released only after 04 years. While releasing the amount after 04 years, the Income Tax Authorities can release the same only when there is no outstanding amount due towards them from the petitioner.

Summary

Issues involved:
1. Jurisdiction of Court under Article 226 of the Constitution of India for declaration and release of seized cash.
2. Application of the "Pradhan Mantri Garib Kalyan Yojana, 2016" for depositing undisclosed income.
3. Police officials' actions in seizing cash and handing it over to the Income Tax Department.
4. Entitlement of the petitioner to avail the benefits of the PMGKY Scheme.
5. Coercive action against the petitioner and the right to legal assistance during interrogation.

Analysis:
1. The petitioner invoked the Court's jurisdiction seeking the release of seized cash and the right to have legal representation during interrogation. The petitioner claimed the seized amount was from the sale of old jewelry after demonetization. The Court found that the police officials acted correctly by handing over the cash to the Income Tax Department as the offense, if any, fell under the Income Tax Act, not the Indian Penal Code. Thus, the Court upheld the actions of the police officials in this regard.

2. The petitioner argued for the application of the PMGKY Scheme to declare and deposit undisclosed income. The Court examined the Scheme's provisions and found that the petitioner, not being ineligible under the Scheme, should be allowed to make a declaration and deposit the undisclosed income. The Court emphasized that the Scheme aimed at revenue enhancement and providing an opportunity for reforming individuals who previously failed to disclose income correctly.

3. The police officials' actions in seizing and handing over the cash to the Income Tax Department were deemed appropriate by the Court. The petitioner's claim of coercion and wrongful retention of the amount was rejected, as no complaint or charge sheet was pending against the petitioner. The Court directed that no coercive action should be taken against the petitioner and allowed the presence of a lawyer during interrogation.

4. The Court clarified that the petitioner, not being ineligible for the PMGKY Scheme, should be permitted to avail the benefits by declaring and depositing the undisclosed income. The Income Tax Authorities were instructed to consider any application from the petitioner for declaration under the Scheme and pass an appropriate order, ensuring compliance with the Scheme's provisions.

5. The Court disposed of the writ petition with directions to refrain from coercive action against the petitioner and allow legal assistance during interrogation. The decision was based on the petitioner's eligibility under the Scheme and the need to ensure compliance with the law while providing an opportunity for rectification.