2017 (8) TMI 490 - HC - Income Tax

Powers to requisition u/s 132A - failure of the Income Tax department to exercise its requisition powers u/s 132A - police authorities had informed the Income Tax Department about the seizure of the cash - Held that - When no such requisition was made, the police authority had no business to withhold the cash, if the same was not required for police parties and could not have been withheld under the powers of Criminal Procedure Code. So far as the police is concerned, when it was convinced that such amount was not involved in any illegal activity nor any offence was registered against the occupants of the car or any other person which may have link to such cash, the said authority had no reason to, in fact, no power to withhold such amount. It was always open for the competent authority acting under section 132A of the Act to requisition such amount, if the conditions contained therein were not satisfied. However, without any such requisition, it was not open to ask the police authorities not to release the amount which the said authorities otherwise did not require to withhold. Deputy Superintendent has imposed certain conditions one of them being that, if and when the Income Tax authorities required the persons from whom the amount was seized to appear and produce the amount, they would do so. - Decided against the revenue.

Summary

Issues:
Challenge to order of Deputy Superintendent of Police releasing seized cash without waiting for Income Tax Department's inquiry.

Analysis:
The case involved a petition by the Income Tax Department challenging an order passed by the Deputy Superintendent of Police releasing cash seized from two individuals in a car. The police seized the cash and other valuables from the car occupants, who claimed to be employees of an Angadia firm. The cash was withdrawn from bank accounts and was alleged to be wrongly seized. The police informed the Income Tax Department about the seizure and requested a responsible officer to be present before the Magistrate. The Income Tax Department had initiated proceedings under section 132 of the Act and issued summons to the individuals to appear and produce documents. The Deputy Superintendent of Police released the cash on certain terms and conditions despite the department's plea not to do so.

The department argued that the release of cash was hasty and should have awaited the outcome of their inquiry into the source of the cash. They contended that proper investigation was necessary before releasing the amount. On the other hand, the respondents' counsel argued that the source of the cash was explained, belonged to the Angadia firm, and full disclosure was made during scrutiny assessment by the Assessing Officer. They highlighted that no FIR was registered, and the police had no power to withhold the cash without any offense being disclosed.

The court observed that the Income Tax Department had not issued any requisition under section 132A of the Act regarding the cash in question. Without such requisition, the police had no authority to withhold the cash if it was not required for police purposes. The police had no power to withhold the amount when no illegal activity was involved, and no offense was registered against the individuals. The court emphasized that the competent authority could requisition the amount under section 132A if conditions were not satisfied. Since no requisition was made, the police had no basis to withhold the cash. The court also noted that the Deputy Superintendent had imposed conditions for the individuals to appear and produce the amount when required by the Income Tax authorities.

Ultimately, the court dismissed the petition, indicating that the release of the cash by the Deputy Superintendent was justified under the circumstances.