1978 (4) TMI 32 - HC - Income Tax

Summary

Issues:
Application under section 132(11) of the Income Tax Act for the return of seized cash and ornaments - Dismissal of application by the Board of Direct Taxes - Claim of petitioner No. 1 that the seized money belonged to him even though part of it belonged to his wife and brother - Relevance of assessment order under section 135(2) against the firm - Competency of petitioner No. 1 to apply for the return of money - Appeal rights of petitioner Nos. 2 and 3 against the order under section 132(5).

Analysis:
The judgment pertains to an application under section 132(11) of the Income Tax Act for the return of seized cash and ornaments. The petitioner, accompanied by his wife and brother, visited a jeweler's premises carrying cash and jewelry. Subsequently, the income tax department raided the premises and seized the cash and ornaments from the petitioner. The Board of Direct Taxes dismissed the petitioner's application under section 132(11) on the basis that an order under section 132(5) had been passed against the jeweler firm, rendering the application infructuous. The petitioner contended that even though part of the seized money belonged to his wife and brother, he was entitled to its return as it was seized from his custody. The court agreed with this contention, emphasizing that the assessment order against the jeweler firm was irrelevant to the petitioner's claim.

The court highlighted that the petitioner, from whose custody the money was seized, had the right to seek its return under section 132(11), regardless of the ownership of the money. The court rejected the department's argument that petitioner Nos. 2 and 3, the wife and brother, should have filed an appeal against the order under section 132(5) before applying under section 132(11). The court held that the failure of petitioner Nos. 2 and 3 to appeal did not preclude the first petitioner from seeking the return of the money under section 132(11). The judgment emphasized the first petitioner's interest in recovering the seized money and upheld his right to apply for its return.

In conclusion, the court allowed the petition, quashed the order of the Board of Direct Taxes, and remitted the matter for fresh consideration by the Notified Authority under section 132(11) of the Income Tax Act. The court directed the Notified Authority to decide the application in accordance with the law, disregarding the findings of the assessment order against the jeweler firm. The petitioners were awarded costs for the proceedings.