2022 (3) TMI 498 - HC - Indian Laws

Seeking refund of part of looted amount on interim custody from the trial Court - Power to requisition books of accounts, etc - From the allegations of the Income Tax Department and in the fact situation, no document has been produced by the petitioner to demonstrate that Income Tax Return discloses his income of such magnitude at any point of time to the Income Tax Authority - HELD THAT - Perusal of Section 132 A reveals that Income Tax Authority under the Act 1961 has power to make requisition for taking over possession or control of such assets (cash amount in present case) from any officer or authority under any other law for the time being in force, if the said income or property has not been disclosed for the purposes of the Income Tax Act. Understandably so, when it is evident that amount in question was seized from the possession of accused persons allegedly belonging to petitioner but never disclosed by petitioner to Income Tax Authority, therefore, department has the remedy available u/s 132 A (1) (c). This procedure is followed by Section 132B which elaborates the manner of dealing after requisitioned under Section 132 A - The power under Section 132 A appears to be distinct vis-a-vis Section 132 (Search and seizure). Here also, it appears that if the amount is not handed over to the Income Tax Department and is released to the petitioner, then it may hamper effective implementation of relevant provision of Income Tax Act and therefore, in the fact situation it is apposite that amount be deposited with the Income Tax authority and proceedings before the competent authority of the Income Tax Department be concluded within the time stipulated as per the relevant provisions of the Income Tax Act. Time is running fast against the department for assessment. Therefore, it is expected that the Income Tax Department shall complete the assessment proceedings within the time stipulated. Resultantly, the petition preferred by the petitioner fails. The trial Court is directed to immediately release the amount in favour of the Director, Income Tax (Investigation) Ayakar Bhawan, Hoshangabad Road, Bhopal. The details of the same are already find place in the application filed by the Income Tax Department. In addition, if any information is required, then the Income Tax Department is at liberty to furnish so. Necessary procedure be carried out at the earliest. Resultantly, the petition stands dismissed.

Summary

Issues:
Petition under Section 482 of Cr.P.C. challenging rejection of application under Section 457 of Cr.P.C. seeking interim custody of looted cash amount pending trial. Dispute over ownership of cash amount recovered from accused persons. Income Tax Department's intervention based on Section 132 A (1) (c) of the Income Tax Act, 1961. Interpretation of provisions of Section 132 A and Section 132 B of the Income Tax Act, 1961.

Analysis:
The petitioner filed a petition under Section 482 of Cr.P.C. challenging the rejection of an application under Section 457 of Cr.P.C. seeking interim custody of a cash amount looted from his residence during a dacoity incident. The petitioner claimed ownership of the cash amount and sought its custody pending trial. The Income Tax Department intervened, citing Section 132 A (1) (c) of the Income Tax Act, 1961, alleging non-disclosure of the assets by the petitioner and other related individuals. The Income Tax Department argued that the cash amount was not disclosed for tax purposes, and therefore, they had the authority to intervene in the matter.

The court considered the provisions of Section 132 A and Section 132 B of the Income Tax Act, 1961. Section 132 A empowers the Income Tax Authority to requisition assets that have not been disclosed for tax purposes. The court noted that the cash amount in question was seized from the accused persons but was never disclosed to the Income Tax Authority by the petitioner. The court highlighted that handing over the amount to the Income Tax Department was the proper course of action to ensure effective implementation of the Income Tax Act.

In a similar case before the High Court of Kerala, the court had approved handing over the amount to the Income Tax Department under Section 132 A and Section 132 B. The court emphasized that failing to transfer the amount to the Income Tax Department could impede the enforcement of relevant provisions of the Income Tax Act. Therefore, the court directed the trial court to release the amount to the Income Tax Department for further proceedings and assessment as per the provisions of the Income Tax Act.

Ultimately, the petition filed by the petitioner was dismissed, and the trial court was instructed to release the cash amount in favor of the Director, Income Tax (Investigation) for further proceedings. The Income Tax Department was directed to complete the assessment proceedings within the stipulated time. The court emphasized the importance of timely completion of assessment proceedings by the Income Tax Department.