1973 (11) TMI 2 - HC - Income Tax

This is a petition under articles 226 and 227 of the Constitution of India and is directed against the order of the income-tax department dated 10th May 1972 passed under section 132 of the Income-tax Act 1961 and rule 112(11) of the Income-tax Rules 1962. When customs authorities are directed to return the amount seized by them whether income-tax department can seize the same from the customs authorities

Summary

Issues:
1. Validity of the authorization warrant under section 132 of the Income-tax Act, 1961.
2. Conflict between the provisions of section 132 of the Income-tax Act and section 110(2) of the Customs Act.
3. Possession of money by Customs authorities and the legality of seizure by the income-tax department.

Analysis:

The judgment pertains to a petition challenging the order of the income-tax department issued under section 132 of the Income-tax Act, 1961, and rule 112(11) of the Income-tax Rules, 1962. The petitioner, Tarsem Kumar, was traveling in a car intercepted by Customs officers, leading to the seizure of money and gold. The Customs proceedings were challenged in court, and the decision was quashed. Subsequently, the income-tax department seized the cash from the petitioner, prompting the current petition.

Regarding the first issue, the court cited a previous case where search and seizure warrants were deemed illegal as the items were not in the possession of the individual named. In the present case, the cash was with the Customs authorities, not the petitioner, making the authorization warrant invalid under section 132.

The second issue involved a contention that the Customs authorities were holding the money for the petitioner, justifying the seizure by the income-tax department. However, the court rejected this argument, emphasizing that the money being case property must follow procedures outlined in the Criminal Procedure Code, as supported by the Customs Act.

The final issue addressed the conflict between the Income-tax Act and the Customs Act. The court highlighted that the later enactment should prevail in case of conflict, but in this scenario, both provisions could apply without contradiction. The court ruled in favor of the petitioner, quashing the warrants and directing the income-tax department to return the money to the Customs department after deducting any amount due to the income-tax department.

In conclusion, the court allowed the petition, emphasizing the need to follow legal procedures and directing the income-tax department to return the seized money to the Customs department after deducting any outstanding income tax dues. The judgment upheld the rule of law and ensured compliance with statutory provisions.