2023 (4) TMI 1004 - HC - Income Tax

Release / return of Seized currency to the petitioner - currency notes recovered by the police under Section 102 Cr.P.C. - unexplained and unaccounted cash - discloser of currency / income in the ITR - HELD THAT - As per the legislative intent of Section 451 Cr.P.C., the property means any property regarding which an offence appears to have been committed or which appears to have been used for the commission of any offence, and therefore, the release of vehicle/article/currency notes under Section 451 Cr.P.C. cannot be restricted merely on account of the fact that they were used for commission of any offence. In the aforecited precedent law, the Hon'ble Apex Court 2002 (10) TMI 773 - SUPREME COURT has held that the court should pass appropriate orders immediately and the articles should not be kept for a long time at the police station, and the procedure for disposal of the seized valuable articles, currency notes, vehicles, seized liquor and narcotic drugs has been laid down therein. In the present case, currency of Rs.47 lacs were recovered by the Police under Section 102 Cr.P.C. way back on 09.10.2018 and still the matter is at the initial stage of the trial and the currency in dispute is lying in the Police Station. Present misc. petition is allowed. The impugned orders passed by the courts below refusing to hand over the seized currency to the petitioner, are hereby quashed and set aside. The seized currency of Rs.47 lacs is ordered to be released in favour of the petitioner on supurdgi subject to the conditions that the petitioner shall furnish a bank guarantee of Rs.10 lacs in favour of the respondent-Income Tax Department, initially for a period of one year and which shall be renewed by the petitioner till completion of proceeding of tax assessment over the seized currency of Rs.47 lacs, by the respondent-Income Tax Department. Upon completion of proceedings of tax assessment, the respondent Income Tax Department shall be at liberty to recover tax from the bank guarantee as submitted by the petitioner.

Summary

Issues involved:
The judgment involves the refusal to hand over seized currency of Rs.47 lacs to the petitioner by the learned Additional Sessions Judge and the learned Judicial Magistrate, Khairwada, District Udaipur.

Details of the Judgment:

Issue 1: Seizure of Currency
The petitioner filed a criminal misc. petition against the order dated 31.07.2019, where the learned Additional Sessions Judge dismissed the revision petition and upheld the order dated 26.04.2019 passed by the learned Judicial Magistrate. The seized currency of Rs.47 lacs was refused to be handed over to the petitioner. The petitioner argued that the currency was seized by the Police under Section 102 Cr.P.C. from an employee of the petitioner, who disclosed the source of the currency. The petitioner claimed that the courts erred in not releasing the currency to him.

Issue 2: Allegations and Suspicion
The petitioner contended that there were no allegations of theft or suspicion of any offense regarding the seized currency. Therefore, the courts were legally required to hand over the custody of the currency to the petitioner in the absence of such suspicions.

Issue 3: Consideration of Income Tax Department's Letter
The courts considered a letter from the Income Tax Department stating that the currency was unexplained and unaccounted cash, and a notice under Section 132-A of the Income Tax Act had been issued to the petitioner. The petitioner argued that any delinquency in tax filings could be addressed separately by the Income Tax Department, but it should not prevent the release of the seized currency to the rightful owner.

Issue 4: Legal Rights of the Petitioner
The petitioner asserted that the courts' approach to the case was erroneous and contrary to the law. The petitioner argued that the seized currency was not required for any trial or inquiry purposes and should have been released to him. The petitioner also offered to provide a bank guarantee for the release of the currency.

Issue 5: Opposition by Income Tax Department
The Public Prosecutor and counsel for the Income Tax Department opposed the release of the seized currency, citing an ongoing assessment proceeding and a warrant issued under the Income Tax Act. They argued against releasing the currency to the petitioner.

Conclusion:
The High Court allowed the misc. petition, quashing the orders of the lower courts. The seized currency of Rs.47 lacs was ordered to be released to the petitioner under certain conditions, including furnishing a bank guarantee of Rs.10 lacs in favor of the Income Tax Department. The release was subject to the completion of tax assessment proceedings by the Income Tax Department.