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TMI Blog2012 (8) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with him cash of rupees eleven lakhs collected from Ahmedabad in respect of the sale of cotton through him as a broker by Shreenathji Trading Company of Bhuj - Kutch to Raj Trading Company of Ahmedabad. On a written requisition from the seller Shreenathji Trading Company, Raj Trading Company had given cheques for Rs. 11 lakhs, which he got discounted with a shroff by the name of M/s, J.J. Shroff at Ahmedabad and got the cash of the said amount. The petitioner was trying to take a bus to Bhuj from the S.T. Bus Depot at Gita Mandir road, Ahmedabad and was questioned by a policeman. The petitioner explained the above facts but the policeman did not believe the same and the petitioner was taken to Kagdapith Police Station, where the police took possession of the cash from him under section 102 of the Code of Criminal Procedure by drawing a panchnama and a receipt of rupees eleven lakhs was given to the petitioner. It appears that an order under section 132A of the Income Tax Act, 1961 (the Act) came to be made by the Deputy Director of Income Tax (Investigation), Unit-III (3) which indicated that the Deputy Director of Income Tax went to the office of Kagdapith Police Station and sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l reason. A copy of the cash book of M/s J.J. Shroff which according to the petitioner clearly explains the source of cash was enclosed therewith. The petitioner also requested for a copy of his statement and also Shri Rajan Shah. 3. By a letter dated 18th August, 2000, the Deputy Director replied that the request for release of cash is to be dealt with by the Commissioner of Income Tax, Rajkot and as such, the application is being forwarded to him and that the Assessing Officer, Bhuj will supply the copies of the statement of the petitioner and Shri Rajan Shah, if the same are going to be used as evidence against the petitioner. That in view of the aforesaid, the request made in the letter dated 10th August, 2000 cannot be acceded to at present. 4. The petitioner on 19th September, 2000 addressed a letter to the Commissioner of Police, City of Ahmedabad stating inter alia that the police ought to have handed over the moneys to the court under section 102(3) of the Code of Criminal Procedure and that instead the same was handed over to the Income Tax Department without any authority of law and asked the police to return the moneys because even the seizure was invalid under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that both the petitioner and Shri Rajan Shah had requested the officer to keep the matter pending till the statement of M/s. J.J. Shroff was recorded but the request was turned down without any lawful reason. It was urged that no irreparable damage would have been caused to the Department if M/s. J.J. Shroff, who was not available at its business premises at night after the office hours, was visited on the next day. According to the learned advocate, if on such visit M/s. J.J. Shroff had stated that they had not discounted the cheques, perhaps there could have been some basis. It was contended that 'information' means some positive material and there was no such material with the Director to form the requisite belief. It was emphatically argued that before signing a warrant of authorisation, the Director should have considered that in these times of liquidity crunch, an amount of Rs. 11 lakhs being taken away from a citizen without any justification can do irreparable damage to the life and liberty of a citizen and to his business and financial standing and no amount of compensation from the Department can be a proper substitute for the same. Attention was invited to the panchnam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1985] 156 ITR 233 which came to be confirmed by the Supreme Court in the case of CIT v. Vindhya Metal Corpn. [1997] 224 ITR 614/91 Taxman 192. It was submitted that the facts of the present case are similar to the facts of the said case and as such, the condition precedent for exercise of power under section 132A of the Act is not satisfied in the present case and as such, the warrant of authorisation is liable to be quashed and set aside and the respondents are required to be directed to return the amount of Rs. 11 lakhs to the petitioner with 18% interest thereon. 6. Opposing the petition, Mr. K.M. Parikh, learned standing counsel for the respondents placed reliance upon the affidavit-in-reply filed by the respondent No.2 wherein it has interalia been stated that the petitioner in his statement recorded under section 131(1A) of the Act, had stated that he was carrying the cash amount which was given to him by one Shri Rajan B. Shah for making cotton purchases for proprietary firms of the said Shri Rajan B. Shah. The petitioner had specifically stated that cash in particular denominations had been handed over to him by Shri Rajan Shah in his office cabin. Simultaneously survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer, and therefore, the petition filed before the C.I.T., Rajkot for release of the seized cash being premature, was not considered. That the request of the petitioner will be considered on completion of the proceedings initiated under section 158BC of the Act. Attention was also invited to the affidavit-in-reply filed by the respondent No. 1 wherein he has stated that in consequence of the information in his possession, he had reason to believe that the said cash would not be disclosed by the petitioner and he had, therefore, required the concerned officer to deliver the cash. Attention was also invited to the fact that during the proceedings under section 133A of the Act in the case of Shri Rajan Shah, a copy of cash book initialled by him was collected and the said cash book did not contain any entry showing any payment to Shri Prakash J. Shah on 25th July, 2000. That it was in view of these facts placed before him by way of a satisfaction note for his approval, that he, after satisfying himself on the basis of the said note accompanied with material, issued warrant of authorisation under section 132A of the Act. Mr. Parikh, accordingly, submitted that in the facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant of authorisation under section 132A of the Act. 10. The question that arises for consideration is as to whether on the facts of the present case there was any material with the respondent No. 1 to arrive at a satisfaction as required under section 132A of the Act for issuance of warrant of authorisation. A perusal of section 132A(1) of the Act shows that the jurisdiction of the authorising officer to authorise an officer to requisition assets which have been taken into custody by an officer or authority under any other law and thereafter to proceed to deal with the assets in the manner provided in sections 132 and 132B arises only where the authorising authority has in consequence of information in his possession reason to believe that such assets represent either wholly or partly income or property which has not been or would not be disclosed for the purposes of the 1921 Act or 1961 Act by any person from whose possession or control such assets have been taken into custody by the officer or authority from whom these were to be requisitioned. Thus, there must be some material which can be regarded as information which must exist on file on the basis of which the authorising of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the documents annexed with the petition, which form part of the record of the income tax authorities, it is apparent on a perusal of the accounts of J.J. Shroff that the same clearly show receipts of cheques No. 937738, 937739, 937740, 937741 and 937742 drawn on Tamilnad Mercantile Bank in favour of Shreenathji Trading Company which have been discounted for cash of Rs. 11 lakhs. The accounts of Raj Trading Company also clearly show issuance of five cheques bearing No. 937738, 937739, 937740, 937741 and 937742 issued in favour of Shreenathji Trading Company on 25th July, 2000. The receipts annexed at Annexure 'I' also show withdrawal of an amount of Rs. 11 lakhs by Shri J.J. Shroff from Siddhi Co-operative Bank Ltd. on 25th July, 2000. The cash recovered by the police from the petitioner was also bearing the label of Siddhi Co-operative Bank, Ahmedabad. Moreover, the bank passbook record of Raj Trading Company of 25th July, 2000 also indicates issuance of the aforesaid five cheques in favour of Shreenathji Trading Company drawn on Tamilnad Co-operative Bank Ltd. In the backdrop of the aforesaid facts, it is the case of the petitioner that the amount was given to him by Shri Rajan Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was that he had received the cash from Rajan Shah. Rajan Shah has in his statement recorded under section 133A of the Act stated that he had given the cash of rupees eleven lakhs to the petitioner through M/s J.J. Shroff. Thus, without verification at the end of M/s J.J. Shroff there was no reason for the respondents to jump to the conclusion that the source of the amount is unexplained. Moreover, Rajan Shah having clearly admitted that he has paid the said amount to the petitioner, and having stated that the amount was paid through M/s J.J. Shroff, the submission in the affidavit-in-reply that the cash books seized from Rajan Shah do not disclose sufficient balance in the proprietary firm of Rajan Shah or his associate concerns, is clearly misconceived inasmuch as it is not the case of Rajan Shah that rupees eleven lakhs had been handed over to the petitioner in cash, under the circumstances there was no question of making any such entry in the cash book. Thus, insofar as the petitioner is concerned, the source of the amount was Rajan Shah, who in turn has admitted payment of the said amount through M/s J.J. Shroff. Under the circumstances, without due verification with M/s J.J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm. The seizure of the books of accounts and the sum of Rs. 17,353/- was without authority of law and, therefore, liable to be quashed. The aforesaid decision came to be carried before the Supreme Court in the case of Vindhya Metal Corpn. (supra) and came to be affirmed.
16. The above decision would be squarely applicable to the facts of the present case inasmuch the respondent No. 1 on the material on record could not have formed the requisite belief under section 132A of the Act and as such, the impugned warrant of authorisation under section 132A of the Act cannot be sustained.
17. For the foregoing reasons, the petition succeeds and is accordingly allowed. The warrant of authorisation dated 25th July, 2000 issued by the first respondent in favour of the second respondent as well as the order under section 132A of the Act are hereby quashed and set aside. The respondents are directed to forthwith return to the petitioner the seized amount of rupees eleven lakhs alongwith interest at the appropriate rate as contemplated under the Act from the date of seizure till the date of repayment. Rule is made absolute accordingly with no order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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