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TMI Blog2016 (5) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... the service of collection and safe delivery of money physically from the customers of Respondent No. 7/HDFC Bank strictly in accordance with the terms of a written agreement entered into between SIPL and HDFC Bank. The Petitioner states that it is also a registered service provider and pays service tax. It is stated that under the Finance Policy of the Government of India, the business carried by the Petitioner is legitimate and within the scope of license granted by the Reserve Bank of India ('RBI') to HDFC Bank. It is asserted that the Petitioner was performing the services of collection and transportation of cash under the direct authorization and on behalf of the HDFC Bank in terms of the agreement with HDFC Bank. A copy of the said agreement dated 23rd August 2014 has been placed on record. 3. The agreement spells out the obligations of the Petitioner. The Petitioner is obliged thereunder to have sufficient security practices, control processes and checks in respect of cash pick up/delivery services 'rendered and handled/executed at its premises or in the bank's premises or at customer's premises or while the cash is in transit on a regular basis.' HDFC Bank has the right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copies. All the copies are to be signed by the customer/depositor as well as employee of the cash agency. The first copy would be issued to the customer at the time of pick up by the agency, the second, third and fourth copies are submitted to the teller at the bank along with the cash collected from the customers. All the three copies are to be signed by the teller in token of having received the cash. 6. Inter alia Clause 5 of Schedule II states as under: '5. The Company shall be responsible for any amount handed over by the Bank to the Company but not properly received by the customer of the Bank, and handed over by the customer of the Bank to the Company but not properly received by the Bank. The Company shall be liable to make good the same to the Bank. For the purpose of this agreement, only those amounts shall be considered as delivered, which are so accepted by the Bank. Such acceptance by the bank shall be at the sole discretion of the Bank.' 7. Clauses 23 to 25 of the Schedule II which are relevant for the present case, read as under: '23. The cash will be carried in sealed envelopes or canvas bags with tamper proof seal or steel trunks duly locked (steal trunks in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the information received from the Commanding Officer, Indirapuram, Ghaziabad on 9th January 2012. It was found carrying the cash to the extent of Rs. 60,48,672. According to SIPL, the Gunman, Driver and Custodian accompanying the armoured vehicle apprised the police personnel that the vehicle was on duty for HDFC Bank. They were also apprised that the pay slips, vouchers and instructions were inside the sealed bags for safety and placed in the sealed containers. SIPL states that the police authorities then took the vehicle and sealed cash containers into custody and the vehicle was then taken to the police station, Link Road, Sahibabad. 12. Mr. R.K. Seth, Deputy Branch Manager of SIPL then reached the police station in response to a call from the Flying Squad Magistrate requiring a responsible official of SIPL to report to him. The statement of Mr. R.K. Seth was recorded by the Joint Director of Income Tax ('JDIT'), CGO Complex, Hapur, Ghaziabad. A copy of the said statement of Mr. Seth has been placed on record. 13. According to the Department, Mr. Seth confirmed that there was an agreement with the HDFC Bank. When asked why there was no logo on the vehicle, Mr. Seth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle have already been noticed hereinbefore. Therefore, it is not correct to state that Mr. Seth was carrying the cash. Secondly, it transpires that Mr. Seth had reached the police station subsequent to the seizure of the armoured vehicle and his statement was thereafter recorded. Thirdly, the statement that Mr. Seth himself did not have any challan/receipt or evidence relating to the cash, appears again to be misleading one. From the file produced before this Court by the Department, it is apparent that when the sealed containers were opened, it contained challans. Photocopies of the challans so found are to be found in the Department's file. 17. There are certain features of these challans which require to be noticed. The first is that they are sequentially numbered as 479801 to 479810 and 479501 to 479507. The challans dated 9th January 2012 contain the names of the customers, the amount of cash collected and the account no. of the customer with the HDFC Bank. They also contain columns which show the number of currency notes and denominations and which tallies with the total amount mentioned in each challan. The Court notes that there was sufficient information available in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to your Assessing Officer, i.e., Company Circle-8(1), Delhi on 17th August 2013. You are, therefore, requested to please contact your Assessing Officer for any further action in this regard." 22. By another letter dated 28th October 2013 the DCIT, Circle-8(1), New Delhi informed SIPL that since search and seizure action was conducted on the employee of SIPL, i.e., Mr. R.K. Seth, R/o X-41, Sector-12, Noida on 9th January 2012 the matter had been referred back to the DCIT (Inv)-II, Ghaziabad. 23. SIPL then addressed a representation to the CBDT on 30th October 2013 again requesting for release of the money to it. Thereafter, SIPL filed the present petition praying for release of the money and directing the CBDT to consider the application of the Petitioner for release of the money. 24. On 28th October 2014 notice was issued in the said writ petition. A reply has been filed by the Department. Assessment order 25. The attention has been drawn to the Court to an assessment order dated 31st March 2014 passed by the ITO, Ward I (3), Noida where the entire cash amount seized was attributed to the income of Mr. R.K. Seth and his complete taxable income assessed at Rs. 67,80,860. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d JDS Limited. Those companies confirmed that they had an agreement with HDFC Bank. There is no valid explanation why the AO failed to make enquiries with the other customers. The AO was not therefore justified in coming to an unacceptable conclusion that the seized cash belonged to Mr Seth who was only an employee of SIPL. Rule 112 F has no application 29. Mr. Rahul Chaudhary referred to Rule 112F of the Income Tax Rules 1962 ( the 'Rules') which was meant to deal with a situation where the search results in recovery of money in the territorial area of an assembly or Parliamentary constituency in which an election is going on. In the first place, it requires to be noticed that Rule 112 F was inserted by the Income Tax (14th Amendment) Rules, 2012 with retrospective effect from 1st July 2012. Therefore, it was not in operation when the search in the present case took place, i.e., 9th January 2012. Secondly, Rule 112 F states that when the seizure takes place of 'any money, bullion, jewellery or other valuable articles or things from a person in whose possession is found and where the election is going on in the assembly or parliamentary constituency," the AO 'shall not be require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO. His statements offered a plausible explanation which could easily be verified. The Court fails to understand how the said sum could ever be added to the returned income of Mr Seth. 34. The Court agrees with the learned counsel for SIPL that the indifferent and callous approach of the Department's officials has resulted in grave injustice to SIPL. It has had to have its account debited for the entire amount and the seized cash remained in the Department's account. The Court has, in the circumstances, no hesitation in holding the actions of the Department, in refusing to release the cash seized from the armoured vehicle to the Petitioner, to be invalid and illegal. Consequential directions 35. The Court holds that the assessment order dated 31st March 2014 making the addition of Rs. 60,48,672 to the returned income of Mr. R K Seth is unsustainable in law and the said addition is hereby deleted. 36. The Department is directed to return to SIPL the entire seized amount of Rs. 60,48,748 together with interest @ 12% per annum from the date of seizure of the cash i.e., 9th January 2012 till the date of return which in any event shall take place not later than two week ..... X X X X Extracts X X X X X X X X Extracts X X X X
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