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TMI Blog2022 (1) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... as to the source of income and to pay the amount of taxes which is assessed on the said income in accordance with the provisions of the Income Tax Act. On the other hand, if the amount is released to the 2nd respondent herein, it is likely to cause difficulties in initiating proceedings under Section 132-A and the further proceedings thereon. Therefore, the balance of convenience is in favour of the petitioner herein which was not taken into consideration by the learned Magistrate. The question of balance of convenience arises because, as far as the proceedings under Section 451 of the Cr.PC is concerned, it is relating to the interim custody of the asset alone and it is not intended for taking a decision on the question of the title/right of the parties over the articles. Therefore, the relevant consideration is as to who is the proper person with whom the amount can be entrusted. Since the petitioner herein is a statutory authority armed with various powers including those under Sections 132-A, 132-B and 153A of Income Tax Act, preference should have been given to the petitioner in the facts and circumstances of the case. Thus the learned Magistrate committed a mistake in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the petitioner in completing the proceedings as mentioned above, within the stipulated time, the amount shall be deposited by the petitioner, with the Judicial First Class Magistrate-II, Mananthavady, thereupon the 2nd respondent shall be entitled to move the Learned Magistrate for getting the same released in his favour, and the same can be released in his favour, subject to such conditions, which the Learned Magistrate may deem fit. - Crl.M.C.No.8195 of 2017, CRL.MP NO.704/2017 And CRL.MP NO.384/2017 - - - Dated:- 10-1-2022 - Honourable Mr.Justice Ziyad Rahman A.A. For the Petitioner : Sri.P.K.R.Menon,Sr.Counsel, Goi(Taxes), Sri.Navaneeth N. Nath, Sc For Income Tax Department For the Respondents : By Sri. Aravind V. Mathew, By Adv Smt.Vijayakumari ORDER This Crl.M.C. is filed by Union of India, Income Tax Department represented by the Deputy Director of Income Tax (Investigation), Income Tax Office, Kozhikod,being aggrieved by Annexure-C common order passed by the Judicial First Class Magistrate Court, Mananthavady in Crl.M.P.No.384/2017 and Crl.M.P.No.704/2017. 2. The facts leading to the said order are as follows: On 12.03.2017, while co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder and praying for allowing the Crl.M.P.No.704/2017 submitted by the petitioner herein. 4. Heard Sri. Navaneeth N. Nath, the learned Standing Counsel for the Income Tax Department, the petitioner herein, Sri. Aravind V. Mathew the learned Public Prosecutor for the 1st respondent and Smt.Vijayakumari, the learned counsel for the 2nd respondent. 5. The question arises in this case is as to the entitlement of the petitioner to have the amount released in their favour, under Section 451 of the Cr.PC. The claim was made by the petitioner by relying upon Section 132-A(i)(c) of the Income Tax Act which reads as follows: 132-A. Powers to requisition books of account, etc.-(1) Where the [Principal Director General or Director General] or [Principal Director or Director] or the [Principal Chief Commissioner or Chief Commissioner] or [Principal Commissioner or Commissioner], in consequence of information in his possession, has reason to believe that- (a) (b) .. (c) any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purposes of the Indian Income-tax Act,1922(11 of 1922), or this Act by any person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d observed in the manner as follows. 18. On a plain reading of S.451 Cr.P.C., it can be seen that the power to order for custody and disposal of property pending trial has to be exercised by the Court by applying judicial discretion and the arrangement once made thereunder is not even final till the conclusion of inquiry or trial. The Court is having a right to terminate the entrustment, get back the property from the person to whom it was given and entrust it to somebody else whom the Court deems fit. In cases of rival claims for interim custody, preference of one person over the other does not settle any right to ownership or possession. The above observation was made by this Court after referring to large number of judicial precedents in this regard. From the above, it is evident that, it is not necessary that the articles are to be released to the person from whom the same was seized. What is relevant is the security of the same and whenever it appears to the court that the security of the said article is at stake, the person with whom the aforesaid entrustment was made can be directed to return the said document. The question that arises here is to be considered in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be](including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is [deemed to be in default, or the amount of liability arising on an application made before the Settlement Commission under sub-section(1) of section 245-C, may be recovered out of such assets]: [Provided that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained] to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the [Principal Chief Commissioner or Chief Commissioner] or [Principal Commissioner or Commissioner], to the person from whose custody the assets were seized: Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that, for getting the aforesaid amount released in favour of the 2nd respondent, he has to convince the authorities as to the source of income and to pay the amount of taxes which is assessed on the said income in accordance with the provisions of the Income Tax Act. 11. On the other hand, if the amount is released to the 2nd respondent herein, it is likely to cause difficulties in initiating proceedings under Section 132-A and the further proceedings thereon. Therefore, the balance of convenience is in favour of the petitioner herein which was not taken into consideration by the learned Magistrate. The question of balance of convenience arises because, as far as the proceedings under Section 451 of the Cr.PC is concerned, it is relating to the interim custody of the asset alone and it is not intended for taking a decision on the question of the title/right of the parties over the articles. Therefore, the relevant consideration is as to who is the proper person with whom the amount can be entrusted. Since the petitioner herein is a statutory authority armed with various powers including those under Sections 132-A, 132-B and 153A of Income Tax Act, preference should have been g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the Income Tax Act, he was bound to disclose the source of the same before the authorities and to pay the tax, as per the rates applicable. Apparently no such exercise is done in this case, at the instance of the 2nd respondent and hence proceedings under section 132-A or 153A are necessitated. Even if the said amount is released to the petitioner herein, it is possible for the 2nd respondent to make a claim of the amount, by following the procedure prescribed in the Income Tax Act. But if the amount is released to the 2nd respondent, it may cause difficulties in implementing the provisions of the Income Tax Act. In such circumstances, I am of the view that Annexure-B order passed by the learned Magistrate is to be set aside. Accordingly, the common order passed in Crl.M.P.No.384/2017 and Crl.M.P.No.704/2017 on 9.10.2017 by the Judicial First Class Magistrate Court-II, Mananthavady is hereby set aside. In the result; i) Crl.M.P.No.384/2017 is dismissed. ii) Crl.M.P.No.704/2017 is allowed and the amounts shall be released to the Income Tax Department for completing the proceedings under Sections 132-B or 153A or any other proceeding under the Income Tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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