Gujarat High Court
Rajiv Agrawal Or His Successor In Office vs State Of Gujarat And Anr. on 29 March, 2005
Equivalent citations: (2006)202CTR(GUJ)80, [2007]290ITR449(GUJ)
Author: M.D. Shah
Bench: M.D. Shah
JUDGMENT M.D. Shah, J.
1. Heard Mr. Manish R. Bhatt, learned Advocate for the applicant, Mr. K.P. Raval, learned Addl. P.P. for the respondent No. 1 State and Mr. Yogesh Lakhani, learned Advocate for the respondent No. 2.
2. An information was received by the office of the applicant Income Tax Department regarding seizure of cash amounting to Rs. 20 lacs 9-6-2004 by the Athwa Police, Surat from the possession of two persons namely Mohd Sarfaraz Mithani and Mohd Maqsood Mithani. An offence was registered at Athwaline Police Station vide CR. No. 9 of 2004 and Athwa Police also informed the Income Tax Department regarding the seizure of cash amount of Rs. 20 lacs. On the basis of this information, the present applicant made an inquiry regarding source of cash seized by Athwa Police. During inquiry, Income Tax Department recorded the statement of respondent No. 2 under Section 131 of the Income Tax Act and in his statement, he claimed that the cash seized by Police Authorities belonged to Shri Babubhai Kishan Pawar, a resident of Kaldar Village, Dhulia District, Maharashtra. He has also stated that this cash was sent to respondent No. 2 for purchase of some unidentified land at Surat, he has also stated that he was unaware of any details except that one Shri Ayubbhai had brought this cash from Maharashtra and the same was handed over to his sons in the parking of Jash Market, Ring Road, Surat. At the end of the inquiry, Income Tax Department found that no satisfactory explanation was given by the respondent No. 2 and other connected persons regarding amount of Rs. 20 lacs. Thereafter, the respondent No. 2 submitted an application before the learned Third Judicial Magistrate, First Class, Surat under Section 451 of the Code of Criminal Procedure and prayed that cash amount of Rs. 20 lacs seized by Athwa Police be handed over to him as it was seized firm his possession and police has not made any report that amount was received through illegal activities or used in any activities against the nation. Shri Rajiv Agrawal, Deputy Director of Income-tax, Surat also made claim for the said seized amount by submitting application dated 29th June, 2004 contending therein that the Income Tax Department, Surat being a complainant has reason to believe that said amount is unaccounted money, and as such, said amount is subject to investigation by Income Tax Department under the provisions of Income Tax Act and Rules. It is also stated that on the said amount, the Income-tax, interest on Income-tax, penalty would be leviable on the said amount. Therefore, under the provisions of Income-tax -Act, 1961 including Sections 132, 132A and 69A the Income Tax Department is the best person to be entitled to take and to retain the said cash amount of Rs. 20 lacs not only pending the conclusion of the criminal trial of the case, but also, in connection with the Income-tax proceedings under the provisions of Income Tax Act, 1961.
After hearing both the parties and learned Addl. P.P. learned J.M.F.C. has rejected the claim of the present petitioner and ordered to hand over Rs. 14 lacs to the respondent No. 2 and remaining 6 lacs was ordered to be handed over to Deputy Director of Income Tax and imposed certain conditions vide order dated 21-8-2004. Against the said order, the present revision application is preferred by the present applicant.
3. It is submitted by Mr. Bhatt, learned Advocate for the applicant that learned Magistrate has erred in not appreciating the provisions of Section 457 of the Code of Criminal Procedure in its true perspective, he has also submitted that learned Magistrate has committed an error in not properly appreciating the provisions of Section 132A of the Income Tax Act.
4. Mr. Raval, learned Addl. P.P. has also supported the case put forward by the applicant and prayed for allowing the revision application.
5. Mr. Yogesh Lakhani, learned Advocate for the respondent No. 2 has opposed the admission of revision application and supported the judgment under challenge and submitted that the impugned judgment is quite legal and proper. He has also submitted that said amount was not recovered during search and seizure during raid of the Income Tax Department and as the inquiry is pending before the Income Tax Department, lower Court has rightly held that respondent No. 2 is entitled to recover the said amount. It is also submitted by Mr. Lakhani that the amount seized by the police is not received from any illegal activities or unaccounted money and no third person has claimed over the said amount, and hence, the order passed by the lower authority is legal and proper.
6. Under Section 132 of the Income Tax Act, on a requisition being made under Sub-section (I), the officer or authority referred to in Clause (a) or Clause (b) or Clause (c), as the case may be, of the Sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody. Once, the warrant of authorization issued against any person, then seized amount is required to be retained by the Income Tax authority and without taking over of the said amount, no further proceedings can be started against any person, from whose custody the amount was recovered. The lower Court has not properly appreciated the provisions of Section 132 of the Income Tax Act and rejected the claim of the present petitioner and handed over the seized amount of Rs. 20 lacs to the respondent No. 2. During the assessment proceedings, if respondent No. 2 satisfies the Income Tax authority, then he is entitled to get Rs. 20 lacs and said amount is released by the Income tax to initiate proceedings under the provisions of the Income Tax Act, the amount must be with Income Tax Department.
Mr. Bhatt, learned Advocate for the applicant, in support of his submission placed reliance in case of Parasnath v. Union of India and Ors. . The Hon'ble Apex Court has held as under :
(i) The Criminal Court had no authority to order handing over of property, i.e., jewellery or cash to persons claiming it.
(ii) xxx xxx xxx (iii) xxx xxx xxx
(iv) Once, an assessment is over the seized property is to be disposed of as per the determination made by the assessing authority.
(v) Where assessment is not complete, the authority issuing the warrant shall take further steps within the stipulated period as required under Section 132(5) of the Act.
7. I have gone through the judgment under challenge and the documents produced before me. I fully agree with the authority cited by the applicant and come to the conclusion that the lower Court has ignored the provisions of Income Tax Act and by that committing error in passing the order in favour of respondent No. 2, and hence, the order passed by the learned Judge is required to be set aside and revision application is deserves to be allowed.
8. For the foregoing reasons, the present revision application is allowed. The order passed by the learned 3rd J.M.F.C., Surat dated 21-8-2004 is hereby quashed and set aside. The Athwa Police Authority is ordered to hand over the amount of Rs. 20 lacs to the applicant forthwith. Rule is made absolute in above terms. Interim relief, if any, is vacated forthwith.