Crl Op(Md)/19340/2021 Of The Deputy Director Of Income Tax (Investigation) v. Shri Sampath

BEFORE THE MADURAI BENGH OF MADRAS HIGH COURTDATED: 15.02.2022CORAM THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN Crl.O.P.(MD)Nos.19340 of 2021 & 1241 of 2022andCrl.M.P(MD)No.10787 of 2021 -Crl.O.P(MD)No.19340 of 2021: The Deputy Director of Income Tax (Investigation),O/o.Joint Director of Income Tax (Investigation),Room No.502, 5[th] Floor, Aayakar Bhavan,Kowdiar P.O, Thiruvananthapuram – 695 003. ... Petitioner/3[rd] Party 1.Shri Sampath ... 1[st] Respondent/Petitioner 2.The State of Tamil Nadu, Represented by, The Sub-Inspector of Police, Thuckalay Police Station, Kanyakumari District. (Crime No.43 of 2021) ... 2[nd] Respondent/Respondent Prayer: Criminal Original Petition filed under Section 482 Cr.P.C.,to call for the records relating to the order passed by the learnedJudicial Magistrate No.1, Padmanabhapuram, dated 03.03.2021 inCrl.M.P.No.1494 of 2021 in reference to Crime No.43 of 2021 (RPNo.18 of 2021) on the file of Thuckalay Police Station and set asidethe same and permit the petitioner to seek custody of the seizedassets ie., cash of Rs.76,02,010/-. Government Advocate (Crl. Side) -Crl.O.P(MD)No.1241 of 2022: State through The Sub-Inspector of Police,Thuckalay Police Station,Kanyakumari District.(Crime No.43 of 2021) ... Respondent/Complainant Prayer: Criminal Original Petition filed under Section 482 Cr.P.C.,to allow the petition to set aside the impugned order passed inCrl.M.P.No.9990 of 2021 in Crl.M.P.No.1494 of 2021, dated 22.12.2021on the file of the learned Judicial Magistrate No.1, Padmanabhapuramhttps://hcservices.ecourts.gov.in/hcservices/ so that the petitioner may be directed to produce two sureties withoriginal title document to the total value of Rs.76,00,000/- toexecute the bond for the above amount. For Petitioner: Mr.G.Mariappan, AdvocateFor Respondent: Mr.B.Thanga Aravindh Government Advocate (Crl. Side) COMMON ORDER Crl.O.P(MD)No.19340 of 2021 has been filed to set aside theorder passed by the learned Judicial Magistrate No.1,Padmanabhapuram, dated 03.03.2021 in Crl.M.P.No.1494 of 2021 inreference to Crime No.43 of 2021 (RP No.18 of 2021) on the file ofThuckalay Police Station and and permit the petitioner to seekcustody of the seized assets ie., cash of Rs.76,02,010/-. 2.Crl.O.P(MD)No.1241 of 2022 has been filed to allow thepetition to set aside the impugned order passed in Crl.M.P.No.9990of 2021 in Crl.M.P.No.1494 of 2021, dated 22.12.2021 on the file ofthe learned Judicial Magistrate No.1, Padmanabhapuram, so that thepetitioner may be directed to produce two sureties with originaltitle document to the total value of Rs.76,00,000/- to execute thebond for the above amount. Crl.O.P(MD)No.19340 of 2021 has been filed to set aside theorder passed by the learned Judicial Magistrate No.1,Padmanabhapuram, dated 03.03.2021 in Crl.M.P.No.1494 of 2021 inreference to Crime No.43 of 2021 (RP No.18 of 2021) on the file ofThuckalay Police Station and and permit the petitioner to seekcustody of the seized assets ie., cash of Rs.76,02,010/-. 2.Crl.O.P(MD)No.1241 of 2022 has been filed to allow thepetition to set aside the impugned order passed in Crl.M.P.No.9990of 2021 in Crl.M.P.No.1494 of 2021, dated 22.12.2021 on the file ofthe learned Judicial Magistrate No.1, Padmanabhapuram, so that thepetitioner may be directed to produce two sureties with originaltitle document to the total value of Rs.76,00,000/- to execute thebond for the above amount. 3.The petitioner in Crl.O.P(MD)No.1241 of 2021 is the defactocomplainant (hereinafter referred to as 'the complainant') and he isrunning a jewelry mart in the name and style as 'Kerala FashionJewelry' at Neyyatin Karai at Trivandrum District, Kerala State. On19.01.2021, at about 05.30 hours, when the complainant has entrusted1-1/2 kgs gold ornaments with his driver along with two others tohand over to his son-in-law at Tirunelveli. The said gold ornamentshave been handed over to his son-in-law on receipt of Rs.76,40,000/-as sale proceeds. At about 08.15 hours, on the same day, while theywere returning in the car, waylaid by four unknown person atKaravilai, out of which, two were on police uniform, robbed the saidsum of Rs.76,40,000/- from the inmates on the car on criminalintimidation. Subsequently, the said amount was recovered from theperson committed robbery. Thereafter, it was deposited in thecustody of the Court in R.P.No.18 of 2021. The petitioner, being thelawful owner of the said property, filed Crl.M.P.No.1494 of 2021 forreturn of the cash and by order, dated 03.03.2021, the learnedJudicial Magistrate No.1, Padmanabhapuram, ordered to return theproperty as interim custody on condition that the complainant shallexecute a bond for a sum of Rs.76,00,000/- and also to deposit theoriginal title deeds to the said tune into the Court. Therefore, thecomplainant filed Crl.M.P.No.9990 of 2021 on the file of the learnedJudicial Magistrate No.1, Padmanabhapuram to modify the conditionimposed by the learned Judicial Magistrate No.1, Padmanabhapuram inCrl.M.P.No.1494 of 2021, dated 03.03.2021, while returning theproperty and by order, dated 22.12.2021, the learned Judicialhttps://hcservices.ecourts.gov.in/hcservices/Magistrate No.1, Padmanabhapuram, dismissed the petition. Challenging the same, the complainant has filed Crl.O.P.No.1241 of2021. Challenging the same, the complainant has filed Crl.O.P.No.1241 of2021. 4.The petitioner in Crl.O.P.No.19340 of 2021, who is the DeputyDirector of Income Tax (hereinafter referred to as 'the Income TaxAuthority'), has filed this petition to set aside the order passedby the learned Judicial Magistrate No.1, Padmanabhapuram inCrl.M.P.No.1494 of 2021, dated 03.03.2021 on the ground that theIncome Tax Authority issued summons under Section 131 (1A) of theIncome Tax Act, 1961 (hereinafter referred to as 'the Act') to thecomplainant and in response, he appeared for enquiry and hisstatement was recorded under Section 131 of the Act on 19.04.2021.In the statement, the complainant deposed that the cash seized bythe police authorities belonged to him and it is his unaccountedincome which has not been reported to Tax. He had neither maintainedproper accounts nor able to explain the source of obtaining the saidcash. On the basis of the statement, on 18.06.201, the Income TaxAuthority requested the learned Judicial Magistrate No.I,Padmanabhapuram, not to release the cash on the petition filed bythe complainant under Section 451 of Cr.P.C. Further, thecomplainant filed an affidavit, dated 09.07.2021, offering theseized cash of Rs.76,40,000/- under Section 69A of the Act. Further,the case of the Income Tax Authority is that on various occasions,large quantum of cash was seized from the complainant, such as, on04.03.2016, a sum of Rs.56,92,000/- was seized, on 20.08.2020, a sumof Rs.1.02 crores was seized by State Tax Officer (Intelligence),Intelligence Squad No.VII, State Goods and Services TaxesDepartment, Neyyattinkara, Thiruvananthapuram and the presentseizure of cash. 5.The learned counsel appearing for the Income Tax Authoritysubmitted that the Income Tax liability is a charge upon any sum forwhich there is no satisfactory explanation regarding the source. Ifthe amount seized is without any legal source and forms part of thesuppressed income, under the provisions of the Income Tax Act, theIncome Tax Department entitled to confiscate the entire amount asliability. That apart, the Income Tax Department is vested withpowers to seize unaccounted cash and documents that contain evidenceof undisclosed income under Sections 132 and 132A of the Act. Insupport of his contention, he relied upon the Judgment reported in(1991) 190 (TR 616 (Madras) -Babu Rao Vs. the Inspector of Policeand this Court held that the Income Tax Authorities, in the eye oflaw, can be construed as the person entitled to seize and to havecustody of the property in the shape of undisclosed income. 6.The learned counsel appearing for the complainant submittedthat though the seized amount was not disclosed to the Income TaxAuthority and when the Income Tax Authorities initiated proceedingsunder Section 132 of the Act, they are entitled for the cash onlyafter completion of the assessment proceedings. While pendinghttps://hcservices.ecourts.gov.in/hcservices/proceedings, they are not entitled to seize the cash. In support of his contention, he relied upon the Judgment of the Honourable HighCourt of Kerala in the case of Union of India, represented byAssistant Director of Income Tax vs. Hashir and others inCrl.M.C.No.2348 of 2015, in which held that the appropriate remedyopen to the Income Tax Officer is to apply Section 226(4) of the Actfor payment of money towards tax and other amounts due. That means,once the assessment proceedings have become final and conclusive,the authorities under the Act are entitled to apply to the learnedMagistrate for release of the portion of amount due and recoverablefrom the first respondent therein under law. In other words, theamount necessary for satisfying the liability of the firstrespondent will have to remain in the custody of the Court despiteany claim raised by parties demanding interim custody pendingfinalization of the assessment proceedings. 7.Heard the learned counsel appearing for the complainant, thelearned counsel appearing for the Income Tax Authority and thelearned Government Advocate (Criminal Side) appearing for the Stateand perused the entire materials available on record. 8.On a perusal of the materials available on record, it is seenthat on the complaint lodged by the complainant, the secondrespondent/the Sub-Inspector of Police registered the case in CrimeNo.43 of 2021 for the offences under Sections 392 and 170 of I.P.Cand now altered to Sections 392, 120, 120(b) and 406 of I.P.C, onthe allegation that the accused persons has robed a sum ofRs.76,40,000/- belonged to the complainant from his employees.During the course of investigation, the second respondent hadarrested the accused persons and recovered a sum ofRs.76,02,010/- and deposited the amount before the learned JudicialMagistrate No.1, Padmanabhapuram in R.P.No.18 of 2021. Thecomplainant being the owner of the property filed petition inCrl.M.P.No.1494 of 2021 for return of cash and the same was allowedon condition that the complainant shall execute a bond for a sum ofRs.76,00,000/- and also to deposit the original title deeds for thesaid value, by order, dated 03.03.2021. Further, the complainantfiled Crl.M.P.No.9990 of 2021 on the file of the learned JudicialMagistrate No.1, Padmanabhapuram to modify the condition imposed inCrl.M.P.No.1494 of 2021, dated 03.03.2021, while returning theproperty and by order, dated 22.12.2021, the learned JudicialMagistrate No.1, Padmanabhapuram, dismissed the petition. Though theIncome Tax Authority, by letter dated 18.06.2021 requested thelearned Judicial Magistrate No.1, Padmanabhapuram, not to releasethe cash, they failed to file any application to implead themselvesas a party in the petition for return of the cash. 9.Admittedly, the Income Tax Authority initiated proceedingsunder Section 132 of the Act and issued summons under Section 131(1A) of the Actand in response, he appeared for enquiry and hisstatement was recorded under Section 131 of the Act on 19.04.2021.https://hcservices.ecourts.gov.in/hcservices/ In the statement, the complainant admitted that the cash belonged tohim and it is his unaccounted income which has not been reported totax. 10.As rightly pointed out by the learned counsel for thecomplainant, the Income Tax Authority initiated proceedings underSection 132 of the Act as against the complainant for non-disclosureof the income to the tune of Rs.76,02,010/- and the said proceedingis pending. Once the assessment procedure have become final andconcluded, the Income Tax Authority is entitled to get the portionof the amount due and recoverable from the complainant. 11.In the judgment relied upon by the Income Tax Authorityreported in (1991) 190 (TR 616 (Madras) -Babu Rao Vs. the Inspectorof Police, already the learned Judicial Magistrate released the cashin favour of the Income Tax Authority and the same was challenged bythe owner of the cash and the same was dismissed saying that theIncome Tax Authorities, in the eye of law, can be construed as theperson entitled to seize and to have custody of the property in theshape of undisclosed income. Whereas in the case on hand, the IncomeTax Authority did not file any petition under Section 451 of Cr.P.Cfor return of cash. The complainant filed a petition for return ofcash and the same was allowed and imposed conditions. Thecomplainant challenging the conditions imposed by the learnedJudicial Magistrate No.1, Padmanabhapuram, filed Crl.M.P.No.9990 of2021 in Crl.M.P.No.1494 of 2021. Therefore, the above Judgment citedby the learned counsel for the Income Tax Authority is not helpfulto the case on hand. Further, the complainant is not entitled tohave custody of the cash, since the Income Tax Authority alreadyinitiated proceedings under Section 132 of the Act as against thecomplainant. 12.In view of the above, the order passed in Crl.M.P.No.1494 of2021, dated 03.03.2021 on the file of the learned JudicialMagistrate No.1, Padmanabhapuram is set aside. The property, namely,the cash of Rs.76,02,010/- deposited in R.P.No.18 of 2021 in CrimeNo.43 of 2021 on the file of the second respondent police will haveto be remained in the custody of the learned Judicial MagistrateNo.1, Padmanabhapuram, pending finalization of the assessmentproceedings raised by the Income Tax Authority. The learned JudicialMagistrate No.1, Padmanabhapuram, is directed to deposit the cashproperty in any one of the Nationalized Bank in the form of fixeddeposit. After completing the assessment proceedings, the Income TaxAuthority is at liberty to approach the learned Judicial MagistrateNo.1, Padmanabhapuram to release the portion of the amount duerecoverable from the complainant. https://hcservices.ecourts.gov.in/hcservices/ 13.Accordingly, both the Criminal Original Petitions aredisposed of. Consequently, connected Miscellaneous Petition isclosed. // True Copy // Sd/-Assistant Registrar (CS-III) / /2022 Sub Assistant Registrar(CS) Note : In view of the present lock down owing to COVID-19 pandemic,a web copy of the order may be utilized for official purposes, but,ensuring that the copy of the order that is presented is the correctcopy, shall be the responsibility of the advocate / litigantconcerned. To 1.The Judicial Magistrate No.1, Padmanabhapuram. 2.Do Through The Chief Judicial Magistrate, Kanyakumari District at Nagercoil. 3.The Sub-Inspector of Police, Thuckalay Police Station, Kanyakumari District. 4.The Additional Public Prosecutor, Madurai Bench of Madras High Court, Madurai. +2 CC to M/s.G.MARIAPPAN, Advocate ( SR-6609[F], SR-6611[F] dated16/02/2022 ) +1 CC to M/s.N.DILIPKUMAR, Advocate ( SR-6630[F] dated 16/02/2022 ) Order made in15.02.2022 Crl.O.P(MD)Nos.19340 of 2021 & 1241 of 2022 RS(25.02.2022) 6P-8C https://hcservices.ecourts.gov.in/hcservices/