Crl.mc/484/2010 Of The Deputy Director Of Income Tax v. State Of Kerala And Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR WEDNESDAY, THE 12TH DAY OF NOVEMBER 2014/21ST KARTHIKA, 1936 Crl.MC.No. 484 of 2010 ( ) ---------------------------AGAINST THE ORDER IN CMP 3644/2008 of JUDL.M.F.C.-I,ERNAKULAM DATED23-06-2009 PETITIONER: -------------- THE DEPUTY DIRECTOR OF INCOME-TAX (INV)-II, O/O.THE ADDL. DIRECTOR OF INCOME-TAX(INV) MADAPARAMBIL BUILDINGS, SOUTH RAILWAY STATION ROAD ERNAKULAM, KOCHI-16. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENTS: ------------------ 1. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA. 2. SHRI VAJARAM, S/O. MANAKLAL, DEWASI KA BASS, VILLAGE & POST DUJANA, PALI DISTRICT RAJASTHAN. RAJASTHAN. 3. SHRI. RAJESH.B.MEHTA, S/O. BHAGECHAND MEHTA, MEHTA VASS, KHAD PALI DISTRICT, RAJASTHAN. R1 BY PUBLIC PROSECUTOR SRI.PHILIP T.VARGHESE THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON12-11-2014, ALONG WITH CRMC. 675/2010, THE COURT ON THE SAME DAYPASSED THE FOLLOWING: Crl.MC.No. 484 of 2010 ( ) APPENDIX PETITIONER'S EXHIBITS: ANNEXURE I: TRUE COPY OF THE PETITION FILED BY THE PETITIONER BEFORETHE HON'BLE COURT OF FIRST CLASS MAGISTRATE IN CMPNO.3644/2008.THE HON'BLE COURT OF FIRST CLASS MAGISTRATE IN CMPNO.3644/2008. ANNEXURE II: TRUE COPY OF THE STATEMENT FILED BY THE PETITIONERBEFORE THE HON'BLE COURT OF FIRST CLASS MAGISTRATE.BEFORE THE HON'BLE COURT OF FIRST CLASS MAGISTRATE. ANNEXURE III: TRUE COPY OF THE SURVEY REPORT. ANNEXURE IV: TRUE COPY OF THE STATEMENT FILED BY THE PETITIONERBEFORE THE HON'BLE COURT OF FIRST CLASS MAGISTRATE.BEFORE THE HON'BLE COURT OF FIRST CLASS MAGISTRATE. ANNEXURE V: TRUE COPY OF THE ORDER OF THE JUDICIAL FIRST CLASSMAGISTRATE'S COURT I, RNAKULAM DATED 23.6.2009.MAGISTRATE'S COURT I, RNAKULAM DATED 23.6.2009. TKS // TRUE COPY // P.S. TO JUDGE C.T.RAVIKUMAR, J. ----------------------------------- Crl.M.C.Nos.484 & 675 of 2010-----------------------------------Dated 12th November, 2014 ORDER Since these Criminal Miscellaneous Cases have matrix fromAnnexure-V common order in C.M.P.Nos.3644 & 3834 of 2008 in CrimeNo.51 of 2008 of South Railway Police Station these matters are takenup for joint consideration and disposal. To be precise, Crl.M.C.No.484of 2010 is directed against the order in C.M.P.No.3644 of 2008 filed bythe Income Tax Department and Crl.M.C.No.675 of 2010 is directedagainst the order in C.M.P.No.3834 of 2008 filed by the first respondentin the said Crl.M.C. In fact, both the aforesaid CMPs were disposed ofalong with C.M.P.No.3628 of 2008 as per order dated 23.6.2009 by theCourt of Judicial First Class Magistrate-I, Ernakulam as per Annexure-Vorder. The bone of contentions in these cases is 7664.5 grams of goldin the form of gold bars and ornaments seized from accused Nos.1 and2 in the aforesaid crime, on 21.11.2008. The Intelligence Officerattached to the Department of Commercial Taxes was the petitioner inC.M.P.No.3628 of 2008. The said petitioner and the petitioner in thecaptioned Criminal Miscellaneous Case viz., the Income Tax Departmentalleged that those goods were transported without any valid documents Crl.M.C.Nos.484 & 675/2010 Crl.M.C.Nos.484 & 675/2010 to show their ownership. Further, it is alleged that the tax due to theState of Kerala was not paid by the accused in relation to the goldornaments. In the said circumstances, to initiate the proceedings underthe Kerala Value Added Tax Act petitions were filed by them to havecustody of the gold ornaments produced in Crime No.51 of 2008. Infact, C.M.P.Nos.3628 and 3644 of 2008 were filed in that regard. Thefirst respondent in the latter Crl.M.C. filed C.M.P.No.3834 of 2008 andexpressed his willingness to furnish guarantee for the gold seized fromaccused Nos.1 and 2 on 21.11.2008 raising the contention that itbelonged to him. Evidently, all the aforesaid C.M.Ps were filed underSection 451 Cr.P.C. for the purpose of getting interim custody of theaforesaid quantity of gold. In C.M.P.No.3644 of 2008 the Department ofIncome Tax contended that the accused persons did not disclose thesource of income by which the gold ornaments were purchased andtherefore, they claimed for custody of the gold ornaments for thepurpose of enquiry under the provisions of the Income Tax Act. To lendsupport to the claim for interim custody the first respondent in the latterCrl.M.C. produced 9 documents before the court below. After hearingthe three petitions they were disposed of as per Annexure-V order ashereunder:- “(1) 7664.5 grams of gold seized by the Railway police incrime 51/08 will be released on interim custody tothe petitioner in CMP.3834/08 (Lalit KumarBhagchand Mehta @ Lalit B.Mehta) on condition thathe shall furnish security for 90% of the value of thesaid gold, as per the value of gold on the date offurnishing security as guarantee for realisation ofIncome Tax due to the Government, if any.crime 51/08 will be released on interim custody tothe petitioner in CMP.3834/08 (Lalit KumarBhagchand Mehta @ Lalit B.Mehta) on condition thathe shall furnish security for 90% of the value of thesaid gold, as per the value of gold on the date offurnishing security as guarantee for realisation ofIncome Tax due to the Government, if any. (2) The Income Tax Authority will have the right to realisethe amount due to the Government, if any, as incometax from the said Lalit B.Mehta, from the saidguarantee.the amount due to the Government, if any, as incometax from the said Lalit B.Mehta, from the saidguarantee. (3) The release of the gold to the Lalit B.Mehta will not inany way affect the power of Income Tax Authority tocontinue with the proceedings u/s.132A of theIncome Tax Act.any way affect the power of Income Tax Authority tocontinue with the proceedings u/s.132A of theIncome Tax Act. (4) The Sales Tax Authority will have the right to realisethe tax amount, if any, due to the State from theguarantee for Rs.2,29,128/- furnished towards thesame by Lalit B.Mehta.the tax amount, if any, due to the State from theguarantee for Rs.2,29,128/- furnished towards thesame by Lalit B.Mehta. (5) The said Lalit B.Mehta shall produce the gold, in thesame condition, as and when required by this court.same condition, as and when required by this court. (6) The petitioner shall execute a bond equivalent to thevalue of the gold ornaments with two solvent suretieseach for the like sum.” value of the gold ornaments with two solvent suretieseach for the like sum.” It is aggrieved by the orders in C.M.P.Nos.3644 and 3834 of 2008 thatthe aforementioned Crl.M.C.s were filed by the Income Tax Department.Various contentions have been raised by the petitioner in these Crl.M.Csand also the first respondent in the latter Crl.M.C. Though notice in thisproceedings was served on respondents 2 and 3 in these Crl.M.Cs they Crl.M.C.Nos.484 & 675/2010 have not chosen to enter appearance and to resist the case. 2. I have heard the learned counsel for the petitioner, thelearned counsel for the first respondent in the latter Crl.M.C. and also thelearned Public Prosecutor. It is aggrieved by the orders in C.M.P.Nos.3644 and 3834 of 2008 thatthe aforementioned Crl.M.C.s were filed by the Income Tax Department.Various contentions have been raised by the petitioner in these Crl.M.Csand also the first respondent in the latter Crl.M.C. Though notice in thisproceedings was served on respondents 2 and 3 in these Crl.M.Cs they Crl.M.C.Nos.484 & 675/2010 have not chosen to enter appearance and to resist the case. 2. I have heard the learned counsel for the petitioner, thelearned counsel for the first respondent in the latter Crl.M.C. and also thelearned Public Prosecutor. 3. The learned counsel appearing for the petitioner in thesecases relied on the decisions of this Court inIbrahim Othayothv.SubInspector of Police and Others((1998) 232 ITR 320), RajivAgrawalv.State of Gujarat((2007) 290 ITR 449 (Guj)) andKrishnagopalv. Director of Income Tax (Investigation)((2009)308 ITR 273 (MP)) to canvass the position that the normal practicewhen claim applications were filed by the Income Tax or Sales TaxDepartments either under Section 451 or 457 Cr.P.C. is to release thearticles seized to any of the Department unless sufficient materialsprima facie establishing their ownership was produced by the otherclaimant. It is submitted by the learned counsel for the petitioner that inC.M.P.No.3644 of 2008 a specific contention has been raised by theDepartment to the effect that its Mumbai unit conducted a survey underSection 133A of the Income Tax Act and prepared Annexure-III reportwhich would reveal that the claim made by the first respondent in the Crl.M.C.Nos.484 & 675/2010 latter Crl.M.C. is a bogus one as M/s.Swarna Sagar Jewellers under hisproprietorship was maintaining only an inflated book stock withouthaving corresponding physical stock and in the said circumstances it iscontended that M/s.Swarna Sagar Jewellers were in the line of providingaccommodation entries to persons with undisclosed assets, when suchassets are detected. It is contended that those aspects were notproperly gone into by the court below while passing the impugnedcommon order. Evidently, the common impugned order was passed asearly as on 23.6.2009 and though these Crl.M.Cs were admitted as earlyas in the year 2010 no interim order staying the operation of the orderwas passed. It is submitted by the counsel on both sides that pursuantto the order dated 23.6.2009 the gold bars and the gold ornaments werereleased to the interim custody of the first respondent in the latterCrl.M.C. subject to the conditions in the said order. It is also submittedthat in compliance with the said order 90% of the value of the seizedgold was furnished by him. Taking into account the aforesaidcircumstances and also taking into consideration of the fact that thepower of the Magistrate under Section 451 Cr.P.C. does not extend tothe determination of ownership of the property seized and what wasdone under the impugned order is only granting the interim custody ofthe seized gold bars and ornaments to the first respondent in the latter Crl.M.C. subject to the conditions in the order I do not think it necessary,at this distance of time viz., more than five years since the order, tointerfere with the impugned order. I am of the view that these Crl.M.Cscan be disposed of by issuing further orders to safeguard the interest ofthe Department. A perusal of Annexure-V order would reveal that thecourt below itself made it clear that the release of gold to the firstrespondent in the latter Crl.M.C. would not in any way affect the powerof Income Tax Authority to continue with the proceedings under Section132A of the Income Tax Act and also the right to realise the amount dueto Government, if any, as income tax from him out of the guarantee. Inthe said circumstances, while retaining the conditions imposed under theimpugned order dated 23.6.2009 it is made clear that the pendency ofthe criminal proceedings in Crime No.51 of 2008 of South Railway PoliceStation and all further actions pursuant thereto will not stand in the wayof the Income Tax Department in initiating appropriate proceedings forthe purpose of assessing tax liability of the persons concerned includingthe first respondent in the latter Crl.M.C., in accordance with law, besidesthe proceedings under Section 132A. It is also made clear that if suchproceedings are initiated by the Department it shall be concluded asexpeditiously as possible and the gold seized in connection with CrimeNo.51 of 2008 of South Railway Police Station and in respect of which Annexure-V order was passed with conditions shall be released finallyonly subject to the outcome of such proceedings. It is also made clearthat if any such proceeding is finalised pending the further proceedings inthe above crime then it will be open to the Income Tax Department tomove the learned Magistrate through appropriate petition. Subject tothe above, these Crl.M.Cs are disposed of. Sd/- C.T.RAVIKUMAR Judge TKS