Wa/1835/2010 Of Chacko V.joseph v. Commissioner Of Income Tax And Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.J.CHELAMESWAR & THE HONOURABLE MR. JUSTICE B.P.RAY FRIDAY, THE 29TH OCTOBER 2010 / 7TH KARTHIKA 1932 WA.No. 1835 of 2010 ----------------------- AGAINST JUDGMENT IN WP(C) NO.19146/2010 DATED 5.8.2010 APPELLANT/WRIT PETITIONER --------------------------------- CHACKO.V.JOSEPH, S/O.V.C.JOSEPH, RESIDING AT VADAKKEMATTATHIL, PUDUPPADI AMSOM, KOZHIKODE TALUK, KOZHIKODE DISTRICT. BY ADV. SRI.C.P.MOHAMMED NIAS RESPONDENTS/RESPONDENTS: ----------------------------------- 1. COMMISSIONER OF INCOME TAX, KOZHIKODE. 2. ASSISTANT DIRECTOR OF INCOME TAX (INVESTIGATION) KOZHIKODE. 3. DEPUTY DIRECTOR OF ENFORCEMENT, DIRCTORATE OF ENFORCEMENT, WAFA BHAVAN, 2ND FLOOR, V.K.SANKUNNI ROAD, KOZHIKODE. 4. ASSISTANT DIRECTOR OF ENFORCEMENT, DIRECTORATE OF ENFORCEMENT, WAFA BHAVAN, 2ND FLOOR, V.K.SANKUNNI ROAD, KOZHIKODE. BY STANDING COUNSEL SRI.JOSE JOSEPH THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 29/10/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J.Chelameswar, C.J. & B. P.Ray, J. ------------------------------------------ W.A. No. 1835 of 2010 ------------------------------------------ Dated this the 29[th]day of October, 2010 JUDGMENT J.Chelameswar, C.J. This writ appeal is preferred by the partially successfulpetitioner in W.P.(C) No.19146 of 2010 aggrieved by the judgmentdated 5[th] August, 2010. 2. The facts leading to the present appeal are as follows:On 19.2.2008, the Kerala Police have intercepted a Skoda carbearing Registration No.TN43/Z-2500 somewhere in the WayanadDistrict and on search of the vehicle they recovered an amount of`88,00,000/- in cash from the said vehicle. The two passengerstravelling by the said car were also arrested. The appellant hereinmade a claim to the effect that the above mentioned amount belongsto him. The police eventually handed over the said amount to theDirectorate of Enforcement. The further details of such handingover may not be necessary for the purpose of this order. W.A.No.1835 of 2010 - 2 - 3. The respondents issued a requisition under Section 132A of the Income Tax Act calling upon the Director ofEnforcement to hand over the above mentioned amount to them.The money was accordingly handed over to the respondents. In themeanwhile, the respondents also issued a notice dated 2.6.2010under Section 131 of the Income Tax Act calling upon the appellantto produce the various documents specified in the said notice and toattend the office of the Assistant Director of Income Tax, Calicut.Admittedly the proceedings for making the assessment underSection 153A of the Income Tax Act against the appellant arepending. 4. On 8.5.2010, the appellant made a representation tothe first respondent praying that the above mentioned amount maybe released in his favour. Complaining that no favourable action istaken on the representation and the withholding of the abovementioned amount is illegal and unsustainable, theappellant/petitioner approached this Court by way of the writpetition which was disposed of by the judgment under appeal. Hence this appeal. 5. By the judgment under appeal, the learned Judge of this Court recorded that the worst case scenario against theappellant herein would be that the appellant might be liable to payan amount of `60,24,333/-. Such a figure was arrived at on thebasis of the claim made by the respondents in their counter affidavitindicating the various heads into which such amount is split up.The learned Judge therefore disposed of the writ petition with adirection to the Income Tax authorities to return that much of theseized amount which is in excess of `65,00,000/- within a period ofone month without prejudice to the respective rights and obligationsof the parties under the provisions of the Income Tax Act. Hence this appeal. 5. By the judgment under appeal, the learned Judge of this Court recorded that the worst case scenario against theappellant herein would be that the appellant might be liable to payan amount of `60,24,333/-. Such a figure was arrived at on thebasis of the claim made by the respondents in their counter affidavitindicating the various heads into which such amount is split up.The learned Judge therefore disposed of the writ petition with adirection to the Income Tax authorities to return that much of theseized amount which is in excess of `65,00,000/- within a period ofone month without prejudice to the respective rights and obligationsof the parties under the provisions of the Income Tax Act. 6. Admittedly, the assessment proceedings against theappellant are pending. We understand from the material on recordthat on an allegation of violation of the provisions of the FEMAcertain proceedings were initiated, but closed subsequent to theinitiation of proceedings under the Income Tax Act. Until theproceedings under the Income Tax Act are completed, it would not W.A.No.1835 of 2010 be possible to decide with certainty as to what is the liability of theappellant under the Income Tax Act. In the circumstances, we mayhave to proceed on the basis of the assertions made in the statementfiled on behalf of the respondents in the writ petition as regards theliability of the appellant. From the statement it appears thataccording to the respondents the total tax liability tentatively fixedfor three financial years, i.e. 2007-08, 2008-09 and 2009-2010 is`49,86,393/- and the respondents are of the opinion that theappellant would also be liable to pay penalty for an amount of`10,37,940/-. 7. It is not very clear from the record nor the learnedcounsel for the respondents is able to make any statement regardingthe time frame required for completing the assessment against theappellant. We are informed that the total amount lying with therespondents as on 28.7.2010, the date on which the statement in thewrit petition was filed, is `1,03,79,468/-, i.e. the seized amount of`88,00,000/- plus the interest accrued thereon. We are alsoinformed that pursuant to the order of the learned Single Judge the W.A.No.1835 of 2010 - 5 - respondents have already released the amount in excess of`65,00,000/- out of the above mentioned amount. In thecircumstances, we deem it appropriate to modify the judgment underappeal directing the respondents to retain only an amount of`40,00,000/- and release the balance amount subject to thecondition that the appellant furnishes security either by way ofproducing bank guarantee or immovable property security to thesatisfaction of the third respondent for an amount of `25,00,000/-(Rupees twentyfive lakhs). Writ appeal is disposed of as above. J.Chelameswar, Chief Justice B.P. Ray, Judge vns The words “third respondent” occurring in line 8 of page 5 ofthe judgment dated 29/10/2010 are corrected and substituted as “firstrespondent” as per order dated 16/02/2011 in I.A.1006/2010. Sd/- Registrar (Judicial)