Wp(C)/20341/2021 Of Muthukoya T v. Commissioner Of Income Tax

PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS WEDNESDAY, THE 18 DAY OF MAY 2022 / 28TH VAISAKHA, 1944 WP(C) NO. 20341 OF 2021 PETITIONER: MUTHUKOYA T.,AGED 71 YEARS, S/O.LATE ABDULLA KOYA, AGATTI ISLAND BEACH RESORT, ISLAND TOWER, BEHIND HPO, MARKET ROAD, KOCHI – 682 011. BY ADVS.P.B.KRISHNANP.B.SUBRAMANYAN SABU GEORGEMANU VYASAN PETERM.K.SREEGESH RESPONDENTS: 1COMMISSIONER OF INCOME TAX, INCOME TAX DEPARTMENT, RANGE-2, ERNAKULAM, KOCHI – 682 019.ERNAKULAM, KOCHI – 682 019. 2ADDL.COMMISSIONER,INCOME TAX DEPARTMENT, OFFICE OF THE ADDL.COMMISSIONER OF INCOME TAX, RANGE-2, ERNAKULAM,KOCHI – 682 019INCOME TAX DEPARTMENT, OFFICE OF THE ADDL.COMMISSIONER OF INCOME TAX, RANGE-2, ERNAKULAM,KOCHI – 682 019 3INCOME TAX OFFICER, INCOME TAX DEPARTMENT, WARD 2(2), RANGE-2, ERNAKULAM, KOCHI – 682 019 BY SRI.CHRISTOPHER ABRAHAM, SC, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30.03.2022, THE COURT ON 18.05.2022 DELIVERED THEFOLLOWING: BECHU KURIAN THOMAS, J. =-=-=-=-=-=-=-=-=-=-=-=-=-= W.P.(C) No.20341 of 2021=-=-=-=-=-=-=-=-=-=-=-=-=-= Dated this the 18[th] day of May, 2022 JUDGMENT Petitioner seeks for the return of original document oftitle belonging to him and impounded under Section 131 (3) of theIncome Tax Act, 1961 (for short,'the Act'). 2. Petitioner alleges that as part of income tax surveyoperations, the premises of the petitioner was inspected on17.02.2010, and on issuing summons to him to produce books ofaccount and other original documents, petitioner produced variousdocuments which were impounded under Section 131(3) of the Act.Subsequently, petitioner filed his returns and cleared the entireincome tax dues in the year 2010 itself. However, petitionercomplains that, respondents are not returning the originaldocuments impounded by them. Petitioner further alleged that hewas the Managing Partner of 'Agatti Island Beach Resort', Agatti, inthe Union Territory of Lakshadweep and that after the documentswere impounded, he filed his income tax returns for the financial years 2006-2007 to 2010-2011. It was pleaded that inspite of therequest for return of the original document of title, and in particular,Sale Deed No.3561/2008 of Sub Registry Office, Ernakulampertaining to his residential house, respondents have, under onepretext or the other delayed returning the document. Petitioneralso asserted that respondents had informed that they misplacedthe documents and that the same will be returned after tracing itout. According to the petitioner, the respondents cannot hold on tothe documents indefinitely and that such an action is illegal andcontrary to the principles of equality enshrined under Article 14 ofthe Constitution of India. 3. A statement was filed on behalf of the respondents pointing out that though the document was misplaced initially dueto the repeated shifting of Assessing Officers, the document wastraced out after strenuous efforts. Respondents further pleaded thatwhile considering the request for return of the documents, theycould identify an amount of Rs.20,00,000/- as outstanding againstthe firm in which the petitioner was a partner and that since he isliable to pay the tax arrears of the firm, the impounded documentscan be released only after payment of the outstanding amount.Respondents further pleaded that the continued retention of the impounded document is due to the substantial tax arrears due fromthe firm in which the petitioner was a partner and is necessary tosafeguard the interests of the revenue. It was also pleaded that thedepartment had no objection to release the document of title, if thepetitioner clears the tax arrears or provides a sufficient bankguarantee for the tax amount. impounded document is due to the substantial tax arrears due fromthe firm in which the petitioner was a partner and is necessary tosafeguard the interests of the revenue. It was also pleaded that thedepartment had no objection to release the document of title, if thepetitioner clears the tax arrears or provides a sufficient bankguarantee for the tax amount. 4. In the reply affidavit filed by the petitioner, it waspleaded that the entire tax liability of the petitioner had beencleared after paying astronomical amounts as fines and penalty.According to the petitioner, the firm 'Agatti Island Beach Resort'was wound up in the year 2012 and that no demand has been madeagainst him for the last 10 years and had there been any amountdue from him, he could have taken the benefit under the 'Vivad SeVishwas Scheme' launched by the Central Government. It wasfurther pointed out that there was no provision under law to retaindocuments of title of an assessee as security for amounts allegedlydue. 5. I have heard Sri. P B. Subramaniam the learnedCounsel for the petitioner and Sri. Jose Joseph, the learnedStanding Counsel for the Income Tax Department and have alsoconsidered the rival contentions. 6. The document in question was seized on 17.02.2010.The respondent has no case that petitioner has any liability inrespect of the assessment years prior to 2009-10. The learnedStanding Counsel for the Income Tax Department fairly concededthat there is no provision under the Act to retain the documents oftitle as security for any tax liability that may arise in the future. Inthe absence of any such statutory provision, the respondents cannotretain documents of title impounded/seized by them under Section131(3) of the Act. 7. Apart from the above, under Section 131(3) of theAct, the documents impounded can be retained in the custody ofthe respondents beyond 15 days only after obtaining approval ofthe Principal Chief Commissioner or other officers named in the saidsubsection. There is no case for the respondents that any suchapproval had been obtained by the department from any of theofficers mentioned in Section 131(3) of the Act. Therefore therespondents cannot under any circumstances retain the documentsof title of the petitioner. 8. In this context, it is apposite to refer to the decisionrendered in Udaya Sounds v. The Principal Commissioner of Income Tax [2022 (2) KLT 717], wherein this Court had observed that apart from obtaining orders of approval from theofficers to retain the documents, there is an added obligation uponthe department to communicate the orders to the assessee toenable retention of documents beyond the period specified in thesaid subsection. Though the said decision related to the retention ofdocuments under Section 132(8), the principle laid down thereinapplies in all its rigour to the documents impounded under Section131(3) as well in view of the mandate under section 131(3)(b) ofthe Act. In view of the above, respondents have acted illegallyand with material irregularity in retaining the documents of titlebelonging to the petitioner. Accordingly, the respondents aredirected to return the original Sale Deed bearing No.3561/2008executed before the Sub Registrar's office, Ernakulam to thepetitioner within an outer period of 30 days from the date of receiptof a copy of this judgment. The Writ Petition is allowed as above. RKM Sd/-BECHU KURIAN THOMAS, JUDGE APPENDIX OF WP(C) 20341/2021 PETITIONER'S EXHIBITS: Exhibit P1 DATED 18.2.2010 TRUE COPY OF THE PROCEEDINGS OF THE 3RD RESPONDENT Exhibit P2DATED 21-6-2010, TRUE COPY OF THE LETTER SEND BY THE PETITIONER TO THE 1ST RESPONDENT. Exhibit P3DATED 19-2-2019, TRUE COPY OF THE REPRESENTATION MADE BY THE PETITIONER. Exhibit P4DATED 19-4-2021, TRUE COPY OF THE REPRESENTATION MADE BY THE PETITIONER. The Writ Petition is allowed as above. RKM Sd/-BECHU KURIAN THOMAS, JUDGE APPENDIX OF WP(C) 20341/2021 PETITIONER'S EXHIBITS: Exhibit P1 DATED 18.2.2010 TRUE COPY OF THE PROCEEDINGS OF THE 3RD RESPONDENT Exhibit P2DATED 21-6-2010, TRUE COPY OF THE LETTER SEND BY THE PETITIONER TO THE 1ST RESPONDENT. Exhibit P3DATED 19-2-2019, TRUE COPY OF THE REPRESENTATION MADE BY THE PETITIONER. Exhibit P4DATED 19-4-2021, TRUE COPY OF THE REPRESENTATION MADE BY THE PETITIONER. Exhibit P5DATED 23/12/2010, TRUE COPY OF THE ASSESSMENT ORDER ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), KOCHI Exhibit P6 DATED 24/12/2010, TRUE COPY OF THE ASSESSMENT ORDER ISSUED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), KOCHI