Wp(C)/32424/2022 Of Khalid B v. Income Tax Department

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENTTHE HONOURABLE MR. JUSTICE DINESH KUMAR SINGHTHURSDAY, THE 1 DAY OF FEBRUARY 2024 / 12TH MAGHA, 1945 WP(C) NO. 32424 OF 2022 PETITIONER: KHALID B.,AGED 41 YEARS, S/O. ABOOBACKER, SAHIRA MANZIL, BALLANGODE ROAD, KUNJATHUR P. O., KASARAGOD – 671323.BY ADV. SRI. MANAS P. HAMEED RESPONDENTS: 1INCOME TAX DEPARTMENT,REPRESENTED BY ITS SECRETARY, GOVERNMENT OF INDIA, NORTH BLOCK,SECRETARIAT BUILDING, NEW DELHI – 110001. 2THE DEPUTY DIRECTOR INCOME TAX (DDIT),OFFICE OF THE DEPUTY DIRECTOR OF INCOME TAX, AAYAKAR BHAVAN, NORTH BLOCK, MANANCHIRA, KOZHIKODE – 673001. 3OFFICER IN CHARGE, RAILWAY POLICE STATION,KERALA RAILWAY POLICE, THAVAKKARA, KANNUR – 670001. 4ADDL. R4. THE DIVISIONAL SECURITY COMMISSIONER,RAILWAY PROTECTION FORCE (MINISTRY OF RAILWAYS, GOVERNMENT OF INDIA), SOUTHERN RAILWAY, PALAKKAD, PIN – 678002. 5ADDL. R5. THE INSPECTOR,RAILWAY PROTECTION FORCE (MINISTRY OF RAILWAYS, GOVERNMENT OF INDIA), CRIME INTELLIGENCE BRANCH, SOUTHERN RAILWAY, PALAKKAD, PIN 678002. (ADDITIONAL R4 AND R5 ARE IMPLEADED AS PER ORDER DATED 16.02.2023 IN I.A.1/2023 IN WP(C) 32424/2022). BY ADV.SRI. T. C. KRISHNA - SCGCSRI. NAVANEETH N. NATH – SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No. 32424 of 2022 ------------------------- Dated this the 1[st] day of February, 2024 JUDGMENT 1. Heard Mr. Manas P. Hameed, learned Counsel for the petitioner, Mr. Navaneeth N. Nath, learned Standing Counsel for thefor the 1[st] and 2[nd] respondents and Mr. T. C. Krishna, learned SeniorStanding Counsel for the 4[th] and 5[th] respondents. 2.The petitioner has filed this writ petition for a writ ofmandamus/direction in the nature of mandamus commanding 2[nd]and 3[rd] respondents to release Rs. 25,87,500/- seized from thepossession of the petitioner on 22.09.2022, when the petitioner wastraveling from Mangalore to Kozhikode by the train Ganganagar –Kochuveli Express. The RPF (Railway Protection Force) detained thepetitioner on regular check up as the petitioner was carrying hugecash amount and intimated the Income Tax authorities. The IncomeTax authorities seized the said amount under Section 132 – A of theIncome Tax Act, 1961. 3.Section 132 – A and Section 132 – B on reproduction read asunder; 1[132A. Powers to requisition booksof account, etc.—(1) Where the [2][[3][Principal Director General or DirectorGeneral] or[4][Principal Director orDirector]] or the[5][[6][Principal ChiefCommissioner or Chief Commissioner] or7[PrincipalCommissionerorCommissioner]], in consequence ofinformation in his possession, has reasonto believe that— of account, etc.—(1) Where the [2][[3][Principal Director General or DirectorGeneral] or[4][Principal Director orDirector]] or the[5][[6][Principal ChiefCommissioner or Chief Commissioner] or7[PrincipalCommissionerorCommissioner]], in consequence ofinformation in his possession, has reasonto believe that— (a) any person to whom asummons under sub-section (1) of section37 of the Indian Income-tax Act, 1922(11 of 1922), or under sub-section (1) ofsection 131 of this Act, or a notice undersub-section (4) of section 22 of theIndian Income-tax Act, 1922, or undersub-section (1) of section 142 of this Actwas issued to produce, or cause to beproduced, any books of account or otherdocuments has omitted or failed toproduce, or cause to be produced, suchbooks of account or other documents, asrequired by such summons or notice andthe said books of account or otherdocuments have been taken into custodyby any officer or authority under anyother law for the time being in force, or (a) any person to whom asummons under sub-section (1) of section37 of the Indian Income-tax Act, 1922(11 of 1922), or under sub-section (1) ofsection 131 of this Act, or a notice undersub-section (4) of section 22 of theIndian Income-tax Act, 1922, or undersub-section (1) of section 142 of this Actwas issued to produce, or cause to beproduced, any books of account or otherdocuments has omitted or failed toproduce, or cause to be produced, suchbooks of account or other documents, asrequired by such summons or notice andthe said books of account or otherdocuments have been taken into custodyby any officer or authority under anyother law for the time being in force, or (b) any books of account or otherdocuments will be useful for, or relevantto, any proceeding under the IndianIncome-tax Act, 1922 (11 of 1922), orunder this Act and any person to whoma summons or notice as aforesaid hasbeen or might be issued will not, orwould not, produce or cause to be produced, such books of account or otherdocuments on the return of such booksof account or other documents by anyofficer or authority by whom or whichsuch books of account or otherdocuments have been taken into custodyunder any other law for the time beingin force, or (c) any assets represent eitherwholly or partly income or propertywhich has not been, or would not havebeen, disclosed for the purposes of theIndian Income-tax Act, 1922 (11 of1922), or this Act by any person fromwhose possession or control such assetshave been taken into custody by anyofficer or authority under any other lawfor the time being in force, then, the [2][[3] [Principal Director Generalor Director General] or [8][PrincipalDirector or Director]] or the[ 5][[6 ][PrincipalChiefCommissionerorChiefCommissioner]or[7][PrincipalCommissioner or Commissioner]] mayauthorise any[9][Additional Director,AdditionalCommissioner,][10][JointDirector],[11][JointCommissioner],12[Assistant Director or Deputy Director]or [13][Assessing Officer] [hereafter in thissection and in sub-section (2) of section278D referred to as the requisitioningofficer] to require the officer or authorityreferred to in clause (a) or clause (b) orclause (c), as the case may be, to deliversuch books of account, other documentsor assets to the requisitioning officer. 1[Explanation:—For the removal ofdoubts, it is hereby declared that thereason to believe, as recorded y theincome-tax authority under this sub-section, shall not be disclosed to anyperson or any authority or the AppellateTribunal.] (2) On a requisition being madeunder sub-section (1), the officer orauthority referred to in clause (a) orclause (b) or clause (c), as the case maybe, of that sub-section shall deliver thebooks of account, other documents orassets to the requisitioning officer eitherforthwith or when such officer orauthority is of the opinion that it is nolonger necessary to retain the same inhis or its custody. (3) Where any books of account,other documents or assets have beendelivered to the requisitioning officer,the provisions of sub-sections (4A) to(14) (both inclusive) of section 132 andsection 132B shall, so far as may be,apply as if such books of account, otherdocuments or assets had been seizedunder subsection (1) of section 132 bythe requisitioning officer from thecustody of the person referred to inclause (a) or clause (b) or clause (c), asthe case may be, of sub-section (1) ofthis section and as if for the words “theauthorised officer” occurring in any ofthe aforesaid sub-sections (4A) to (14),the words “the requisitioning officer” were substituted.] (3) Where any books of account,other documents or assets have beendelivered to the requisitioning officer,the provisions of sub-sections (4A) to(14) (both inclusive) of section 132 andsection 132B shall, so far as may be,apply as if such books of account, otherdocuments or assets had been seizedunder subsection (1) of section 132 bythe requisitioning officer from thecustody of the person referred to inclause (a) or clause (b) or clause (c), asthe case may be, of sub-section (1) ofthis section and as if for the words “theauthorised officer” occurring in any ofthe aforesaid sub-sections (4A) to (14),the words “the requisitioning officer” were substituted.] 2[3[132B]. Application of seized orrequisitioned assets.—(1) The assetsseized under section 132 or requisitionedunder section 132A may be dealt with inthe following manner, namely:— requisitioned assets.—(1) The assetsseized under section 132 or requisitionedunder section 132A may be dealt with inthe following manner, namely:— (i) the amount of any existingliability under this Act, the Wealth-taxAct, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the Gift-taxAct, 1958 (18 of 1958) and the Interest-tax Act, 1974 (45 of 1974), and theamount of the liability determined oncompletion of the assessment [4][undersection 153A and the assessment of theyear relevant to the previous year inwhich search is initiated or requisition ismade, or the amount of liabilitydetermined on completion of theassessment under Chapter XIV-B for theblock period, as the case may be](including any penalty levied or interestpayable in connection with suchassessment) and in respect of which suchperson is in default or is [5][deemed to bein default, or the amount of liabilityarising on an application made beforethe Settlement Commission under sub-section (1) of section 245C, may berecovered out of such assets]: 6[Provided that where the personconcerned makes an application to theAssessing Officer within thirty days fromthe end of the month in which the assetwas seized, for release of asset and the nature and source of acquisition of anysuch asset is explained] to thesatisfaction of the Assessing Officer, theamount of any existing liability referredto in this clause may be recovered out ofsuch asset and the remaining portion, ifany, of the asset may be released, withthe prior approval of the [7][PrincipalChiefCommissionerorChief8Commissioner]or[PrincipalCommissioner or Commissioner], to theperson from whose custody the assetswere seized: Provided further that such asset orany portion thereof as is referred to inthe first proviso shall be released withina period of one hundred and twenty daysfrom the date on which the last of theauthorisations for search under section132 or for requisition under section132A, as the case may be, was executed: (ii) if the assets consist solely ofmoney, or partly of money and partly ofother assets, the Assessing Officer mayapply such money in the discharge of theliabilities referred to in clause (i) and theassessee shall be discharged of suchliability to the extent of the money soapplied; (iii) the assets other than moneymay also be applied for the discharge ofany such liability referred to in clause (i)as remains undischarged and for thispurpose such assets shall be deemed tobe under distraint as if such distraint was effected by the Assessing Officer or,as the case may be, the Tax RecoveryOfficer under authorisation from the1[Principal Chief Commissioner or ChiefCommissioner]or[2][PrincipalCommissioner or Commissioner] undersub-section (5) of section 226 and theAssessing Officer or, as the case may be,the Tax Recovery Officer may recoverthe amount of such liabilities by the saleof such assets and such sale shall beeffected in the manner laid down in theThird Schedule. (iii) the assets other than moneymay also be applied for the discharge ofany such liability referred to in clause (i)as remains undischarged and for thispurpose such assets shall be deemed tobe under distraint as if such distraint was effected by the Assessing Officer or,as the case may be, the Tax RecoveryOfficer under authorisation from the1[Principal Chief Commissioner or ChiefCommissioner]or[2][PrincipalCommissioner or Commissioner] undersub-section (5) of section 226 and theAssessing Officer or, as the case may be,the Tax Recovery Officer may recoverthe amount of such liabilities by the saleof such assets and such sale shall beeffected in the manner laid down in theThird Schedule. (2) Nothing contained in sub-section (1) shall preclude the recovery ofthe amount of liabilities aforesaid by anyother mode laid down in this Act. (3) Any assets or proceeds thereofwhich remain after the liabilities referredto in clause (i) of subsection (1) aredischarged shall be forthwith made overor paid to the persons from whosecustody the assets were seized. (4) (a) The Central Governmentshall pay simple interest at the rate of 3[one-half per cent. for every month orpart of a month] on the amount bywhich the aggregate amount of moneyseized under section 132 or requisitionedunder section 132A, as reduced by theamount of money, if any, released underthe first proviso to clause (i) of sub-section (1), and of the proceeds, if any,of the assets sold towards the dischargeof the existing liability referred to in clause (i) of sub-section (1), exceeds theaggregate of the amount required tomeet the liabilities referred to in clause(i) of sub-section (1) of this section. (b) Such interest shall run from thedate immediately following the expiry ofthe period of one hundred and twentydays from the date on which the last ofthe authorisations for search undersection 132 or requisition under section132A was executed to the date ofcompletion of the assessment [4][undersection 153A or under Chapter XIVB]. 5[Explanation 1.]—In this section,— (i) “block period” shall have themeaning assigned to it in clause (a) ofsection 158B; (ii) “execution of an authorisationfor search or requisition” shall have thesame meaning as assigned to it inExplanation 2 to section 158BE.] 6[Explanation 2.—For the removal ofdoubts, it is hereby declared that the“existing liability” does not includeadvance tax payable in accordance withthe provisions of Part C of Chapter XVII.] 4.The petitioner has remedy of filing an application underSection 132B of the Act before the Income Tax authorities toexplain the source of the cash amount ceased from him. In viewthereof, the present writ petition is disposed of with liberty to the petitioner to approach the 2[nd] respondent within one week fromtoday. The decision on the petitioner’s application shall be takenwithin period of two weeks thereafter in accordance with the lawafter giving an opportunity of hearing to the petitioner to explainsource of the cash seized from his possession on 22.09.2022. Svn Sd/- DINESH KUMAR SINGH JUDGE APPENDIX OF WP(C) 32424/2022 PETITIONER’S EXHIBITS EXHIBIT P8TRUE COPY OF LETTER DATED 31.10.2022COMMUNICATEDBYDIVISIONALSECURITYCOMMISSIONER & PUBLIC INFORMATION OFFICER,RAILWAY PROTECTION FORCE, SOUTHERN RAILWAYUNDER THE RIGHT TO INFORMATION ACTCOMMUNICATEDBYDIVISIONALSECURITYCOMMISSIONER & PUBLIC INFORMATION OFFICER,RAILWAY PROTECTION FORCE, SOUTHERN RAILWAYUNDER THE RIGHT TO INFORMATION ACT EXHIBIT P9TRUE COPY OF REPORT DATED 22.09.2022 SUBMITTEDBY INSPECTOR, CRIME INTELLIGENCE BRANCH BEFORETHE INCOME TAX OFFICER (EXEMPTIONS), KANNUR,RECEIVED BY THE PETITIONER UNDER THE RIGHT TOINFORMATION ACTBY INSPECTOR, CRIME INTELLIGENCE BRANCH BEFORETHE INCOME TAX OFFICER (EXEMPTIONS), KANNUR,RECEIVED BY THE PETITIONER UNDER THE RIGHT TOINFORMATION ACT DINESH KUMAR SINGH JUDGE APPENDIX OF WP(C) 32424/2022 PETITIONER’S EXHIBITS EXHIBIT P8TRUE COPY OF LETTER DATED 31.10.2022COMMUNICATEDBYDIVISIONALSECURITYCOMMISSIONER & PUBLIC INFORMATION OFFICER,RAILWAY PROTECTION FORCE, SOUTHERN RAILWAYUNDER THE RIGHT TO INFORMATION ACTCOMMUNICATEDBYDIVISIONALSECURITYCOMMISSIONER & PUBLIC INFORMATION OFFICER,RAILWAY PROTECTION FORCE, SOUTHERN RAILWAYUNDER THE RIGHT TO INFORMATION ACT EXHIBIT P9TRUE COPY OF REPORT DATED 22.09.2022 SUBMITTEDBY INSPECTOR, CRIME INTELLIGENCE BRANCH BEFORETHE INCOME TAX OFFICER (EXEMPTIONS), KANNUR,RECEIVED BY THE PETITIONER UNDER THE RIGHT TOINFORMATION ACTBY INSPECTOR, CRIME INTELLIGENCE BRANCH BEFORETHE INCOME TAX OFFICER (EXEMPTIONS), KANNUR,RECEIVED BY THE PETITIONER UNDER THE RIGHT TOINFORMATION ACT EXHIBIT P10A TRUE COPY OF THE RTI REPLY DATED 31.03.2023COMMUNICATED BY THE ADDITIONAL 4TH RESPONDENTCOMMUNICATED BY THE ADDITIONAL 4TH RESPONDENT EXHIBIT P11A TRUE COPY OF THE RTI REPLY DATED 11.05.2023COMMUNICATED BY THE ADDITIONAL DIVISIONALRAILWAYMANAGERANDFAA,PALAKKADDIVISION/SOUTHERN RAILWAYCOMMUNICATED BY THE ADDITIONAL DIVISIONALRAILWAYMANAGERANDFAA,PALAKKADDIVISION/SOUTHERN RAILWAY EXHIBIT P12A TRUE COPY OF THE INCOME TAX RETURNACKNOWLEDGMENT FOR THE YEAR 2020-21ACKNOWLEDGMENT FOR THE YEAR 2020-21 EXHIBIT P13A TRUE COPY OF THE INCOME TAX RETURNACKNOWLEDGMENT FOR THE YEAR 2022-23ACKNOWLEDGMENT FOR THE YEAR 2022-23 EXHIBIT P14A TRUE COPY OF THE WRITTEN EXPLANATION DATED13.06.2022 FILED BEFORE THE DEPUTY DIRECTOR OFINCOME TAX, INVESTIGATION 2, KOZHIKODE13.06.2022 FILED BEFORE THE DEPUTY DIRECTOR OFINCOME TAX, INVESTIGATION 2, KOZHIKODE