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2016 Supreme(Del) 2005
IN THE HIGH COURT OF DELHI AT NEW DELHI
S. MURALIDHAR & VIBHU BAKHRU, JJ.
SECURITRANS INDIA PVT. LTD. - Petitioner
Vs.
UNION OF INDIA & ORS. - Respondents
W.P.(C) 7088/2014
Decided On : 17-05-2016
For the Appellant :Mr. P.S. Sharda with Mr. Kshitij Sharda, Advocates.
For the Respondent:Mr. Amit Mahajan, Advocate for R-1.
Mr. Rahul Chaudhary, Senior Standing counsel for R-2 to R-6.
Mr. Sharique Hussain, Advocate for R-7/HDFC Bank Ltd.
The court emphasized the importance of the Department's responsibility to verify details and make necessary enquiries before attributing seized cash, and held the Department's actions as invalid and illegal.
Headnote:
Income Tax - Seizure of Cash - Income Tax Act, 1961, Section 132A - Summary
Fact of the Case:
The petitioner, Securitrans India Pvt. Ltd. (SIPL), filed a writ petition against the Income Tax Department seeking the release of a seized sum of Rs. 60,48,672 while transporting cash from customers of HDFC Bank to its branch at Ghaziabad. SIPL was engaged in transporting cash on behalf of banks and had a written agreement with HDFC Bank for collection and safe delivery of money.
Finding of the Court:
The court found that the Department's actions were invalid and illegal as it failed to verify the details of the cash and did not make necessary enquiries with the bank or customers. The assessment order attributing the seized cash to an employee of SIPL was held unsustainable, and the court directed the Department to return the seized amount to SIPL with interest and pay costs to SIPL.
Issues: The issues involved the validity of the Department's actions in seizing and attributing the cash to an employee of SIPL, and the failure to make necessary enquiries before making the assessment.
Ratio Decidendi: The Department's failure to verify the details of the seized cash and make necessary enquiries, as well as the invalid attribution of the cash to an employee of SIPL, led to the court's decision to declare the Department's actions as invalid and illegal.
Final Decision: The assessment order attributing the seized cash to an employee of SIPL was held unsustainable, and the Department was directed to return the seized amount to SIPL with interest and pay costs to SIPL.
S. Muralidhar, J.
1. The Petitioner, Securitrans India Pvt. Ltd. (‘SIPL’), has filed this writ petition against the Income Tax Department (‘hereinafter referred to as ‘the Department’) [Respondent Nos. 2 to 6] seeking various reliefs including the release of a sum of Rs. 60,48,672 which was seized while transporting cash from the customers of HDFC Bank [Respondent No.7] to its Gandhi Nagar Branch at Ghaziabad.
Background facts
2. The background to the petition is that the Petitioner-SIPL is engaged in the business of transporting cash on behalf of the banks in its armoured vehicles including cash collections from customers of the various banks. In the instant case, SIPL carries out the service of collection and safe delivery of money physically from the customers of Respondent No. 7/HDFC Bank strictly in accordance with the terms of a written agreement entered into between SIPL and HDFC Bank. The Petitioner states that it is also a registered service provider and pays service tax. It is stated that under the Finance Policy of the Government of India, the business carried by the Petitioner is legitimate and within the scope of license granted by the Reserve Bank of India (‘RBI’) to HDFC Bank. It is asserted that the Petitioner was performing the services of collection and transportation of cash under the direct authorization and on behalf of the HDFC Bank in terms of the agreement with HDFC Bank. A copy of the said agreement dated 23rd August 2014 has been placed on record.
3. The agreement spells out the obligations of the Petitioner. The Petitioner is obliged thereunder to have sufficient security practices, control processes and checks in respect of cash pick up/delivery services “rendered and handled/executed at its premises or in the bank’s premises or at customer’s premises or while the cash is in transit on a regular basis.” HDFC Bank has the right to immediately notify the RBI in the event of any breach of security and leakage of confidential customer information/data/records. In these eventualities, HDFC is liable to its customers for any damages and SIPL shall indemnify HDFC for such losses or damages.
4. There are also clauses regarding confidentiality or authority of the information that may be provided to SIPL for the purpose of discharging its contractual obligations. Schedule-I to the Agreement sets out the scope of the services. The obligation of SIPL is “to pick up, collect, obtain, currency notes from the bank’s customers/clients and any other related documents etc. and deposit the same with the bank.” The other obligations as spelt out in Schedule I include “to deliver, hand over, pay, issue cash, currency notes to the customers/clients of the bank in accordance with the instructions that may be given by the bank from time to time and also collect related documents/cheques from the customers and submit to the bank”; “to obtain the signatures, receipts, acknowledgements, etc. and/or any other documents/papers from the customers of the bank and deliver/hand over or forward the same to the bank from time to time in accordance with the instructions of the bank”; “to account, be responsible for cash, currency notes from the bank from time to time”; “to furnish, generate prepare such reports containing such details as may be specified by the bank from time to time;” and “any other services incidental or related to the aforesaid services.”
5. Schedule II to the Agreement sets out the “Modalities and procedures to be followed by the company which form part of this agreement.” This included the instructions issued by HDFC Bank at the central processing units for the cash pick up/deliveries at the nominated Bank Manager/Officer at any other centres by the local HDFC Bank head or any other office of the bank, as specified and instructed by the Bank to the Petitioner from time to time. The instructions given by HDFC
