The main legal point established in the judgment is that the authorised officer under S.132 of the Income-tax Act is not competent to claim seized documents for investigation unless the discovery results from a search as specified in the Act.

Headnote:
Seizure - Criminal Procedure - S.435, S.436, S.561A, S.439 - Indian Income Tax Act, 1961 - S.132 - Summary of Acts and Sections: The court discussed the provisions of S.132 of the Income-tax Act, 1961, which empowers the authorised officer to seize property or income not disclosed for the purposes of the Act. The court compared these provisions with those of the Foreign Exchange Regulation Act and the Customs Act, highlighting the narrower scope of power conferred on the authorised officer under the Income-tax Act.
Fact of the Case:

The case involved the seizure of Indian currency notes from the second respondent, who claimed that the money belonged to the first respondent. The Income-tax Officer and the first respondent filed petitions seeking possession of the seized amount. The police submitted a final report stating that the money belonged to the first respondent.
Finding of the Court:

The court found that the authorised officer under S.132 of the Income-tax Act was not competent to claim the seized documents for investigation, as the discovery did not result from a search as specified in the Act. The court held that the order to return the seized amount to the first respondent was in order and required no interference.
Issues: The main issue was whether the authorised officer under S.132 of the Income-tax Act was competent to claim the seized documents for investigation, given the circumstances of the case.
Ratio Decidendi: The court's decision was based on the comparison of the provisions of S.132 of the Income-tax Act with those of the Foreign Exchange Regulation Act and the Customs Act, highlighting the narrower scope of power conferred on the authorised officer under the Income-tax Act.
Final Decision: The court dismissed the criminal revision petition and held that the order to return the seized amount to the first respondent was in order and required no interference.

Judgment :-

1. These two matters arise out of one and the same case. The criminal revision petition is by the Income-tat Officer (Assessment) 4, Calicut and the Criminal Miscellaneous Petition is by the 1st respondent in the said criminal revision petition. The criminal revision is stated to be under S.435 and 436 the Code of Criminal Procedure and the Crl. M.P. is under S.561 A. and 439 of the Code of Criminal Procedure. For the purpose of discussion, I am referring to parties as arrayed in the Criminal Revision Petition.

2. The facts leading to these proceedings in this court may briefly be stated as follows: At about 1 a m on 24-12-1970 the police on petrol duty in certain part of Calicut saw the 2nd respondent walking along the road with a bag. The police on suspicion stopped and searched him, and found that the bag with him contained Indian currency notes of 100 rupee denomination which in the aggregate came to Rs. 1,00,000/-. He was arrested under S.54 and 550 of the Code of Criminal Procedure and was produced before the Sub Magistrate I, Kozhikode. The learned Sub Magistrate remanded the accused and sent the currency notes to the Treasury for safe custody. The police had reported that at the time of the arrest the second respondent had stated that the amount belonged to one Ahammed Thangal and that he was carrying it for payment to one Sri. Koyappa at Puthuppady. On 28-121970 he filed CMP. No. 64/1970 for bail stating interalia that the money seized from him actually belonged to the 1st respondent. He also filed a separate petition (which does not appear to have been numbered) praying that the amount seized from him may be made over to the Ist respondent. The 1st respondent also had filed a petition Crl. M. P. 65/1970 on 28-121970 itself claiming that the money seized from the 2nd respondent was to be made over to him. The learned Magistrate passed orders on the petition, CMP 65/1970; to await final report in Crime No. 372/1970, the case registered against the 2nd respondent. The bail application was rejected by the learned Magistrate; but he was subsequently enlarged on bail by the Sessions Court.

3. In the meanwhile the revision petitioner herein had filed CMP. 1/1971 on the file of the Sub Magistrate on 1-1-1971 praying that the amount seized from the 2nd respondent represents wholly or partly property or income which had not been disclosed for purposes of Indian Income Tax Act, and therefore it may be made over to him. Later on, the Income-tax Officer (Recovery), Calicut also made a petition, CMP. 54/1971 on the file of the Sub Magistrate, stating that the 2nd respondent had been assessed to income-tax to the tune of Rs. 58,501/-, a penalty of Rs. 42,900/- had also been imposed on him, and that in the aggregate a sum of Rs. 1,01,401/- is due from him. It was also prayed that the money in court deposit may be made over to him.

4. On 20-11-1971 the police submitted the final report in Crime No.372 of 1970 referring the case as one of mistake of fact. The refer report was to the effect that 2nd respondent had not committed any offence and that the money seized from him actually belonged to the 1st respondent.

5. Thereafter, the learned Magistrate clubbed together all the petitions, namely CMP. 65/1970 filed by the 1st respondent, CMP. 1/1971 filed by the Revision Petitioner and CMP. 54/1971 filed by the Income-tax Officer (Recovery) and drew up proceedings in M. C. No. 45/1971. The learned Magistrate repelled the motions in CMP. No. 1/1971 and CMP. 54/1971, and allowed the petition in CMP. 65/1970. In doing so, the learned Magistrate accepted the version of the 2nd respondent that he was only a servant under the 1st respondent and that he was carrying the amount in question for payment to the 1st respondent's office at Kalpetta.

6. Aggrieved by the order passed by the learned Sub Magistrate in M. C. 45/1970, both the Revision petitioner herein as well as the Income-tax Officer (Recovery) filed revisions before the District

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1972 Supreme(Ker) 119

The main legal point established in the judgment is that the authorised officer under S.132 of the Income-tax Act is not competent to claim seized documents for investigation unless the discovery results from a search as specified in the Act.

Cases Referred (1)