Point of Law: Section 132-B of Income Tax Act provides for manner in which assets seized under Section 132-A is to be dealt with.

ORDER :

This Crl.M.C. is filed by Union of India, Income Tax Department represented by the Deputy Director of Income Tax (Investigation), Income Tax Office, Kozhikod, being aggrieved by Annexure-C common order passed by the Judicial First Class Magistrate Court, Mananthavady in Crl.M.P.No.384/2017 and Crl.M.P.No.704/2017.

2. The facts leading to the said order are as follows:

On 12.03.2017, while conducting vehicle inspection at Tholpetty Check post, Excise Officials found that the 2nd respondent is carrying cash of Rs.50 lakhs without any proper supporting documents. Consequently, the 2nd respondent was produced before the Sub Inspector of Police, Thirunelly and F.I.R. was registered as Crime No.126/2017 of Thirunelly Police Station. The amount was also seized and the same was produced before the Judicial First Class Magistrate Court-II, Mananthavady. Upon getting information from the Inspector of Police, Thirunelly, Income Tax authorities has issued summons to the 2nd respondent under Section 131 of the Income Tax Act seeking to explain the source of the said amount. He stated that the seized cash was not his money and it was handed over to him by his friends for starting a super market at Banglore. The details of the said persons were also furnished. After conducting an inquiry, the income tax authorities found that the 2nd respondent failed to explain the source of the same properly and therefore it was decided to initiate proceedings against him. As part of the same, a notice of requisition was issued to the Sub Inspector of Police under Section 132A(1)(c) of Income Tax Act, directing him to deliver the same to the Requisitioning Officer. However, it was informed by the Sub Inspector of Police that the amount is already deposited before the Judicial First Class Magistrate Court, Mananthavady and the same is in the custody of the court.

3. In such circumstances, the petitioner herein submitted Crl.M.P. No.704/2017 before the learned Magistrate under Section 451 of the Code of Criminal Procedure (Cr.PC). At the same time, the 2nd respondent herein submitted Crl.M.P.No. 384/2017 seeking the very same relief. The petitioner herein submitted a detailed objection to Crl.M.P.No.384/2017. After hearing both sides, both the aforesaid claim petitions were disposed of by the learned Magistrate as per order dated 9.10.2017 which is produced in the Crl.M.C. as Annexure-C. As per the said order, Crl.M.P.No.704/2017 filed by the petitioner herein was dismissed. The petition submitted by the 2nd respondent was allowed in part and the release of 70% of the amount was ordered in favour of the 2nd respondent herein upon furnishing a bank guarantee or security of immovable property for the said amount. This Crl.M.C. is filed challenging the aforesaid common order and praying for allowing the Crl.M.P.No.704/2017 submitted by the petitioner herein.

4. Heard Sri. Navaneeth N. Nath, the learned Standing Counsel for the Income Tax Department, the petitioner herein, Sri. Aravind V. Mathew the learned Public Prosecutor for the 1st respondent and Smt.Vijayakumari, the learned counsel for the 2nd respondent.

5. The question arises in this case is as to the entitlement of the petitioner to have the amount released in their favour, under Section 451 of the Cr.PC. The claim was made by the petitioner by relying upon Section 132-A(i)(c) of the Income Tax Act which reads as follows:

“132-A. Powers to requisition books of account, etc.-(1) Where the [Principal Director General or Director General] or [Principal Director or Director] or the [Principal Chief Commissioner or Chief Commissioner] or [Principal Commissioner or Commissioner], in consequence of information in his possession, has reason to believe that-

(a)……

(b)…..

(c) any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purposes of the Indian Income-tax Act,1922(11 of 1922), or this Act by any person from whose possession or control s