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2006 Supreme(P&H) 4449
PUNJAB & HARYANA HIGH COURT
Adarsh Kumar Goel and Rajesh Bindal JJ.
Delta Overseas
Versus
Union Of India
C.W.P. No. 16928 of 2006,
Decided On : DECEMBER 6, 2006
The main legal point established in the judgment is that the seizure of bank accounts must be justified by an appropriate order determining the liability of the petitioners.
Headnote:
Seizure - Bank Accounts - Income-tax Act, 1961 (Section 110(1) and (3)), Code of Criminal Procedure (Section 102) - The court held that the seizure of the bank accounts was not legally justified as no order determining liability of the petitioners had been passed. The court also noted that no proceedings were pending against the petitioners except for a show cause notice, and directed the release of the bank account unless an appropriate order justifying seizure was passed.
Fact of the Case:
The petitioners sought quashing of an order seizing the balance in their bank accounts, which was challenged in a previous court order. A fresh order was passed in violation of the previous court order, justifying the seizure of the bank accounts.
Finding of the Court:
The court found that the seizure of the bank accounts was not legally justified as no order determining liability of the petitioners had been passed. The court directed the release of the bank account unless an appropriate order justifying seizure was passed.
Issues: The main issue was the legality of the seizure of the bank accounts and whether it was justified without an order determining the liability of the petitioners.
Ratio Decidendi: The court held that the seizure of the bank accounts was not legally justified as no order determining liability of the petitioners had been passed. The court also noted that no proceedings were pending against the petitioners except for a show cause notice, and directed the release of the bank account unless an appropriate order justifying seizure was passed.
Final Decision: The writ petition was dismissed, and the court did not go into the validity of the order justifying the seizure of the bank accounts on merits.
1. This writ petition seeks quashing of order dated 20-10-2006, Annexure P.2, whereby respondent No. 3, Senior Intelligence Officer, Directorate of Revenue Intelligence, Ludhiana, seized the balance lying in the bank accounts of the petitioners in violation of order of this Court dated 7-9-2006 in CWP No. 5969 of 2006 [2007 (209) E.L.T. 15 (P & H)], Annexure P.1.
2. Case of the petitioners is that petitioner Nos. 1 and 2 are sole proprietorship concerns, belonging to Shri Kulbhushan Goyal, proprietor (who is also petitioner No. 6 in his capacity as Karta of HUF and petitioner No. 7 in his individual capacity), while petitioner Nos. 3 to 5 are partnership concerns of which Shri Kulbhushan Goyal was a partner. Petitioner No. 8 is wife of Shri Kulbhushan Goyal. The bank accounts belonging to the petitioners were seized/attached by the Customs Department, which was challenged by them by filing CWP No. 5969 of 2006, which was allowed by this Court. In violation of the said order, a fresh order, Annexure P.2 has been passed.
3. A reference to order of this Court, Annexure P.1 shows that contention raised therein was that accounts were seized without authority of law which was defended by the Customs Department on the plea that seizing of the account was for the purpose of investigation and securing financial interest of the Government. Seizure was defended by referring to Section 110(1) and (3) of the Income-tax Act, 1961 (for short, #24;the Act#25;) i.e., goods being liable to confiscation or documents being useful for proceeding under the Act. This Court noticed that no order determining liability of the petitioners having been passed, either for recovery of the amount or to the effect that there was any liability for confiscation, seizure of bank accounts was not legally justified. Reference was also made to seizure permissible under Section 102 of the Code of Criminal Procedure, which provision had not been invoked. Finally, this Court concluded as under :-
#28;In the present case, there is no adjudication-administrative or quasi-judicial or judicial by any authority either determining any liability of the petitioners, provisional or final or holding that the amount in bank account represented sale proceeds of any smuggled goods or was otherwise liable to confiscation or that the seizure of the account will be useful for or relevant under the provisions of the Act. It has not been shown that any proceedings are pending against the petitioners except that petitioner No. 7 has been summoned as a witness for giving evidence as per Annexures P.5, P.6 and P.7. Show Cause Notice Annexure P.8 has also been issued alleging that goods exported by some of the petitioners were liable to confiscation and amount of draw back claimed and received fraudulently was liable to be recovered under Rule 16 of the Customs and Central Excise Duties Drawback Rules, 1995 read with Section 76(1)(b) of the Customs Act. The said show cause notice is dated 13-3-2005 and no further order has been shown. In view of the above, we are of the view that the bank account of the petitioners cannot be kept seized for indefinite period. Respondent No.2 who has seized the bank account is directed to pass an appropriate order within one month from the date of receipt of a copy of this order releasing the bank account unless by then any other appropriate order justifying seizure of bank account is passed.#29;
4. Stand on behalf of the respondents is that this Court while holding that the seizure at earlier stage was illegal, directed release of bank account #28;unless by then any other appropriate order justifying seizure of bank account is passed.#29;
5. Case of the respondents is that bank account was not released as further order dated 20-10-2006 was passed within one month of receipt of copy of earlier order to the effect that the balance lying in the bank accounts of the petitioners was sale proceeds of spurious/smuggled goods and the amounts pertained to d
