IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HONOURABLE SMT JUSTICE K. SUJANA CRIMINAL REVISION CASE No.414 of 2021

28^th DAY OF NOVEMBER 2025 Between:

Deputy Director of Income Tax (Inv)

Unit II(1), Aayakar Bhavan, Hyderabad.

PETITIONER AND E.Sampath Kumar, And another.

RESPONDENTS

ORDER

This Criminal Revision Case is filed before this Court, being aggrieved by common order dated 12.01.2021 passed in Crl.MP.No.808 of 2019 and Crl.MP.No.851 of 2019 in Crime No.47 of 2019 on the file of the VI Additional Judicial Magistrate of First Class, Warangal.

2. The brief facts of the case are that on 15-03-2019, during frisking at Platform No. 2 of Warangal Railway Station, the Railway Police intercepted an individual carrying unexplained cash of Rs.30 lakhs in Rs.2,000 and Rs.500 denominations, seized the amount under a panchanama, and deposited it before the JACM, Railways, Khazipet. Based on the Railway Police report dated 20-03-2019, the Income Tax Department initiated proceedings under Section 132A of the Income Tax Act, 1961 and filed Crl.M.P. No. 808/2019 before the VI Additional JACM, Warangal seeking interim custody of the seized cash for further investigation, assessment of taxability, and tracing of unreported financial transactions. Simultaneously, the first respondent filed Crl.M.P. No. 851/2019 claiming ownership of the money. Despite repeated summons, the first respondent failed to produce evidence of the legitimate source of the cash, and the Department relied on supporting case law asserting its entitlement to custody for investigation. However, by order dated 12-01-2021, the Court directed that the cash remain with it and required the Income Tax Department to issue notices and complete assessment within three months, failing which the respondent would be entitled to the money after deduction of tax, prompting the Department to challenge the order as illegal, without jurisdiction, and contrary to the record.

3. Heard Sri B.Narasimha Sharma, learned counsel for revision petitioner, Sri Anirudh Reddy, learned counsel for respondent NO.1, and Sri D. Arun Kumar, learned Additional Public Prosecutor, appearing for respondent No.2 – State.

4. Learned counsel for the petitioner submitted that the impugned order is illegal, unjust, without jurisdiction, and contrary to law and the material on record, as it wrongly directed the Income Tax Department to complete assessment without granting custody of the seized cash and further held that the first respondent would be entitled to the amount after deducting tax, which is wholly contrary to the scheme of the Income Tax Act, 1961. He contended that the trial Court erred in holding that Section 132A applies only to an Officer or Authority and not to the Court, and further erred in rejecting the Department’s request for custody of the seized cash despite such custody being essential for completing investigation and enabling the Assessing Officer to proceed under Sections 143(3)/147/153A. He lamented that the trial Court acted illegally by prescribing a timeline for completing assessment, although such timelines are exclusively governed by Section 153 of the Act, and assessment proceedings cannot be triggered unless the Department first obtains custody of the asset pursuant to a warrant issued under Section 132A(1)(c). Therefore, prayed this Court to set aside impugned order, directing the custody of the seized cash be handed over to the Income Tax Department to enable completion of investigation and subsequent assessment.

5. On the other hand, the learned counsel for respondent No.1, and learned Additional Public Prosecutor, respectively, opposed the submissions made by learned counsel for petitioner and submitted that the trial Court committed no error in refusing to hand over the seized cash to the Income Tax Department and rightly directed the Department to first complete the assessment proceedings in accordance with law before seeking custody. They contended that the Income