CHACKO V.JOSEPH V. COMMISSIONER OF INCOME TAX AND OTHERS

WA/1835/2010

AI Insights

This case involves a writ appeal by Chacko V. Joseph, the appellant, against the judgment of the Single Judge of the High Court, which directed the Income Tax authorities to return the seized amount in excess of `65,00,000/- to the appellant. The background of the case involves the interception of a vehicle by Kerala Police, which led to the recovery of `88,00,000/- in cash. The appellant claimed ownership of the money, which was subsequently handed over to the Directorate of Enforcement. The Income Tax authorities later claimed the amount under Section 132A of the Income Tax Act. The appellant's request for the release of the funds was initially denied, leading to the writ petition. The appeal contested the conditions set by the Single Judge regarding the release of the funds.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 756033 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 29-10-2010
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: C P NIAS
• Keywords: Assessment proceedings; FEMA; Income Tax; Seizure of cash
• Section: 153A; 131; 132A

Judgement Text

" IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.J.CHELAMESWAR & THE HONOURABLE MR. JUSTICE B.P.RAY FRIDAY, THE 29TH OCTOBER 2010 / 7TH KARTHIKA 1932 WA.No. 1835 of 2010 ----------------------- AGAINST JUDGMENT IN WP(C) NO.19146/2010 DATED 5.8.2010 APPELLANT/WRIT PETITIONER --------------------------------- CHACKO.V.JOSEPH, S/O.V.C.JOSEPH, RESIDING AT VADAKKEMATTATHIL, PUDUPPADI AMSOM, KOZHIKODE TALUK, KOZHIKODE DISTRICT. BY ADV. SRI.C.P.MOHAMMED NIAS RESPONDENTS/RESPONDENTS: ----------------------------------- 1. COMMISSIONER OF INCOME TAX, KOZHIKODE. 2. ASSISTANT DIRECTOR OF INCOME TAX (INVESTIGATION) KOZHIKODE. 3. DEPUTY DIRECTOR OF ENFORCEMENT, DIRCTORATE OF ENFORCEMENT, WAFA BHAVAN, 2ND FLOOR, V.K.SANKUNNI ROAD, KOZHIKODE. 4. ASSISTANT DIRECTOR OF ENFORCEMENT, DIRECTORATE OF ENFORCEMENT, WAFA BHAVAN, 2ND FLOOR, V.K.SANKUNNI ROAD, KOZHIKODE. BY STANDING COUNSEL SRI.JOSE JOSEPH THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 29/10/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J.Chelameswar, C.J. & B. P.Ray, J. ------------------------------------------ W.A. No. 1835 of 2010 ------------------------------------------ Dated this the 29th day of October, 2010 JUDGMENT J.Chelameswar, C.J. This writ appeal is preferred by the partially successful petitioner in W.P.(C) No.19146 of 2010 aggrieved by the judgment dated 5th August, 2010. 2. The facts leading to the present appeal are as follows: On 19.2.2008, the Kerala Police have intercepted a Skoda car bearing Registration No.TN43/Z-2500 somewhere in the Wayanad District and on search of the vehicle they recovered an amount of `88,00,000/- in cash from the said vehicle. The two passengers travelling by the said car were also arrested. The appellant herein made a claim to the effect that the above mentioned amount belongs to him. The police eventually handed over the said amount to the Directorate of Enforcement. The further details of such handing over may not be necessary for the purpose of this order. W.A.No.1835 of 2010 - 2 - 3. The respondents issued a requisition under Section 132A of the Income Tax Act calling upon the Director of Enforcement to hand over the above mentioned amount to them. The money was accordingly handed over to the respondents. In the meanwhile, the respondents also issued a notice dated 2.6.2010 under Section 131 of the Income Tax Act calling upon the appellant to produce the various documents specified in the said notice and to attend the office of the Assistant Director of Income Tax, Calicut. Admittedly the proceedings for making the assessment under Section 153A of the Income Tax Act against the appellant are pending. 4. On 8.5.2010, the appellant made a representation to the first respondent praying that the above mentioned amount may be released in his favour. Complaining that no favourable action is taken on the representation and the withholding of the above mentioned amount is illegal and unsustainable, the appellant/petitioner approached this Court by way of the writ petition which was disposed of by the judgment under appeal. W.A.No.1835 of 2010 - 3 - Hence this appeal. 5. By the judgment under appeal, the learned Judge of this Court recorded that the worst case scenario against the appellant herein would be that the appellant might be liable to pay an amount of `60,24,333/-. Such a figure was arrived at on the basis of the claim made by the respondents in their counter affidavit indicating the various heads into which such amount is split up. The learned Judge therefore disposed of the writ petition with a direction to the Income Tax authorities to return that much of the seized amount which is in excess of `65,00,000/- within a period of one month without prejudice to the respective rights and obligations of the parties under the provisions of the Income Tax Act. 6. Admittedly, the assessment proceedings against the appellant are pending. We understand from the material on record that on an allegation of violation of the provisions of the FEMA certain proceedings were initiated, but closed subsequent to the initiation of proceedings under the Income Tax Act. Until the proceedings under the Income Tax Act are completed, it would not W.A.No.1835 of 2010 - 4 - be possible to decide with certainty as to what is the liability of the appellant under the Income Tax Act. In the circumstances, we may have to proceed on the basis of the assertions made in the statement filed on behalf of the respondents in the writ petition as regards the liability of the appellant. From the statement it appears that according to the respondents the total tax liability tentatively fixed for three financial years, i.e. 2007-08, 2008-09 and 2009-2010 is `49,86,393/- and the respondents are of the opinion that the appellant would also be liable to pay penalty for an amount of `10,37,940/-. 7. It is not very clear from the record nor the learned counsel for the respondents is able to make any statement regarding the time frame required for completing the assessment against the appellant. We are informed that the total amount lying with the respondents as on 28.7.2010, the date on which the statement in the writ petition was filed, is `1,03,79,468/-, i.e. the seized amount of `88,00,000/- plus the interest accrued thereon. We are also informed that pursuant to the order of the learned Single Judge the W.A.No.1835 of 2010 - 5 - respondents have already released the amount in excess of `65,00,000/- out of the above mentioned amount. In the circumstances, we deem it appropriate to modify the judgment under appeal directing the respondents to retain only an amount of `40,00,000/- and release the balance amount subject to the condition that the appellant furnishes security either by way of producing bank guarantee or immovable property security to the satisfaction of the third respondent for an amount of `25,00,000/- (Rupees twentyfive lakhs). Writ appeal is disposed of as above. J.Chelameswar, Chief Justice B.P. Ray, Judge vns The words “third respondent” occurring in line 8 of page 5 of the judgment dated 29/10/2010 are corrected and substituted as “first respondent” as per order dated 16/02/2011 in I.A.1006/2010. Sd/- Registrar (Judicial) "