Khalid B., aged 41 years, s/o. Aboobacker V. Income Tax Department, represented by its Secretary and Deputy Director Income Tax (DDIT), Office of the Deputy Director of Income Tax and Officer in Charge, Railway Police Station, Kerala Railway Police and Divisional Security Commissioner, Railway Protection Force, Southern Railway and Inspector, Railway Protection Force, Crime Intelligence Branch, Southern Railway

WP(C)/32424/2022

AI Insights

The case involves Khalid B., the petitioner, who filed a writ petition seeking the release of Rs. 25,87,500 seized by the Income Tax authorities. The amount was seized during a routine check by the Railway Protection Force (RPF) on 22.09.2022, when the petitioner was traveling by train. The RPF informed the Income Tax authorities, leading to the seizure under Section 132A of the Income Tax Act, 1961. The petitioner argued for the release of the seized amount, contending that he could explain the source of the money. The court, after hearing the arguments, decided to allow the petitioner to approach the Income Tax authorities to explain the source of the money, with a directive for a timely decision on the matter.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 810576 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 01-02-2024
• Assessment Year: misc
• Other Referred Cases: Dharmaraj Bhosale vs. Directorate of Enforcement, 2014 KHC 5032
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: NAVANEETH NATH; T C KRISHNA
• Assessee Lawyers: MANAS HAMEED
• Keywords: Income Tax; Seizure of cash; Writ of Mandamus; Railway Protection Force; Requisition of Assets
• Section: 132A; 132B

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 1ST DAY OF FEBRUARY 2024 / 12TH MAGHA, 1945 WP(C) NO. 32424 OF 2022 PETITIONER: KHALID B., AGED 41 YEARS, S/O. ABOOBACKER, SAHIRA MANZIL, BALLANGODE ROAD, KUNJATHUR P. O., KASARAGOD – 671323. BY ADV. SRI. MANAS P. HAMEED RESPONDENTS: 1 INCOME TAX DEPARTMENT, REPRESENTED BY ITS SECRETARY, GOVERNMENT OF INDIA, NORTH BLOCK,SECRETARIAT BUILDING, NEW DELHI – 110001. 2 THE DEPUTY DIRECTOR INCOME TAX (DDIT), OFFICE OF THE DEPUTY DIRECTOR OF INCOME TAX, AAYAKAR BHAVAN, NORTH BLOCK, MANANCHIRA, KOZHIKODE – 673001. 3 OFFICER IN CHARGE, RAILWAY POLICE STATION, KERALA RAILWAY POLICE, THAVAKKARA, KANNUR – 670001. 4 ADDL. R4. THE DIVISIONAL SECURITY COMMISSIONER, RAILWAY PROTECTION FORCE (MINISTRY OF RAILWAYS, GOVERNMENT OF INDIA), SOUTHERN RAILWAY, PALAKKAD, PIN – 678002. 5 ADDL. R5. THE INSPECTOR, RAILWAY PROTECTION FORCE (MINISTRY OF RAILWAYS, GOVERNMENT OF INDIA), CRIME INTELLIGENCE BRANCH, SOUTHERN RAILWAY, PALAKKAD, PIN 678002. (ADDITIONAL R4 AND R5 ARE IMPLEADED AS PER ORDER DATED 16.02.2023 IN I.A.1/2023 IN WP(C) 32424/2022). BY ADV. SRI. T. C. KRISHNA - SCGC SRI. NAVANEETH N. NATH – SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.02.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 32424 OF 2022 2 DINESH KUMAR SINGH, J. -------------------------- W.P.(C) No. 32424 of 2022 ------------------------- Dated this the 1st day of February, 2024 JUDGMENT 1. Heard Mr. Manas P. Hameed, learned Counsel for the petitioner, Mr. Navaneeth N. Nath, learned Standing Counsel for the for the 1st and 2nd respondents and Mr. T. C. Krishna, learned Senior Standing Counsel for the 4th and 5th respondents. 2. The petitioner has filed this writ petition for a writ of mandamus/direction in the nature of mandamus commanding 2nd and 3rd respondents to release Rs. 25,87,500/- seized from the possession of the petitioner on 22.09.2022, when the petitioner was traveling from Mangalore to Kozhikode by the train Ganganagar – Kochuveli Express. The RPF (Railway Protection Force) detained the petitioner on regular check up as the petitioner was carrying huge cash amount and intimated the Income Tax authorities. The Income Tax authorities seized the said amount under Section 132 – A of the Income Tax Act, 1961. 3. Section 132 – A and Section 132 – B on reproduction read as under; WP(C) NO. 32424 OF 2022 3 1[132A. Powers to requisition books of account, etc.—(1) Where the 2[3 [Principal Director General or Director General] or 4[Principal Director or Director]] or the 5[6[Principal Chief Commissioner or Chief Commissioner] or 7[Principal Commissioner or Commissioner]], in consequence of information in his possession, has reason to believe that— (a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents, as required by such summons or notice and the said books of account or other documents have been taken into custody by any officer or authority under any other law for the time being in force, or (b) any books of account or other documents will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act and any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be WP(C) NO. 32424 OF 2022 4 produced, such books of account or other documents on the return of such books of account or other documents by any officer or authority by whom or which such books of account or other documents have been taken into custody under any other law for the time being in force, or (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 such assets have been taken into custody by any officer or authority under any other law for the time being in force, then, the 2[3 [Principal Director General or Director General] or 8[Principal Director or Director]] or the 5[6 [Principal Chief Commissioner or Chief Commissioner] or 7[Principal Commissioner or Commissioner]] may authorise any 9[Additional Director, Additional Commissioner,] 10[Joint Director], 11[Joint Commissioner], 12[Assistant Director or Deputy Director] or 13[Assessing Officer] [hereafter in this section and in sub-section (2) of section 278D referred to as the requisitioning officer] to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer. WP(C) NO. 32424 OF 2022 5 1[Explanation:—For the removal of doubts, it is hereby declared that the reason to believe, as recorded y the income-tax authority under this sub- section, shall not be disclosed to any person or any authority or the Appellate Tribunal.] (2) On a requisition being made under sub-section (1), the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of that sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody. (3) Where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of sub-sections (4A) to (14) (both inclusive) of section 132 and section 132B shall, so far as may be, apply as if such books of account, other documents or assets had been seized under subsection (1) of section 132 by the requisitioning officer from the custody of the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of this section and as if for the words “the authorised officer” occurring in any of the aforesaid sub-sections (4A) to (14), the words “the requisitioning officer” WP(C) NO. 32424 OF 2022 6 were substituted.] 2[3[132B]. Application of seized or requisitioned assets.—(1) The assets seized under section 132 or requisitioned under section 132A may be dealt with in the following manner, namely:— (i) the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure- tax Act, 1987 (35 of 1987), the Gift-tax Act, 1958 (18 of 1958) and the Interest- tax Act, 1974 (45 of 1974), and the amount of the liability determined on completion of the assessment 4[under section 153A and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be] (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is 5[deemed to be in default, or the amount of liability arising on an application made before the Settlement Commission under sub- section (1) of section 245C, may be recovered out of such assets]: 6[Provided that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the WP(C) NO. 32424 OF 2022 7 nature and source of acquisition of any such asset is explained] to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the 7[Principal Chief Commissioner or Chief Commissioner] or 8[Principal Commissioner or Commissioner], to the person from whose custody the assets were seized: Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed: (ii) if the assets consist solely of money, or partly of money and partly of other assets, the Assessing Officer may apply such money in the discharge of the liabilities referred to in clause (i) and the assessee shall be discharged of such liability to the extent of the money so applied; (iii) the assets other than money may also be applied for the discharge of any such liability referred to in clause (i) as remains undischarged and for this purpose such assets shall be deemed to be under distraint as if such distraint WP(C) NO. 32424 OF 2022 8 was effected by the Assessing Officer or, as the case may be, the Tax Recovery Officer under authorisation from the 1[Principal Chief Commissioner or Chief Commissioner] or 2[Principal Commissioner or Commissioner] under sub-section (5) of section 226 and the Assessing Officer or, as the case may be, the Tax Recovery Officer may recover the amount of such liabilities by the sale of such assets and such sale shall be effected in the manner laid down in the Third Schedule. (2) Nothing contained in sub- section (1) shall preclude the recovery of the amount of liabilities aforesaid by any other mode laid down in this Act. (3) Any assets or proceeds thereof which remain after the liabilities referred to in clause (i) of subsection (1) are discharged shall be forthwith made over or paid to the persons from whose custody the assets were seized. (4) (a) The Central Government shall pay simple interest at the rate of 3 [one-half per cent. for every month or part of a month] on the amount by which the aggregate amount of money seized under section 132 or requisitioned under section 132A, as reduced by the amount of money, if any, released under the first proviso to clause (i) of sub- section (1), and of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in WP(C) NO. 32424 OF 2022 9 clause (i) of sub-section (1), exceeds the aggregate of the amount required to meet the liabilities referred to in clause (i) of sub-section (1) of this section. (b) Such interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment 4[under section 153A or under Chapter XIVB]. 5[Explanation 1.]—In this section,— (i) “block period” shall have the meaning assigned to it in clause (a) of section 158B; (ii) “execution of an authorisation for search or requisition” shall have the same meaning as assigned to it in Explanation 2 to section 158BE.] 6[Explanation 2.—For the removal of doubts, it is hereby declared that the “existing liability” does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII.] 4. The petitioner has remedy of filing an application under Section 132B of the Act before the Income Tax authorities to explain the source of the cash amount ceased from him. In view thereof, the present writ petition is disposed of with liberty to the WP(C) NO. 32424 OF 2022 10 petitioner to approach the 2nd respondent within one week from today. The decision on the petitioner’s application shall be taken within period of two weeks thereafter in accordance with the law after giving an opportunity of hearing to the petitioner to explain source of the cash seized from his possession on 22.09.2022. Sd/- DINESH KUMAR SINGH JUDGE Svn WP(C) NO. 32424 OF 2022 11 APPENDIX OF WP(C) 32424/2022 PETITIONER’S EXHIBITS EXHIBIT P1 TRUE COPY OF TRADE/BUSINESS LICENSE DATED 25.05.2022 ISSUED BY BELMA VILLAGE PANCHAYAT, MANGALORE, IN FAVOUR OF THE PETITIONER, AND ITS TRUE ENGLISH TRANSLATED COPY ATTESTED BY A NOTARY EXHIBIT P2 TRUE COPY OF THE RELEVANT PAPER REPORT OF \"DESHABHIMANI DAILY\" ON 23.09.2022 EXHIBIT P3 TRUE COPY OF ACCOUNT STATEMENT OF PETITIONER'S BANK ACCOUNT MAINTAINED WITH KERALA GRAMIN BANK FROM 21.05.2021 TO 06.05.2022 EXHIBIT P4 TRUE COPY OF ACCOUNT STATEMENT OF PETITIONER'S BANK ACCOUNT MAINTAINED WITH STATE BANK OF INDIA FROM 01.04.2022 TO 27.09.2022 EXHIBIT P5 TRUE COPY OF ACCOUNT STATEMENT OF PETITIONER'S BANK ACCOUNT MAINTAINED WITH KASARAGOD DISTRICT CO-OPERATIVE BANK LTD FROM 30.04.2022 TO 10.08.2022 EXHIBIT P6 TRUE COPY OF JUDGMENT PASSED BY THIS HONOURABLE COURT IN DHARMARAJ BHOSALE VS. DIRECTORATE OF ENFORCEMENT, 2014 KHC 5032 EXHIBIT P7 TRUE COPY OF SUMMONS DATED 22.09.2022 ISSUED BY THE 2ND RESPONDENT EXHIBIT P8 TRUE COPY OF LETTER DATED 31.10.2022 COMMUNICATED BY DIVISIONAL SECURITY COMMISSIONER & PUBLIC INFORMATION OFFICER, RAILWAY PROTECTION FORCE, SOUTHERN RAILWAY UNDER THE RIGHT TO INFORMATION ACT EXHIBIT P9 TRUE COPY OF REPORT DATED 22.09.2022 SUBMITTED BY INSPECTOR, CRIME INTELLIGENCE BRANCH BEFORE THE INCOME TAX OFFICER (EXEMPTIONS), KANNUR, RECEIVED BY THE PETITIONER UNDER THE RIGHT TO INFORMATION ACT WP(C) NO. 32424 OF 2022 12 EXHIBIT P10 A TRUE COPY OF THE RTI REPLY DATED 31.03.2023 COMMUNICATED BY THE ADDITIONAL 4TH RESPONDENT EXHIBIT P11 A TRUE COPY OF THE RTI REPLY DATED 11.05.2023 COMMUNICATED BY THE ADDITIONAL DIVISIONAL RAILWAY MANAGER AND FAA, PALAKKAD DIVISION/SOUTHERN RAILWAY EXHIBIT P12 A TRUE COPY OF THE INCOME TAX RETURN ACKNOWLEDGMENT FOR THE YEAR 2020-21 EXHIBIT P13 A TRUE COPY OF THE INCOME TAX RETURN ACKNOWLEDGMENT FOR THE YEAR 2022-23 EXHIBIT P14 A TRUE COPY OF THE WRITTEN EXPLANATION DATED 13.06.2022 FILED BEFORE THE DEPUTY DIRECTOR OF INCOME TAX, INVESTIGATION 2, KOZHIKODE "