VIJAYA BHARATI V. UNION OF INDIA

Crl.MC/5038/2023

AI Insights

This case involves a legal dispute over the interim custody of Rs. 40 lakhs seized by the Excise Circle Inspector during a routine check. The money was intended for jewelry procurement by Balaji Jewellers, owned by the 1st petitioner, R. Ravirajan. The Income Tax Department later claimed the money for potential tax liabilities. The Judicial Magistrate initially ordered the release of the money to the IT Department, which was contested by the petitioners. The High Court's decision emphasized the lack of a completed assessment or demand for tax, thus invalidating the IT Department's claim over the seized money.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 725536 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 26-09-2023
• Assessment Year: misc
• Other Referred Cases: Union of India v. State of Kerala, Abdul Khader v. Sub Inspector of Police and Ors., K.Choyi v. Syed Abdulla Bafakky Thangal and Ors., J.R. Malhotra and Another v. the Additional Sessions Judge, Jullundur & ors.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: VIPIN NARAYAN
• Assessee Lawyers: BEJOY P J; P RAGHUNATH; GOVIND NAIR; BONNY BENNY; BALU TOM
• Keywords: Assessment proceedings; Excise Department; Income Tax; Interim release; Jurisdiction; Seizure of cash
• Section: 132; 153A; 131(1); 132A; 132B; 451; 226(4)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V TUESDAY, THE 26TH DAY OF SEPTEMBER 2023 / 4TH ASWINA, 1945 CRL.MC NO. 5034 OF 2023 AGAINST CMP 2061/2022 OF JUDICIAL MAGISTRATE OF FIRST CLASS -II, MANANTHAVADY PETITIONERS: 1 R.RAVIRAJAN, AGED 55 YEARS, PROPRIETOR: BALAJI JEWELLERS: 79 MAIN ROAD: SATTUR: MADURAI-625001 BY POWER OF ATTORNEY HOLDER AND SON BALAGANESH R 2 BALAGANESH, AGED 33 YEARS, S/O RAVIRAJAN: BALAJI JEWELLERS: 79 MAIN ROAD: SATTUR: MADURAI-625001 3 VIJAYA BHARATI, AGED 42 YEARS S/O DAKSHINAMURTI: 9, POOKARA LANE: SOUTH MASI STREET: SOUTH GATE: MADURAI- 625001 BY ADVS. BEJOY JOSEPH P.J. P.RAGHUNATH GOVIND G. NAIR BONNY BENNY BALU TOM RESPONDENT: THE STATE OF KERALA REP. BY EXCISE CIRCLE INSPECTOR, EXCISE CIRCLE OFFICE MANANTHAVADY, PIN - 670645 OTHER PRESENT: SRI. VIPIN NARAYAN, SR. PP THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 26.09.2023, ALONG WITH Crl.MC.5038/2023, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Crl.M.C.Nos. 5034 & 5038/2023 :2: IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V TUESDAY, THE 26TH DAY OF SEPTEMBER 2023 / 4TH ASWINA, 1945 CRL.MC NO. 5038 OF 2023 AGAINST CMP 371/2023 OF JUDICIAL MAGISTRATE OF FIRST CLASS -II, MANANTHAVADY PETITIONERS: 1 VIJAYA BHARATI,AGED 42 YEARS, S/O.DAKSHINAMURTI: 9 POOKARA LANE: SOUTH MASI STREET: SOUTH GATE: MADURAI - 625001 2 BALAGANESH R, AGED 33 YEARS, S/O RAVIRAJAN: BALAJI JEWELLERS, 79 MAIN ROAD: SATTUR: MADURAI- 625001 [3RD RESPONDENT IN CRL.M.P.371/2023] BY ADVS. BEJOY JOSEPH P.J. GOVIND G. NAIR P.RAGHUNATH BALU TOM BONNY BENNY RESPONDENTS: 1 UNION OF INDIA INCOME TAX DEPARTMENT REP. BY THE ASSISTANT DIRECTOR OF INCOME TAX [INVESTIGATION]-2: KOZHIKODE - 673001 2 THE STATE OF KERALA REP BY EXCISE CIRCLE INSPECTOR: EXCISE CIRCLE OFFICE: MANANTHAVADY-670 645. THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 26.09.2023, ALONG WITH Crl.MC.5034/2023, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Crl.M.C.Nos. 5034 & 5038/2023 :3: “CR” ORDER [Crl.M.C. Nos.5034/2023, 5038/2023] These petitions have been filed challenging the common order dated 6.6.2023 in C.M.P.No. 2061/2022 and C.M.P.No. 371/2023 filed in C.M.P.No. 1866/2023 on the file of the Judicial Magistrate of the First Class, Mananthavady. The above applications have been filed seeking interim release of a sum of Rs.40 lakhs seized by the Circle Inspector of Police, Mananthavady, in the course of routine patrol duty. 2. Short facts are as under: For simplicity and clarity, the parties will be referred to as described in C.M.P.No. 2061/2022. The 1st petitioner operates a jewellery business under the name ‘Balaji Jewellers’ located in Sattur, Madurai. He is an Income Tax payee and his establishment is registered under the Goods and Services Tax Act. The 2nd petitioner, the son of the 1st petitioner, oversees the business. On 6.10.2022, the 3rd petitioner, an employee, was entrusted with Rs. 40 lakhs for jewellery procurement and an additional sum of Rs. 25,000/- for related expenses. The 3rd petitioner is stated to have travelled to Thrissur, Kerala, for the purchases. During his bus journey, an inspection by the Excise Crl.M.C.Nos. 5034 & 5038/2023 :4: Circle Inspector, Mananthavady, revealed that the 3rd petitioner carried approximately Rs.40 lakhs in cash. Due to the 3rd petitioner's inability to provide a satisfactory explanation for the large amount, the cash was seized. It was subsequently produced before the Jurisdictional Magistrate along with a report numbered as C.M.P.No. 1866/2022. 3. The petitioners approached the learned Magistrate and filed Crl.M.P.No. 2061/2022 seeking interim release of the cash. 4. While the matter was pending consideration, the Income Tax Department filed a report indicating that the proceedings had been initiated under Section 131(1) of the Income Tax Act, 1961. Later, a report was filed before the learned Magistrate stating that the money should be released to the IT Department for appropriation towards the taxes and interest payable and the penalty leviable, which would become due on completion of the assessment proceedings and the penalty proceedings within the time specified under the Income Tax Act. Later, C.M.P.No.371/2023 was filed seeking interim custody of the cash. 5. The learned Magistrate, after considering the rival submissions, relied on the law laid down by this Court in Union of India v. State of Crl.M.C.Nos. 5034 & 5038/2023 :5: Kerala1 and came to the conclusion that the petitioners cannot be granted interim custody of the cash. It was held that the Income Tax Authority is the authority conferred with powers under the IT Act, and the Department was entitled to get the cash on interim custody. Orders were issued to release the sum of Rs.40 lakhs to the Assistant Director for proceeding under Section 132B or 153A or any other proceeding under the Income Tax Act. The Assistant Director was ordered to execute an undertaking that the entire proceedings shall be completed within a period of six months from the date of release. It was further ordered that if the Assistant Director failed to complete the proceedings within six months, it was ordered that the amount shall be deposited before the court. 6. In view of the issues involved, this Court had requested the learned Senior Counsel Sri Joseph Markose to assist this Court in resolving the issues. The learned Senior Counsel has graciously consented to shoulder the task. 7. Sri. P. Raghunath, the learned counsel appearing for the petitioners, submitted that the order passed by the learned Magistrate is illegal. According to the learned counsel, the Income Tax Act is a self-contained Act, which regulates the actions carried out by the officers 1 [2022 ICO 253] Crl.M.C.Nos. 5034 & 5038/2023 :6: empowered under the provisions. According to the learned counsel, the Excise Officer who has seized the cash has submitted a report before the learned Magistrate stating that no further proceedings are required to be initiated against any person. As a matter of fact, only a report was filed before the Magistrate reporting the seizure of the cash, and nothing has transpired thereafter. No provision in the Income Tax Act prohibits any individual from carrying cash. According to the learned counsel, the last date for submitting an assessment for an individual is the end of July 2023, and the said period had not expired on the date of seizure. It is only after the said date when the return of income is filed or is directed to be filed under Section 148 of the Act the question as to whether any tax is payable or due from the petitioners would arise. If the Department felt that an assessee had failed to submit a return of income, the Department is bound to issue a notice under Section 148 of the Act. On receipt of the said notice, the assessee has to be granted not less than 30 days to respond, and only thereafter can an assessment order be passed. It is further submitted that Section 132A of the Income Tax Act can have no application in the instant case. Placing reliance on the law laid down in Abdul Khader v. Sub Inspector of Police and Ors.2, it was argued that the said provision would not empower the Commissioner to 2 [MANU/KE/0508/1998] Crl.M.C.Nos. 5034 & 5038/2023 :7: require a court to deliver assets that are in the court's custody. It is further submitted that the embargo under the IT Act is only against a person receiving an amount of Rs.2 lakhs or more in respect of “transactions” other than by way of account payee cheque or draft, etc. In the instant case, there is no receipt of cash involved in respect of any transaction. According to the learned counsel, as no certificate has been drawn up under Section 222 of the IT Act, the only option left to the Assessing officer or Tax Recovery Officer is to apply to the court in whose custody there is money belonging to the assessee for payment. In order to substantiate the said contention, reliance is placed on the law laid down in K.Choyi v. Syed Abdulla Bafakky Thangal and Ors.3. Reliance is placed on the law laid down by the Apex court in J.R. Malhotra and Another v. the Additional Sessions Judge, Jullundur & ors.4 and it is argued that the Revenue cannot indirectly keep the money on the plea that there will be a demand in future. Reliance is placed on Section 69A of the Income Tax Act, and it is submitted that during any financial year, the assessee is found to be the owner of any money, and the assessee offers no explanation about the nature and source of acquisition of money or if the explanation offered is not satisfactory, the money may be deemed to be income of the assessee for such financial year. It is submitted that the learned 4 AIR 1976 SC 219 3 [1980(1) SCC 459] Crl.M.C.Nos. 5034 & 5038/2023 :8: Magistrate proceeded on the basis that Section 132 and Section 153A of the IT Act would have application. Section 153A would have application only where a search is initiated under Section 132 or books of account, other documents, or any assets are requisitioned under Section 132A and not otherwise. According to the learned counsel, the 1st petitioner is an assessee, and he had produced the book of accounts. If that be the case, the revenue had to adjudicate as to whether the petitioner had unexplained money in his possession in the course of routine assessment. Reliance is also placed on Section 133A of the IT Act, which deals with the powers of an Income Tax Authority to survey and referring to 133A(4), it is argued that an Income Tax Authority, while exercising powers under Section 133A, has no powers to remove or cause to be removed from the place wherein he has entered any cash, stock or other valuable article or thing. Finally, it is submitted that while exercising powers under Section 451 of the Cr.P.C., the learned Magistrate is only considering the entitlement to interim custody and nothing more and under no circumstances could the amount be entrusted with the revenue as they had not established any right over the same. 8. In response, Sri. Suvin R. Menon, the learned Central Government Counsel, articulates that, pursuant to Section 132A of the Income Tax Act, a requisition for surrendering seized amounts is initiated Crl.M.C.Nos. 5034 & 5038/2023 :9: when there exists reason to believe that any asset is representational, either in whole or in part, of income or property that has not been or would not be disclosed in adherence to the provisions of the Act. The learned counsel points out that under Section 132A, the Income Tax Department holds entitlement to the custody of the apprehended amount for subsequent appropriation relative to taxes and penalties accruable as per provisions in the Income Tax Act. It is stated that in instances involving unexplained cash or assets, the stipulations of Section 69A in conjunction with Section 115BBE are applicable. As provided in the above provisions, an individual found in possession of presumed income, manifesting as unexplained money, incurs a tax liability of 60%, with an additional surcharge of 25% applied to the tax, culminating in a comprehensive tax imposition amounting to 83.25% of the confiscated cash. The revenue is conferred with the authority to assess income over the preceding four years from individuals from whom unexplained cash has been seized. The aforementioned provisions are relied upon, and it is urged that the resultant tax obligations and potential penalties deriving from such assessment or penal proceedings are to be appropriated from the seized cash. It is contended that if the amount is handed over to the persons who kept undisclosed income in their possession, it would impede the revenue from implementing the procedures delineated under Section 132A, Crl.M.C.Nos. 5034 & 5038/2023 :10: Section 132B, and Section 153A of the Income Tax Act. It is urged that the quantifiable tax on such ascertainable income, accompanied by the leviable interest and penalties, necessitates adjustment from the assets or amounts seized or requisitioned under Section 132A after the finalization of the assessment or penalty proceedings as per the pertinent provisions of the Income Tax Act. 9. Sri Joseph Markos, the learned Senior Counsel, who agreed to assist this Court as amicus curiae, has guided this Court through the relevant provisions. The attention of this Court is drawn to Section 4, and it is pointed out that income tax is levied for any ‘assessment year’ regarding the total income of the ‘previous year’ for every person. The standard due date for most individuals to file a return is 31st July of the assessment year. However, for individuals whose accounts are mandatorily audited under the Act, the due date extends to 30th September/31st October of the assessment year. It was pointed out that if any cash is seized during the financial year 2022-23, which is subject to income tax as per the Income Tax Department, the due date to file the return for such individuals is 31st July 2023, unless their accounts necessitate a tax audit. In such cases, the final date for filing the return is 30th September/31st October. Regarding assessment proceedings stemming from a return filed by an assessee, the revenue is allotted nine months from Crl.M.C.Nos. 5034 & 5038/2023 :11: the close of the assessment year to finalize the assessment. Thus, for income accrued during the previous year 2022-23 (corresponding to assessment year 2023-24), the revenue must complete the assessment by 31st December 2024. The revenue holds the authority under Section 147/148 to assess escaped income before the lapse of three years from the conclusion of the relevant assessment year if the escaped income is below Rs.50 Lakhs and ten years if it exceeds Rs.50 Lakhs, subject to the conditions stipulated in Section 147/148. The authority to conduct an assessment under Section 153A arises solely when a person has been scrutinized under Section 132 or documents or assets have been requisitioned under Section 132A. In other instances, the assessment must be concluded under Section 143. Under Sections 132 and 132A, the Department has the authority to search any individual or location and to seize any undisclosed income or valuable items found during such search or requisition assets taken into custody by any “officer or authority” under any prevailing law if it represents undisclosed income. However, this Court has held in Abdul Khader (supra) that Section 132A does not authorize the Department to requisition the “Court” to hand over the money that has been produced before the court as in the instant case. The aforesaid provision would apply only to an officer or authority. Under Section 226(4), the Department may petition the Court holding money belonging to the Crl.M.C.Nos. 5034 & 5038/2023 :12: assessee to settle the due tax. Still, this power can be exercised only after the ascertainment of tax due after a completed assessment under the Act. Reference is made to K. Choyi (supra) and it is urged that if an assessment is concluded while assets are in the Court’s custody, the suitable recourse for the Revenue is to file an application under Section 226(4) of the Act. It is further urged that the directive given by the learned Magistrate to finalize the assessment within six months from the date of the release of the amount cannot be said to be in conformity with the provisions of the Act as it contradicts the provisions of the IT Act. 10. Sri. Vipin Narayan, the learned Government Pleader, argued that the provisions deals with property which appears to have been the subject matter of the commission of any offence. He points out that in the instant case, no further proceedings was initiated as no wrongdoing was found. It is further submitted that though passing an order under Section 451 is discretionary, the discretion has to be exercised judiciously. 11. I have considered the submissions advanced. 12. The only question that needs determination is to who is entitled to interim custody of the cash that has been seized by the Excise Preventive Officer during a routine check inside a bus. It is undisputed that the Excise Crl.M.C.Nos. 5034 & 5038/2023 :13: Department has closed the proceedings as they could not detect any wrongdoing on the part of the person from whom the cash was seized. 13. The power of the learned Magistrate under S. 451 of the Code has been lucidly encapsulated by this Court in V Prakashan and K.P. Pankajakshan and Another5. It was observed as under. 7…………….S. 451 enables the Magistrate to provide for interim custody of such property pending conclusion of enquiry or trial. It is only a temporary arrangement and what is contemplated is only an interim provision to provide custody with a proper person as the Court thinks fit with liability to produce the property back as and when directed by the Court. The maximum duration of the arrangement is only till conclusion of the enquiry or trial. It follows that the arrangement is only temporary and the main object is to protect or preserve the property pending trial. Even if the person entrusted with interim custody is the owner, his possession or custody during the period of entrustment is only as representative of the Court and not in his independent right. He is bound by the terms of entrustment and the bond executed by him in favour of the Court. Any failure to comply with the terms will entail the necessary consequences also. His ownership or right to possession may not operate against his obligation to the Court. The entrustment or custody will not invest him with any preferential right to ownership or even possession. In the eye of law his possession or custody is only that of Court. 8. The arrangement once made is not even final till the conclusion of the inquiry or trial. Court is having the right to terminate the entrustment, get back the property from him and entrust it to 5 (1985 CrLJ 951) Crl.M.C.Nos. 5034 & 5038/2023 :14: somebody else whom the Court deems fit in appropriate cases even before the conclusion of the inquiry or trial. So much so, the person entrusted with the property may also be entitled to seek termination of the entrustment and surrender the property even before the conclusion of trial. Cases may arise where the person to whom interim custody was ordered may not care to undertake the obligation. In such cases the Court may have to make other arrangements for custody pending trial. After giving custody the Court may for reasons think that his custody may not be proper. In such cases the Court can terminate the arrangement and make other arrangements. Pending inquiry or trial more than one such arrangement could be made. The order is only of an interlocutory nature. 9. Ever/in cases of rival claims for interim custody, the preference made to one person does not settle any right to ownership or possession. Irrespective of defeat in a contest for interim custody, the defeated party can successfully enforce his claim for custody if ultimately he comes out with flying colours. The ultimate consideration is only who is the proper person considered by the Court for entrustment of the property. In doing so, the Court may have considerations like safety of the property, the possibility of getting it back without damage etc. The arrangement is being made by the Court only for preservation of property for being handed over to the person to whom custody has to be ordered under S. 452 after conclusion of trial or to be dealt with otherwise. 10. What is stated above does not mean that the power of the Court is arbitrary. Even though the power is discretionary it has to be exercised in a judicial manner. It is likely that there may be contest for getting interim custody. The person entitled to ownership or possession may be interested in getting custody to himself in preference to the opponents due to various reasons. He may have the fear that at the Crl.M.C.Nos. 5034 & 5038/2023 :15: hands of somebody else the property is liable to damage or misappropriation of the proceeds. Questions of prestige also may be there. For that reason itself there may be stiff opposition also. Custody to a wrong person may result in irreparable loss to the rightful claimant. Even though the power is discretionary, it is rather of a quasi-civil nature. In the choice of the person to be entrusted with interim custody in such cases the Court may have to take into consideration all the relevant aspects. 14. It is undisputed that the 1st petitioner is an assessee under the Income Tax Act. A sum of Rs. 40 Lakhs was seized from the possession of the 3rd petitioner, who is stated to be an employee of the 1st petitioner. The seizure was on 8.10.2022. What ultimately matters to the revenue is that the 1st petitioner, who is an assessee, has come forward and identified himself as the owner of Rs 40 Lakhs, which has now been seized. 15. Under Section 4 of the Income Tax Act, income tax is charged for any ‘assessment year’ in respect of the total income of the ‘previous year’ of every person. Under Section 3, the ‘previous year’ is defined as the financial year immediately preceding the assessment year. Under Section 2(9) of the Act, ‘Assessment year’ is defined as the period of 12 months commencing the 1st day of April every year under Section 2(9). In short, for income earned by a person during the financial year 1st April 2022 to 31st March, 2023, the previous year is 2022-23 and the corresponding assessment year is 2023-24. Crl.M.C.Nos. 5034 & 5038/2023 :16: 16. Under Section 139, every person whose total income during the previous year exceeds the maximum amount not chargeable to income tax shall file a return of income in the prescribed Form on or before the due date prescribed. The due date for filing of a return for most persons is 31st July of the assessment year. However, in respect of persons whose accounts are compulsorily required to be audited under the Act (tax audit), the due date is 30th September/31st October of the assessment year. If any cash is seized from a person on a date falling with the financial year 2022-23 and which the Income Tax Department contends is assessable to income tax, the due date for such person to file the return is 31st July, 2023 (unless his accounts are required to be tax audited, in which case the last date for filing of the return is 30th September/31st October. 17. The Income Tax Act contemplates two types of assessments, viz., i assessment pursuant to a return filed or notice issued by the Department calling upon a person to file a return; ii assessment consequent to search proceedings. 18. With respect to assessment proceedings pursuant to a return filed, the Department has time of to complete the assessment within nine Crl.M.C.Nos. 5034 & 5038/2023 :17: months from the end of the assessment year. Therefore, for income earned during the previous year 2022-23 corresponding to the assessment year 2023-24, the Department has time till 31.12.2024 to complete the assessment. The Department can assess escaped income under Section 147/148 before the expiry of three years from the end of the relevant assessment year if the escaped income is less than Rs. 50 Lakhs and ten years from the end of the relevant assessment year if the escaped income is more than Rs.50 Lakhs subject to the conditions mentioned in Section 147/148. 19. The next question is whether Section 153A of the IT Act, relied on by the learned Magistrate, would have any application in the instant case. Section 153A reads as follows: 153-A. Assessment in case of search or requisition.—[(1)] Notwithstanding anything contained in Section 139, Section 147, Section 148, Section 149, Section 151 and Section 153, in the case of a person where a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132-A after the 31st day of May, 2003 but on or before the 31st day of March, 2021, the Assessing Officer shall— (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years [and for the relevant assessment year or years] referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, Crl.M.C.Nos. 5034 & 5038/2023 :18: apply accordingly as if such return were a return required to be furnished under Section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and of the relevant assessment year or years: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years and for the relevant assessment year or years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years and for the relevant assessment year or years referred to in this sub-section pending on the date of initiation of the search under Section 132 or making of requisition under Section 132-A, as the case may be, shall abate: Provided also that the Central Government may by rules made by it and published in the Official Gazette (except in cases where any assessment or reassessment has abated under the second proviso), specify the class or classes of cases in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made 3284[and for the relevant assessment year or years: Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless— (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has Crl.M.C.Nos. 5034 & 5038/2023 :19: escaped assessment for such year or years; and (c) the search under Section 132 is initiated or requisition under Section 132-A is made on or after the 1st day of April, 2017. Explanation 1.— For the purposes of this sub-section, the expression “relevant assessment year” shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.— For the purposes of the fourth proviso, “asset” shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account. (2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or Section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the order of such annulment by the Principal Commissioner or Commissioner: Provided that such revival shall cease to have effect, if such order of annulment is set aside. Explanation.—For the removal of doubts, it is hereby declared that,— (i) save as otherwise provided in this section, Section 153-B and Section 153-C, all other provisions of this Act shall apply to the assessment made under this section; (ii) in an assessment or reassessment made in respect of an assessment year under this section, the tax shall be chargeable at the rate or rates as applicable to such assessment year. Crl.M.C.Nos. 5034 & 5038/2023 :20: 20. Under Section 153A, in the case of a person, where a search is initiated under Section 132, or books of account, documents, or asset is requisitioned under Section 132, notwithstanding the other provisions of the Act, the Department can complete an assessment of income for six assessment years immediately preceding the assessment year in which search is conducted, or requisition is made. Jurisdiction to make an assessment under Section 153A will arise only when the person has been searched under Section 132 or documents or assets are requisitioned under Section 132A. In all other cases, the assessment has to be completed under Section 143. 21. It would therefore be apposite to refer to Section 132 of the Act, which provision reads as under: 132. Search and seizure.—(1) Where the Principal Director General or Director General or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner, or Joint Director or Joint 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 (11 of 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, or Crl.M.C.Nos. 5034 & 5038/2023 :21: (b) 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 produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income Tax Act, 1922 (11 of 1922), or under this Act, or (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income Tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property), then,— (A) the Principal Director General or Director General or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, may authorise any Additional Director or Additional Commissioner or Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income Tax Officer, or (B) such Additional Director or Additional Commissioner or Joint Director or Joint Commissioner, as the case may be, may authorise any Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income Tax Officer, (the officer so authorised in all cases being hereinafter referred to as the authorised officer) to— (i) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or thing are kept; (ii) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available; (ii-a) search any person who has got out of, or is about to get into, or is in, the building, place, vessel, vehicle or aircraft, if the authorised officer has reason to suspect that such person has Crl.M.C.Nos. 5034 & 5038/2023 :22: secreted about his person any such books of account, other documents, money, bullion, jewellery or other valuable article or thing; (ii-b) require any person who is found to be in possession or control of any books of account or other documents maintained in the form of electronic record as defined in clause (t) of sub-section (1) of Section 2 of the Information Technology Act, 2000, to afford the authorised officer the necessary facility to inspect such books of account or other documents;] (iii) seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing found as a result of such search: Provided that bullion, jewellery or other valuable article or thing, being stock-in-trade of the business, found as a result of such search shall not be seized but the authorised officer shall make a note or inventory of such stock-in-trade of the business. (iv) place marks of identification on any books of account or other documents or make or cause to be made extracts or copies therefrom; (v) make a note or an inventory of any such money, bullion, jewellery or other valuable article or thing: Provided that where any building, place, vessel, vehicle or aircraft referred to in clause (i) is within the area of jurisdiction of any Principal Chief Commissioner or Chief Commissioner] or Principal Commissioner or Commissioner], but such Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c), then, notwithstanding anything contained in Section 120, it shall be competent for him to exercise the powers under this sub-section in all cases where he has reason to believe that any delay in getting the authorisation from the 2867[Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner having jurisdiction over such person may be prejudicial to the interests of the revenue: Crl.M.C.Nos. 5034 & 5038/2023 :23: Provided further that where it is not possible or practicable to take physical possession of any valuable article or thing and remove it to a safe place due to its volume, weight or other physical characteristics or due to its being of a dangerous nature, the authorised officer may serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it, except with the previous permission of such authorised officer and such action of the authorised officer shall be deemed to be seizure of such valuable article or thing under clause (iii): Provided also that nothing contained in the second proviso shall apply in case of any valuable article or thing, being stock-in-trade of the business. Provided also that no authorisation shall be issued by the Additional Director or Additional Commissioner or Joint Director or Joint Commissioner on or after the 1st day of October, 2009 unless he has been empowered by the Board to do so. Explanation.— For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal. (1-A) Where any Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in consequence of information in his possession, has reason to suspect that any books of account, other documents, money, bullion, jewellery or other valuable article or thing in respect of which an officer has been authorised by the Principal Director General or Director General] or Director or any other Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner to take action under clauses (i) to (v) of sub-section (1) are or is kept in any building, place, vessel, vehicle or aircraft not mentioned in the authorisation under sub-section (1), such Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner] may, notwithstanding anything contained in Section 120, authorise the said officer to take action under any of the clauses aforesaid in respect of such building, place, vessel, Crl.M.C.Nos. 5034 & 5038/2023 :24: vehicle or aircraft. Explanation.— For the removal of doubts, it is hereby declared that the reason to suspect, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal. (2) The authorised officer may requisition the services of,— (i) any police officer or of any officer of the Central Government, or of both; or (ii) any person or entity as may be approved by the Principal Chief Commissioner or the Chief Commissioner or the Principal Director General or the Director General, in accordance with the procedure, as may be prescribed, in this regard, to assist him for all or any of the purposes specified in sub-section (1) or sub-section (1-A) and it shall be the duty of every such officer or person or entity to comply with such requisition.] (3) The authorised officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing, for reasons other than those mentioned in the second proviso to sub-section (1), serve an order on the owner or the person who is in immediate possession or control thereof that he shall not remove, part with or otherwise deal with it except with the previous permission of such officer and such officer may take such steps as may be necessary for ensuring compliance with this sub-section. Explanation.—For the removal of doubts, it is hereby declared that serving of an order as aforesaid under this sub-section shall not be deemed to be seizure of such books of account, other documents, money, bullion, jewellery or other valuable article or thing under clause (iii) of sub-section (1). (4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any Crl.M.C.Nos. 5034 & 5038/2023 :25: statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income Tax Act, 1922 (11 of 1922), or under this Act. Explanation.—For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income Tax Act, 1922 (11 of 1922), or under this Act. (4-A) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search, it may be presumed— (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person’s handwriting, and in the case of a document, stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested. (8) The books of account or other documents seized under sub-section (1) or sub-section (1-A) shall not be retained by the authorised officer for a period exceeding thirty days from the date of the order of assessment or reassessment or recomputation under sub-section (3) of section 143 or section 144 or section 147 or Section 153-A or clause (c) of Section 158-BC unless the reasons for retaining the same are recorded by him in writing and the approval of the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Crl.M.C.Nos. 5034 & 5038/2023 :26: Director General or Director General] or Director for such retention is obtained: Provided that the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General] or Director shall not authorise the retention of the books of account and other documents for a period exceeding thirty days after all the proceedings under the Indian Income Tax Act, 1922 (11 of 1922), or this Act in respect of the years for which the books of account or other documents are relevant are completed. (8-A) An order under sub-section (3) shall not be in force for a period exceeding sixty days from the date of the order:] Provided that the Principal Director or Director or, as the case may be, Principal Commissioner or Commissioner shall not approve the extension of the period for any period beyond the expiry of thirty days after the completion of all the proceedings under this Act in respect of the years for which the books of account, other documents, money, bullion, jewellery or other valuable articles or things are relevant. (9) The person from whose custody any books of account or other documents are seized under sub-section (1) or sub-section (1-A) may make copies thereof, or take extracts therefrom, in the presence of the authorised officer or any other person empowered by him in this behalf, at such place and time as the authorised officer may appoint in this behalf. (9-A) Where the authorised officer has no jurisdiction over the person referred to in clause (a) or clause (b) or clause (c) of sub-section (1), the books of account or other documents, or any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in Sections 132-A and 132-B referred to as the assets) seized under that sub-section shall be handed over by the authorised officer to the Assessing Officer having jurisdiction over such person within a period of sixty days from the date on which the last of the authorisations for search was executed and thereupon the powers exercisable by the authorised officer under sub-section (8) or sub-section (9) shall be exercisable by such Assessing Officer.] Crl.M.C.Nos. 5034 & 5038/2023 :27: (9-B) Where, during the course of the search or seizure or within a period of sixty days from the date on which the last of the authorisations for search was executed, the authorised officer, for reasons to be recorded in writing, is satisfied that for the purpose of protecting the interest of revenue, it is necessary so to do, he may with the previous approval of the Principal Director General or Director General or the Principal Director or Director, by order in writing, attach provisionally any property belonging to the assessee, and for the said purposes, the provisions of the Second Schedule shall, mutatis mutandis, apply. (9-C) Every provisional attachment made under sub-section (9B) shall cease to have effect after the expiry of a period of six months from the date of the order referred to in sub-section (9B). (9-D) The authorised officer may, during the course of the search or seizure or within a period of sixty days from the date on which the last of the authorisations for search was executed, make a reference to,— (i) a Valuation Officer referred to in Section 142-A; or (ii) any other person or entity or any valuer registered by or under any law for the time being in force, as may be approved by the Principal Chief Commissioner or the Chief Commissioner or the Principal Director General or the Director General, in accordance with the procedure, as may be prescribed, in this regard, who shall estimate the fair market value of the property in the manner as may be prescribed, and submit a report of the estimate to the authorised officer or the Assessing Officer, as the case may be, within a period of sixty days from the date of receipt of such reference.]] (10) If a person legally entitled to the books of account or other documents seized under sub-section (1) or sub-section (1-A) objects for any reason to the approval given by the Principal Chief Commissioner or Chief Commissioner, Principal Commissioner or Commissioner, Principal Director General or Director General or Director under sub-section (8), he may make an application to the Crl.M.C.Nos. 5034 & 5038/2023 :28: Board stating therein the reasons for such objection and requesting for the return of the books of account or other documents 2905[and the Board may, after giving the applicant an opportunity of being heard, pass such orders as it thinks fit. (13) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches and seizure shall apply, so far as may be, to searches and seizure under sub-section (1) or sub-section (1-A). (14) The Board may make rules in relation to any search or seizure under this section; in particular, and without prejudice to the generality of the foregoing power, such rules may provide for the procedure to be followed by the authorised officer— (i) for obtaining ingress into any building, place, vessel, vehicle or aircraft to be searched where free ingress thereto is not available; (ii) for ensuring safe custody of any books of account or other documents or assets seized. Explanation 1.— For the purposes of sub-sections (9-A), (9-B) and (9-D), the last of authorisation for search shall be deemed to have been executed,— (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; or (b) in the case of requisition under Section 132-A, on the actual receipt of the books of account or other documents or assets by the authorised officer. Explanation 2.—In this section, the word “proceeding” means any proceeding in respect of any year, whether under the Indian Income Tax Act, 1922 (11 of 1922), or this Act, which may be pending on the date on which a search is authorised under this section or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year. Crl.M.C.Nos. 5034 & 5038/2023 :29: 22. Under Section 132, the Income Tax Department has the power to search any person or place when they have reasons to believe, inter alia, that any person has in his possession money or other valuable article or thing which represents income and which has not been disclosed and seize any such money or valuable thing found during such search. This is not relevant in these cases as the money was not found during the search by the Department. 23. Section 132-A of the Act reads as follows: 132-A. Powers to requisition books of account, etc.—(1) Where the Principal Director General or Director General or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissionerin 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 (11 of 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 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 Crl.M.C.Nos. 5034 & 5038/2023 :30: 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 Principal Director General or Director General or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may authorise any Additional Director, Additional Commissioner, Joint Director, Joint Commissioner, Assistant Director or Deputy Director, Assistant Commissioner or Deputy Commissioner or Income Tax Officer (hereafter in this section and in sub-section (2) of Section 278-D 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. Explanation.— For the removal of doubts, it is hereby declared that the reason to believe, as recorded by 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 (4-A) to (14) (both inclusive) of Section 132 and Section 132-B shall, so far as may be, apply as if such books of account, other documents or assets had been seized under sub-section (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 (4-A) to (14), the words “the requisitioning officer” were substituted. Crl.M.C.Nos. 5034 & 5038/2023 :31: 24. Under Section 132-A, if the Department has reason to believe, inter alia, that any asset which represents income and which has not been disclosed under the Act by any person has been taken into custody by any “officer or authority” under any other law for the time being in force, then the Department can requisition such officer or authority to deliver such asset to the Department and such officer or authority is obliged to deliver the same. 25. This Court in Abdul Khader (supra), after interpreting Section 132A of the IT Act had occasion to hold as under: Section 132A empowers the Commissioner to order requisition of assets. If in the opinion of the officer the assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purpose of the Income-tax Act, on being satisfied, the officer empowered may authorise any officer under sub-section (2) of section 278D to require the officer or authority, to deliver such books of account, other documents or assets to the requisitioning officer. On the arrest of the petitioner and the seizure of the gold under sections 41(d) and 102 of the Criminal Procedure Code, the gold is brought under the custody of the court, and the first respondent—Sub-Inspector of Police was holding the gold on behalf of the Judicial First Class Magistrate Court. Subsequently, Crime No. 104 of 1997 was registered before the Valiyathra Police Station under exhibit P-2, there is no dispute on the fact that while the warrant under section 132A was issued, the gold was under the custody of the Judicial Magistrate of First Class-II, Thiruvananthapuram, and the first respondent is holding the property on behalf of the court. Section 152A does not empower the Commissioner to require the court to deliver the assets. The provision is referable only to an “officer” or Crl.M.C.Nos. 5034 & 5038/2023 :32: “authority” referred to under sub-section (1) and not the court. A similar question has been considered by a Division Bench of the Punjab and Haryana High Court in CIT v. Balbir Singh, [1993] 203 ITR 650, referred to earlier wherein the Tax Recovery Officer under whose custody lay the assets recovered, was not holding the assets independently. It was deposited with him in pursuance of the order of the court. Therefore, a warrant could not have been issued against the court since the officer is holding the assets on behalf of the court. Of course, it is open to the Income-tax Officer to apply to the Magistrate for the release of the assets in their favour. In the order referred to by the Income-tax Department in Crl. R.P No. 571 of 1996 (Ibrahim Othayoth v. Sub-Inspector of Police, [1998] 232 ITR 320 (Ker)), and connected cases, it is a case where the Department themselves applied for release of the articles seized. The question under section 132A was not raised or considered in that case. 26. It was held that Section 132-A does not empower the Department to requisition a “Court” to deliver any seized assets, and the provision is referable only to an officer or authority. In view of the above, as the seized money has been deposited in Court by the Excise officer, then the requisitioning power under Section 132-A cannot be availed by the Department. 27. Now, it is necessary to understand the implications of Section 132B of the IT Act. Section 132-B reads as under: Crl.M.C.Nos. 5034 & 5038/2023 :33: 132-B. Application of seized or requisitioned assets.—(1) The assets seized under Section 132 or requisitioned under Section 132-A may be dealt with in the following manner, namely:— (i) the amount of any existing liability under this Act, the Wealth Tax Act, 1957, the Expenditure Tax Act, 1987, the Gift Tax Act, 1958 and the Interest Tax Act, 1974, and the amount of the liability determined on completion of the assessment or reassessment or recomputation 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 2919 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 245-C, may be recovered out of such assets]: 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 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 Principal Chief Commissioner or Chief Commissioner] or 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 132-A, as the case may be, was executed; Crl.M.C.Nos. 5034 & 5038/2023 :34: (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 was effected by the Assessing Officer or, as the case may be, the Tax Recovery Officer under authorisation from the Principal Chief Commissioner or Chief Commissioner or 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 sub-section (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 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 132-A, 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 clause (i) of sub-section (1), exceeds the aggregate of the amount required to meet the liabilities referred to in Crl.M.C.Nos. 5034 & 5038/2023 :35: 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 132-A was executed to the date of completion of the assessment or reassessment or recomputation. Explanation 1.—In this section,— (i) “block period” shall have the meaning assigned to it in clause (a) of Section 158-B; (ii) “execution of an authorisation for search or requisition” shall have the same meaning as assigned to it in Explanation 2 to Section 158-BE. 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. 28. Under Section 132B, an asset seized during a search under Section 132 or requisition under Section 132A can be applied by the Department to settle any existing liability of the person under the Income Tax Act (and other allied Acts) or any liability determined on completion of an assessment. However, since Section 132B refers to the application of seized or requisitioned assets, this section cannot have any application to the instant cases. Crl.M.C.Nos. 5034 & 5038/2023 :36: 29. It would also be profitable to refer to Section 133-A, which provides for the power of survey. The relevant portion reads as under: 133-A. Power of survey.—(1) Notwithstanding anything contained in any other provision of this Act, an income tax authority may enter— (a) any place within the limits of the area assigned to him, or (b) any place occupied by any person in respect of whom he exercises jurisdiction, or (c) any place in respect of which he is authorised for the purposes of this section by such income tax authority, who is assigned the area within which such place is situated or who exercises jurisdiction in respect of any person occupying such place at which a business or profession or an activity for charitable purpose is carried on, whether such place be the principal place or not of such business or profession or of such activity for charitable purpose, and require any proprietor, trustee, employee or any other person who may at that time and place be attending in any manner to, or helping in, the carrying on of such business or profession or such activity for charitable purpose— (i) to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be available at such place, (ii) to afford him the necessary facility to check or verify the cash, stock or other valuable article or thing which may be found therein, and (iii) to furnish such information as he may require as to any Crl.M.C.Nos. 5034 & 5038/2023 :37: matter which may be useful for, or relevant to, any proceeding under this Act. Explanation.—For the purposes of this sub-section, a place where a business or profession or activity for charitable purpose is carried on shall also include any other place, whether any business or profession or activity for charitable purposeis carried on therein or not, in which the person carrying on the business or profession or activity for charitable purpose states that any of his books of account or other documents or any part of his cash or stock or other valuable article or thing relating to his business or profession or activity for charitable purpose are or is kept. (2) An income tax authority may enter any place of business or profession referred to in sub-section (1) only during the hours at which such place is open for the conduct of business or profession and, in the case of any other place, only after sunrise and before sunset. xxxxxx xxxxxxxxxx xxxxxxxx xxxxxxx (4) An income tax authority acting under this section shall, on no account, remove or cause to be removed from the place wherein he has entered, any cash, stock or other valuable article or thing. 30. It would be relevant to note that in view of Section 133A(4), an Income Tax authority vested with the power of Survey is not empowered to remove or cause to be removed from the place wherein he has entered any cash, stock, or other valuable article or thing. 31. Under Section 226(4), the Department can apply to the Court in Crl.M.C.Nos. 5034 & 5038/2023 :38: whose custody there is money belonging to the assessee to meet the tax due by that assessee. This power can, however, be exercised only when the tax has been determined to be due by an assessment completed under the Act. The Apex Court in K. Choyi (supra) has occasion to consider the above aspects and had occasion to hold as under. Shri Lalit and Shri Datar, learned counsel for the appellant, urged that Section 132 of the Income Tax Act was applicable to assets in the custody of the Court also and that the Income Tax Officer, who may not physically seize the assets, may achieve the result by requesting the Court to deliver the assets to him. We do not think it necessary to consider this question in the situation that has arisen on the facts of the case. There can be no question of making a seizure under Section 132 of the Income Tax Act and proceeding further under the provisions of that section, once an assessment is completed. Seizure under Section 132 relates to a pre-assessment stage. If an assessment is completed before the seizure is effected and while the assets are still in the custody of the court, the appropriate remedy for the Revenue is to make an application under Section 226(4) of the Income Tax Act. 32. The Apex Court had made it clear that if an assessment is completed while assets are in the custody of the Court, the appropriate remedy to the Revenue is to make an Application under Section 226(4). The Department will not be entitled to make this request in the instant cases as no assessments have been completed as yet. Crl.M.C.Nos. 5034 & 5038/2023 :39: 33. In the case on hand, the seizure was effected on 8.10.2022. The income earned by a person during the financial year 1st April 2022 to 31st March 2023 is to be assessed in the year 2023-24. The 1st petitioner, being an assessee is bound to file a return of income not before 31st July, 2023. If the 1st petitioner does not disclose the income that has been detected, the Department would have time to complete the assessment till 31.12.2024. The Department would have the power to assess escaped income under Section 147/148 before the expiry of three years from the end of the relevant assessment year. The jurisdiction to make an assessment under Section 153A will arise only when the person has been searched under Section 132 or documents or assets are requisitioned under Section 132A. In all other cases, the assessment has to be completed under Section 143. However, in view of the law laid down in Abdul Khader (supra), Section 132A would not empower the Department to requisition the learned Magistrate. Section 132B would also have no application in view of the above. As held by the Apex Court in Choyi (supra) the revenue can only apply to the Court in whose custody there is money belonging to the assessee to meet the tax due by that assessee, and such power can be exercised only when the tax has been determined to be due by an assessment completed under the Act. As the assessment has not been completed, such a course cannot now be adopted. Crl.M.C.Nos. 5034 & 5038/2023 :40: The advantage gained by the revenue owing to the detection of cash from the possession of the 3rd respondent is that the 1st petitioner has come forward claiming the amount. While making an assessment, the revenue would be in a position to insist that the amounts seized also be included in the returns to be submitted by the 1st petitioner before the due date. 34. In J.R. Malhotra (supra), the facts are like this. One Romesh Chander was travelling in a car. His car was intercepted by the police. A sum of Rs.1,61,411/- was found in a bag in his hands. He was taken to the police station and a criminal case was registered against him under Sections 411, 413 and 414 of the Penal Code, 1860, and under Sections 4, 5, 6, and 8 of the Foreign Exchange Act, 1947. The Commissioner of Income Tax issued a warrant of authorization empowering certain officers under Section 132 of the Income Tax Act to conduct a search and seizure. Pursuant to that authorization the authorized officer seized the sum of Rs.1,61,411/- and certain books and documents. The business premises of Romesh Chander and the other respondents, who were his partners, were searched and certain documents and books were seized. Romesh Chander, by a writ petition, challenged the warrant of authorisation. The High Court of Punjab and Haryana held the search to be invalid and directed the Revenue to return the money and the books. On appeal, the High Court on November 22, 1972, Crl.M.C.Nos. 5034 & 5038/2023 :41: accepted in part the appeal of the Revenue and held that the amount and the books and documents be returned by the Revenue to the Station House Officer, Police Station, Kartarpur, who was directed to proceed in accordance with law. Finally, after several developments, the learned Magistrate directed the Income Tax authorities to return the amount in dispute, and the said order was affirmed by all courts. The matter finally reached the Hon’ble Supreme Court. While confirming the order passed by the learned Magistrate, the Apex Court held as under in paragraphs 18 and 19 of the judgment. 18. There is no criminal case against the respondent Romesh Chander. The order of the High Court dated May 25, 1972 directed the return of the sum of Rs 1,61,411 and the documents to the respondent Romesh Chander. The order of the learned Single Judge was affirmed by the High Court on November 22, 1972. No appeal was preferred against the order of the High Court. The order of the High Court was that the amount of Rs 1,61,411 and the books and other documents were to be returned to the Station House Officer. After the criminal case had been filed the authorities have no right to keep the money, under any provision of law. There is no question of adjustment of the sum of Rs 1,61,411 by reason of the fact that there is no valid order of assessment and there is no demand for income tax. 19. The Revenue cannot indirectly keep the money on the plea that there will be a demand, and, therefore, the money should be allowed to be kept with the Revenue. There must be authority of law under which the money can be kept. There is no legal order to keep Crl.M.C.Nos. 5034 & 5038/2023 :42: the money. The appeal, therefore, fails and is dismissed with costs. (emphasis supplied ) 35. It was held that if there is no valid order of assessment and no demand for income tax, the Revenue cannot indirectly keep the money on the plea that there will be a demand, and, therefore, the money should be allowed to be kept with the Revenue. 36. In the case on hand, the 1st petitioner is yet to file his assessment. He would have to disclose the sum of Rs.40 Lakhs, which was seized from his employee. The Revenue can thereafter complete the assessment in accordance with the provisions of the Act. As there is no valid order of assessment and no culminated demand for Income Tax, the revenue cannot aspire to keep the money on the premise that there will be demand later in point of time. At present, there is no authority of law under which the money can be demanded and be kept by the revenue. 37. Sri. Suvin R. Menon, in the course of his arguments, had pointed out that the learned Magistrate has issued directions to the Revenue to conclude the assessment within a time frame. It was urged that no such direction could have been issued. I find that there is considerable force in the submission Crl.M.C.Nos. 5034 & 5038/2023 :43: made by the learned counsel. As per the provisions of the Act, the assessee has been granted a time frame to file his return with respect to income of the previous year, and further time has been granted to the Revenue to make an assessment. The revenue can only act in terms of the provisions of the Act. The learned Magistrate, while exercising powers under Section 451 of the Code, cannot issue directions to the revenue to conclude the assessment proceedings within a time frame bypassing the provisions. The order passed by the learned Magistrate is clearly illegal on that count as well. 38. In view of the above discussion, the order passed by the learned Magistrate ordering the handing over of the amounts to the revenue cannot be sustained. I hold that Union of India v. State of Kerala (supra) was rendered in the facts of the said case without noting the principles of the law laid down in J.R.Malhotra (supra). 39. Before parting, this Court places on record its profound appreciation for the valuable assistance rendered by the learned Amicus Curiae and the learned counsel appearing for both sides. 40. These petitions will stand allowed. The following directions are issued. Crl.M.C.Nos. 5034 & 5038/2023 :44: a. The common order passed by the learned Magistrate will stand quashed. b. The Assistant Director, with whom the amounts were entrusted, is ordered to return the amounts released to the learned Magistrate. c. The learned Magistrate shall release the amount to the 1st petitioner on furnishing a bond for a sum of Rs.40 lakhs (Rupees Forty Lakhs only) with two solvent sureties each for the like sum to the satisfaction of the learned Magistrate. d. The 1st petitioner shall file his return disclosing the amount, and the revenue shall finalize the same in accordance with law. sd/- RAJA VIJAYARAGHAVAN V JUDGE PS/24/9/23 Crl.M.C.Nos. 5034 & 5038/2023 :45: APPENDIX OF CRL.MC 5034/2023 PETITIONER ANNEXURES Annexure A-1 PHOTOCOPY OF THE APPLICATION U/S 482 DATED 17.11.2022 Annexure A-2 PHOTOCOPY OF THE APPLICATION FILED BY IT DEPARTMENT BEFORE THE JUDICIAL FIRST CLASS MAGISTRATE COURT-II, MANANTHAVADY DATED 27.04.2023 Annexure A-3 PHOTOCOPY OF THE NOTES OF ARGUMENTS DATED 31.05.2023 Annexure A-4 CERTIFIED COPY OF COMMON ORDER PASSED BY THE JFCM, MANANTHAVADY IN CRL.MP 2061/2022 DATED 06.06.2023 Crl.M.C.Nos. 5034 & 5038/2023 :46: APPENDIX OF CRL.MC 5038/2023 PETITIONER ANNEXURES Annexure A-1 PHOTOCOPY OF THE APPLICATION U/S 482 IN CRL. M.P.2061/2022 DATED 17.11.2022 Annexure A-2 PHOTOCOPY OF THE APPLICATION FILED BY IT DEPARTMENT BEFORE THE JFCM-II MANANTHAVADY IN CMP NO. 371/2023 IN CMP 1866/2023 DATED 27.04.2023 Annexure A-3 PHOTOCOPY OF THE NOTES OF ARGUMENTS DATED 31.05.2023 Annexure A-4 PHOTOSTAT COPY OF COMMON ORDER PASSED BY THE JFCM, MANANTHAVADY IN CRL.MP 371/2023 DATED 06.06.2023 "