RAMESHKUMAR SHANKARLAL AND CO V. DEPUTY COMMISSIONER OF INCOME TAX

SCA/13896/2019

AI Insights

The case revolves around a partnership firm, Rameshkumar Shankarlal and Co, which sought to reclaim Rs. 24,50,000 in cash seized from its employees by the police in Ajmer, allegedly for purchasing property. The firm contended that the cash belonged to them, while the income tax department treated it as unaccounted income of Bhuraram Patel, one of the employees. The court examined the procedural adherence of the department in appropriating the seized cash towards Bhuraram's tax liabilities and found no legal or procedural impropriety. The court also considered the implications of various legal provisions under the Income Tax Act, particularly Sections 132, 132A, 132B, and 271(1)(c), which govern the seizure and handling of unaccounted cash.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 761941 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 22-02-2022
• Assessment Year: misc
• Other Referred Cases: Hemal Dilipbhai Shah vs. Assistant Commissioner of Income-tax, Sangram Singh vs. Election Tribunal, Kotah, M.Padmanabha Iyengar vs. Government of A.P., Saurashtra Paper and Board Mills Pvt Ltd vs. State of Gujarat and others
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: M R BHATT
• Assessee Lawyers: JAIMIN DAVE; PRANAY SHAH
• Keywords: Assessment proceedings; Income Tax; Penalty; Refund application; Seized cash; Unaccounted income
• Section: 147; 148; 143(3); 271(1)(c); 132; 153A; 132A; 132B; 244(A)

Judgement Text

"C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 13896 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALA Sd/- and HONOURABLE MS. JUSTICE NISHA M. THAKORE Sd/- ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2 To be referred to the Reporter or not ? YES 3 Whether their Lordships wish to see the fair copy of the judgment ? NO 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? NO ================================================================ RAMESHKUMAR SHANKARLAL AND CO Versus DEPUTY COMMISSIONER OF INCOME TAX ================================================================ Appearance: MR JAIMIN R DAVE, ADVOCATE for the Petitioner(s) No. 1 MR PRANAY V SHAH, ADVOCATE for the Petitioner(s) No. 1 MR M.R.BHATT, SR.ADVOCATE for M.R. BHATT & CO. for the Respondent(s) No. 1,2 ========================================================== CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 22/02/2022 ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE NISHA M. THAKORE) 1. By this writ-application under Article 226 of the Constitution of India, the writ-applicant has prayed for the following reliefs : Page 1 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 “9(a) To quash and set aside impugned order/letter dated 16.11.2018 at Annexure-A to this petition; 9(b) Direct Respondents herein to refund an amount of Rs.24,50,000/- along with statutory interest from the date of filing of his Petition; 9(c) Pending hearing and final disposal of this Petition this Hon’ble Court may be pleased to direct respondent an amount of Rs.24,50,000/- against Bank Guarantee and/or Bond of equivalent amount; 9(d) Any other and further relief, which is just and proper, may kindly be granted as may be deemed expedient by this Hon’ble Court in the facts and circumstances of the case; 9(e) Award cost of the present petition.” 2. The facts giving rise to this writ-application may be summarized as under : 2.1. The writ-applicant is a partnership firm registered under the Partnership Act, 1932 (for short, the ‘Act 1932’). There are in all nine partners in a partnership firm. 2.2. The partnership firm is engaged in the business of Angadia (courier service). Page 2 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 2.3. It appears from the materials on record that two employees of the partnership firm, namely Bhuraram and Ganpat Singh, were travelling to Ajmer on 24/06/2009. It is the case of the writ-applicant that they were asked to go to Ajmer for the purpose of purchasing a property in the form of office/shop on behalf of the firm. It is also the case of the firm that it had handed over an amount of Rs.24,50,000/- (Twenty-Four Lakh Fifty Thousand) in cash to the two employees referred to above for the purpose of payment towards the purchase of shop-cum-office. 2.4. There is a strong assertion on the part of the firm that the cash referred to above belongs to the firm. The two employees named above were detained by the police near the Clock Tower, Ajmer, and the cash referred to above was seized. 2.5. It appears that upon seizure the firm filed an application under Section 457 of the Code of Criminal Procedure for the release of the cash. The said application was rejected by the court at Ajmer vide the order dated 16/09/2009. 2.6. Being aggrieved by the order passed by the Magistrate at Ajmer rejecting the application for release of the cash, the firm preferred a revision application before the Additional Sessions Judge (Fast Track) at Ajmer. The revision application also came to be rejected vide order dated 03/01/2011. The firm thereafter preferred the Page 3 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 Criminal Misc. Petition No.747 of 2012 before the High Court of Rajasthan at Jaipur and assailed the two orders dated 16/09/2009 and 03/11/2011 respectively referred to above. The High Court of Rajasthan disposed of the matter vide order dated 28/09/2016, asking the firm to approach the trial court for release of the said amount. 2.7. Pursuant to the order passed by the High Court of Rajasthan, the firm once again approached the Court of the Chief Judicial Magistrate, Ajmer. The Chief Judicial Magistrate, Ajmer, passed an order dated 20/12/2016, directing the police to hand over the cash to the firm, if not required in any other proceedings. 2.8. However, it appears that way back on 09/02/2011, the Chief Judicial Magistrate, Ajmer, while rejecting the application of the firm for release of the cash, had passed an order directing that the amount of Rs.24,50,000/- in cash which was seized from the two employees of the firm shall be deposited with the Income Tax Department, Jodhpur. Accordingly, on 24/02/2011, the seized cash came to be deposited with the Assistant Director of Income Tax (Inv.)-I, Jodhpur. 2.9 It appears that the case of Bhuraram was centralized with the ACIT-CC-1(2), Ahmedabad, and the requisite amount came to be transferred to the CIT (Central), Ahmedabad. On 15/10/2012, the statement of one Bhuraram was recorded under Section 131 of the Act, wherein he stated that the source of the cash seized from Page 4 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 his possession was from sale of silver. Bhuraram also filed affidavits of two individuals to whom he is said to have sold the silver. However, Bhuraram was not able to produce those two purchasers before the Income Tax authorities for interrogation. Bhuraram further accepted the said cash as his undisclosed income and requested the department to deduct the corresponding tax from the seized amount. On 31/10/2012, the assessment of Bhuraram was completed under Section 143(3) read with Section 153(A) of the Act by the ACIT, CC-1(2), Ahmedabad, and an addition of Rs.24,50,000/- was made in the hands of Bhuraram M. Patel. 2.10. The DCIT-CC-1(2), Ahmedabad, thereafter vide order dated 07/03/2013, levied penalty of Rs.7,35,000/- under Section 271(1)(c) of the Act for concealment of the income in case of Bhuraram. A notice under Section 148 of the Act dated 21/03/2013 came to be issued to the firm. On 01/07/2013, the CIT-Ahmedabad dismissed the appeal of Bhuraram. On 01/01/2014, the assessment order was passed under Section 143(3) read with Section 147 of the Act. The Assessing Officer concluded that out of Rs.24,50,000/- shown by way of an entry, Rs.13,00,000/- stood explained and an amount of Rs.11,50,000/- was treated as the unexplained cash seized on 24/06/2009. 3. At this stage, we must look into the assessment order dated 01/01/2014 referred to above in the case of the firm for the Assessment Year 2010-2011, more particularly, para-4 of the said order. Page 5 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 “4. During the course of assessment proceedings, it is seen from the books of account produced that the assessee has shown withdrawal of Rs.24.50 Lac on 23.06.2009 and the description is narrated as “Chief Judicial Magistrate Court” Ajmer Ganpat Singh B. Rajput Bhuraram M. Gandhi Makan Milkat Mate”. The Authorized Representative was requested to explain the source of such a huge cash. The Authorized Representative explained that it can be verified from the cash book that the assessee firm is having sufficient cash balance to withdraw and send Rs.24.50 Lac for purchase of Shop at Ajmer. The Authorized Representative was requested to produce/furnish evidence of such accumulation in the cash book. The Authorized Representative explain that it can be seen from the bank account that the assessee firm has withdrawn Rs.3 Lac on 02.04.2009 and 10 lac on 28.05.2009 from the bank and the same are reflected in the cash book, rest of the cash is out of day-to-day Khep Income/Receipt. On perusal of the cash book, it is seen that the assessee is having a very limited amount of receipt in the cash book and there is also equivalent withdrawal/expenses appearing in the cash book on account of Khep Expenses, Stationery, news Paper, Officer Expenses, Delivery Expenses etc. which implies that the accumulation of huge cash of Rs.11.50 lac (Rs.24.50 lac – Rs.13 lac) is not found justifiable and the cash book appears to be a drafted one to justify the source of cash seized. The Authorized Representative argued that opening balance of the cash book may be accepted as the source of cash withdrawal. The Authorized Representative was requested to produce evidence and explain when there is Page 6 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 meager difference between Khep Income and Expenses, resulting net income of current financial year as show by the assessee at Rs.82,000/-, how Rs.15.00 Lac can be accepted as opening balance shown in cash book on 01.04.2009. The Authorized Representative did not put forth any further argument but submitted that the cash withdrawal is out of cash available with the assessee firm and requested not to draw any adverse inference on this account. After taking into account all the facts, evidences available on records and circumstances of the case it is concluded that out of Rs.24.50 Lac which were seized by the SHO, Clock Tower, Police Station, Ajmer only Rs.13.00 Lac are found to be explained on being withdrawn from the bank account and the rest of the amount of Rs.11.50 Lac is required to be added to the total income of assessee. Hence, Rs.11.50 Lac is treated as unexplained cash seized on 24.06.2009 and same is added to the total income of the assessee. Penalty proceeding u/s.271(1)(c) is initiated separately for concealment the particulars of its income or furnishing inaccurate particulars of such income (Addition Rs.11,50,000/-) Subject to the above remarks and date made available, the total income of the assessee is computed as under: Total income as per return : Rs. 82,000/- Add: As per para 4 above : Rs.11,50,000/- Total income : Rs.12,32,000/- Page 7 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 Assessed u/s 143(3) r.w.s. 147 of the I. T. Act. Give credit for pre-paid taxes, if any, after due verification. Charge interest u/s. 234A, 234B, 234C, 234DF as the case may be. Issue demand notice and challan. Penalty proceeding u/s.271(1)(c) is initiated separately for concealment the particulars of its income or furnishing inaccurate particulars of such income.” 4. Thus, it appears from the aforesaid that the assessment in the case of the firm proceeded on the footing of the entry of Rs.24.50 lakh in the books of account on 23/06/2009, wherein the description is narrated as the “Chief Judicial Magistrate Court, Ajmer, Ganpat Singh B. Rajput Bhuraram M. Gandhi Makan Milkat Mate”. 5. It is the case of the Revenue that the said entry was made by the firm after the seizure of the cash and the same is clearly borne out from the said book entry itself which narrates the factum of litigation of the seized cash in the Court of CJM. On 02/01/2014, the CIT (Ahmedabad) dismissed the appeal of Bhuraram filed against the order imposing penalty. On 02/11/2015, the department adjusted Rs.24,50,000/- towards the outstanding tax demand and penalty in the case of Bhuraram and the balance amount of Rs.7,49,956/- along with interest up to 01/01/2015 was refunded to Bhuraram. Such adjustment was in terms of Section 132B(3) of the Act. On 04/03/2016, the CIT(A) allowed the appeal filed by the firm and deleted the addition. The Rajasthan High Court, vide the order dated 28/09/2016 passed in the Criminal Misc. Petition No.747 of 2012, directed the firm to approach the trial court for release Page 8 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 of the amount. Pursuant to the direction issued by the Rajasthan High Court, the firm went before the trial court. The trial court, vide order dated 20/12/2016, directed the department to release the seized amount in favour of the firm, if not required in any other proceedings. 6. It is the case of the department that the trial court in its order dated 20/12/2016 failed to take into account the factum of such seized amount having been adjusted against the liabilities of Bhuraram as well as the consequential refund amount along with the interest having been paid to Bhuraram. Thereafter on 24/09/2017, 07/08/2018 and 11/10/2018 respectively, the firm requested the department to refund the amount. On 16/11/2018, the impugned order came to be passed, whereby the application for refund came to be rejected on the ground that the cash of Rs.24,50,000/- was seized from Bhuraram and not from the firm. The said amount was partly adjusted against the Income Tax demand raised in the case of Bhuraram and the balance was refunded to him along with interest in accordance with the provisions of Section 132B(3) of the Act. On 15/03/2019, Bhuraram preferred an application for grant of interest under Section 244(A) of the Act on the refunded amount of Rs.7,49,956/-. On 25/04/2019, the Income Tax Officer, Ahmedabad, passed an order under Section 154 of the Act granting interest of Rs.93,744/- to Bhuraram. The order reads thus: “4. The assessee has applied for rectification vide dated 24.10.2017 for the A.Y. 2010-2011 and requested for issue of interest u/s. 132B(4)(b) of the Act. The balance amount of Page 9 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 Rs.7,49,956/- was issued from PD A/c. Of Principal Commissioner of Income Tax (Central-1), Ahmedabad to the assessee vide Cheque No.717887 dated 02,.01.2015 and same was received by assessee on 02.01.2015. Accordingly, after due verification, order u/s.154 of the Act dated 267/02/2018 was passed resulting into a refund of 63,746/- (interest u/s. 132B(4)(b) of the Act) and rejecting claim of refund u/s.244A of the Act stating that granting of refund out of seized cash is governed by section 132B(4)(b) of the Act and the manual refund of Rs.63,746/- was issued to the assessee on 09.03.2018 with the prior approval of the Jt. CIT, Range-1(2), Ahmedabad vide approval letter No.Jt.Cit/Range-1(2)/Manual refund/2017-18 dated 08.03.2018. The working of interest u/s. 132B(4)(b) is as under: 132B(4)(b) Interest Date of requisition u/s.132A of seized cash by the Department Numbers of days from 25.02.2011 to 25.06.2011 Date of conclusion of Assessments proceedings u/s. 143(3) r.w.s.153A(1) (b) for A. Y. 2010-11 Amount of Refund received by the assessee after adjustment against the remaining demand vide cheque No.717887 dated 02.01.2015 Interest u/s. 132B(4)(b) of the Act. i.e. from 26.06.2017 to 31.10.2012 [17 Month x Rs.7,49,956/- x 0.5%] 24.02.2011 120 days 25.06.2011 31.10.2012 Rs.7,49,956/- Rs.63,746/- The assessee, not being satisfied with the above refund issued, filed a fresh CPGRAM petition vide G.No.:CBODT/E/ 2019/05873 dated 15/03/2019, seeking interest u/s.244A of the Act for 26 months of Rs.97,494/-. Page 10 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 6. On perusal of the assessee’s CPGRAM grievance petition, it appears that the assessee was seeking interest u/s.244A of the Act for 26 month of Rs.97,494/-. The claim of the assessee is cross-verified with the case record and it is found that the assessee was eligible for refund of interest u/s.244 of the Act on refund of Rs.7,49,956/- for 25 months from 01.01.2013 to 21.01.2015 since the department was holding the assessee’s refund for 25 months after the assessment was completed and the case is rectified u/s.154 of the Act. The working of interest u/s.244A of the Act is as under: Interest u/s. Refund due from Date of release of refund of Rs.7,49,956/- Amount of 244A Interest =Refunded amount x no. of month due (from 01.01.2013 to 21.01.2015) x 0.5% 01.01.2013 21.01.2015 244A 749956 X 25 Month X 0.5% = Rs.93,744/- Interest u/s.244A of the Act Rs.93,744/- Total Income Remained unchanged Recalculate taxes and interest as per law and give credit to prepaid tax, if any. Issue demand notice/challan or R. O. accordingly after due verification of taxes paid. Date:25/04/2019 (D.L.Waghela) Place:Ahmedabad Income-Tax Officer, Ward-1(2)(1), Ahmedabad” Page 11 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 7. We have heard Mr.Jaimin Dave, learned counsel appearing for the writ-applicant firm and Mr.M.R.Bhatt, learned senior counsel appearing for the respondents. 8. Mr.Jaimin Dave, the learned counsel would submit that the department could not have appropriated the seized cash towards the income tax liabilities of Bhuraram and further could not have paid the balance cash to Bhuraram, more particularly, when the department was very well aware that the writ-applicant was claiming ownership of the seized cash since the year 2009. He would submit that the Revenue could not have appropriated the seized cash towards the income tax liabilities of Bhuraram, more particularly, when the Revenue has assessed the seized cash in the hands of the writ-applicant firm. Mr. Dave, the learned counsel would submit that the Assessing Officer made addition of Rs.11,50,000/- based on the seized cash vide order dated 01/01/2014 which, ultimately, the CIT(A) deleted vide order dated 04/03/2016. Mr.Dave, the learned counsel would submit that in none of the proceedings as above, the department took the stance that the seized cash was appropriated towards the liabilities of Bhuraram. On the contrary, according to Mr.Dave, the department always believed it to be the income of the firm. 9. In the aforesaid context, Mr.Dave, the learned counsel seek to rely upon the decision of this Court in case of Hemal Dilipbhai Shah vs. Assistant Commissioner of Income-tax reported in [2017] 80 taxmann.com 151 (Gujarat). Mr.Dave would submit that the entire action on the part of the department is in breach of the Page 12 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 principles of natural justice. He would submit that the department could not have paid the balance cash to Bhuraram without issuing notice to the writ-applicant firm. Mr.Dave would submit that in a case where the ownership of the seized cash is in dispute the department is duty bound to determine the actual owner before handing over the cash/assets seized in accordance with Section 132(B) of the Act. 10. In the last, Mr.Dave submitted that the action on the part of the department is contrary to the order passed by the Rajasthan High Court and also the order passed by the Judicial Magistrate, First Class. He submitted that vide order dated 20/12/2016, the Judicial Magistrate, First Class, had directed the department to hand over the seized cash to the writ applicant firm, and in such circumstances, the department was bound by the same. 11. On the other hand, this writ-application has been vehemently opposed by Mr.M.R.Bhatt, the learned senior counsel appearing for the Revenue. Mr.Bhatt would submit that the writ-applicant has no case worth the name and the writ- application deserves to be rejected. Mr.Bhatt would submit that the case put up by the writ-applicant was rightly not accepted as no amount was seized by the department in case of the writ- applicant firm. The cash was seized by the Ajmer police from the possession of Bhuraram and the same was deposited in the name of Bhuraram by the CIT (Central), Jaipur, in the PD account of the CIT (Central), Ahmedabad. Mr.Bhatt would submit that the assessment under Section 143(3) read with Section 147 of the Act in the case of the writ-applicant firm was Page 13 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 made by the Income Tax Officer, Ward-2(2), Ahmedabad, vide order dated 01/01/2014 on the basis of the details forwarded by the ACIT-CC-1(2) Ahmedabad, whereas the refund application of the writ-applicant was rejected as no amount was seized in the hands of the firm. The cash was in the hands of Bhuraram. He would submit that the notice under Section 153(A) of the Act was issued to Bhuraram and not to the firm. During the course of the post-search proceedings as well as the assessment proceedings, Bhuraram admitted that the cash seized belongs to him and not to the firm. The addition in respect of the seized cash was made in the hands of Bhuraram for the A.Y. 2010- 2011 while finalizing the order under Section 143(3) read with Section 153(A) of the Act. He would submit that the penalty under Section 271(1)(c) of the Act was also levied in the case of Bhuraram on concealment of the income of Rs.24,50,000/-. The refund of the balance amount after set-off of the other tax liabilities was also issued to Bhuraram in view of the proceedings under sub-section 3 of Section 132(B) of the Act. 12. In the last, Mr.Bhatt submitted that the notice under Section 153(A) was issued to Bhuraram and not to the firm. The addition in respect of the seized cash was made in case of Bhuraram. The penalty under Section 271(1)(c) of the Act was also levied in case of Bhuraram. The refund of the balance amount after the set-off of the other liabilities was also issued to Bhuraram in view of the provisions of sub-section 3 of Section 132(B) of the Act. 13. In such circumstance referred to above, Mr.Bhatt would submit that the department cannot be said to have wrongly Page 14 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 withhold any amount pertaining to the writ-applicant. He would submit that the writ-application may be rejected. 14. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is, whether in the facts and circumstances of the case, the writ-applicant firm is entitled for refund of the seized cash which is otherwise declared ‘unaccounted money’ and taxed in the hands of the searched person. 15. At this stage, it would be appropriate to first examine the order passed by the Assessing officer in the case of writ- applicant firm in the proceedings under Section 143(3) read with Section 147 of the Act. It transpires from the record that the reopening of the assessment proceedings for the A.Y. 2010-11 came to be initiated in the case of the writ-applicant pursuant to the notice dated 21/03/2013 issued under Section 148 of the Act. As recorded in the assessment order, which is produced at page 33, the writ-applicant firm had moved before the Rajasthan High Court for release of the seized cash of Rs.24.50 lakh way back in the year 2012. At that stage, a copy of such application along with a copy of the FIR dated 25.06.2009 and other evidence were forwarded to the ACIT, Central Circle-1(2), Ahmedabad, for necessary action, which ultimately culminated into the reopening in the case of the writ-applicant firm. During such proceedings, the notice under Section 142(1) read with Section 143(2) of the Act was issued upon the writ-applicant on 05/11/2013. The said notice was responded to by the writ- applicant firm by filing a reply on 31/12/2013, which is Page 15 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 produced at page 27. By way of such reply, the writ-applicant firm has tried to explain the source of income of Rs.24.50 lakh. 16. On reading the assessment order in the case of the writ- applicant, it transpires that though the writ-applicant had offered the explanation for the whole seized amount of Rs.24.50 lakh under the description of “Chief Judicial Magistrate Court”, Ajmer, Ganpat Singh B.Rajput, Bhuraram Ganchi Makan Milkat Mate”, the Assessing Officer had assigned cogent reasons by recording specific findings that the “accumulation of huge cash of Rs.11.50 lakh (Rs.24.50 lakh (-) Rs.13 lakh) is not found justifiable and the cash book appears to be drafted one to justify the source of cash seized”. It further transpires that the authorized representative of the writ- applicant firm was given an opportunity to produce the evidence in support of their assertion. However, the only explanation tendered by the writ- applicant was that the cash withdrawal was out of cash available with the assessee firm. It is in this peculiar facts that the Assessing Officer concluded that so far as the remaining amount of Rs.11.50 lakh is concerned, in absence of any material, the same to be treated as unexplained income and is required to be added to the total income of the assessee. Further directions were issued for separate proceeding under Section 271(1)(c). 17. Thereafter, in the appeal before the Commissioner of Income Tax (Appeals) – 4, Ahmedabad, the writ-applicant firm, for the first time, placed on record the extract of the balance- sheet as on 31/03/2009 along with the ITR for the F.Y. 2008-09 corresponding the A.Y. 2009-10 with the photograph of Page 16 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 acknowledgment slip. The writ-applicant firm, relying upon the further documents, contended that the additional amount of Rs.11.50 lakh was, in fact, shown as the closing balance as on 31/03/2009, which had been carried forward by the writ- applicant as reflected in the balance-sheet as on 01/04/2009. The writ-applicant firm by submitting the details of various entries as reflected in the cash book for the period between 01/04/2009 and 30/03/2009 contended that there was an available balance of amount Rs.15 lakh as on 01/04/2009, which had continued all throughout for the aforesaid period. The Commissioner of Income Tax (Appeals) - 4, Ahmedabad, had no alternative but to accept the case of the writ-applicant firm and, therefore, directed to delete the additions made by the Assessing Officer while allowing the appeal in favour of the writ-applicant firm. 18. Having regard to the facts narrated in details as above, we have gathered an impression that the writ-applicant, in collusion with Bhuraram, took the Revenue for a ride. We do not propose to cast any aspersions on either of them, but at the same time, it needs to be noted that when Bhuraram was intercepted by the police at Ajmer and cash was recovered from his possession, his first version was that he was in possession of cash as he had sold silver. Bhuraram was not able to furnish any information as regards the two individuals to whom he had sold the silver and collected the cash in lieu of such sale transaction. Bhuraram accepted that the said cash was his undisclosed income and asked the department to do the needful in accordance with law. 19. On the other hand, the writ-applicant says that Bhuraram Page 17 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 was its employee and he was sent to Ajmer with cash for the purpose of purchasing a property in the form of office/shop on behalf of the firm. This case put up by the writ-applicant is unpalatable. If an employee of a firm is sent with such a huge amount in cash, then why all of a sudden the said employee had to say before the Revenue that it was his cash and he was the owner of the cash. 20. When Bhuraram persuaded the matter with the Revenue, what was the writ-applicant doing ? When the learned counsel appearing for the writ-applicant was confronted with this question, the only reply was that it was not within the knowledge of the writ-applicant that Bhuraram was pursuing the matter with the Revenue, as if Bhuraram was the lawful owner of the cash. The legitimate question arises to be answered by the writ- applicant is, as to at what point of time Bhuraram severed off the master-servant relationship ? Nothing is forthcoming on record. On one hand the writ-applicant went on asserting that the cash belongs to it, and on the other hand, Bhuraram took the stance that he was the lawful owner of the cash. 21. Under the Income Tax Act, Section 132B provides for the procedure for application of the assets seized under Section 132 or requisitioned under Section 132A and release of the assets thereunder. As per Section 132B(1), an assessee has to make an application for release of the seized assets within a period of thirty days. The reference to the word ‘existing liability’ authorises the officer to realise the amount of the existing liability by way of recovery from such seized assets. The closed examination of Sections 132 to 132B of the Act embodies an Page 18 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 integrated scheme laying down the procedure comprehensively for the search and seizure and the power of the authorities making the search and seizure to order confiscation of the assets seized. Section 132A of the Act confers power to the authorities to requisition the books of the account in consequence of the information in their possession. Section 132B provides the manner in which the assets retained under sub-section (5) of Section 132 can be dealt with. Sub-section (7) provides that if an assessing officer is satisfied that the seized assets or any part thereof were held by such person for and on behalf of such other person, the assessing officer may proceed under sub-section (5) against such other person and the provisions of Section 132 shall apply to such other persons as well. Sub-section (11) provides that if any person objects for any reasons to such order made under sub-section (5), he can, within a period of 30 days of the date of such order, make an application before the Chief Commissioner stating the reasons therein of such objections and requesting for appropriate relief in the matter. 22. In light of the aforesaid scheme envisaged for release of the seized assets, if we examine the case on hand we find that the Revenue has also committed some mistake, but the question is, whether the writ-applicant, in the facts and circumstances of the present case, is entitled to now assert, as a matter of right, that the department should return the cash to him with interest. The analysis of the facts which has emerged on record makes the overall conduct of the writ-applicant highly suspicious. (1) On 24/06/2009, the cash amount was seized from Bhuraram Patel by the SHO, Clock Tower Police Station, Ajmer, pursuant to the order dated 09/02/2011 passed by Page 19 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 the Chief Judicial Magistrate. The seized amount of cash was handed over to the ADIT (Inv.), Jodhpur. The first statement of the searched person Bhuraram Patel came to be recorded under Section 132(4) of the Act by the Revenue on 24/03/2011, wherein he admitted that the cash amount belongs to him. It further transpires from the record that in the said statement under Section 131(A) of the Act recorded by the Investigation Wing, Jodhpur, a specific query was raised to the assesee Bhuraram Patel (searched person), which is produced at page 68. In question no.5, a specific query was raised as regards the claim of the writ- applicant firm which was categorically denied by the said Bhuraram Patel (searched person). (2) It is pertinent to note that though the writ-applicant being aware about the objection raised by the Revenue while opposing release of the cash in an application under Section 457 of Cr.P.C., chose not to approach the Revenue seeking release of the seized cash under Section 132B of the Act. The Revenue had categorically taken the stance that the department has proceeded under Section 132 of the Act. Admittedly, the writ-applicant chose to submit application seeking refund of the cash seized before the respondent department for the first time on 17/03/2016 followed by an applications-cum-reminders dated 24/09/2017, 07/08/2018 and 11/10/2018 respectively. (3) Further, the writ-applicant had approached the concerned JMFC Court at Ajmer under Section 457 of the Code of Criminal Procedure for release of the seized cash in Page 20 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 July, 2009. The said application under Section 457 of Cr.P.C. came to be rejected by the concerned trial court vide order dated 16/09/2009, against which even a revision was preferred by the writ-applicant, which also came to be rejected on 3/1/2011. Therefore, the seized cash came to be transferred by the ADIT (Inv.) - 1, Jodhpur, to the CIT (Central) Jaipur on 24/02/2011, which ultimately came to be transferred to the CIT (Central), Ahmedabad, in the year 2012 for initiation of appropriate block assessment proceedings against the said Bhura Ram Patel (searched person). It is upon such transfer that the Assessing Officer, i.e. the Assistant Commissioner of Income Tax, assumed the jurisdiction for initiation of the proceedings against Bhuraram Patel (searched person) under Section 153(A) of the Act by issuing the notice dated 07/09/2011. (4) The Assessing Officer was made to believe that the seized cash belongs to the searched person in view of the uncontroverted statement made by Bhuraram Patel recorded on 24/03/2011. Based on such satisfaction, the assessment proceedings in the case of Bhuraram Patel (searched person) was initiated by issuing the notice dated 07/09/2011 under Section 153-A of the Act, which was responded to by the assessee (searched person) by filing the return on 15/10/2012, declaring his total income of Rs.54,000/-. In response to the specific query raised by the Assessing Officer to explain the source of cash seized and requisitioned under Section 132A of the Act on 24/02/2011 of Rs.24.50 lakh along with the supporting Page 21 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 documents/evidence, the said assessee Bhuraram Patel (searched person) had submitted his reply dated 15/10/2012 (which is reproduced in the order at page 72), wherein the searched person had accepted that the seized cash belongs to him being derived from the sale of silver. It further transpires that the statement of Bhuraram Patel (searched person) was first recorded on 24/03/2011 under Section 132 (4) of the Act. The second statement was recorded on 15/10/2012 (which is placed on record at page 75). However, at the end of the assessment proceedings, the Assessing Officer, upon appreciation of the materials on record, by an order dated 31/10/2012, arrived at a conclusion that said assesee was holding unaccounted income of Rs.24.50 lakh for the A.Y. 2010-11. (5) The said order of the Assessing Officer was further challenged by the said assessee – Bhuraram Patel (searched person) by preferring an appeal on 22/11/2012 before the CIT(A), Ahmedabad. However, the CIT (A), Ahmedabad, vide order dated 02/01/2014 had dismissed the appeal, thereby confirming the order passed by the Assessing Officer of the unexplained income of Rs.24.50 lakh. Even the penalty order under Section 27(1)(C) of the Act, 1961, came to be passed against the said searched person on 07/03/2013 by the Deputy Commissioner of Income Tax, Central Circle-I (2), Ahmedabad, levying the penalty of an amount of Rs.7.35 lakh. The appeal preferred by the said assessee - Bhuraram Patel against the aforesaid order of penalty came to be rejected by the CIT(A), Ahmedabad, vide order dated 01/01/2014. The Page 22 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 CIT(A) found the story of the said assessee not believable as except for the affidavit no other cogent material or evidence were brought on record and, therefore, confirmed the order passed by the Deputy Commissioner levying the penalty under Section 270(1)(C) of the Act. Thus, as on date of the passing of the order dated 01/01/2014 in the case of the writ-applicant firm, the proceedings under Section 153A against the searched person Bhuraram Patel had already concluded in view of the order dated 31/10/2012 passed by the Assessing Officer, treating the cash in the hand of said assessee as ‘unaccounted income’. In fact, the matter travelled in appeal and even penalty proceedings had already been started. On the other hand, when the assessment proceedings were initiated against the writ-applicant firm and were heard, the writ-applicant had failed to furnish the aforesaid details before the Assessing Officer. 23. It is pertinent to note that nothing has been placed on record by the writ-applicant to suggest that the proceedings undertaken by the department under Section 132 of the Act, were objected to by the writ-applicant at the relevant point of time. In fact, the inaction on the part of the writ-applicant firm as against the statement of the searched person Bhuraram Patel, the Assessing Officer has been made to form a reasonable belief of treating the seized cash in the hands of the searched person Bhuraram, for initiation of the proceedings under Section 153A of the Act as against Bhuraram only. Had the writ-applicant firm approached before the Revenue Department, then the recourse Page 23 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 as available under Section 132 or Section 153C of the Act had also been followed against the writ-applicant firm. In fact, it was only when the said fact was noticed in the proceedings before the Rajasthan High Court challenging the criminal proceedings arising out of Section 457 Cr.P.C. that the papers related to the writ-applicant were placed before the Revenue Department, which culminated into the reopening proceedings under Section 148 of the Act. The Court further finds that the reopening proceedings in the case of the writ-applicant has been carried out in terms of Section 143(3) read with Section 147 of the Act rather than Section 153C of the Act. Again, there is no challenge to the order declaring the seized cash in the hands of Bhuraram Patel as ‘unaccounted income’ of the searched person. Even, there is no challenge to the order of penalty and the seized cash being adjusted towards the same. We find that there is no irregularity or illegality in the order passed by the Assessing Officer, treating the seized cash as ‘unaccounted income’ in the hands of the searched person Bhuraram Patel.. 24. In light of the aforesaid facts and legal position, this Court does not find any fault with the department of having refused to release the seized amount at the relevant point of time or even the refund thereafter. At the same time, declaring the income in the case of the writ- applicant being not taxable, will not ipso facto result into refund of the seized cash, which has otherwise been realized from the searched person. 25. It is well-settled legal position that prerogative writs under Article 226 of the Constitution can be issued only in grave cases where the subordinate tribunals or bodies or officers act wholly Page 24 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 without jurisdiction, or in excess of jurisdiction, or in violation of principles of natural Justice, or refused to exercise jurisdiction vested in them, or there is error apparent on the face of record which has resulted in manifest injustice. In the case of Sangram Singh vs. Election Tribunal, Kotah, AIR 1955 SC 425, in para 14 of the judgment the Supreme Court has observed as under : “That, however, is not to say that the jurisdiction will be exercised whenever there is an error of law. The High Courts do not, and should not, act as courts of appeal under Article 226. Their powers are purely discretionary and though no limits can be placed upon that discretion it must be exercised along recognized lines and not arbitrarily ; and one of the limitations imposed by the Courts on themselves is that they will not exercise jurisdiction in this class of case unless substantial injustice has ensued, or is likely to ensue. They will not allow themselves to be turned into courts of appeal or revision to set right mere errors of law, which do not occasion injustice in a broad and general sense, for, though no Legislature can impose limitations on these constitutional powers it is a sound exercise of discretion to bear in mind the policy of the Legislature to have disputes about these special rights decided as speedily as may be. Therefore, writ petitions should not be lightly entertained in this class of case.” 26. In M.Padmanabha Iyengar vs. Government of A.P., reported in AIR 1990 AP 357, Jeevan Reddi, J. (as His Lordship then was) observed as follows : Page 25 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 “It must also be remembered that, the remedy under Article 226 is a discretionary one. The Court is not bound to interfere merely on the establishment of an irregularity or illegality. The Court must further be satisfied that such interference is called for to meet, or to further, the ends of justice. If by interfering in the matter the interests of justice are going to suffer, this Court will withhold its arm;” (see Sangram Singh vs. Election Tribunal, Kotah, AIR 1955 SC 425 and Venkateswara Rao vs. Government of Andhra Pradesh, AIR 1966 SC 828). 27. A Division Bench of this High Court in the case of Saurashtra Paper and Board Mills Pvt Ltd vs. State of Gujarat and others, reported in (1992) 2 GLR 871, observed as under: “It is a settled principle of law that the remedy under Article 226 of the Constitution of India is discretionary in nature and in a given case, even if some action or order challenged in the petition is found to be illegal and invalid, the High Court while exercising its extraordinary jurisdiction thereunder can refuse to upset it with a view to doing substantial justice between the parties.” 28. It has been rightly observed that the legal formulations cannot be enforced divorced from the realities of the fact situation of the case. While administering law, it is to be tempered with equity, and if the equitable situation demands after setting right the legal formulations, not to take it to the logical end, the High Court would be failing in its duty if it does Page 26 of 27 C/SCA/13896/2019 JUDGMENT DATED: 22/02/2022 not notice the equitable consideration and mould the final order in exercise of its extraordinary jurisdiction. Any other approach would render the High Court a normal Court of Appeal, which it is not. 29. In view of the aforesaid, we decline to grant any relief to the writ-applicant. The writ-application accordingly stands rejected. (J. B. PARDIWALA, J.) (NISHA M. THAKORE, J.) /MOINUDDIN Page 27 of 27 "