Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2021 (1) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (1) TMI 24 - HC - Income TaxSearch warrant u/s 132 - Retention of cash seized in search - HELD THAT:- There were no circumstances existing for the Principal Director of Income Tax (INV), Hyderabad to issue any warrant for search or seizure under Section 132 of the Act on 28.8.2019 when the cash had been handed over to the Income Tax Department by the Task Force Police on 27.8.2019 and therefore the seizure of the cash from Vipul Kumar Patel by the respondents and its retention till date by them is per se illegal. Intimation by the Police to the Income Tax Department on 27.08.2019 would not confer jurisdiction on the Income Tax Department to detain and withhold cash, that too by issuance of an invalid search warrant under Section 132 of the Act; and there is no basis for the Income Tax Department to invoke the provisions of Section 132, 132A and 132B of the Act since there is no 'reason to believe' that the assessee has violated any provision of Law. This is because, as held in Vindhya Metal Corporation and others [1997 (3) TMI 3 - SUPREME COURT] mere possession of cash of large quantity, without anything more, could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which would not have been disclosed by the person in possession for purpose of the Income Tax Act. In the absence of any rival claim for the cash amount of ₹ 5.00 crores by any third party, the respondents cannot imagine a third party claimant and on that pretext retain the cash indefinitely from M/s.Mectec thereby violating Article 300-A of the Constitution of India. A return of income would be filed by M/s.Mectec, the petitioner for the annual year 2019-20 only after 31st March, 2020. The explanation of the cash transaction can be expected to be found only after such return of income is filed by the petitioner. There is no basis for the respondents to presume that petitioner would not disclose the cash transaction of ₹ 5.00 crore in its Income Tax return which was not filed by the alleged date of seizure of the cash by the Police, i.e., 26.08.2019. As rightly contended by the petitioner, an income tax inspection and/ or investigation would be permissible only in respect of a past event but not for possible future contingencies; and if the petitioner was going to disclose and explain the cash of ₹ 5.00 crore in its income tax returns for 2019-20, there was no basis for proceeding with any coercive action against the petitioner such as retention of cash. Retention of cash by the respondents even before the commencement of an offence under the Income Tax Act, 1961, i.e., possible future non- disclosure by the petitioner in its income tax return which would be filed after 31st March, 2020 would clearly violate Article 300-A of the Constitution of India. Even the statements recorded under Section 132 of the Act from Vipul Kumar Patel cannot be relied upon by the respondents to contend that he is working with M/s. P. Umesh Chandra and Sons or M/s. P. Umesh Chandra and Company and not the petitioner. The very seizure and retention of the cash amount of ₹ 5.00 crore by the respondents from 27.08.2019 till date is illegal and unsustainable. Writ Petitions are allowed.
|