TMI Blog2008 (1) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts of appellant No.1 had been restrained by order issued under Section 132 (3) of the Income Tax Act, 1961 (in short the 'Act'). The Bank issued a similar letter to appellant No.3 intimating that the said appellant had been restrained from operating her Savings Bank account by order dated 3.8.2005 passed under Section 132(3) of the Act. Appellant's stand was that existence of the lockers and the bank accounts were disclosed by the appellants in the regular books of account maintained and no opportunity was provided to establish the said fact. It was further submitted that the computers which contained the details of the bank accounts were available at the business premises at Janakpuri and no opportunity was allowed to the appellants to place these before the authorities. Grievance is made that apart from the non grant of opportunity no effort whatsoever was made to ascertain whether the accounts had been disclosed in the regular books of account maintained by the appellants. On 8.8.2005 appellant addressed a letter to the Additional Director of Income Tax stating inter alia that all bank accounts under restraint have been disclosed in the regular books of account and also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On 28.10.2005 the appellants were supplied with copies of the Panchnama. On 29.10.2005 appellant No.1 requested the respondents to adjust towards self assessment tax of Rs.77,68,177/- for the assessment year 2005-06 from the seized amount of Rs.1,81,91,982/- and to release the balance. On 29.11.2005 appellants Nos.1 and 3 moved an application under Section 132 (B) of the Act for release of the amount seized on 5.10.2005 i.e. within 30 days of the end of the month in which seizure took place. Several documents were filed to substantiate the claim. Again on 16.2.2006 Income tax authorities were requested for adjustment of Rs.40,00,000/- as advance tax for the assessment year 2006-07 from the seized amount and to release the balance. Since the respondents failed to respond to the requests of the appellants, writ petitions Nos.6313-6315 of 2006 were filed inter alia for the following directions: '(a) to respondents to release the balance amount of Rs.61,85,502/- to petitioner No.1 after accepted adjustments; (b) to respondents to release amount of Rs.25,27,035 to petitioner No.3; (c) quash and set aside Warrants of Authorization dated 4.10.2005; (d) declare restraint order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned for estimated liability. Such a course is not available after deletion of the provision relating to estimated liability in 2002. Similarly, the provisions relating to block period assessments in Chapter XIV were deleted w.e.f. 1.6.2003. As the authorities themselves permitted adjustment of self assessment and advance tax, there was in effect release accepting the stand of the appellants and the balance amount of Rs.81,00,000/- has perforce to be refundable. The power under Section 132(1)(iii) relates to seizure and the proviso deals with assets which cannot be seized. There is no dispute that Section 132 (3) read with Section 132 (8A) restricts the period of operation of the order of restraint to 60 days. Section 132B relates to adjusting liability on completion of assessment under Section 153A and it is relatable to the year in which search and seizure was initiated and block period in terms of Chapter XIV-B. Section 158 relates to retention and not appropriation. 9. Stand of the respondents on the other hand was that reference to Section 153A in Section 132B shows that it relates to estimated liability. Though it is accepted that the provision relating to estimated liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto a demand draft is only a safeguard for safe custody of these assets and is irrelevant to the legality of the seizure itself. It is therefore submitted that in the instant case, the seizure was made legally and as per the powers vested in the Director of Income Tax (Investigation), respondent No.1 under Section 132 (1) of the Act." 14. "The Search and Seizure Manual" to which reference has been made deals with in Chapter V under heading "Post Search Work". The relevant paras 5.01 and 5.02 read as follows: "5.01 After the return of the search parties, a check list should be prepared for pending and immediate follow up work. The check list may inter alia include:- (a) List of places where search has to be continued. (b) Details of bank lockers sealed and to be opened subsequently. (c) List of places where valuables are sealed in premises itself on the ground that verification with Wealth-tax records is not possible or pending valuation of assets. (d) List of godowns holding stocks, in respect of which prohibitory orders have been issued. (e) List of places where police guards have been posted. (f) Details of bank accounts which have been frozen under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re deposited in a Bank, the relationship that is constituted between the banker and the customer is one of the debtor and creditor and not trustee and beneficiary. The banker is entitled to use the monies without being called upon to account for such user, his only liability being to return the amount in accordance with the terms agreed between him and the customer. And it makes no difference in the jural relationship whether the deposits were made by the customer himself, or by some other persons, provided the customer accepted them. There might be special arrangement under which a Banker might be constituted a trustee, but apart from such an arrangement, his position qua Banker is that of a debtor, and not trustee. The law was stated in those terms in the old and well-known decision of the House of Lords in Foley v. Hill (1848 11 H.L.C. 289 E.R. 1002) and that has never been questioned." 18. In the judgment of House of Lords in Foley v. Hill [(1843 to 1860) All E.R. Re-print 16] referred in the aforesaid judgment of the Constitution Bench, it was inter alia held as under: "Money, when paid into a bank, ceases altogether to be the money of the owner, it is then the money of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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