TMI Blog2016 (5) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Department made no enquiries with the HDFC Bank. Inexplicably the Investigation wing of the Department abdicated its basic responsibility and simply passed the buck to the AO. Mr R K Seth was only an employee of SIPL. He was not carrying the cash as was wrongly presumed by the AO. His statements offered a plausible explanation which could easily be verified. The Court fails to understand how the said sum could ever be added to the returned income of Mr Seth. The Court agrees with the learned counsel for SIPL that the indifferent and callous approach of the Department's officials has resulted in grave injustice to SIPL. It has had to have its account debited for the entire amount and the seized cash remained in the Department's account. The Court has, in the circumstances, no hesitation in holding the actions of the Department, in refusing to release the cash seized from the armoured vehicle to the Petitioner, to be invalid and illegal. The Department is directed to return to SIPL the entire seized amount of ₹ 60,48,748 together with interest @ 12% per annum from the date of seizure of the cash i.e., 9th January 2012 till the date of return which in any event shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis. HDFC Bank has the right to immediately notify the RBI in the event of any breach of security and leakage of confidential customer information/data/records. In these eventualities, HDFC is liable to its customers for any damages and SIPL shall indemnify HDFC for such losses or damages. 4. There are also clauses regarding confidentiality or authority of the information that may be provided to SIPL for the purpose of discharging its contractual obligations. Schedule-I to the Agreement sets out the scope of the services. The obligation of SIPL is to pick up, collect, obtain, currency notes from the bank s customers/clients and any other related documents etc. and deposit the same with the bank. The other obligations as spelt out in Schedule I include to deliver, hand over, pay, issue cash, currency notes to the customers/clients of the bank in accordance with the instructions that may be given by the bank from time to time and also collect related documents/cheques from the customers and submit to the bank ; to obtain the signatures, receipts, acknowledgements, etc. and/or any other documents/papers from the customers of the bank and deliver/hand over or forward the same t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l or steel trunks duly locked (steal trunks in case the cash collected is huge and bulk). The cash deposit challan will also be sealed with the cash to prevent any chance of tampering or alterations. 24. All moneys picked up will be carried to the designated branch of the bank for deposit over the counter. The receiving branch will accept, examine and count the cash and if in order will acknowledge the cash deposit on the third and fourth copies of the cash deposit challans. 25. The amount carried by the bank either from the customer to the bank or bank to the customer cannot exceed ₹ 4 crore per trip. Cash that can be transported per van shall be limited to ₹ 4.00 crore. 8. Schedule III to the Agreement sets out the consideration to be paid for the services rendered. SIPL also simultaneously furnished an Indemnity Bond in favour of HDFC Bank agreeing to make good the loss or damages caused to the Bank. An Addendum to the Agreement sets out the precise guidelines for cash pick-up and delivery services. 9. On 9th January 2012, a date when the polling in the elections to the Uttar Pradesh Legislative Assembly was in progress, one of the armoured vehicl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment with the HDFC Bank. When asked why there was no logo on the vehicle, Mr. Seth pointed out that the vehicle was recently painted. When asked to give the name and address of the private parties whose cash that has been transporting , Mr. Seth suggested some of the parties names, i.e., ITC (P) Limited, Mahindra M.G., Bharti Retail, M.S. Sport Limited, Trent Ltd. etc. When asked do you have any evidence of parties, whose cash you are carrying is disclosed or accounted as per provisions of Income Tax Act, 1961 , Mr. Seth is supposed to have replied No Sir, I have no evidence for this cash. When asked apart from above, you have to say anything Mr. Seth replied: HDFC bank has given the facility to its customers that their cash collected by us should be deposited daily in their accounts. We have collected the cash is to be deposited in HDFC Branch, Gandhi Nagar, Ghaziabad. Stand of the Department 14. From the counter affidavit filed in this Court by Mr. Sanjeev Kumar Yadav, JDIT (Investigation), Meerut the inference drawn by the Department from the above information provided by Mr. Seth was that SIPL was engaged in the business of carrying cash for HDFC, ICICI, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount mentioned in each challan. The Court notes that there was sufficient information available in the challans for the Department to know who the customers were and what their account numbers with the HDFC Bank were. Therefore, it is incorrect on the part of Mr Yadav to say that there was no evidence in the forms of challans or receipts. The information contained in the slips cold have been easily verified by the Department. 18. In response to a pointed query to Mr. Rahul Chaudhary, learned Senior standing counsel for the Department whether the Assessing Officer ( AO ) to whom the case was transferred made enquiries with the HDFC Bank or with the customers whose names were found in the slips, the answer was in the negative. Further events 19. To continue the narration of what transpired thereafter, after the statement of Mr. Seth was recorded on 9th January 2012, the seized containers were opened on 10th January 2012 in the premises of State Bank of India ( SBI ) at Navyug Market, Ghaziabad. According to SIPL, despite the sealed containers disclosing the aforementioned details the police took the vehicle and handed over the money to the JCIT who produced authorization und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh amount seized was attributed to the income of Mr. R.K. Seth and his complete taxable income assessed at ₹ 67,80,860. The AO ordered interest under Section 234A, 234B and 234C of the Act and also issued penalty proceedings under Section 271(1) (c) of the Act. 26. In the said assessment order, the after setting out the statement made by Mr. Seth and the terms of the agreement entered into before HDFC Bank and SIPL, in para 13 the AO noticed that on 17th February 2014 Mr. Seth has filed the photocopies of the cash deposit slips issued by HDFC Bank in the name of the various private parties. According to the AO, the challan slips provided by SIPL did not bear the signature of SIPL except in the case of Trents Limited. The AO then noted that the cash was seized on 9th January 2014 by the Flying Squad Magistrate and that SIPL had no evidence in the shape of challan deposit slips of the customers of the HDFC Bank for the undisclosed cash of ₹ 60,48,672. Incomplete enquiry by the AO 27. The above conclusion of the AO appears not to be correct since the file produced by the Department before this Court today contains the cash slips recovered from the containers in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first place, it requires to be noticed that Rule 112 F was inserted by the Income Tax (14th Amendment) Rules, 2012 with retrospective effect from 1st July 2012. Therefore, it was not in operation when the search in the present case took place, i.e., 9th January 2012. Secondly, Rule 112 F states that when the seizure takes place of any money, bullion, jewellery or other valuable articles or things from a person in whose possession is found and where the election is going on in the assembly or parliamentary constituency, the AO 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. This by no means states that the AO is relieved of the duty to make an enquiry to determine whether the cash or other valuable articles seized from a person in fact belongs to such person. 30. To be fair Mr. Rahul Chaudhary himself did not contest the position that the legal requirement of the AO having to make an enquiry was not dispensed with by Rule 112 F. Invalidity of the Department's actions 31. The case on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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