TMI Blog2004 (4) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-4-2004 - Judge(s) : KALYAN JYOTI SENGUPTA. JUDGMENT KALYAN JYOTI SENGUPTA J, -This batch of petitions raises common question of fact and law with an insignificant variation. In all these cases the petitioners herein have prayed for a writ of mandamus commanding respondents Nos. 1 to 6 to restrain from appropriating and/or withdrawing any amount lying in favour of the petitioners from respondent No. 7 and further in particular appropriating and/or withdrawing any amount in respect of the several managers' cheques all dated February 19, 2004. Further direction has been sought for commanding respondents Nos. 7 and 8 to honour the managers' cheques issued by City Bank drawn in favour of the petitioners as and when presented. The common grievance of the petitioners is that despite presentation of the managers' cheques, the bank authorities are not honouring because of the preventive and obstructive action being taken by the Revenue authorities. The petitioners and each of them at an earlier point of time came to this court for identical grievance challenging a prohibitory order dated February 20, 2004, issued under section 132(3) of the Income-tax Act, 1961 (hereinafter refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ful reading of section 132 it will appear to this court that the Revenue official cannot seize anything or any substance other than mentioned in the said section. The money lying in the bank or in the custody of the bank meant for honouring the managers' cheques and/or pay order cannot be said to belong to the petitioners under banking law. The bank is not a custodian of the money of the petitioners rather it is debtor to the petitioners in terms of the contract of banking transaction. At the highest the amount which is sought to be withdrawn by the Revenue officials is "a debt" payable on demand or maturity of any "term deposit" to the petitioners. Under the provisions of the said section, the Revenue officials cannot force the bank to pay the money to it or to withdraw the same forcibly. Therefore, this action on part of the respondents in the name of search and seizure aiming to obstruct and/or prevent the petitioners from encashment, as well as the bank from honouring the managers' cheques is unauthorised and not permitted under the provisions of the said Act. They cannot seize the money, at the highest the Revenue official can attach by issuing prohibitory orders under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shes on the expiry of 60 days from the date of issuance, but the authorities concerned are not debarred from issuing fresh order; as the power of extension is no longer in the statute book. He contends that the court has to look into the prime object of making provision for search and seizure ignoring subtle technical difficulties. He contends that in the event the period of search and seizure is not prolonged beyond 60 days, in a case where investigation cannot be completed within a short time then the undisclosed income cannot be unearthed and recovery of the tax on this income would be impossible, for the person concerned will go away with the money. He contends citing the principle laid down by a number of Supreme Court decisions that the courts do not interfere with the action nor stall any cause of issuance of show cause notice being operated under the Revenue statute or action of this nature, if taken lawfully. He submits that if it is held that the money kept at the bank is not the money of the petitioners then certainly it is "a debt" payable by the bank to the petitioners as a creditor and this debt can very well be attached and/or be subjected to the order of seizu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e treated to be of the petitioners for seizing the same, or the money lying and/or kept under the bank custody can be seized under any circumstances as per the provisions of the said section or not. Firstly, I shall deal with prima facie whether fresh restraint order dated April 20, 2004, can be issued on the facts and circumstances of this case. Admittedly, the prohibitor order under section 132(3) of the said Act dated April 20,2004, has been issued afresh in relation to the same summons against the same persons. No new and further development took place. In my view as rightly submitted by Mr. Chatterjee this fresh order is not permissible under law in view of the insertion of sub-section (8A) of the said section 132. Previously, before the insertion of the Finance Act, 2002, there was a provision for extension beyond the period of 60 days. I have seen carefully the Finance Bill of 2002 (reported in [2002] 254 ITR (St.) 153), it appears to me to obviate the difficulties then being faced by the affected person a rigid time limit of 60 days has been fixed and the earlier provision of extension has been deleted with the idea that whatever is required to be done to maintain the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to seize it. Before I address this question and issue, I think it is necessary for me to quote the relevant portion of the provision of section 132(1) of the said Act. "132. (1) Where the Director-General or Director or the Chief Commissioner or Commissioner or any such Joint Director or Joint Commissioner as may be empowered in this behalf by the Board, 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, 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 (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 of other documents Which will be useful for, or relevant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, but such Chief 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 Chief Commissioner or Commissioner having jurisdiction over such action may be prejudicial to the interests of the Revenue: 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). (1A) Where any Chief Commissioner or Commissioner, in consequence of informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debarred from recovering this amount. I accept the argument of Mr. Chatterjee fallowing the decisions rendered by several High Courts on this question cited by him, that the money lying at the bank at the present moment does not belong to the petitioner rather the bank is a debtor to the petitioners. The moment the managers' cheques are produced for encashment, this amount will be made over to pay off the debt. In the Madras High Court Division Bench judgment in I. Devarajan v. Tamil Nadu Farmers Service Co-operative Federation [1981] 131 ITR 506 and of the Division-Bench of the Kerala High Court in ITO v. M. Shajahan [1976] 104 ITR 347, it has been observed amongst others that it will not be the money of the petitioners but the same can be treated to be "a debt" and it is liable to be attached under section 132(3) of the said Act. Neither the cheque nor the pay order, nor the managers' cheques for that matter, are money themselves, these are merely valuable documents. These documents may be seized by the Revenue officials but the money itself is in connection with these documents. I find considerable force in the argument of Mr. Chatterjee that the Revenue official cannot comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse account in a short-term fixed deposit not exceeding ninety days. These fixed deposits or deposit as the case may be shall be issued in the name of the concerned Commissioner or Joint Commissioner of Income-tax and these fixed deposit receipts shall be handed over to the aforesaid officials. They or the holder of the receipts shall not encash the same without leave of the court. This order is passed keeping in view the possibility that in the event any absolute order of injunction is passed in favour of the petitioners consequently the money is allowed to be withdrawn and the writ petition is dismissed ultimately, then it will be impossible to recover the probable tax dues that might be assessed, whereas, if the writ petition succeeds then the amount that will be invested in the short-term fixed deposits and the interest to be fetched thereon will enure to the benefit of all the petitioners. Affidavits in opposition are to be filed within three weeks from date. Reply within two weeks thereof. Matter to appear in the monthly list of July, 2004, for hearing. This order is passed without prejudice to the rights and contentions of the parties. The Revenue officials shall proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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