TMI Blog1995 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... rge of the Government Railway Police (Broad Gauge), Gwalior, found that the aforementioned Nirbay Kumar was in possession of silver ornaments weighing 604 Kgs. A case was registered under sections 102 and 103 of the Code of Criminal Procedure, 1973 (hereinafter referred to as the "Code"). Simultaneously, the police sent information to the income-tax authorities. After two days, a warrant of authorisation was issued under section 132A of the Act. This directed the Station Incharge of the Government Railway Police (Broad Gauge), Gwalior, to make available the silver ornaments to the officer who had signed the warrant of authorisation. As the Second Additional Chief Judicial Magistrate, Gwalior, had taken cognizance of the case under sections 102 and 103 of the Code, an application was also moved before the aforementioned court. A prayer was made that the aforementioned silver ornaments be given to the income-tax authorities. This prayer was declined by the aforementioned Judicial Magistrate. An order to this effect was passed on July 20, 1990. It is worthwhile to mention here that in the meantime, ten persons came forward and claimed ownership in the silver ornaments. Their case was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as released by the aforesaid authorities through C. J. M. Gwalior, on July 20, 1990, and the assessee has accounted for the said seized jewellery after release in his stock register on July 21, 1990, and the stock available on July 21, 1990, after taking into account the aforesaid silver jewellery was of 106.019 grams. However, it is stated that the aforesaid silver ornaments have again been deposited with the Gwalior Treasury on November 1, 1990, in compliance with the directions of higher courts. However, since the matter is still sub judice before the higher authorities, no finding is being given on the silver jewellery seized. It is accordingly argued that there was no justification to issue the warrant of authorisation or to continue with the retention of these seized materials. The second set pertains to two writ petitions. These bear Nos. 2155 of 1990 and 2063 of 1990. The brief facts out of which these petitions have arisen be noticed : On August 20, 1990, a sum of Rs. 4,68,000 was seized by the police from the person of one Santosh Kumar Jain. At the same time, the person in possession was arrested and the Judicial Magistrate took cognizance of the matter. On the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the intention to purchase readymade silver ornaments. They went to Nagpur but could not settle the purchases as they were new in this line of trade. Therefore, they returned back to Gwalior. Police arrested and seized the money. On going through the cash book it is noted that all the three partners have contributed their share capital amounting to Rs. 1,50,000 each, This money has been deposited on August, 10, 11, 12, 13 and 15 of 1990, Rs. 30,000 by each partner daily. They were required to explain the source of money deposited in the firm. They have filed their individual cash book pages showing the cash position. On going through the individual's cash it is seen that there are various deposits in various names. On query to this it is submitted that it is not loan deposits but it is repay back of money advanced to various peoples. In support the list of persons showing the amount and the date when the money was advanced have been identified. It is also stated that they are doing their separate business of brokerage of silver, interest income. Shri Santosh Kumar has also stated in his statement placed on record that he has a masala mixer mill. It is also stated by them that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of Chief Judicial Magistrate, Gwalior. The petitioner made a prayer for the release of the suitcase. The Income-tax Department filed objections. A plea was taken that a warrant of authorisation has been issued under section 132A(1)(c) of the Act. A prayer was accordingly made that the money in question be not handed over to the petitioner. The Chief Judicial Magistrate passed an order to the effect that the petitioner is not entitled to the amount. This led to the filing of the present petition. The warrant of authorisation has been challenged. A plea has also been taken that the part of money which was seized belonged to one Pankaj Kumar. An explanation has also been given that part of the money was brought from Devendra Kumar of Bhandar. In all the cases, the jurisdiction of the officer who had issued the warrant of authorisation is being challenged on the ground that the officer who had issued the warrant had not applied his mind. According to the petitioners whose property is allegedly involved vis-a-vis the warrant submitted that there is nothing on the record to indicate that there was satisfaction on the part of the officer issuing the warrant which may fall within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alior, therefore, the concerned officer had jurisdiction. It is submitted that even if there is lack of jurisdiction this shall not be fatal to the legality of the warrant of authorisation. It is argued that if ultimately it is found that the person who is claiming the property is an assessee at some other place then the custody of the seized property would be handed over to or made available or put under the custody of the assessing authority which has the jurisdiction. The further stand taken is that there is no final order of assessment by any assessing authority and no reliance can be placed on the orders of assessment placed on the record. According to him, these are not final dues. It is pointed out that the assessing authority passing the order at Mathura has not pronounced upon as to the nature of the transaction on account of the fact that proceedings are pending in this court. Thus, the issues involved in these petitions are : (i) Whether the officer issuing the warrant of authorisation had applied his mind and had reason to believe that circumstances existed for issuing the warrant. (ii) Whether the officer who issued the warrant had the territorial jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) is seized under sub-section (1) or sub-section (1A), as a result of a search initiated or requisition made before the 1st day of July, 1995, the Income-tax Officer, after affording a reasonable opportunity to the person concerned of being heard and making such enquiry as may be prescribed, shall, within one hundred and twenty days of the seizure, make an order, with the previous approval of the Deputy Commissioner,-- (i) estimating the undisclosed income (including the income from the undisclosed property) in a summary manner to the best of his judgment on the basis of such materials as are available with him ; (ii) calculating the amount of tax on the income so estimated in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act ; (iia) determining the amount of interest payable and the amount of penalty imposable in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act, as if the order had been the order of regular assessment ; (iii) specifying the amount that will be required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, then, the Director-General or Director or the Chief Commissioner or Commissioner may authorise any Deputy Director, Deputy Commissioner, Assistant Director, Assistant Commissioner or Income-tax Officer [hereafter in this section and in sub-section (2) of section 278D referred to as the requisitioning officer] to require the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer." " 226. Other modes of recovery.--(1) Where no certificate has been drawn up under section 222, the Assessing Officer may recover the tax by any one or more of the modes provided in this section. . . (4) The Assessing Officer or Tax Recovery Officer may apply to the court in whose custody there is money belonging to the assessee for payment to him of the entire amount of such money, or, if it is more than the tax due, an amount sufficient to discharge the tax. " The salient facts be again recapitulated. In petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid. Be it noted in this connection that the police had not registered any crime against respondent No. 3 and the Income-tax Department on being apprised of the seizure had laid claim to that money and to custody thereof in accordance with provisions aforequoted. Neither the S. H. O., Janakganj Police Station, nor the learned Magistrate, had any jurisdiction to enquire into the validity of the warrant of authorisation for delivery of that money, to the Income-tax Officer concerned, namely, Shri Khanduja, nor of the competence of the Officer issuing the warrant of authorisation. Indeed, we are further of the view that this court also, in this matter, is not at all concerned with the validity of the warrant of authorisation. We are simply concerned to see if the S. H. O., Police Station, Janakganj, or the learned Magistrate, Shri Samadhiya, dealt with the sum of Rs. 3,15,000 recovered from respondent No. 3 in a manner not authorised by law. " As such counsel for the Union of India is right in his submission that the order passed by the Second Additional Chief Judicial Magistrate in the bunch of ten petitions referred to in paragraph 3, directing the return of silver ornaments to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be authorised is a field open to judicial review. " I am of the view that the question as to whether there was due satisfaction or not is to be determined by taking into consideration the circumstances which existed on the day the warrant is issued. This satisfaction is not to be judged by taking note of subsequent events and explanations which may be furnished. I am of the considered view that in all the cases the warrant of authorisation was properly issued as the concerned officer had reason to believe that the condition precedent for the exercise of power did exist. Thus, in the petitions referred to in paragraph 3 of this order the person found to be in possession is not an assessee. The persons claiming to be owners have yet to prove their ownership. The assessing authority at Mathura has not commented upon this. Even the Court of the Second Additional Chief Judicial Magistrate chose to hand over the ornaments on sapurdgi. Nirbay Kumar had disclaimed ownership. The persons who have claimed ownership have not so far been declared owners. As such the apprehension of the officer who issued the warrant could not be said to be ill-founded. Again in the two writ petitions d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under section 226(4) of the Income-tax Act. " In the writ petition referred to in paragraph 4 order of assessment has been passed. The source of money has been explained. As such warrant of authorisation shall cease to operate with regard to cash subject-matter of the petition. In Writ Petition No. 1853 of 1991 the assessment has been completed. The ratio of the decision given in K. Choyi's case [1980] 123 ITR 435 (SC) would apply to the above case. Thus, I am of the view : (i) The criminal court had no authority to order handing over of property, i.e., jewellery or cash to persons claiming it. (ii) Satisfaction of the authority issuing the warrant is to be determined as per the situation existing on the date when the warrant is issued and the requisite satisfaction satisfy the test of judicial review. (iii) Lack of territorial jurisdiction is not fatal to the issuance of the warrant. (iv) Once an assessment is over the seized property is to be disposed of as per the determination made by the assessing authority. (v) Where assessment is not complete the authority issuing the warrant shall take further steps within the stipulated period as required under section 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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