Income-tax custody over seized cash prevails where the source is unexplained and release would hinder assessment proceedings.

Seized cash required for proceedings under the Income-tax Act should remain under the custody of the tax authorities where its source is unexplained. The High Court held that section 132A and the need for assessment and consequential action under the tax law prevailed over the criminal court's power to release property under the Code of Criminal Procedure. An order directing release of the cash to the claimant was therefore set aside, and the amount was ordered to be handed over to the Income-tax Department.

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Issues: Whether the seized cash was required to be retained and handed over to the Income-tax Department for proceedings under the Income-tax Act, or could be released to the claimant under the Code of Criminal Procedure.

Analysis: The seized amount had been the subject of inquiry by the Income-tax Department and no satisfactory explanation for its source was found. The Court held that, in the context of proceedings under the Income-tax Act, the lower court had failed to properly appreciate the effect of section 132A and the need for the Income-tax Department to retain custody of the asset pending assessment and consequential action. The reliance placed on the criminal court's power to release property under the Code of Criminal Procedure was held not to override the tax authorities' entitlement to keep the cash for income-tax proceedings.

Conclusion: The order releasing the cash to the claimant was set aside, and the seized amount was directed to be handed over to the Income-tax Department.

Final Conclusion: The seized cash was held to be subject to retention by the tax authorities for action under the Income-tax Act, and the claimant was not entitled to immediate release of the amount.

Ratio Decidendi: Where seized cash is required for proceedings under the Income-tax Act and its source remains unexplained, the criminal court should not release it to a claimant in a manner that defeats the statutory custody and assessment powers of the income-tax authorities.

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