Police custody and tax requisition: seized cash could be requisitioned under income-tax law, but not handed over without magistrate's order.

Property seized by police remains in police custody, not court custody, until a Magistrate passes an order under section 457 of the Code of Criminal Procedure. On that basis, the police officer in possession or control of the cash was the relevant custodian for section 132A of the Income-tax Act, so the requisition by the Income-tax authorities was valid. However, the police could not lawfully hand over the seized cash to the Income-tax authorities without first obtaining a section 457 order. As the requisition was upheld, the consequential challenge to the block assessment notice under section 158BC also failed, and the notice was treated as valid.

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Issues: (i) Whether a requisition for seized cash under section 132A of the Income-tax Act, 1961 was valid when the property remained in police custody and no order under section 457 of the Code of Criminal Procedure, 1973 had been passed; (ii) whether the police could lawfully deliver the seized cash to the Income-tax authorities without such an order; and (iii) whether the notice under section 158BC of the Income-tax Act, 1961 was valid consequentially.

Issue (i): Whether a requisition for seized cash under section 132A of the Income-tax Act, 1961 was valid when the property remained in police custody and no order under section 457 of the Code of Criminal Procedure, 1973 had been passed.

Analysis: The scheme of sections 102 and 457 of the Code of Criminal Procedure, 1973 shows that property seized by the police must be reported to the Magistrate and can be dealt with only under judicial orders. Until an order under section 457 is passed, the property remains with the police and cannot be treated as being in the custody of the court. On that footing, the police officer was the person in possession or control of the seized cash, bringing the case within section 132A(1)(c) of the Income-tax Act, 1961.

Conclusion: The requisition under section 132A was valid.

Issue (ii): Whether the police could lawfully deliver the seized cash to the Income-tax authorities without an order under section 457 of the Code of Criminal Procedure, 1973.

Analysis: Although the Income-tax authorities could requisition the assets from the police officer in possession, the police were bound by the criminal procedure provisions not to part with the seized property except pursuant to an order of the competent Magistrate. Delivery of the cash to the requisitioning officer without first obtaining such order was contrary to law.

Conclusion: The police were not legally competent to deliver the seized cash without a section 457 order.

Issue (iii): Whether the notice under section 158BC of the Income-tax Act, 1961 was valid consequentially.

Analysis: The challenge to the notice under section 158BC rested only on the alleged invalidity of the requisition under section 132A. Once the requisition was upheld, the foundation for attacking the block assessment notice disappeared.

Conclusion: The notice under section 158BC was valid.

Final Conclusion: The statutory requisition was upheld, the police delivery of the seized cash was held unauthorized, and the consequential block assessment proceedings were sustained.

Ratio Decidendi: Seized property remains with the police, not in the custody of the court, until a Magistrate passes an order under section 457 of the Code of Criminal Procedure, 1973; therefore, such property may be requisitioned under section 132A of the Income-tax Act, 1961 from the police officer in possession, but it cannot be handed over by the police except under judicial authority.

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