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Issues: Whether the Magistrate had jurisdiction under section 457 of the Code of Criminal Procedure, 1973 to direct delivery of currency and clothes seized by the police, or whether the assets had to be handed over to the Income-tax Department for inquiry under section 132A and section 132(5) of the Income-tax Act, 1961.
Analysis: The seized assets were alleged to represent undisclosed income and had been requisitioned under the Income-tax Act. Although section 457 of the Code of Criminal Procedure, 1973 permits a Magistrate to pass orders regarding property seized by police, that jurisdiction is only summary in nature. The Income-tax Act, 1961 is a special enactment for dealing with assets believed to constitute undisclosed income, and once a requisition is made under section 132A, the officer or authority in custody of the assets is bound to deliver them to the Requisitioning Officer. The inquiry as to the nature and ownership of the assets is to be conducted by the Income-tax Officer under section 132(5), not by the Magistrate in a summary proceeding.
Conclusion: The Magistrate had no occasion to decide ownership of the seized assets and ought to have directed delivery to the authorised Income-tax ; the order in favour of the private claimant was illegal.
Final Conclusion: The seized assets were required to be handed over to the authorised Income-tax Officer so that the statutory inquiry regarding undisclosed income could proceed under the special fiscal regime.
Ratio Decidendi: Where seized property is the subject of requisition under the Income-tax Act, 1961, the special statutory procedure under section 132A and section 132(5) governs possession and inquiry, and the Magistrate should not undertake a summary determination of title under section 457 of the Code of Criminal Procedure, 1973.
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