Writ for return of seized cash rejected; disputed ownership to be decided in income tax appeals, not Art.226

HC held that the trust is a distinct assessable entity from its managing trustee, who is separately assessable in his individual capacity. Since the Income Tax Department has already treated the seized cash as unexplained income of the managing trustee and passed assessment orders against him, now under challenge in appeal, examination of the validity of seizure and determination of whether the money belongs to the trust or the trustee would involve adjudicating disputed questions of title and fact. Such issues lie outside the limited writ jurisdiction under Art. 226. HC therefore declined to entertain the writ petition seeking return of seized money, leaving the petitioners to pursue appropriate statutory remedies against the impugned proceedings.

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Issues Involved:
1. Scope and authority of the 2nd respondent under Section 132A of the Income Tax Act, 1961.
2. Legality of the seizure of cash by the 4th respondent.
3. Impact of subsequent assessment orders on the writ petition.

Summary:

Issue 1: Scope and Authority under Section 132A of the Income Tax Act
The primary question revolves around the 2nd respondent's authority to requisition assets under Section 132A of the Income Tax Act, 1961. The 2nd respondent requisitioned Rs.68,14,000/- seized by the 4th respondent/Election Officer under the Standard Operating Procedure (SOP) dated 29.05.2015. The petitioners sought the release of this amount. The court noted that the requisition under Section 132A must be based on "reason to believe" that the assets were not disclosed for tax purposes. The court found that the SOP does not constitute "law" for the purpose of Section 132A(1)(c) and thus the requisition of assets was without jurisdiction.

Issue 2: Legality of the Seizure by the 4th Respondent
The petitioners challenged the legality of the seizure by the 4th respondent, arguing that it was contrary to the SOP and any subsequent requisition by the Income Tax authorities was illegal. The court referenced the Patna High Court judgment in Indian Traders vs. State of Bihar, which held that SOPs do not empower authorities to transfer seized assets to the Income Tax Department under Section 132A. The court concluded that the seizure and subsequent requisition were beyond the authority granted under Section 132A.

Issue 3: Impact of Subsequent Assessment Orders
The court took judicial notice of subsequent events, specifically the assessment order dated 29.04.2021, which treated the seized money as unexplained income in the hands of the 2nd petitioner. The court noted that any order directing the return of the money to the 1st petitioner trust would indirectly decide the title over the assets, which is currently under appeal. The court emphasized that determining the title over the assets is a factual question beyond the jurisdiction under Article 226 of the Constitution of India.

Conclusion:
The writ petition was dismissed, with the court stating that the petitioners could pursue statutory remedies against the impugned proceedings dated 01.02.2021. The time spent in the writ petition would be excluded from the limitation period for filing an appeal. The court did not issue any costs and closed the connected miscellaneous petitions.

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