Interim custody of seized cash cannot be claimed by tax authorities before completed assessment; Magistrate cannot fix assessment timelines.

Where seized cash was not taken in an income-tax search and no completed assessment or crystallised tax demand existed, the Revenue had no present basis to retain the money under the requisition or recovery provisions of the Income-tax Act. Interim custody had to be decided under Section 451 CrPC, so release to the Income Tax Department was not justified and interim return to the petitioner was warranted on security. A Magistrate also could not direct the Revenue to complete assessment within a court-fixed period, because assessment timelines are governed by the Income-tax Act and not by a Section 451 proceeding. The time-bound direction was therefore unsustainable, and the cash was ordered to be released to the petitioner subject to stipulated security.

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Issues: (i) Whether the seized cash was liable to be released to the Income Tax Department or returned to the petitioner on interim custody. (ii) Whether the Magistrate could direct the Revenue to complete the assessment within a fixed time frame while dealing with an application under Section 451 of the Code of Criminal Procedure, 1973.

Issue (i): Whether the seized cash was liable to be released to the Income Tax Department or returned to the petitioner on interim custody.

Analysis: The cash was not seized in a search conducted by the Income Tax Department and the departmental proceedings had not culminated in any completed assessment or crystallised tax demand. Section 132A of the Income-tax Act, 1961 enables requisition only from an officer or authority in custody of assets and does not authorise requisition against a court. Section 132B applies only to seized or requisitioned assets and cannot be used before assessment is completed. Section 226(4) permits the Revenue to seek payment from money in court custody only after tax is determined on completed assessment. The Revenue therefore had no present legal basis to retain the amount, and interim custody had to follow the ordinary principles governing custody of property under Section 451 of the Code of Criminal Procedure, 1973.

Conclusion: The cash could not be handed over to the Income Tax Department, and interim release was warranted in favour of the petitioner.

Issue (ii): Whether the Magistrate could direct the Revenue to complete the assessment within a fixed time frame while dealing with an application under Section 451 of the Code of Criminal Procedure, 1973.

Analysis: The time for filing returns and completing assessments is governed by the Income-tax Act, 1961. A Magistrate exercising jurisdiction under Section 451 of the Code of Criminal Procedure, 1973 cannot bypass the statutory scheme by issuing directions to the Revenue to complete assessment within a court-fixed period. Such a direction was beyond the Magistrate's authority and was inconsistent with the statutory framework governing assessment proceedings.

Conclusion: The time-bound direction issued to the Revenue was unsustainable.

Final Conclusion: The common order of the Magistrate was set aside and the seized cash was directed to be released to the petitioner on furnishing the stipulated security, leaving the Revenue to proceed in accordance with law for assessment and recovery, if otherwise permissible.

Ratio Decidendi: Where tax liability has not yet been determined by completed assessment, the Revenue cannot claim interim custody of seized money in court custody under the requisition or recovery provisions of the Income-tax Act, 1961, and a Magistrate cannot superimpose a time-limit on statutory assessment proceedings.

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