2023 (12) TMI 1416 - HC - Indian Laws

Petitioners to Receive Rs. 156 Lakhs; Magistrate's Order Overturned; Court Cites Precedents and Requires Bond with Sureties.

Mohammed Salih; Shabeer Ali; Smt. Sabeena; C.K. Muhammed; Muhammed Suhaib P. C; Muhammed Shameer Versus Union of India, Income Tax Department represented by The Deputy Director of Income Tax (Inv) -II, Kozhikode; Deputy Director, Directorate of Enforcement, Kozhikode

The HC ruled that the petitioners were entitled to the release of Rs. 156 lakhs seized by the authorities, setting aside the Magistrate's order that ... Release of amount of Rs. 156 lakhs seized from the petitioners after furnishing bank guarantee - accounted money or not - HELD THAT:- Counsel for the petitioners relied on the order R. RAVIRAJAN; BALAGANESH; VIJAYA BHARATI VERSUS THE STATE OF KERALA & UNION OF INDIA [2023 (9) TMI 1557 - KERALA HIGH COURT], in which this Court considered a similar matter in detail and found that the Income Tax department is not entitled for the amount. In the above order, this Court specifically observed that the order passed by the learned Magistrate ordering the handing over of the amount to the revenue in such situation can not be sustained. Conclusion - The orders by the Judicial First Class Magistrate Court, Nilambur, directing the release of the seized amount to the Income Tax Department were set aside. The petitioners were granted the release of the seized amount upon furnishing a bond and sureties, ensuring compliance with procedural requirements. In the light of the above order, these Criminal Miscellaneous Cases are to be allowed. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment were:Whether the amount of Rs. 156 lakhs seized from the petitioners should be released to them or retained by the Income Tax Department.The validity of the Magistrate's order directing the release of the seized amount to the Income Tax Department.The applicability of a prior decision by the Court in a similar matter and its influence on the current case.ISSUE-WISE DETAILED ANALYSIS1. Release of Seized AmountRelevant Legal Framework and Precedents: The case involved the application of legal principles related to the seizure of money by authorities and the conditions under which such money can be released. The petitioners relied on a previous order by the Court in Crl. M. C. No. 5034/2023, where it was determined that the Income Tax Department was not entitled to retain the seized amount.Court's Interpretation and Reasoning: The Court examined the circumstances under which the money was seized and the subsequent order by the Magistrate. The Court noted that in a similar case, it had ruled against the retention of the seized amount by the Income Tax Department. The Court found that the reasoning in the prior case applied equally to the present circumstances.Key Evidence and Findings: The petitioners provided evidence that the money was raised through legitimate means, including the sale of gold ornaments, and was intended for a business transaction that ultimately did not occur. The Court took into account the petitioners' explanation and the lack of evidence to suggest that the money was unaccounted or illegally obtained.Application of Law to Facts: The Court applied the legal principles from the previous case to the facts at hand, concluding that the Magistrate's order to release the money to the Income Tax Department was not sustainable. The Court emphasized that the petitioners had accounted for the money and there was no legal basis for its retention by the authorities.Treatment of Competing Arguments: The Income Tax Department argued that the issue was pending before the Apex Court. However, both parties conceded that the Apex Court had dismissed the relevant Special Leave Petition (SLP), thereby upholding the prior decision of the Court.Conclusions: The Court concluded that the petitioners were entitled to the release of the seized amount. The Magistrate's orders were set aside, and the Court directed the release of the money to the petitioners upon furnishing a bond with sureties.SIGNIFICANT HOLDINGSCore Principles Established: The judgment reinforced the principle that money seized by authorities must be released to the rightful owners if it is accounted for and there is no legal justification for its retention. The Court highlighted the importance of adhering to precedents, especially when higher courts have dismissed challenges to such decisions.Final Determinations on Each Issue:The orders by the Judicial First Class Magistrate Court, Nilambur, directing the release of the seized amount to the Income Tax Department were set aside.The petitioners were granted the release of the seized amount upon furnishing a bond and sureties, ensuring compliance with procedural requirements.