1990 (6) TMI 227 - HC - Indian Laws

Orders releasing Rs. 3,15,000 seized under Section 132-A Income Tax Act quashed for lack of jurisdiction

Union of India (UOI) Versus Incharge Police Station and Ors.

HC quashed the orders passed by the Judicial Magistrate concerning the custody and release of Rs. 3,15,000 seized from respondent No. 3, holding those ... - ISSUES: Whether the learned Judicial Magistrate had jurisdiction to pass orders regarding custody and release of seized money when a warrant of authorisation under Section 132-A of the Income Tax Act had been issued to the Income Tax Department.Whether the police officer holding seized cash can transfer custody of the money without complying with the statutory provisions under Section 132-A of the Income Tax Act.Whether the learned Magistrate was obliged to hear the Income Tax Department before passing orders relating to the custody of the seized money.Whether the validity of the warrant of authorisation issued under Section 132-A can be questioned by the police or the Magistrate in the course of custody proceedings.Whether the orders passed by the Magistrate on 26-4-1990 and 30-4-1990 dealing with the custody and release of the seized money were lawful and valid. RULINGS / HOLDINGS: The learned Magistrate lacked jurisdiction to deal with the custody of the money seized by the police after a warrant of authorisation under Section 132-A(1) of the Income Tax Act had been issued to the Income Tax Officer, and the orders passed by him on 26-4-1990 and 30-4-1990 are declared 'illegal and void'.The police officer holding the seized cash was acting under 'authority' of law and was bound to comply with the provisions of Section 132-A for transfer of custody to the authorised Income Tax Officer; any transfer of custody otherwise is not authorised by law.The learned Magistrate was 'bound not to ignore and overlook the documents which were on record' and was 'incumbent on him... not to pass any order in the matter without first hearing the department' which was a necessary party to the custody claim.Neither the police officer nor the Magistrate had jurisdiction to enquire into the validity or competence of the warrant of authorisation issued under Section 132-A; such validity is not justiciable in the custody proceedings before them.The money seized remained in the custody of the police and had not come into the possession of the Magistrate's Court; accordingly, the Magistrate had no authority to release the money to the respondent on bond. RATIONALE: The Court applied the statutory framework of Section 132-A of the Income Tax Act, which governs the procedure for custody and transfer of seized property related to income tax investigations, emphasizing that the police officer is an 'Officer/authority' acting under 'authority' of law and must comply with requisitions by authorised Income Tax Officers.The Court underscored the mandatory nature of the warrant of authorisation issued by the Commissioner of Income Tax and held that the police and Magistrate are statutorily 'handicapped' from dealing with the seized money otherwise than as provided by the special law.The Court rejected arguments challenging the validity of the warrant of authorisation in these proceedings, holding that the question of validity is not relevant to the jurisdiction of the police or Magistrate in custody matters.The Court noted the procedural impropriety of the Magistrate passing orders without hearing the Income Tax Department, which was a necessary party, thereby violating principles of natural justice and statutory mandate.This decision affirms the primacy of the special statutory scheme under the Income Tax Act over ordinary criminal or civil jurisdiction in matters concerning custody of seized money related to income tax investigations, reinforcing the exclusivity of Section 132-A procedures.