TaxTMI 
TaxTMI 
2017 (10) TMI 1162
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....of feature films in Telugu and Tamil languages. According to the petitioner, he deposited a sum aggregating to Rs. 40 Crores during the period from 23-12-2016 to 27-12-2016 into their current account with Canara Bank, after the Government of India notified the demonetisation of certain currencies. Thereafter, Warrants of Authorisation were issued on 30-12-2016, followed by a Prohibitory Order dated 31-12-2016 under Section 132(3) of the Income Tax Act, 1961. Searches were conducted at various places in Chennai and Hyderabad and a sworn statement was recorded from the Director of petitioner-company on 02-01-2017 and 03-01-2017. Thereafter, a sum of Rs. 22.99 Crores was ordered to be seized on 04-01-2017 followed by an order for seizure of another amount of Rs. 13.98 Crores, both of which were lying in the current account of the petitioner. 4. After more than 50 days of the seizure of the aforesaid amounts, the petitioner gave a sworn statement expressing willingness to disclose an amount of Rs. 20 Crores under the scheme known as Pradhan Mantri Garib Kalyan Yojana Scheme, 2016, hereinafter referred to as PMGKY Scheme. Actually the said scheme viz., PMGKY Scheme, introduced under ....
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.... Department objected to the interim prayer for keeping Rs. 5 Crores out of the seized amount, in RBI Bonds, in terms of Section 199F, on the ground that the same may tantamount to releasing the amount from out of the clutches of the Department. 10. After hearing the arguments on both sides, this Court passed an interim order on 23-3-2017 to the following effect: 8. Therefore, we are of the considered view that by an act of balancing the rights of both sides, this application could be disposed of with the following directions: 1) the 2nd respondent, without prejudice to the contentions to be raised, shall keep out of the seized cash, a sum of Rs. 5.00 crores in RBI Bonds, but to keep the bonds with the 2nd respondent himself in safe custody, without releasing the same to the petitioner; 2) the 2nd respondent shall issue a letter to the effect that the amount has been kept in RBI bonds to enable the petitioner to file a declaration; 3) the petitioner shall file a declaration under Section 199-C, in the form prescribed, on or before 31-3- 2017; 4) the declaration so submitted shall be treated as validly made, at least insofar as the twin....
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....etter dated 27.07.2017 issued by the 1st respondent refusing to release an amount of Rs. 5 Crores from out of the seized amount; and (c) to direct the 1st respondent to confer all consequential benefits under the PMGKY Scheme including the release of Rs. 5 Crores. 15. A careful look at all the three components of the prayer made in the writ petition would show that the main object of the petitioner is to have a direction to the respondents to accept his declaration of undisclosed income of Rs. 20 Crores under the PMGKY Scheme. Once this relief is granted, a sum of Rs. 5 Crores representing 25% of the disclosed income would come back to the petitioner automatically as a consequence. 16. Though the first component of the prayer made in the main writ petition is to declare the seizure of cash to the tune of Rs. 20 Crores as illegal, the said prayer may become redundant once the seized amount of Rs. 20 Crores is treated as an income declared under the PMGKY Scheme. In fact the total amount seized from the bank accounts of the petitioner was Rs. 36.97 Crores. The petitioner is not seeking a declaration that the seizure of the entire amount of Rs. 36.97 Crores is illegal. The petit....
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....ion in the previous writ petition itself, for a direction to release an amount of Rs. 5 Crores. After all the petitioner came up with a miscellaneous petition in the previous writ petition for the release of Rs. 5 Crores for being deposited into RBI bonds, for compliance with Section 199F. Therefore, the petitioner could have come up with another miscellaneous petition in the very same writ petition. 21. However, we do not wish to dismiss this writ petition on the sole ground that the petitioner could not have converted into a fresh writ petition, what could have been filed as a miscellaneous petition in a previous writ petition. If we dismiss this writ petition on this sole ground, the petitioner can come up with a miscellaneous petition in the previous writ petition and the same will only be a multiplication. Therefore, we shall decide here and now, whether the petitioner is entitled to the reliefs prayed for. 22. As we have indicated earlier, the prayer of the petitioner in this writ petition comprises of three parts, the first part challenging the seizure of the amount to the extent of Rs. 20 Crores, the second part challenging the rejection of the request for release of ....
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....we need to go into the dispute with regard to the above issues. Even if we go by the counter filed by the department to the rejoinder filed by the petitioner, the department has a surplus amount of Rs. 10.44 Crores, which is twice the amount now sought by the petitioner to be released. Therefore, the department will still have a sum of Rs. 5.44 Crores, which is not adjustable (1) either towards any disputes under the PMGKY Scheme; (2) or towards any other dues payable by the petitioner. Keeping this fundamental fact in mind, let us now go to the contentions raised. The refusal of the department to release the amount of Rs. 5 Crores sought for by the petitioner, is on account of the fact that the seizure was effected under Section 132B of the Income Tax Act. It is stated by the respondents in their counter affidavits that after the Government of India notified demonetisation of certain currencies, the petitioner started depositing cash into the current account and also started effecting withdrawals and diversions. A huge amount of Rs. 40 Crores came to be deposited by the petitioner on two dates, viz., 23.12.2016 and 27.12.2016, forcing the department to issue a prohibitory order un....
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....t account. Within a couple of days from 23.12.2016 to 27.12.2016, the petitioner deposited an amount of nearly Rs. 40 Crores. The Taxation Laws (Second Amendment) Act, 2016 was notified in Government Gazette on 15.12.2016. But the petitioner did not make use of the same. Therefore, the department issued warrant of authorisation on 30.12.2016, followed by a prohibitory order under Section 132(3) on 31.12.2016. A sworn statement was recorded under Section 132(4) on 02.01.2017, in and by which the petitioner agreed to disclose Rs. 40 Crores under the PMGKY Scheme. A search was conducted on 04.01.2017 and the amounts lying in bank were seized on 04.01.2017 and 05.01.2017. The first writ petition was filed in March, 2017. 29. Therefore, in the timeline of events, the seizure was effected first and the petitioners offer to come under the Scheme came later. Hence, the petitioner cannot fall back upon Section 199N to contend that the provisions of Section 132B will not apply to a case covered by Chapter IX-A. 30. Section 132B (1) deals with assets seized under Section 132 or requisitioned under Section 132A. We do not know how the amount lying in the current account of a person, on a....