TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 657
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....rime No.126/2017 of Thirunelly Police Station. The amount was also seized and the same was produced before the Judicial First Class Magistrate Court-II, Mananthavady. Upon getting information from the Inspector of Police, Thirunelly, Income Tax authorities has issued summons to the 2nd respondent under Section 131 of the Income Tax Act seeking to explain the source of the said amount. He stated that the seized cash was not his money and it was handed over to him by his friends for starting a super market at Banglore. The details of the said persons were also furnished. After conducting an inquiry, the income tax authorities found that the 2nd respondent failed to explain the source of the same properly and therefore it was decided to initiate proceedings against him. As part of the same, a notice of requisition was issued to the Sub Inspector of Police under Section 132A(1)(c) of Income Tax Act, directing him to deliver the same to the Requisitioning Officer. However, it was informed by the Sub Inspector of Police that the amount is already deposited before the Judicial First Class Magistrate Court, Mananthavady and the same is in the custody of the court. 3. In such circumstances....
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....or [Principal Commissioner or Commissioner] may authorise any [Additional Director, Additional Commissioner,] [Joint Director],[Joint Commissioner],[Assistant Director or Deputy Director],[Assistant Commissioner or Deputy Commissioner] or Income-tax Officer (hereafter in this section and in sub-section(2) of section 278-D referred to as the requisitioning officer) to require the officer or authority referred to in clause(a) or clause(b) or clause (c), as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer. Explanation.- For the removal of doubts, it is hereby declared that the reason to believe, as recorded by the income-tax authority under this sub-section, shall not be disclosed to any person or any authority or the Appellate Tribunal.]" The aforesaid provision enables the authorized officer of the Department to make a requisition before any authority who is in possession and control of any assets of any person, which has not been disclosed to the Income Tax authorities for the purposes of Income Tax Act. In this case, by invoking the aforesaid powers, the petitioner had already sent a notice to the Sub Inspector of Police....
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....t explain the source of the same. Failure to explain the source warrants a proceeding under the Income Tax Act by the appropriate authorities under the said Act. In such circumstances, the petitioner herein is having all the authority to initiate proceedings against the 2nd respondent by issuing a notice under Section 131 of the Income Tax Act. Since the amount was seized by the Sub Inspector of Police, a notice under Section 132A(1)(c)was also a remedy available to the petitioner herein which they have already invoked. However, further proceedings pursuant to Section 132-A could not be continued because of the fact that by that time, the amount was entrusted with the custody of the court. 8. Even though all the aforesaid statutory provisions were brought to the notice of the learned Magistrate, the application submitted by the petitioner was dismissed by holding that the interest of the petitioner can be secured by allowing retention of the 30% of the total amount involved therein. 9. While considering this issue, the procedure to be followed by the Income Tax Authorities after initiating proceedings under Section 132A is very much relevant. Section 132-B of the Income Tax Act p....
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.... shall be discharged of such liability to the extent of the money so applied; (iii) the assets other than money may also be applied for the discharge of any such liability referred to in clause (i) as remains undischarged and for this purpose such assets shall be deemed to be under distraint as if such distraint was effected by the Assessing Officer or, as the case may be, the Tax Recovery Officer under authorisation from the [Principal Chief Commissioner or chief Commissioner] or [Principal Commissioner or Commissioner] under sub-section(5) of section 226 and the Assessing Officer or, as the case may be, the Tax Recovery Officer may recover the amount of such liabilities by the sale of such assets and such sale shall be effected in the manner laid down in the Third Schedule." Going by the aforesaid provisions, it can be seen that, any person who has a claim over the aforesaid asset or money can submit an application before the Assessing Authority within 30 days from the end of the month in which the asset was seized. If a person who is claiming the said amount is able to convince the assessing authority as to the source of acquisition of the same, he can get the aforesaid amoun....
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....fice v. State of Gujarat [2007]290 ITR 449 (Guj)] and the decision of Allahabad High Court in Union of India v. Judicial Magistrate (Eastern Railway), Mughalsarai and Another [(1983)140 ITR All 553] 13. It is true that even while dismissing the application submitted by the petitioner herein, the learned Magistrate ordered to retain 30% of the amount for securing the interest of the Income Tax Department. Apparently, an amount of 30% was fixed under the impression that the same would take care of the amount likely to be payable by the 2nd respondent towards tax element. However, such an exercise is beyond the scope of the jurisdiction under Section 451 of the Cr.PC and was unwarranted. The liability of tax is to be determined by the authorities concerned under the Income Tax Act after completing the proceedings contemplated therein. If it is found that there was an attempt to evade the payment of tax, in addition to the tax liability at higher rates, there are provisions for imposing penalty as well. In such circumstances, the amount actually payable by the 2nd respondent is likely to exceed far beyond 30% of the amount as fixed by the learned Magistrate. In such circumstances, the....