TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1521
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....mounting Rs. 15,80,000/- belonging to the petitioner No. 1 despite lapse of one year from the date of seizure i.e., 05.04.2024 and despite submission of detailed explanation, dated 06.05.2024 as illegal, arbitrary, unjust, irrational, without jurisdiction, contrary to the provisions of Income Tax Act, 1961 and Standard Operating Procedure (SOP) for seizure and release of cash and other items dated 19.08.2021 issued by the respondent No. 5 besides being violative of right of the petitioner under Article 14 and 21 of the Constitution of India and consequently, direct the respondent No.4 to release the seized amount of Rs. 15,80,000/- to the petitioner No. 1 and pass such other order or orders. 2. Heard the learned counsel for the petitioners; learned Standing counsel appearing for the Income Tax Department and learned Senior Counsel appearing on behalf of the learned counsel for the respondent No. 5. 3. Submissions of the learned counsel for the petitioners: (a) The petitioner No. 1 is a Housewife, having PAN card bearing No. AJGPL5329M. Since the income of petitioner No. 1 is below the taxable limit, petitioner No. 1 would not be liable to be assessed to income tax. T....
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....ps to order release of such cash to such persons from whom the cash is seized after passing a speaking order to that effect. 'The S.O.P.' clearly states that in no case, the matter relating to seized cash/valuables shall be kept pending in malkhana/treasury for more than 7 days after the date of poll, unless an FIR/Complaint is filed. (d) It is further submitted that in the present case, no FIR has been lodged against the petitioner No. 2. Against the seizure, the Committee formed by the respondent No. 5 ought to have undertaken suo-moto examination and passed an order for release of such cash to the petitioners within 07 days from the date of seizure. Instead of doing so, the respondent No. 5 officials without application of mind, vitiates the entire process. (e) It is pertinent to mention that nowhere in 'the S.O.P.' for seizure and release of cash and other items dated 19.08.2021 issued by the respondent No. 5 conferred jurisdiction upon the Income tax officials to take possession of the seized cash amount. It only states that if the released cash amount is more than Rs.10 lakhs, the nodal officer of income tax shall be kept informed before the release is effec....
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....r abuse of the provisions of the Income Tax Act. Further, the respondents-authorities failed to decide the petitioner No. 1 representation within a period of 120 days as mandated by the statute, the respondent authorities are duty bound to release the seized amounts in the light of the law laid down by the High Court of Gujarat in Ashish Jayantilal Sanghavi Vs. Income Tax Officer (2022) 444 ITR 457 (Gujarat). 4. Submissions of the learned Standing Counsel for the respondent Nos. 2 to 4: (a) The respondent Nos. 2 to 4 and respondent No. 5 filed respective counter affidavits. Basing on the averments made in the counter affidavits, learned Standing counsel for the respondent Nos. 2 to 4 would submit that during the period of Model Code of Conduct in Tamil Nadu for General Elections to the Hon'ble Lok Sabha, 2024, the Flying Squad Team and Static Surveillance Teams (SST) while monitoring the activities w.r.t. distribution and rotation of cash and other kind to the voters of such constituency, has intercepted the petitioner No. 2 at Chennai Central Railway Station on 05.04.2024 at 11.00 a.m., who was in possession of Rs. 15.80 lakhs in cash, without any supporting documentar....
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....s the petitioner No. 2 has not filed his return of income for any of the assessment years till 05.04.2024, i.e., up to the date of cash seizure, and as a warrant of requisition under Section 132A of the Act has been executed on 05.04.2024, as per the provisions of Clause (i) of Explanation 2 to Section 148 of the Income Tax Act, 1961, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in his case. Accordingly, after obtaining necessary permission from the authorities concerned, notices under Section 148, dated 27.03.2025 have been issued for assessment year 2021-2022 to 2024-2025 against the petitioner No. 2 calling for return of income for those assessment years. In response to the said notices, the petitioner No. 2 has filed his returns of income for the assessment years 2021-2022 to 2024-2025 on 21.05.2025. Taking these returns of income into account, after obtaining necessary approval from the Ld PCIT(C), Visakhapatnam on 05.06.2025, notices under Section 143(2) have been issued against the petitioner No. 2 for the said assessment year calling for certain particulars in connection with the above scru....
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....s no force in the contention of the petitioners that the respondent No.4 is not releasing the seized cash which contrary to the provisions of Income Tax Act, 1961 and 'the S.O.P.' dated 19.08.2021 issued by the respondent No. 5. (g) The learned Standing counsel further contends that the requisition letter, dated 25.03.2025 submitted by the petitioner No. 2 on 17.02.2025 before the Assessing Officer requesting for release of seized cash of Rs. 15.80 Lakhs deposited in the P.D. Account of the Department has been disposed of on 07.07.2025 rejecting his claim for release of the seized amount and the said letter was served on the petitioner No. 2 on 07.07.2025 by mail and a copy served through notice server on the petitioner No. 2 on 08.07.2025. (h) The learned Standing counsel further contends that as per the appraisal report, petitioner No. 1 in her reply, dated 06.05.2024, had claimed that the cash of Rs. 15.80 lakhs intercepted from petitioner No. 2 on 05.04.2024 belongs to her which was given to him for marriage related shopping of her daughter Ms. Lakshmi Ramya, at Chennai & Kanchipuram. As per the appraisal report, the details relating to the cash of Rs. 15.80 l....
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....ilway stations, hotels, farmhouses, hawala agents, financial brokers, cash couriers, pawn brokers and other suspicious locations to monitor black money flow during elections as per the Income Tax Act and also to coordinate with Flying Squads, Static Surveillance Teams and other Enforcement Agencies during currency of elections. Further, he would submit that if any cash exceeding Rs.10 lakhs is reported to the Income Tax Department; they shall initiate necessary action under Income Tax laws. If it is not possible to seize the same under Income Tax laws, then Income Tax Department shall pass on information to the C.E.O. of the State/UT instantly who shall take steps under IPC, if the cash is suspected to be used for bribing electors. CISF authorities will forward necessary information and extend all cooperation in this regard. (ii) The learned Senior Counsel further contends that as per 'the S.O.P.' dated 29.05.2015, if the cash found is more than Rs. 50,000/- preliminary proceedings are initiated to ascertain whether the cash is linked to the commission of any electoral offences. If it is found that the cash has no nexus with any such offence, the same is released to its ow....
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....f India and sought to issue direction to the respondent No.4 to release forthwith the seized cash of Rs. 15.80 lakhs to the petitioner No. 1 with interest, in the interest of justice. (b) The learned counsel for the petitioners further contends that the petitioner No. 1 in her explanation dated 06.05.2024 submitted a detailed documentary evidence, including bank statements and withdrawal records proving the legitimate source of the seized cash of Rs. 15.80 lakhs which is meant for marriage expenses of her daughter. The centralization of petitioner No. 2's case to the respondent No.4 under Section 127 on 16.12.2024 does not justify the continued detention of cash in view of the reason that no tax liability upon the petitioner No. 1 has been established. Learned counsel submits that the proceedings in question was a outcome of a raid conducted under 'the S.O.P.' of the Election Commission of India and the seizure was not a consequence of a raid made by the Income Tax Department under Section 132 of the Income Tax Act, 1961 nor any order could be passed in appropriated exercise of jurisdiction under section 226 of the Income Tax Act to requisition the money in the absence of ....
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.... seizure is not linked with any candidate or political party or any election campaign etc., as per Standard Operating Procedure, it shall take immediate steps to order release of such cash etc., to such persons from whom the cash was seized after passing a speaking order to that effect. The Committee shall look into all cases and take decision on seizure. (ii) The procedure of appeal against seizure should be mentioned in the seizure document and it should also be informed to such persons at the time of seizure of telephone No. of the convenor of the Committee. (iii) All the information pertaining to release of cash, shall be maintained by the Nodal Officer expenditure monitoring in a register, serially date wise with the details regarding amount of Cash intercepted/seized and date of release to the person(s) concerned. (iv) If the release of cash is more than Rs.10 lakhs, the nodal officer of Income Tax shall be kept informed before the release is effected. (v) All cases of seizure of cash etc., effected by FS, SST or Police authorities shall immediately be brought to the notice of the Committee formed in the District and the Committee shall tak....
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....d a sum of Rs. 15.80 lakhs from the petitioner No. 2 on 05.04.2024 around 11.00 A.M. at Central Railway Station, Chennai. After seizure of the said amount, it is apparent from the record that no F.I.R. has been registered and not submitted the same before the competent court having jurisdiction not only within 24 hours but till date, as provided under clause 9 of 'the S.O.P'. As per clause 13, the seized amount has to be deposited in the treasury unit of the concerned district but seized cash was not deposited. It is provided in clause 13 that a copy of seizure of case in excess or above Rs.10 lakhs, shall be forwarded to the Income Tax authority engaged for the purpose. There is no provision made in this clause to handover the seized cash to the Income Tax Department. 12. Further, the Committee constituted under clause 16, sub clause (i) also did not examine the case of the petitioners in seizing their cash and to ascertain whether the seizure is linked with any candidate or political party in election campaign. As per the mandatory procedure to be followed by the Committee to look into all cases of seizure and to take decision on the same for release of such cash by passing sp....
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....n of the order reads as under: "18. Ms. Sinha, learned Standing counsel appearing for the Department, has strenuously tried to justify the action of the Income Tax Department in requisitioning the money from the District Treasury and for initiating a proceeding against the proprietor of the petitioner under the provisions of 'the Act' completely failing to appreciate that the proceeding in question was an outcome of a raid conducted under the guidelines of the Election Commission of India and the seizure was not a consequence of a raid made by the Income Tax authorities under section 132 of the Income Tax Act, 1961 nor any order could be passed in purported exercise of jurisdiction under section 226(3) of 'the Act' to requisition the money in absence of a duly constituted proceeding. 19. In a last ditch effort Ms. Sinha appearing for the Income Tax Department by filing a supplementary counter affidavit which enclosed an extract of guidelines justified the requisition of seized cash as being an exercise under the said guidelines. Unfortunately the guidelines enclosed at Annexure 'A' to the said affidavit though referred as the guidelines iss....
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....ase where the three men Committee constituted under the guidelines would have opined in favour of the seizure then perhaps the money transfer to the Income Tax Department made sense but such is not the case and neither the Committee has found the seizure justified nor the proceedings in question has been initiated following a seizure under section 132 of 'the Act'. 23. In such view of the matter, the action of the District Treasury Officer, Muzaffarpur in succumbing to the dictates of the Income Tax Department to transfer the seized cash vide Annexure 5 to the writ petition on 11.4.2019 is dehors the guidelines and even the requisition made by respondent no.6 through his letter dated 4.4.2019 addressed to the District Magistrate, Muzaffarpur at Annexure F/9 vide order dated 11.4.2019 at Annexure 5 is wholly illegal and without sanction of law. 24. What we find surprising is that even when the Committee constituted has accepted vide Annexure J/9 that the seizure was wrong, the Income Tax Department has proceeded to exercise jurisdiction over the cash seized as if the seizure made by the Flying Squad under the guidelines of the Election Commission of India w....
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....he Income Tax Department under Section 132 of the Income Tax Act. The seizure was made by the Flying squad/Static Surveillance Team (SST) of the respondent No. 5 during the General Elections, 2024 as per 'the S.O.P' prescribed by them. As such, it is held that the action of the officials of the respondent No. 5 in handing over cash of the petitioner No. 1, to the Income Tax Department and the action of the Income Tax Department in holding on the cash in their P.D. account is absolutely without jurisdiction and without sanction of law. It is further held that that the officials of the Election Commission of India, has to strictly follow the procedure provided under clause 16. 17. In that view of the matter, we have no hesitation to hold that the action of the respondent No. 5 in seizing the cash of Rs. 15.80 lakhs belonging to the petitioner No. 1 and further handing it over to the Income Tax Department i.e., the respondent No. 2 is illegal, arbitrary, unjust, irrational, without jurisdiction, without any authority and without any sanction of law and contrary to 'the S.O.P' for seizure and release of cash and other items dated 19.08.2021 issued by the Election Commission of India....