Kamlesh Shah vs Union Of India
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Telangana High Court

Kamlesh Shah vs Union Of India on 21 June, 2024

Author: P.Sam Koshy

Bench: P.Sam Koshy, N.Tukaramji

        THE HONOURABLE SRI JUSTICE P. SAM KOSHY

                                         AND

        THE HONOURABLE SRI JUSTICE N. TUKARAMJI

                   WRIT PETITION No.11667 of 2021

ORDER:

(per the Hon'ble Sri Justice P.SAM KOSHY)

Heard Mr. Vedula Srinivas, learned Senior Counsel appearing

on behalf of Ms. Vedula Chitralekha, learned counsel for the

petitioner and Mr. B. Narasimha Sarma, learned Additional Solicitor

General along with Ms. Mamata Choudary, learned Senior Standing

Counsel for Income Tax, appearing for the respondents.

2. The present is a writ petition which has been filed seeking for

issuance of a writ in the nature of Mandamus holding that the action

of respondent No.6 in seizing cash of Rs.3,75,30,000/- belonging to

the petitioner on 15.09.2020 to be illegal, unconstitutional and

contrary to the provisions of Section 152 of the Income Tax Act, 1961

(briefly 'the Act' hereinafter). It was also the relief sought for by the

petitioner that the action on the part of respondent No.6 in further

handing over the aforementioned cash to respondent Nos.3 and 4

and further the action of respondent Nos.3 and 4 in declaring the

said cash to have been recovered from the premises bearing No.8-2-

684/4/13/B, Anand Banjara Colony, Road No.12, Banjara Hills,

Hyderabad, by way of a panchnama prepared on 16.09.2020 to be

also illegal, unconstitutional and contrary to the provisions of

Section 132 of the Act.

3. The petitioner claims himself to be the proprietor of M/s. S.K.

Traders which is engaged in the business of agricultural produce like

vegetables, fruits, post-harvest activities and other agro-based

produce since 1984. He claims himself to be operating his business

from the premises that he has allegedly taken on rent i.e. No.8-2-

684/4/13/B, Anand Banjara Colony, Road No.12, Banjara Hills,

Hyderabad. According to him, on 03.09.2020, he had come from

Ahmedabad via Bombay, Pune and Solapur to Hyderabad bringing

along with him cash of Rs.3,75,30,000/-. It was contended by him

that he had come from Ahmedabad on a Scorpio vehicle bearing

registration No.MH19BJ6470 which he had purchased from one

Shailesh Kumar Patel on 05.09.2020.

4. It was the further contention that on 15.09.2020, the petitioner

was in the process of depositing the said cash with the Canara Bank,

Kundanbagh Branch and the said amount was kept in the Scorpio

vehicle for the said purpose. However, in between the said vehicle

was intercepted by respondent No.6 who belongs to the Police Task

Force for the State of Telangana and they recovered an amount of

Rs.3,60,00,000/- from the said vehicle in cash. The vehicle at the

relevant point of time was being driven by Eshwar Dileepji Solanki

and there was the co-driver Harish Ram Bai Patel. Subsequently, on

interrogation with the two drivers of Scorpio vehicle, they disclosed

the cash amount to have been received from the local manager of

M/s. P. Vijay Kumar & Co., a company placed at Bombay who had

their local office at Hyderabad located at No.8-2-684/4/13/B, Anand

Banjara Colony, Road No.12, Banjara Hills, Hyderabad. In the course

of search and seizure of the said premises, which according to the

drivers was local office of M/s. P. Vijay Kumar & Co., they received

another cash amount of Rs.15,30,000/-. Thus, they took into

custody the entire amount of Rs.3,75,30,000/-. Later on, the entire

cash amount and the two persons were handed over by respondent

No.6 to respondent Nos.3 and 4.

5. The petitioner claims the two drivers of the said vehicle and the

vehicle also belonging to him and the drivers were also his staff and

the cash amount was his business money which is already reflected

in his bank statement and the entire seizure proceedings initiated to

be bad in law. Later on, according to the petitioner, a legal notice

dated 19.02.2021 was got issued alleging that the amount has been

illegally seized by the Police and withheld by the Income Tax Officials

without following the due process of law and subsequently the writ

petition was filed claiming for the reliefs that are reflected in the

preceding paragraphs.

6. Learned Senior Counsel for the petitioner heavily relied upon a

decision of this very High Court in Writ Petition No.23023 of 2019

decided on 28.12.2020 and submitted that the said judgment

squarely applies to the facts of the present case, and therefore, a

similar relief is to be granted in favour of the petitioner herein.

According to the learned counsel for the petitioner there is a clear

violation of Section 132 of the Act and for which reason also the writ

petition needs to be allowed. According to the learned counsel for the

petitioner the case of the respondents themselves is that the vehicle

was intercepted and the amount of money was seized by the Police

Authorities i.e. respondent No.6 and thereafter respondent No.6

handed over the said amount and the two people along with the

vehicle in which the cash was recovered to respondent Nos.3 and 4.

Hence, the amount had already reached hands of the Police as also

the Income Tax Department. Therefore, the said amount could not

have been subsequently shown to have been seized in the course of

search operation done at the premises of the petitioner, thus, the

provisions of Section 132 of the Act stands violated.

7. It was also the contention of the learned Senior Counsel for the

petitioner that the action on the part of respondent No.6 in

transferring the vehicle, the two occupants of the vehicle and the

cash to the Income Tax Department to be contrary to law. There was

no paper work carried out by respondent No.6 in respect of the

interception of vehicle and cash amount received from the said

vehicle, and the subsequent transfer to the I.T. Department. For this

reason also, the entire proceedings and the action initiated by the

Income Tax Department deserves to be vitiated and allowing of the

said reliefs as sought for.

8. According to the learned Senior Counsel for the petitioner, both

the drivers, the panch witnesses, have all not supported the case of

the Income Tax Department as such these statements has lost its

significance and cannot be relied upon any further for retaining of

the said cash which should by now be released back to the

petitioner.

9. Thus, the learned Senior Counsel for the petitioner prayed for

allowing of the writ petition and for release of the said amount lying

in custody of respondent Nos.3 and 4.

10. Referring to the reply given by respondent No.6, the learned

Additional Solicitor General contended that the factual matrix of the

entire case began with respondent No.6 finding two persons Eshwar

Dileepji Solankiand Harish Ram Bai Patel moving in a Scorpio

vehicle bearing registration No.MH19BJ6470 on 15.09.2020 at early

hours around 6:00 AM. The vehicle in which they were moving was

carrying Rs.3,75,00,000/-. On enquiry they revealed their personal

particulars and also contended that they were the official car drivers

of M/s. P. Vijay Kumar and Co., Bombay and that they had collected

the cash from a person named Giri and were thereafter proceeding to

take the money to Solapur. It is thereafter that respondent No.6 has

made a communication to the authorities of Income Tax Department

requesting them to take further action in the matter.

11. According to respondent No.6, it was the entire cash of

Rs.3,75,00,000/- recovered from the vehicle itself. It was the further

contention of the learned Additional Solicitor General that the nature

of transaction was nothing but hawala transaction and that cash

was being transported for the said purpose. There was no justifiable

explanation provided by the persons who were found to be in

possession of cash, nor were they able to produce any evidence that

it was accounted for. Further in terms of the cash received, a search

in the premises of M/s. P. Vijay Kumar & Co., was conducted under

Section 132 of the Act wherein certain incriminating documents and

pen drives were recovered which would further substantiate the fact

that it was nothing but a hawala transaction.

12. It was also the contention of the learned Additional Solicitor

General that it was a case where the cash found was unexplained

money under Section 69A of the I.T. Act and that the petitioner

herein, viz., Kamlesh Shah, is a subsequent entry in the play. That

he was not in any manner connected or associated with the said

cash, nor was he associated with the two persons who were found

with the cash. Moreover, the vehicle found to be involved in the

operation also was not that of the petitioner at least at the relevant

point of time.

13. According to the learned Additional Solicitor General, the

petitioner herein has entered the arena staking claim of the cash for

the first time after about a month's time from the date of incident.

According to the learned Additional Solicitor General, the various

transactions and inconsistent statements and stand on the part of

the petitioner Kamlesh Shah itself disproves his association in the

entire transaction. That, on the other hand, it also clearly reflects

that he has been planted by someone else only for getting the seized

cash back. In spite of repeated opportunities being given, the

petitioner or anybody else failed and refused to furnish any

information to substantiate such claims. Though the petitioner at

one point of time submitted that he shall be answerable to the

officers at Ahmedabad, however, a commission issued by respondent

No.2 - DDIT(Inv) Ahmedabad for verification and recording of the

statement of the petitioner came unfulfilled and the petitioner could

not be found at the address furnished in return of income. Later the

petitioner submitted that he was presently being assessed with the

Central Circle, Mumbai.

14. So far as the reliance by the petitioner in Writ Petition

No.29297 of 2021 of the Division Bench of this High Court is

concerned, the learned Additional Solicitor General contended that

the judgment has since been stayed by the Hon'ble Supreme Court

vide order dated 31.08.2021 in Special Leave Petition (Civil) No.2040

of 2021. That the petitioner has miserably failed to establish any

bona fides and their entire claim is totally unfounded and

exploitative and lacks factual proof and details so far as the

credentials of the claim is concerned.

15. According to the learned Additional Solicitor General in the

case of petitioner themselves in a judgment of the Division Bench of

the Gujarat High Court in Kamleshbhai Rajnikant Shah vs. DDIT,

Surat 1, authored by Hon'ble Mr. Justice J.B. Pardiwala (as he then

was) have declined to make over the seized amount to the petitioner

upholding the entire proceedings drawn by the Income Tax

Department under somewhat similar circumstances. The learned

Additional Solicitor General further relied upon a judgment from the

High Court of Madhya Pradesh in the case of Amar Agarwal vs. DIT 2

and also another judgment of the Gujarat High Court in the case of

Vipul Chavda vs. State of Gujarat 3 wherein the two High Courts

have in very categorical terms endorsed the stand of the Income Tax

Department holding them to be entitled to the custody of cash till the

[2020] 420 ITR 274

2005 193 CTR 465

[2018] 253 Taxmann 263 (Guj)

determination of the proceedings under Sections 132 and 132B of

the Act is finalized.

16. According to the learned Additional Solicitor General, since the

police authorities had only found the persons to be in possession of

certain unexplained huge amount of cash money without any

satisfactory explanation, the police authorities thought it proper to

inform the same to Income Tax Department rather than initiating the

criminal procedure mechanism and had escorted the money and the

authorities of the Income Tax Department. Therefore, only on the

ground that it was intercepted by the police authorities and later on

handed over to the Income Tax Department would not vitiate the

proceedings drawing a clear distinction between the physical and

legal custody of cash.

17. Learned Additional Solicitor General referring to the judgment

of Gujarat High Court in the case of Kamleshbhai Rajnikant Shah

(supra) contended that merely because the police authorities

intercepted the vehicle would not amount to seizure of cash as

contemplated under Section 102 of Cr.P.C as was being contended

by the learned counsel for the petitioner, and that the police

authorities had only informed the Income Tax Department and

thereafter the Income Tax Department initiated proceedings under

Section 132 of the Act. Thus, the same cannot be found fault with,

as it was only upon being satisfied that the cash was not adequately

explained and further that such cash would not have been

accounted for and brought to tax. The legal custody of the cash

sought to be taken could only have been done by way of a search

proceedings under Section 132 of the Act which has been duly

carried out by the Income Tax Department. Hence, there is hardly

any scope of interference left for this Court in exercise of its

extraordinary writ jurisdiction.

18. As regards the presumption that cash that was recovered

belongs to the petitioner, it was necessary to be proved by way of

rebuttal with unequivocal evidences which the petitioner in the

instant case has miserably failed. Mere paper representation or the

so-called procedural lacunas by itself cannot justify the claim of the

petitioner for the said cash. It has been time and again held by

various High Courts as also the Hon'ble Supreme Court that a seized

cash ought not to be handed over to any person staking claim on it

for mere asking unless such person establishes to the satisfaction of

the statutory authorities that such cash did in fact belong to the

claimant and also it was properly explained and accounted for.

19. Lastly, it was contended by the learned Additional Solicitor

General that from the materials collected and the information

generated from the people who were questioned and who were found

in possession of cash, there was little doubt for the Income Tax

Department to presume that these employees were not the

employees of M/s. P. Vijay Kumar & Co. Subsequently, the seized

cash was added to the income of M/s. P. Vijay Kumar & Co., by way

of assessment which was completed vide order dated 29.03.2022

passed by Central Circle, Mumbai, by way of addition under Section

69 of the Act, in addition penalty proceedings under Section 274

read with Section 271AAB(1A) of the Act. Thus, the claim of the

petitioner falls flat, and therefore, the learned Additional Solicitor

General prayed for dismissal of the writ petition with exemplary

costs.

20. Having heard the contentions put forth on either side and on

perusal of records, some of the discrepancies that are reflected from

the pleadings in the writ petition itself are as under:

i. In paragraph No.5, the petitioner contends that he

came to Hyderabad by Scorpio vehicle bearing

registration No.MH19BJ6470 from Ahmedabad on

03.09.2020 and he brought along with him cash of

Rs.3,75,30,000/-. At the same time, he says that

he had purchased the said Scorpio vehicle from

one Shailesh Kumar Patel on 05.09.2020, i.e.,

subsequent to his coming to Hyderabad which is

highly improbable. The petitioner would have

purchased the vehicle first and then would have

travelled on the same day to Hyderabad along with

the cash.

ii. Another aspect which seems to be improbable is

that the petitioner submitted that he had met the

Chief Manager, Canara Bank, Kundanbagh

Branch, Hyderabad the previous day and as per

the assurance given by the bank officials, he was

to deposit the amount in the bank next day. If that

be so, there was no necessity for the petitioner to

have loaded his Scorpio vehicle at the early hours

on 15.09.2020 as the distance from Banjara Hills

to KundanBagh is hardly 30 minutes drive and

there was no necessity for the two drivers Eshwar

Dileepji Solankiand Harish Ram Bai Patel

transporting the said cash to the branch so early

in the morning. Thus, the said claim of the

petitioner also becomes highly improbable.

iii. Another fact which needs appreciation is that the

petitioner had reached Hyderabad on 03.09.2020.

He kept with him the entire cash all this period till

15.09.2020. Thereafter, for the first time, he

raised his claim for return of money with the

Income Tax Department in October, 2020 i.e.

almost after a month's time from the date of the

amount so seized. This also seems to be natural

and raises several doubts so far the credentials

and his claim is concerned.

21. As regards the premises which was searched under Section

132 of the Act, the petitioner claims it to be his property taken on

rent from one Mr. Narayan Choul, whereas, the rental agreement

shown by the petitioner along with the writ petition would show that

the said rental agreement was executed only on 03.09.2020 i.e. the

date on which he came to Hyderabad from Bombay and the said

rental agreement seems to have been executed by stamp paper which

was purchased almost a year back i.e. on 16.09.2019. Another fact

which gives rise to serious doubt in respect of the ownership of

Scorpio vehicle involved in the cash transaction is that, according to

the petitioner, he had reached Hyderabad on 03.09.2020. However,

the purchase of the vehicle was shown to have been executed on

05.09.2020 on which date the petitioner is shown to be at Jalgaon,

Nasik for execution of the so-called agreement for sale. The said

stamp paper also used for execution of motor vehicle sale agreement

seem to have been one purchased in the year 2019 which again gives

rise to various doubts so far as the authenticity of the transfer of the

vehicle itself. Moreover, as has been contended earlier, if he had

already come to Hyderabad on 03.09.2020 there could not had been

a possibility of his purchasing the vehicle subsequently on

05.09.2020. It would have been other way round where he would

have purchased the vehicle first and then would have travelled to

Hyderabad.

22. Last but not the least, the fact that subsequently assessment

proceedings were initiated on the basis of the additional undisclosed

cash seized, the assessment orders have also been passed in the

light of the search and seizure proceedings drawn under Section 132

of the Act in the instant case against M/s. P. Vijay Kumar & Co., by

Central Circle, Mumbai. Hence, there is nothing left to be

adjudicated in this petition. What is further to be appreciated is that

in the aforesaid assessment proceedings initiated against

M/s. P. Vijay Kumar & Co., the petitioner herein sent a letter

through e-mail in respect of his claim based upon which the

authorities concerned further conducted an investigation, in

pursuance of an operation of prohibitory proceedings under Section

132(3) of the Act at the said premises which the petitioner claims to

be his premises taken on rent from Mr. Narayan Choul. When the

authorities of the Income Tax Department reached the said premises

showing the warrant to Mr. Narayan Choul in the course of his

statement being recorded, he categorically denied having entered into

a rental agreement with the petitioner herein. Rather he submits

that he had given the said premises for an annual rent of

Rs.60,000/- about an year ago to one Mr. Vyas Dinesh kumar

Girijashankar who used to pay him by cash every month and that

the rental agreement was only oral. Further the authorities also

found that in the seized cash, the name of M/s. P. Vijay Kumar &

Co., was printed at the top on an Indian One-rupee note.

23. With all these discrepancies that have been reflected from the

pleadings enclosed along with the writ petition, we now proceed to

consider the judicial precedents on the subject matter. The High

Court of Allahabad in Assistant Commissioner of Income-tax vs.

P.N. Sanyal 4 in paragraph No.8 held as under:

"8. On due consideration of rival submissions, we find that the exercise of power under Section 132 and 132 A of the Income Tax Act is essentially an exercise in administrative domain as settled by a Five Members Bench of Income Tax Appellate Tribunal in Promain Ltd. (supra) which has been upheld by a Division Bench of this Court in the case of Commissioner of Income Tax v.

Dr. A. K. Bansal (Individual) (supra). That view has also been affirmed by Delhi High Court in the case of M.B. Lal (supra). Moreover, in the judgment of Rajasthan High Court in the case of Smt. Chitra Devi Soni (supra), we notice that neither the judgment of Delhi High Court nor the judgment of Five Members Bench of Income Tax Appellate Tribunal, Delhi, has been considered."

[2014] 45 taxmann.com 516 (Allahabad)

24. The Madhya Pradesh High Court in the case of Smt. Suman

Singhal vs. Director of Income-tax (Investigation) 5 in paragraph

No.17 held as under:

"17. It is worth mentioning here that neither there is any allegation of malice against respondent No.1 in the petition nor it was argued that he acted with malice while issuing warrant of authorization. The record produced by the respondents clearly establishes that respondent No. 1 was in possession of the information on the basis of which he had reason to believe that cash and silver which were seized represented assets which would not have been disclosed for the purpose of income-tax. From the reasons recorded by respondent No. 1, it is apparent that it has rational connection and relevant bearing on the formation of belief leading to issuance of warrant of authorization under Section 132A of the Income-tax Act. There is a direct nexus between material coming notice of the authority and formation of belief for issuance of warrant under Section 132A of the Income-tax Act."

25. Further, the High Court of Gujarat in the case of Vipul Chavda

(supra) in paragraph Nos.9, 10 and 15 has held as under:

"9. The provision of section 132A provides for the authority prescribed in the said provision in consequence

[2012] 20 taxmann.com 835 (Madhya Pradesh)

of information in his possession has reason to believe that any person has omitted or failed to produce such books of account or other documents as required by the summons issued under sub-section (1) of section 37 or sub-section (1) of section 131 or sub-section (4) of section 22 or sub-section (1) of section 142 of the Act."

1. It further requires the officer or authority to deliver such books of account, other documents or assets to the requisitioning officer.

2. Section 132A(1)(c) provides that in consequence of the information in his possession, if the officer has reason to believe that any assets represent either wholly or partly income or property which has not been or would not have been disclosed for the purpose of Income-tax Act, 1922, by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, the request can be made and such authority or officer shall deliver the books of account, other documents and assets to the requisitioning officer either forthwith or if the authority is of the opinion that it is no longer necessary to retain in his custody.

3. It is pertinent to note that the Court while denying the request of the Income-tax Department on the ground that no summons so far has been issued nor any search was commenced, failed to notice the provision of section 132(1)(c), which permits requisition on the officer having

reason to believe that any asset represent either wholly or partly income or property which has not been disclosed for the purpose of Income-tax Act by any person from whose possession or control, such assets have been taken into custody by any officer or authority under any other law for the time being in force may require such authority to deliver such books of account, other documents or assets to the concerned offices. The requisition for currency notes when is made by the competent authority, the currency notes are required to be placed at the disposal of the Income-tax Department for processing further under the Income-tax Act. The authority concerned also has powers to frame assessment under section 153 and 153A of the Act, which provide for time limit for completion of assessment and reassessment. As rightly pointed out, section 153A permits the authority to assess or reassess the total income of six assessment years, immediately preceding the assessment year relevant to the previous year, when the search is made under section 132 books of account, requisition under section 132A after the 31st day of May, 2003. Shri M.M. Bhatt, learned Senior Counsel appearing for the applicant-Department is right in pointing out that any further delay caused would hamper the right of the concerned authority of assessing or reassessing the total income of the assessee or earlier years and that may also cause loss of required material and may have bearing on collection of tax causing substantive loss to the Revenue, if eventually the liability is saddled.

10. Reference would be necessary to the case of Deputy Director of Income-tax v. State of Gujarat (supra), wherein this Court has held that there is no power with the Police Authority to withhold the currency notes. Once the police seizes the currency notes and informs the Income-tax Department, the requisition has to be made. The Court has also held that the inquiry under section 451 of the Code of Criminal Procedure and one under Section 132A of the Act are quite different. There are limited powers under section 451 of the Code of Criminal Procedure, whereas under section 132A of the Act, a specific provision is made for such purpose. Before the High Court, the case was of stealing of cash of Rs.42.50 lakh and the employee of the concerned complainant was arrested from whom such amount of Rs.42.50 lakh was seized. The intimation was given by the police officer to the Income-tax Department to approach the trial Court to initiate the proceedings. The complainant also moved before the trial Court for getting the currency notes and the Deputy Director of Income-tax submitted an application to hand over the currency notes to complete the proceedings initiated by the Income-tax Department against the respondent.

1. The trial Court had rejected the application filed by the Deputy Director of Income-tax Department and handed over the currency notes of Rs.30 lakh to the complainant on his furnishing surety and directed the police to retain the amount of Rs.12 lakh in its custody. The Department was also directed to complete the proceedings within 15

days under intimation to the Court if any income-tax liability was accruing to the Department and to pass necessary order. It was directed that in the event of any tax liability accruing to the Department, the respondent would pay the same immediately under the intimation of the Court. Warrant of authorization was served upon the police and it was though informed of the Revision Application being pending before the Court, the police handed over the currency notes to the complainant, relying upon the order passed by the trial Court.

2. This court allowed the application of the tax authority on the ground that the question of huge currency notes was involved and if proceedings of inquiry under section 132A of the Act were initiated, the truth would come out before the Income-tax Department regarding the genuineness of the muddamal currency notes seized. It also held and observed that the police authority has no power to retain the cash nor does it have any power to hand over such cash to the complainant. It is incumbent upon the police to hand over the cash to the Department for completion of proceedings initiated by the Department. It was also held that the trial Court also was not right in directing handing over currency notes to the complainant when the proceedings were already initiated by the Department under section 132A of the Act. Accordingly, the order was quashed and set aside.

15. In the case of Uday Navinchandra Sangani (supra), Special Criminal Application No.58 of 2015, decided on

20.01.2015, a learned Single Judge of this Court, has held as under:

[21] Now, so far as the contention of the learned advocate for the petitioner with regard to the provisions of Section 132A of the Act is concerned, from the record it appears that the respondent No.1 herein as a Deputy Director of Income Tax (Investigation), Unit 3, Surat, had filed the application under Section 132A of the Act. The concerned authority of the Income Tax Department authorized the respondent No.1 to initiate the aforesaid proceedings. In the affidavit filed on behalf of respondent No.1, it is specifically stated that based on the information made available and after causing necessary inquiry the competent authority under the Income Tax Act was satisfied about the ingredients of Section 132A of the Act to the effect that the contents of 42 gunny bags relate to transactions not recorded in the books of account. It is further

that the authorization under Section 132 A of the Act is not under challenge in the present proceedings. Thus, whether there was adequate material for the competent authority to form the required satisfaction either under Section 132 of Section 132A of the Act is not a question which can be agitated by any assessee. This Court in the decision rendered in the acase of Sunil

Vidhyasagar Gat (Supra) has held that Whether on the information in his possession the authority should exercise his powers under Section 132A, must be decided by the authority and not by the High Court. The concerned authority under Section 132A alone is entrusted with the powers to administer it. If from the material disclosed it may be prima facie said that he had reason to believe that any of those conditions existed, it is not open to the High Court, exercising powers under Article 226 of the Constitution, to set aside the warrant of authorization on a reappraisal of the evidence.

[22] This Court in the decision rendered in the case of Deputy Director of Income Tax (Investigation) (Supra) observed in para 14, 15 and 16 as under:

14. This Court is now required to see whether the applicant was entitled for custody of muddamal seized by the police for completion of proceedings initiated by the Department or not. Section 132 of the Act would be relevant in this respect.

Section 132 stipulates that, on a requisition being made under sub-section (1), the officer or authority referred to in Clause (a) or Clause (b) or Clause (c), as the case may be, of the sub-section shall

deliver the books of account, other documents or assets to the requisition officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody.

15. Under Section 451 of the Code, the Criminal Court has limited power to make inquiry. However, the Court has no power to go in detail and hence, specific provision is made in the Act under Sec. 132-A once the proceedings is initiated by the Department. Under Section 132-A of the Act, neither the Court nor the Police Authority has the power to release the currency notes. Hence, scope of inquiry under Sec.451 of the Code as also under Sec.132-A of the Act is quite different.

16. The intention of the Legislature by incorporating Section 132 of the Act is only to protect the interest of revenue of the State and if authority is satisfied regarding the source of income, it may pass appropriate order to hand over the muddamal to the assessee or any concerned person. When question of huge currency is involved and if proceedings of inquiry under Sec. 132-A of the Act are

initiated, then certainly truth will come before the Department regarding genuineness of the muddamal seized.

[23]   Further,    this     Court,     vide    order   dated
07.10.2010        rendered        in      Special   Criminal

Application No.1009 of 2010, observed as under:

Under Section 132A of the Income Tax Act, the competent authority if has reason to believe inter alia that any assets represent either wholly or partly income or property which has not been, or would not have been, disclosed for the purposes of the Indian Income Tax Act, by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force, may require such authority to deliver such books of accounts, other documents or assets to the requisitioning officer. In exercise of this power, the order for requisitioning cash currency was passed. Learned Magistrate, therefore, correctly placed the currency notes at the disposal of the Income Tax Department for further process in terms of Income Tax Act including for assessment under Section 153, if so found necessary.

[24] Similar view is also taken by this Court in Criminal Revision Application No.333 of 2013. In another case, this Court, vide order dated 24th April 2014 passed in Special Criminal Application No.2499 of 2013, observed in para 6 as under:

6. Having heard learned counsels for the parties, considering the provisions of Sections 132A(2), 132B and 153 A of the Income Tax Act, 1961 and the case relied by the learned Senior Advocate for the appellant Department, I am of the view that the impugned order is contrary to the provisions of the Income Tax Act, 1961 and currency notes seized by the police during the search and seizure in exercise of powers under Prohibition of Gambling Act, deserves to be handed over to the Income Tax Department. Accordingly, order dated 28.06.2013 passed by the learned Metropolitan Magistrate, Court No.22, Ahmedabad in Misc. Application No.108 of 2013 is hereby quashed and set aisde and the Incharge Police Officer of Ellisbridge Police Station, Ahmedabad shall hand over muddamal being currency notes of Rs.4,78,356/- and Rs.36,30,990/- to the concerned officer to the petitioner department.

[25] Thus, in view of the decisions rendered by this Court in the aforesaid cases, the respondent No.1 herein Income Tax Department is entitled to get the custody of Muddamal 42 gunny bags."

26. The High Court of Gujarat also in the case of Kamleshbhai

Rajnikant Shah (supra) held in paragraph Nos.7.4, 7.6, 7.7, 7.8 and

7.13 as under:

"7.4 It is further true that when issuance of an authorization under section 132A of the Act, is challenged in a court of law, it will be open to the petitioner to contend that on the facts or information disclosed, no reasonable man could have arrived at the conclusion that the action under section 132A was called for although the formation of opinion under the said section is subjective. It is well to remember that the jurisdiction under Article 226 of the Constitution of India of this Court is very limited. In fact, this Court should not act as an appellate or revisional court and as such, has no justification to examine meticulously the information in order toe decide for itself as to whether the action under section 132A was called for or not. Suffice it to say that in exercise of the extraordinary jurisdictions this Court can examine whether the act or issuance of an authorization under section 132A is arbitrary or malafide or whether the subjective satisfaction which is recorded is such that it indicates lack of application of mind of the appropriate

authority. According to us, the reason to believe must be based on definable material or materials and if the information or the reason to believe has no nexus with the belief or there is no definable material or tangible information for formation of such belief, then, in such a case, action taken under section 132A of the Act would be treated as illegal.

7.6 Thus, the scope of interference with the Warrant of Authorization in a writ application under Article 226 of the Constitution is very limited. As held by this Court in the case of Shalini Verma (supra)", whether on the information the authority concerned should have exercised his power under section 132A must be decided by the said authority and not by this Court. The concerned authority under section 132A alone is entrusted with the power to demonstrate the same. If from the materials disclosed, it must be prima facie said that the authority had reason to believe that any of those conditions existed, then, it was not open for this Court while exercising power under Article 226 of the Constitution to set aside the Warrant of Authorization on a reappraisal of the evidence.

7.7 We requested Mr. Bhatt, the learned Senior Counsel appearing for the revenue to call for the original file from the office of the Deputy Director of Income Tax (Investigation), Unit-III, Surat, so as to verify in what manner the satisfaction has been arrived at and recorded for the purpose of the issue of Warrant of Authorization.

Mr. Bhatt, made the original file available for us for our perusal through a messenger. We have gone through the original file more particularly the Satisfaction Note dated 25/10/2018 put up by DDIT (Investigation-III), Surat and the satisfaction recorded in writing by the Principal DIT (Investigation), Surat. Having regard to the satisfaction Note, we may only at this stage that there is more than a prima facie case for the purpose of justifying the issue of Warrant of Authorization.

7.8 In the case of N.K. Jewellers (supra), an employee of the assessee was returning from Amritsar and he was found to be in possession of Rs. 30,00,000/- in cash in a search by the railway police. Upon receipt of the information by the department, a Warrant of Authorization under section 132 of the Act was issued by the Director of Income Tax and the cash of Rs. 30,00,000/- was requisitioned and assessed. The proceedings for assessment for the Block Period from April 1, 1991 to June 3, 2000 under section 158 BD of the Act were initiated. The explanation of the assessee before the Assessing Officer was that his employee had gone to Amritsar to make some purchase of gold but the transaction did not materialize. The Assessing Officer was of the view that the amount represented the sale of goods made by the assessee on the earlier occasions and the sale proceedings were being carried back to Delhi. After considering the statements of various persons and other materials on record, the authorities came to the conclusion that it was concealed income and assessed

the assessee to tax. It was argued before the Assessee that the proceedings initiated under section 132 of the Act itself were invalid for the reason that it could not have been based on a search conducted on a train by the police authority and therefore, the proceedings initiated for the Block Assessment for the relevant period were without jurisdiction. Such contention raised before the Supreme Court came to be navigated by the Supreme Court by observing as under:

"This plea was not raised by the appellant before any of the authorities. Further, we find that in view of the attachment made in section 132A of the Incom-tax Act, 1961 by the Finance Act of 2017, the "reason to believe" or "reason to suspect", as the case may be, shall not be disclosed to any person or any authority or the Appellate Tribunal as recorded by the income-tax authority under section 132 or section 132A. We, therefore, cannot go into that question at all. Even otherwise, we find that the explanation given by the appellant regarding the amount of cash of Rs. 30 Lakhs has been treated as income not recorded in the books of account maintained by it."

7.13 In the overall view of the matter, we are convinced that we should not interfere in the present matter. We do not find any palpable error or gross illegality going to the

root of the matter in the issue of Warrant of Authorization under sub-section (1) of section 132 of the Act."

27. So far as the judgments cited by the learned counsel for the

petitioner, the plain reading of the factual matrix under which those

judgments were passed would clearly reflect that those were under

an entirely different contextual background and also on different

facts unlike in the present case. Therefore, those judgments are

distinguishable on facts itself and they cannot be applied in a

straight jacket formula in the given facts of the present case.

28. We had directed the learned Senior Standing Counsel for the

Income Tax Department to make available the original records to

look into the reasons available on record on the basis of which the

warrant of authorization was issued and the search and seizure

proceedings were initiated. Upon opening of the sealed cover

provided by the Income Tax Department and on perusal of the entire

records both in respect of the preliminary search and subsequent

proceedings drawn, we find that there was no any lacunas or

procedural irregularities committed by the authorities concerned and

that of the requirement under the statutes, particularly, that which

is envisaged under Section 132 of the Act, have all been met.

29. For all the aforesaid reasons, finding of facts and on perusal of

the original records, we do not find any strong case made out by the

petitioner calling for an interference with the impugned action on the

part of the respondent authorities and also for granting of the reliefs

that has been sought for in the present two writ petitions.

30. The writ petition thus fails and is accordingly dismissed.

No costs.

31. As a sequel, miscellaneous petitions pending if any, shall stand

closed.

___________________ P. SAM KOSHY, J

___________________ N. TUKARAMJI, J

Date: 21.06.2024

Note: The I.T. Dept. had handed over two sealed envelopes containing the original records. After perusal, we have again sealed those envelopes. The Court Officer is directed to hand over the sealed envelopes to the learned Senior Standing Counsel for the I.T. Department.

B/o.GSD