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Judgment
C.S. Karnan, J.—The short facts of the prosecution case are as follows:-
On 17.10.2003, when the accused was travelling on his motorcycle with a sum of Rs. 8,07,050/- in cash, the Sub Inspector of Police, City Crime
Branch intercepted him near Gandhi Irvin Bridge, Egmore and registered a case against him for offences under Sections 41(2) read with 102
Cr.P.C. on suspicion that the money was stolen property or it had been obtained through some other offence. The Sub Inspector of Police seized
the said cash and produced the same before the Court and on his requisition, the said amount has been deposited in the Corporation Bank.
Subsequently, the Sub Inspector of Police, who took up the investigation has filed a final report dated 19.01.2004 stating that the case was
referred as ""further action dropped"" and the final report was accepted by the Court.
At this juncture, the petitioner/accused has filed Crl.M.P. No. 167 of 2004, stating that the said amount was kept by him for business purpose and
during investigation police detected nothing against him. During the course of inquiry, the learned Magistrate suo-moto ordered issuance of notice
to the Income Tax Department to ascertain their views about the cash seized from the petitioner. The Income Tax Department has filed a counter
and opposed the claim of the petitioner in Crl.M.P. No. 167 of 2004 and also another petition in Crl.M.P. No. 854 of 2004 for the return of the
cash.
On considering the averments of both parties and on hearing the arguments of the learned counsels on either side, the learned Magistrate on
considering that the counsel for the petitioner had agreed for retention of 30% amount is to be paid to the Income Tax Department subject to the
outcome of the final assessment. The seized amount of Rs. 8,07,050/- has been deposited in Corporation Bank, Egmore, by the learned
Magistrate Court on 31.10.2003.
Therefore, the learned Magistrate partly allowed the claim in Crl.M.P. No. 167 of 2004 and a sum of Rs. 5,30,000/- was ordered to be
returned to the petitioner on his executing a bond of Rs. 6,00,000/- with one security for like sum on condition that he shall return the amount to
the Court as and when required. The learned Magistrate further directed the petitioner to file an affidavit/undertaking that he shall redeposit the
amount on the direction of the Court.
Likewise, the learned Magistrate partly allowed the claim in Crl.M.P. No. 854 of 2004 filed by the Income Tax Department and ordered that a
sum of Rs. 2,92,373/- was to be returned to the Income Tax Department, which was the balance after deduction of Rs. 5,30,000/- from the total
amount.
Aggrieved by the said order, the Income Tax Department, has filed the above revision.
The highly competent senior Special Public Prosecutor argued that ordering to return only part of the seized amount is contrary to law and facts
of the case. As per Section 132A of the Income Tax Act, 1961, the Income Tax Department is empowered to enquire into the unexplained cash
seized from the first respondent and had assessed the same in accordance with the relevant provisions of the Income Tax Act, 1961. Further, the
return of cash of Rs. 5,30,000/- to the accused is illegal. Actually, the unexplained cash seized from the accused ought to have been returned to the
Income Tax Department. The highly competent counsel has pointed out a question of law that the second respondent, viz., the Sub Inspector of
Police, attached to the Central Crime Branch had conducted an investigation on the said offence and finally filed a report stating that the case was
referred as ""further action dropped"". Subsequently, the learned Magistrate has no jurisdiction to pass any order on the said case, especially the
return of cash to the accused. Actually, the Income Tax Authorities are vested with the powers of investigation regarding unexplained cash seized
from the accused, as such, the Income Tax Department is entitled to receive the entire seized amount. The learned Magistrate has failed to
understand the purpose for which Section 132A of the Income Tax Act, 1961, is introduced in the Statute book which relates to the pre-
assessment stage, but the reason given by the learned Magistrate that the Department is not entitled to seize the amount, seized by the Police as the
Tax is yet to be determined, is contrary to Section 132A of the Income Tax Act. The accused stated that the alleged loan given by the sister-in-law
of the assessee did not reflect in the return filed by the assessee and the brother of the assessee has no sufficient means to advance loan to the
accused. Further, the accused, his brother and his wife have not maintained any books of accounts.
The very competent counsel appearing for the revision petitioner further contended that the learned Magistrate erred in splitting the seized
amount and returning a part of the amount to the Department and a part of the amount to the first respondent herein. Actually, the police officer has
to hand over the seized amount to the Income Tax Department. Hence, the highly competent senior Special Public Prosecutor, Mr. K. Ramasamy
entreats the Court to set-aside the trial Court''s order.
The very competent counsel for the first respondent vehemently argued that the seized amount has to be restored to the first respondent herein,
who is an income tax assessee. The complainant i.e., Sub Inspector of Police had seized the amount and registered the case under Crime No. 899
of 2003. subsequently, the investigation had been duly conducted by the complainant and the said case was ""referred as to further action dropped
as such, the criminal case has not been proved in the initial stage. Therefore, the learned Magistrate ought to have rejected the case in X Crime
No. 899 of 2003, in limine, considering the present circumstances. Therefore, nothing is surviving on the file of the learned Magistrate. Therefore,
the first respondent is entitled to receive the entire seized amount without any condition. The action of the Sub Inspector of Police had disturbed
the first respondent''s reputation, business and place including his time. If the Income Tax Department issued any show cause notice regarding the
unexplained cash, he is prepared to provide suitable explanation. However, the respondent is put into hardship since a false case has been foisted
against the respondent, subsequently, the Income Tax Department also came into the picture on the suo-moto order of the Magistrate.
The learned counsel for the State vehemently argued that the Sub Inspector of Police attached to the Crime Branch contended that the accused
had been intercepted on suspicion and a sum of Rs. 8,07,050/- was found as unexplained money in the possession of the accused, therefore, a
criminal case has been levelled against him. Subsequently, the case is referred to the learned Magistrate, who is the competent authority to decide
the issue of ownership of seized money. The highly competent counsel further contended that it is open to the accused to provide a suitable
explanation to the Income Tax Authorities and get return of his money. The Income Tax Authorities also have to conduct an enquiry and then only
could the matter be decided. Now, a part of seized amount has been handed over to the accused, as interim custody, with a stringent condition
that he has to return the money to the Court as and when required. Therefore, the entire amount rests permanently under the custody of the Court
and hence, the revision is not maintainable against the interim order. Further, no one will be prejudiced on the strength of the interim order passed
by the learned Magistrate. The complainant has registered a criminal case against the accused since he had not given suitable reply at the time of
interrogation, and as such, he is not an innocent person. Even though, the criminal case has been closed, the relevant issues have so far not been
decided, hence, the case is existing on the file of the learned Magistrate, therefore, the very competent counsel prays to dismiss the above revision.
On considering the facts and circumstances of the case and arguments advanced by the learned counsels on all sides and on perusing the
impugned common order of the learned Magistrate, this Court does not find any lapse in the conclusions arrived at regarding the return of money in
part to the accused on a stringent condition. This Court''s further view is that the seized amount should not be kept idle as ""dead investment"". The
amount seized from the first respondent herein could be utilized until the veracity of the case has bee determined. Hence, the interim order is
maintainable. Therefore, the part amount had been released to the accused on condition that he executes a bond for a sum of Rs. 6,00,000/- with
one surety for likesum on condition that he shall return the amount to the Court as and when required. Therefore, the learned Magistrate''s order
will not be prejudicial to the interest of the Income Tax Department. In the result, the above revision is dismissed. Consequently the order passed
in Crl.M.P. No. 167 of 2004, on the file of Additional Chief Metropolitan Magistrate, Egmore, Chennai, dated 22.03.2004 is confirmed.