Atta Husain vs Director Of Income Tax (Investigation) and Others

Challenge in this writ petition under Arts. 226 and 227 of the Constitution is made to an order dot. 29th Jan., 2001 Annex. P5 by which'' the competent authority of the IT Department has initiated proceedings against the petitioner u/s 132A of the IT Act, 1961.

Facts in nutshell relevant for deciding the writ petition indicate that on 23rd Jan., 2001 petitioner was travelling allegedly in a jeep hired by him in District, Bhopal. The jeep was seized by the Station House Officer, Khajuri Sadak District--Bhopal and cash amounting to Rs. 6.5 lacs was seized from the vehicle in which the petitioner was travelling.

Records indicate that the petitioner made certain allegations against the police officer who had seized the vehicle and the cash, and petitioner has tried to indicate that the police officer was trying to extract a bribe of Rs. 1 lac. Be it as it may be, the matter was reported to the Superintendent of Police, Bhopal. With regard to seizure of the cash, Crime No. 14/1/2001 was registered against the petitioner for offences punishable u/s 7 and 8 of Bhrastachar Niwaran Adhiniyam r/w ss. 120B, 511 of IPC. In the meanwhile, due to seizure of the huge amount of cash, the Superintendent of Police on 27th Jan., 2001 informed respondent Nos. 1 and 2 (IT Department.) about the facts as are indicated hereinabove and the impugned action is taken on the basis of the aforesaid information. section 132A of the IT Act reads as under :

132A. Powers to requisition books of account, etc.--(1) Where the Director General or Director or the Chief CIT or CIT, in consequence of information in his possession has reason to believe that--

(a)...............

(b)...............

(c) 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 1922 (11 of 1992), or this 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 then the Director General or Director or the Chief CIT or CIT may authorize any Jt. Director, Jt. CIT, Asstt. Director or Dy. Director, Asstt. CIT or Dy. CIT or ITO (hereafter in this section and in sub-s. (2) of section 278D referred to as the requisitioning officer) to require the officer or authority referred to in cl. (a) or cl. (b) or cl. (c) as the case may be, to deliver such books of account, other documents or assets to the requisitioning officer.

It is the case of the petitioner that with regard to criminal case registered against the petitioner, no action was taken and the police has submitted a closure report. However, it is seen from the records that the amount seized from the petitioner was deposited with the police authorities and the police authorities have resultantly deposited it with the Criminal Court, where the matter was registered by the police authorities. After the communication was received from the Superintendent of Police, Bhopal and on being satisfied that it was a fit case for taking action u/s 132A of the IT Act, 1961, the warrant of authorization was issued on 29th Jan., 2001 by the Director of IT (Inv.), Bhopal u/s 132A requiring the police authorities to deliver the seized cash to the IT Department. After the warrant of requisition was served on respondent No. 3, the petitioner was arrested and subsequently was released on bail. Trie police authorities informed the IT Department that the seized cash has been deposited in the Court. The petitioner, thereafter, made an application before the First Addl. Sessions Judge for release of the cash. This prayer of the petitioner was rejected on 28th June, 2001 on the ground that the cash cannot be released to the petitioner as warrant of requisition u/s 132A is already issued. However, after passing this order and rejecting the prayer made by the petitioner, the First Addl. Sessions Judge passed another order on 23rd Nov., 2001. Another order was passed that the cash can be released by the consent of the IT Department and the IT authorities are free to pass necessary order in the tax proceedings. Subsequently, on 3rd Sept., 2002, petitioner again made an application before the First Addl. Sessions Judge Bhopal for release of the seized amount and on 24th March, 2003 the First Addl. Sessions Judge Bhopal passed an order directing the respondent No. 2 to examine the documents submitted by the petitioner and to give a finding if the seized cash is accounted for or not. If unaccounted for, amount for tax liability was required to be intimated. On the ground that this direction of the First Addl. Sessions Judge was contrary to law, the IT Department has filed a petition before this Court u/s 482 of CrPC being MCrC No. 2310 of 2003 and stay has been granted by this Court on 7th April, 2003 and the matter is sub judice before this Court. Consequently, the investigation directed by the Addl. District Judge had been stayed and the petitioner contends that he is being harassed unnecessarily for the last 8 years and the proceedings are not coming to an end. The IT Department is not concluding the proceedings in the matter and the petitioner is being harassed due to the delay. Being aggrieved with the aforesaid, this petition is filed for quashing the proceedings initiated by the IT Department u/s 132A and in support of this contention, reliance is placed to the law laid down in the case of Commissioner of Income Tax, Allahabad and Others Vs. Vindhya Metal Corporation and Others,

Shri A. P. Singh, learned counsel for the petitioner submitted that the proceedings being held against the petitioner u/s 132A are liable to be quashed for the simple reason that more than 8 years have passed and IT Department is unable to conclude the proceedings. Accordingly, contending that the investigation having taken a long period of time has caused harassment to the petitioner, this writ petition is filed. That apart, it is argued on merit that petitioner has disclosed the sources of income of the seized amount, therefore, he prays for interference into the matter.

Shri Jain learned counsel for the respondent Department has filed a detailed return and. has pointed out that the investigation into the matter could not be completed due to the illegal order passed by the First Addl. Sessions Judge Bhopal on 24th March, 2003 in MJC No. 6 of 2002 which is pending consideration before this Court in MCrC No. 2310 of 2003 wherein the entire proceeding is stayed by this Court. It is the case of the respondent Department that the petitioner is unable to explain either wholly or partly as to how the seized cash has come into his custody and various other factors required for conducting the enquiry are not forthcoming from the petitioner and it is, therefore, stated that until and unless the investigation is not completed, the proceedings cannot be quashed.

Shri Jain, learned counsel inviting my attention to the proceedings held in the matter and the facts with regard to communication of the petitioner, argues that the petitioner explains source of the seized amount, as having being received by way of compensation, sale of agricultural lands and advance from a proposal for sale of certain house. Inviting my attention to the tabulated chart in this regard as pleaded in para 5.13 of the return filed by the IT Department, Shri Jain, learned counsel submits that the explanation given by the petitioner is unconvincing. The petitioner has submitted explanation with regard to certain transactions that have taken place from 3rd of June, 1994 upto 11th of December, 2001 and it is not known as to how the petitioner was carrying the said amount on 23rd Jan., 2001. Accordingly, contending that on the explanation submitted by the petitioner, the law laid down in the case of Vindhya Metal Corporation (supra) will not apply and it is not a case where the investigation u/s 132A can be quashed on the basis of the material available on record. As far as delay in concluding the proceedings is concerned, it is pointed out by the respondent that due to order passed by the learned First Addl. Sessions Judge and pendency of the matter before this Court, the respondent could not conclude the proceedings.

Having heard learned counsel for the parties and considering the totality of the facts and circumstances of the case, we are of the considered view that it is not a fit case where the proceedings initiated against the petitioner can be quashed exercising extraordinary jurisdiction by this Court in a writ petition under Art. 226 of the Constitution. The power for quashing the proceedings u/s 132A can be exercised by this Court only if prima facie material available on record or the explanation of the petitioner indicates that he is being unnecessarily harassed or that he has given justification, reasonable in nature for possession of the seized amount. The material available on record is not sufficient enough, for this Court to record a finding in favor of the petitioner and for quashing the proceedings. In the present case, the petitioner should produce the documents and other material with regard to receipt of Rs. 6.5 lacs, which was seized from him while going in a jeep hired from the District Bhopal on 23rd Jan., 2001. The explanation given by the petitioner with regard to the cash seized from him indicates the following facts :

Sr.

No. Date

Amount

Particulars

1.

3-6-1994

1,98,558

Compensation

2.

11-3-1997

3,86,000

Sale of agricultural lands

3.

11-3-1997

1,25,000

Sale of agricultural lands

4.

11-1-2001

1,00,000

Sale of agricultural lands

5.

11-12-2001

98,000

Sale of agricultural lands

6.

7-1-2001

2,50,000

Advance against proposed sale of a house No. 33 at Ward No. 9 Mundi

7.

Nov., 2000

1,21,000

Sales proceeds of Tractor Trolley

If the aforesaid facts are analyzed, it would be seen that the petitioner says that the amount of Rs. 6.5 lacs seized from him on 23rd Jan., 2001 was the amount received by him in the manner as indicated hereinabove. These amounts are received by the petitioner on 3rd June, 1994, 11th March, 1997 and on 7th Jan., 2001 and it is not known as to how and under what circumstances the amount received by the petitioner during the period of more than six years is kept by him or he is carrying the same amount along with him wherever he is going or was with him on 23rd Jan., 2001. The explanation given by the petitioner is not convincing enough to bring the same with the purview of the law laid down in the case of Vindhya Metal Corporation (supra). The petitioner has to give a convincing explanation for the cash found in his person on 23rd Jan., 2001 and if the explanation is not convincing enough then no prima facie case is made out in the matter and interference into the matter by a Writ Court is not warranted. Even though, during the course of hearing of this writ petition, Shri A,P. Singh submitted that the delay in conclusion of the proceedings is good enough to quash the proceedings, we are of the considered view that the delay in conclusion of the proceedings is not due to any specific act on the part of the Department, the delay is due to the proceedings pending before this Court u/s 482 of CrPC and the order passed by the Addl. Sessions Judge and in view of this, the delay cannot be attributed to the respondent and, therefore, the proceedings cannot be quashed by this Court.

Keeping in view the explanation given by the petitioner, we do not deem it appropriate to interfere into the matter. Accordingly, finding no merit in the claim made by the petitioner, the petition is dismissed.

Before parting, it may be observed that the findings recorded and the reasons given as indicated for dismissing this petition are provisional and a prima facie observation of this Court to consider the question of interference under Art. 226 of the Constitution and shall not come in the way of the petitioner in any other proceedings.

With the aforesaid, the petition is dismissed.