The Calcutta High Court had directed the Income Tax Department that refund, if any, of money seized in a raid before demonetization should be made in new currency.
Justice Joymalya Bagchi, who penned the order in an application moved by the assessee for modification of an earlier order passed in 2015, held that payment of refund, if any should not be made in the old currency.
In the year 2012, the police raided the residence of the assessee and seized more than Rs. 2 crore cash found at his home. The cash, in the custody of the police was later handed over to the IT department, on its request to ACJM. As per the order of the ACJM,the department obtained the custody of money subject to the submission of a bond of the equivalent amount to be executed by the Assistant Director of the IT Department.
This was challenged by the IT Department in the High Court. The High Court disposed of the case on October 6, 2015 with a direction to the IT Department to complete the assessment in accordance with law. It also directed that the seized currency will not be altered and shall be made available for the purpose of trial and after completion of assessment, refundable money, if any, shall be returned to the assessee in accordance with law.
A year later, after the scrapping of Rs. 500 and 1000 notes by the Government, the assessee moved the High Court for modification of its earlier order.
Allowing the plea of the assessee, the Court said that IT Department after completing the assessment will refund money, if any, in valid/ new currency to the assessee.
It was said that section 5(a)(ii)(c) of the Specified Bank Notes (Cessation of Liabilities) Act, 2017, permits a person to hold, old currency notes pursuant to a direction given by a Court of law in relation to a case pending before the Court.
“In the light of the authority vested in the Court to permit a person to hold on to old currency notes on or after the appointed dated, that is, 31st December, 2016, I hold that the Court giving such direction has incidental power to give liberty to such person to deposit such notes so held by him with the Central Bank after the appointed date and upon such deposit the Bank shall be under an obligation to replace the said notes with new currency notes.”
“Extinguishment of liability of the Reserve Bank in respect of any specified currency note under section 3 of the Act of 2017 is subject to a direction issued by a Court of law permitting a person to hold on to specified currency notes in connection with a pending proceeding and the Bank cannot deny its liability in such cases if the said person deposits the specified notes in the Bank after the appointed date with leave of the Court. It is trite law that an act of Court cannot prejudice any one and, therefore, any person who is holding on to specified notes after the appointed date in terms of a Court order, such person cannot be disadvantaged and denied liability by the Bank if such notes are subsequently deposited with the leave of the Court.”
The Court further ordered that seized currency will be videographed by the IT Department and will be produced as and when required by the trial court.
Read the full text of the Order below.
