Balance of Convenience to be taken into Account for Deciding Interim Custody of Seized Articles: Kerala HC releases Unaccounted Cash with Rs. 50 lakhs to Income Tax Dept. [Read Order]

The Kerala High Court while releasing the unaccounted cash with Rs. 50 lakhs to the Income Tax Department held that Balance of Convenience to be taken into account for deciding interim custody of seized articles.

While conducting vehicle inspection at Tholpetty Check post, Excise Officials found that the respondent is carrying cash of Rs.50 lakhs without any proper supporting documents. Consequently, the respondent was produced before the Sub Inspector of Police, Thirunelly and F.I.R. was registered of Thirunelly Police Station. The amount was also seized and the same was produced before the Judicial First Class Magistrate Court-II, Mananthavady. Upon getting information from the Inspector of Police, Thirunelly, Income Tax authorities has issued summons to the 2nd respondent under Section 131 of the Income Tax Act seeking to explain the source of the said amount. He stated that the seized cash was not his money and it was handed over to him by his friends for starting a supermarket at Bangalore. The details of the said persons were also furnished. 

After conducting an inquiry, the income tax authorities found that therespondent failed to explain the source of the same properly and therefore it was decided to initiate proceedings against him. As part of the same, a notice of requisition was issued to the Sub Inspector of Police under Section 132A(1)(c) of Income Tax Act, directing him to deliver the same to the Requisitioning Officer. However, it was informed by the Sub Inspector of Police that the amount is already deposited before the Judicial First Class Magistrate Court, Mananthavady and the same is in the custody of the court.

The single bench of Justice Zyad Rehman A.A. held that if the amount is released to the petitioner herein (IT Department), there is a specific procedure contemplated for getting the amount released in favor of the 2nd respondent (Razak), from whose custody the amounts were seized…On the other hand, if the amount is released to the 2nd respondent herein, it is likely to cause difficulties in initiating proceedings under Section 32-A and the further proceedings thereon. Therefore, the balance of convenience is in favour of the petitioner herein.

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