Appeal Against Interim Order Granting Custody of Cash to Assessee Fails After Cash Release: Kerala HC Dismisses Income Tax Dept’s Appeal [Read Order]

The Kerala High Court dismissed the Income Tax department’s appeal, holding that a challenge against an order granting interim custody of cash to the assessee does not survive after the release of cash.

The Income Tax Department, the petitioner, filed the petition challenging Annexure A order of the Judicial First Class Magistrate Court-I, Perinthalmanna, granting interim custody of Rs.49,83,950/- to the Muhammed Riyas K, 2nd respondent.

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When the matter is taken up for consideration, Counsel for the 2nd respondent submitted that, pursuant to the impugned order, the cash was released to his client. In the report called for, the Magistrate has stated that the cash was released to the 2nd respondent on 19.10.2023 and no proceedings in connection with CMP 1973 of 2023 in CMP 171 of 2022 are pending before that court.

An interim order providing custody of cash is a court's temporary decision to give a particular party custody of seized or contested cash, usually while a case is pending. Until a final decision is rendered, this is done to preserve the status quo, safeguard the assets, or stop money from being spent. As the case develops, these orders, which are typically made to guarantee a just conclusion, may be appealed or changed.

A single bench of Justice V.G.Arun observed that “Since the cash is released on interim custody to the 2nd respondent, the challenge cannot survive. Moreover, release on interim custody does not prevent the Income Tax Department from approaching the jurisdictional Magistrate with an application after completion of the assessment proceedings.”

The petitioner department was represented by Navaneeth.N.Nath and Susie B Varghese. The respondent was represented by Jikku Seban George and Deepti Susan George.

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