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Dy. Cit vs Mohd. Farooq

High Court Of Judicature at Allahabad|30 June, 2004

JUDGMENT / ORDER

ORDER Bha Vnesh Saim, J.M.
This appeal by the revenue is directed against the order of Commissioner (Appeals)-U, Lucknow, dated 31-1-2002, for the assessment year 1995-96.
2. The revenue has challenged the deletion of the addition of Rs. 1,80,000.
2. The revenue has challenged the deletion of the addition of Rs. 1,80,000.
3. The brief facts, as taken from the record, are that on 21-4-1994, SHO, GRP, Police Station Charbagh, Lucknow, seized cash of Rs. 1,80,000 from the possession of Shri Nadimul Haque, son of Shri Hamisul Haque, resident of Mirzapur, Gorakhpur, who is stated to be employee of the assessee. Subsequently, cash was seized and requisitioned under section 132A of the Income Tax Act by DIP, Investigation, Kanpur. Shri Nadimul Haque stated before the police as well as Income Tax Authorities that in fact the money did not belong to him but to the assessee and he was carrying the cash to Nasik by train. In the proceedings under section 132(5) of the Act, assessee Shri Mohd. Farooq, proprietor of M/s Mohd. Nasim Mohd. Amin Fruit Merchant and Commission Agent, Gorakhpur, admitted that the cash was sale proceeds of goods sold on behalf of grape farmers and agriculturists of Nasik and the assessee had deputed Shri Nadimul Haque to remit the same to the concerned parties. However, the assessee's version was not believed under section 132(5) of the Income Tax Act and the cash in question was treated to be the undisclosed income of the assessee. The assessee in compliance to the notice under section 142(l) of the Income Tax Act filed return of income at Rs. 37,200 showing income from business of dealing in grapes and commission agency and dealing in vegetables. It was explained by the assessee during the course of assessment proceedings that the cash belonged to the agriculturists and grape farmers based at Nasik as under
3. The brief facts, as taken from the record, are that on 21-4-1994, SHO, GRP, Police Station Charbagh, Lucknow, seized cash of Rs. 1,80,000 from the possession of Shri Nadimul Haque, son of Shri Hamisul Haque, resident of Mirzapur, Gorakhpur, who is stated to be employee of the assessee. Subsequently, cash was seized and requisitioned under section 132A of the Income Tax Act by DIP, Investigation, Kanpur. Shri Nadimul Haque stated before the police as well as Income Tax Authorities that in fact the money did not belong to him but to the assessee and he was carrying the cash to Nasik by train. In the proceedings under section 132(5) of the Act, assessee Shri Mohd. Farooq, proprietor of M/s Mohd. Nasim Mohd. Amin Fruit Merchant and Commission Agent, Gorakhpur, admitted that the cash was sale proceeds of goods sold on behalf of grape farmers and agriculturists of Nasik and the assessee had deputed Shri Nadimul Haque to remit the same to the concerned parties. However, the assessee's version was not believed under section 132(5) of the Income Tax Act and the cash in question was treated to be the undisclosed income of the assessee. The assessee in compliance to the notice under section 142(l) of the Income Tax Act filed return of income at Rs. 37,200 showing income from business of dealing in grapes and commission agency and dealing in vegetables. It was explained by the assessee during the course of assessment proceedings that the cash belonged to the agriculturists and grape farmers based at Nasik as under Names Names Amount Rs.
Amount Rs.
(i) M/s Uttam Vithal Rao Niphade 62,000
(ii) Suresh Pandit Dhonse 45,000
(iii) Gopi Nath Laxmi Pawar 30,000
(iv) Balkrishna Mahadeo 21,000
(v) M/s Sadashiv Gobhaji Thakre 10,000
(vi) Bajirao Dada Dhomse 6,000
(vii) Sekh Noor Sekh Chand Shivade 6,000 Total 1,80,000
4. The IT authorities recorded the statements of assessee and his employee Shri Nadimul Haque as well as of the first four agriculturists, and in case of M/s Sadashiv Gobhaji Thakre the statement could not be recorded due to nonavailability of the assessing officer. As such, affidavit was filed in detail. In case of remaining two persons, one party stated to have expired. However, in all the cases confirmatory letters were filed before the IT authorities claiming ownership in the amount carried by Nadimul Haque. It was explained that the assessee was commission agent and the amount in question was sale proceeds, which was to be delivered to the respective parties at Nasik mentioned above through the son of the assessee, Mohd. Anis who is stated to be residing in Nasik. The assessing officer did not believe the statement of all the persons and also did not believe the explanation of the assessee and has given certain reasons for disbelieving the version of the assessee, precisely on the reason that no books of account have been maintained and that the delivery of the grapes from Nasik to Gorakhpur is not proved and no details whatsoever are maintained. Assessing officer also noted that the persons, who claimed right in the cash, did not take any action in the Civil court against the assessee. The assessing officer recorded those facts in para 9 of the assessment order and treated it to be explained money of the assessee and made the addition of Rs. 1,80,000.
4. The IT authorities recorded the statements of assessee and his employee Shri Nadimul Haque as well as of the first four agriculturists, and in case of M/s Sadashiv Gobhaji Thakre the statement could not be recorded due to nonavailability of the assessing officer. As such, affidavit was filed in detail. In case of remaining two persons, one party stated to have expired. However, in all the cases confirmatory letters were filed before the IT authorities claiming ownership in the amount carried by Nadimul Haque. It was explained that the assessee was commission agent and the amount in question was sale proceeds, which was to be delivered to the respective parties at Nasik mentioned above through the son of the assessee, Mohd. Anis who is stated to be residing in Nasik. The assessing officer did not believe the statement of all the persons and also did not believe the explanation of the assessee and has given certain reasons for disbelieving the version of the assessee, precisely on the reason that no books of account have been maintained and that the delivery of the grapes from Nasik to Gorakhpur is not proved and no details whatsoever are maintained. Assessing officer also noted that the persons, who claimed right in the cash, did not take any action in the Civil court against the assessee. The assessing officer recorded those facts in para 9 of the assessment order and treated it to be explained money of the assessee and made the addition of Rs. 1,80,000.
5. It is relevant to mention here that the business income of the assessee on commission basis was accepted by the assessing officer. However, commission income from grape business was enhanced to Rs. 60,000 which was subsequently deleted by the Commissioner (Appeals) and whatever income was shown by the assessee on commission was accepted. The addition was challenged before the Commissioner (Appeals). The same submissions were reiterated and it was also submitted that all the agriculturists proved the version of the assessee and, as such, no addition should be made. It was also explained that though no regular books of account have been maintained but all the details of the selling of the grapes on commission are maintained in which vehicle number, bill number, date, total amount of sales and commission received are mentioned. Therefore, it was prayed before the Commissioner (Appeals) that addition may be deleted. The Commissioner (Appeals), considering the facts of the case, deleted the entire addition. The findings of the Commissioner (Appeals) in para 7 of the appellate order are reproduced for the sake of convenience :
5. It is relevant to mention here that the business income of the assessee on commission basis was accepted by the assessing officer. However, commission income from grape business was enhanced to Rs. 60,000 which was subsequently deleted by the Commissioner (Appeals) and whatever income was shown by the assessee on commission was accepted. The addition was challenged before the Commissioner (Appeals). The same submissions were reiterated and it was also submitted that all the agriculturists proved the version of the assessee and, as such, no addition should be made. It was also explained that though no regular books of account have been maintained but all the details of the selling of the grapes on commission are maintained in which vehicle number, bill number, date, total amount of sales and commission received are mentioned. Therefore, it was prayed before the Commissioner (Appeals) that addition may be deleted. The Commissioner (Appeals), considering the facts of the case, deleted the entire addition. The findings of the Commissioner (Appeals) in para 7 of the appellate order are reproduced for the sake of convenience :
"I have carefully considered the arguments of the appellant as well as the reasons given by the assessing officer for rejecting the appellant's explanation regarding the source of cash of Rs. 1,80,000. The appellant's case is that the amount of Rs. 1,80,000 was the sale proceeds of grapes of various growers at Nasik, which of course was disbelieved by the assessing officer, who held it to be the unexplained money of the appellant. It is significant to note that the appellant's stand is corroborated by the statement of Shri Nadimul Haque made before the GRP immediately after the seizure of cash and this statement was also corroborated by the letters accompanying the cash of Rs. 1,80,000 and recovered along with it. Apart from that, the growers concerned came all the way from Nasik and were examined on oath either in proceedings under section 132(5) of the Act or in regular assessment proceedings. Thus, all the independent evidence corroborates the stand of the appellant and I find no reason not to accept the statement as correct. The learned assessing officer has, however, not accepted the contention of the appellant giving a number of arguments. The arguments, in my opinion, cannot be a substitute for factual and contemporaneous evidence on the side of the assessee. I am, therefore, of the view that the appellant has been able to satisfactorily explain the nature and source of the cash in question. The addition made on account of unexplained cash of Rs. 1,80,000 is accordingly deleted. "
6. The revenue is in appeal. Learned Departmental Representative mainly relied the order of the assessing officer and argued that no details whatsoever were maintained to support the contention of the assessee. Learned Departmental Representative also argued that the documents, which were recovered along with the cash, have not been explained and that no delivery of the grapes from Nasik to Gorakhpur has been proved and, as such, all the statements of the persons are afterthought and Commissioner (Appeals), without considering the facts of the case in proper perspective, deleted the addition.
6. The revenue is in appeal. Learned Departmental Representative mainly relied the order of the assessing officer and argued that no details whatsoever were maintained to support the contention of the assessee. Learned Departmental Representative also argued that the documents, which were recovered along with the cash, have not been explained and that no delivery of the grapes from Nasik to Gorakhpur has been proved and, as such, all the statements of the persons are afterthought and Commissioner (Appeals), without considering the facts of the case in proper perspective, deleted the addition.
7. On the other hand, learned counsel for the assessee filed detailed paper book in which all the details have been mentioned connected with the proceedings. Learned counsel for the assessee submitted that though regular books of account, i.e., cash book and ledger are not maintained but the assessee maintained the names of the consignees who had sent grapes from Nasik which is supported by bill number, vehicle number, sale rate and the total expenses and commission earned by the assessee. Learned counsel for the assessee submitted that four of the grape agriculturists were examined by the IT authorities who have clearly supported the version of the assessee. Learned counsel for the assessee submitted that in all the cases confirmatory letters have been filed. He has also argued that the business income from commission is accepted by the department and, as such, no adverse inference should be drawn that money seized by the police belonged to the assessee. Learned counsel for the assessee submitted that the amount was the sale proceed of the grapes which was to be delivered at Nasik. Therefore, no addition could be made in the hands of the assessee. Learned counsel for the assessee submitted that the papers, which were recovered from Nadimul Haque by the police, if are not believed, then no addition could be made in the hands of the assessee as the person, who was found in possession of the cash, could have. been subjected to addition by the IT department. Learned counsel for the assessee took us through various relevant papers in the paper book to support his contentions.
7. On the other hand, learned counsel for the assessee filed detailed paper book in which all the details have been mentioned connected with the proceedings. Learned counsel for the assessee submitted that though regular books of account, i.e., cash book and ledger are not maintained but the assessee maintained the names of the consignees who had sent grapes from Nasik which is supported by bill number, vehicle number, sale rate and the total expenses and commission earned by the assessee. Learned counsel for the assessee submitted that four of the grape agriculturists were examined by the IT authorities who have clearly supported the version of the assessee. Learned counsel for the assessee submitted that in all the cases confirmatory letters have been filed. He has also argued that the business income from commission is accepted by the department and, as such, no adverse inference should be drawn that money seized by the police belonged to the assessee. Learned counsel for the assessee submitted that the amount was the sale proceed of the grapes which was to be delivered at Nasik. Therefore, no addition could be made in the hands of the assessee. Learned counsel for the assessee submitted that the papers, which were recovered from Nadimul Haque by the police, if are not believed, then no addition could be made in the hands of the assessee as the person, who was found in possession of the cash, could have. been subjected to addition by the IT department. Learned counsel for the assessee took us through various relevant papers in the paper book to support his contentions.
8. We have considered the rival submissions and material available on record and the details submitted in the paper book.
8. We have considered the rival submissions and material available on record and the details submitted in the paper book.
9. It is an admitted fact that cash was seized from Nadimul Haque by the railway police. The relevant report of the railway police is reproduced in the assessment order in which itself it is mentioned by the police that on seeing the police Nadimul Haque was found to be perturbed and, as such, on suspicion he was stopped for enquiry and during his interrogation Nadimul Haque explained that he was carrying cash in the bag which belonged to the assessee which was to be delivered'at Nasik to M/s Uttam Bitthal Rao. He also explained that since bank draft could not be prepared, therefore, he was carrying the cash on behalf of the assessee for delivery at Nasik. The police took it as evasion of sales-tax and income-tax and, as such, seized the same. On the basis of these facts, the cash was handed over to the IT authorities upon which necessary proceedings were conducted.
9. It is an admitted fact that cash was seized from Nadimul Haque by the railway police. The relevant report of the railway police is reproduced in the assessment order in which itself it is mentioned by the police that on seeing the police Nadimul Haque was found to be perturbed and, as such, on suspicion he was stopped for enquiry and during his interrogation Nadimul Haque explained that he was carrying cash in the bag which belonged to the assessee which was to be delivered'at Nasik to M/s Uttam Bitthal Rao. He also explained that since bank draft could not be prepared, therefore, he was carrying the cash on behalf of the assessee for delivery at Nasik. The police took it as evasion of sales-tax and income-tax and, as such, seized the same. On the basis of these facts, the cash was handed over to the IT authorities upon which necessary proceedings were conducted.
10. Before dealing with the powers of police to seize the cash in question, we would like to record certain reasons for upholding the findings of the Commissioner (Appeals). Shri Nadimul Haque in his initial statement to the police confirmed the fact that he was carrying the cash for the assessee for delivery at Nasik. He has made the same statement before the Income Tax Authorities in which also he has confirmed that he was to deliver the cash to Mohd. Anis, son of the assessee, for delivery to the grape agriculturists. The assessee was also examined by Income Tax Authorities who have also confirmed this fact in his statement. Four of the parties mentioned at serial Nos. 1 to 4 were also examined by IT authorities and they have confirmed their transaction for selling of grapes through the assessee on commission basis. Assessing officer also accepted the commission income of the assessee. However, it was enhanced but the Commissioner (Appeals) deleted the addition. The Commissioner (Appeals) specifically mentioned in the appellate order that for earning commission of 5 per cent, assessee would have turnover of Rs. 12,53,424. Therefore, the totality of the circumstances and facts clearly suggests and proves that assessee was commission agent and was earning commission on sale of the grapes. Therefore, sale proceeds of grapes can never be unexplained income of the assessee. The department did not file any appeal against the deletion of the enhancement in the business income of the assessee. Even assessing officer accepted the commission income of the assessee. Considering the turnover, as stated by the Commissioner (Appeals) in the appellate order, it is clear that the amount, as seized by the police, was part of the sale proceeds of the assessee as it had not exceeded the total turnover of the assessee. These facts clearly prove that the assessee had been able to discharge his onus to prove that the money in cash in fact belonged to the grape agriculturists which was to be delivered at Nasik. 'The assessee had maintained all the details with regard to the selling of the grapes on commission basis even if no regular books of account have been maintained. Learned Departmental Representative mainly relied on the findings of the assessing officer that no action is taken by the grape agriculturists for recovery of their dues. But it is not always necessary that if no action is taken, then adverse presumption should be drawn, more particularly, when the agriculturists on oath confirmed selling of their grapes through the assessee on commission basis. Learned Departmental Representative also relied on the findings of the assessing officer as no delivery of the grapes is proved from Nasik to Gorakhpur. It is the duty of the assessee to take delivery of grapes for sale on commission basis. Assessee never claimed it to be purchase. Therefore, assessee is not supposed to maintain any purchase voucher for the same. Assessee had mentioned bill number, vehicle number and amount of sale proceeds along with the commission in his accounts though the same may not be regular books of account. Therefore, it could prove that the assessee had been receiving goods for sale on commission basis. Therefore, these reasons are not sufficient to uphold the findings of the assessing officer. Learned Departmental Representative also argued that the details mentioned in the seized papers by the police are not explained. However, on going through the contents of the letter, it is revealed that the details are recorded in the letter-head of the assessee in which briefly it was mentioned that 180 is sent and it is also stated that since draft could not be prepared, therefore, cash is being sent. Even if it is recorded in number but it was letter-head of the assessee and at least would explain that cash was sent for delivery at Nasik. The case of the assessee had been that cash was to be delivered to the agriculturists being their sale proceeds. Even Nadimul Haque, who was apprehended by railway police, had explained the same not only in his initial statement to the police but in his subsequent statement to the Income Tax Authorities also. If for the sake of argument it may be taken that Nadimul Haque and assessee are making false statements then the whole case of the revenue would be demolished because in that event the onus would be upon Nadimul Haque to explain the source of possession of the cash and, as such, no addition could be made in the hands of the assessee if no satisfactory evidence is given. In this case, assessee specifically explained before the authorities below that it was the sale proceeds of the grapes which was to be delivered at Nasik to the agriculturists and agriculturists corroborated the statement, Therefore, the submission of the learned departmental Representative has no force and is accordingly rejected. Considering the above discussion and the facts of the case and, more particularly, when income from commission is accepted by the department in case of the assessee, then the explanation of the assessee with regard to the possession of cash of Rs. 1,80,000 at the railway station should not have been disbelieved. Commissioner (Appeals) was thus justified in deleting the entire addition in the hands of the assessee.
10. Before dealing with the powers of police to seize the cash in question, we would like to record certain reasons for upholding the findings of the Commissioner (Appeals). Shri Nadimul Haque in his initial statement to the police confirmed the fact that he was carrying the cash for the assessee for delivery at Nasik. He has made the same statement before the Income Tax Authorities in which also he has confirmed that he was to deliver the cash to Mohd. Anis, son of the assessee, for delivery to the grape agriculturists. The assessee was also examined by Income Tax Authorities who have also confirmed this fact in his statement. Four of the parties mentioned at serial Nos. 1 to 4 were also examined by IT authorities and they have confirmed their transaction for selling of grapes through the assessee on commission basis. Assessing officer also accepted the commission income of the assessee. However, it was enhanced but the Commissioner (Appeals) deleted the addition. The Commissioner (Appeals) specifically mentioned in the appellate order that for earning commission of 5 per cent, assessee would have turnover of Rs. 12,53,424. Therefore, the totality of the circumstances and facts clearly suggests and proves that assessee was commission agent and was earning commission on sale of the grapes. Therefore, sale proceeds of grapes can never be unexplained income of the assessee. The department did not file any appeal against the deletion of the enhancement in the business income of the assessee. Even assessing officer accepted the commission income of the assessee. Considering the turnover, as stated by the Commissioner (Appeals) in the appellate order, it is clear that the amount, as seized by the police, was part of the sale proceeds of the assessee as it had not exceeded the total turnover of the assessee. These facts clearly prove that the assessee had been able to discharge his onus to prove that the money in cash in fact belonged to the grape agriculturists which was to be delivered at Nasik. 'The assessee had maintained all the details with regard to the selling of the grapes on commission basis even if no regular books of account have been maintained. Learned Departmental Representative mainly relied on the findings of the assessing officer that no action is taken by the grape agriculturists for recovery of their dues. But it is not always necessary that if no action is taken, then adverse presumption should be drawn, more particularly, when the agriculturists on oath confirmed selling of their grapes through the assessee on commission basis. Learned Departmental Representative also relied on the findings of the assessing officer as no delivery of the grapes is proved from Nasik to Gorakhpur. It is the duty of the assessee to take delivery of grapes for sale on commission basis. Assessee never claimed it to be purchase. Therefore, assessee is not supposed to maintain any purchase voucher for the same. Assessee had mentioned bill number, vehicle number and amount of sale proceeds along with the commission in his accounts though the same may not be regular books of account. Therefore, it could prove that the assessee had been receiving goods for sale on commission basis. Therefore, these reasons are not sufficient to uphold the findings of the assessing officer. Learned Departmental Representative also argued that the details mentioned in the seized papers by the police are not explained. However, on going through the contents of the letter, it is revealed that the details are recorded in the letter-head of the assessee in which briefly it was mentioned that 180 is sent and it is also stated that since draft could not be prepared, therefore, cash is being sent. Even if it is recorded in number but it was letter-head of the assessee and at least would explain that cash was sent for delivery at Nasik. The case of the assessee had been that cash was to be delivered to the agriculturists being their sale proceeds. Even Nadimul Haque, who was apprehended by railway police, had explained the same not only in his initial statement to the police but in his subsequent statement to the Income Tax Authorities also. If for the sake of argument it may be taken that Nadimul Haque and assessee are making false statements then the whole case of the revenue would be demolished because in that event the onus would be upon Nadimul Haque to explain the source of possession of the cash and, as such, no addition could be made in the hands of the assessee if no satisfactory evidence is given. In this case, assessee specifically explained before the authorities below that it was the sale proceeds of the grapes which was to be delivered at Nasik to the agriculturists and agriculturists corroborated the statement, Therefore, the submission of the learned departmental Representative has no force and is accordingly rejected. Considering the above discussion and the facts of the case and, more particularly, when income from commission is accepted by the department in case of the assessee, then the explanation of the assessee with regard to the possession of cash of Rs. 1,80,000 at the railway station should not have been disbelieved. Commissioner (Appeals) was thus justified in deleting the entire addition in the hands of the assessee.
11. Though none of the parties has taken up the issue with regard to the powers of the police to seize the cash during the course of argument but we find from the order under section 132(5) of the Income Tax Act, dated 19-8-1994, copy of which is filed in the paper book, that the assessee in his reply before the IT authorities, challenged the jurisdiction of GRP on the ground that it had no right to seize the cash from any businessman. The plea of the assessee was rejected as this plea is not relevant for income-tax proceedings. We also find from the assessment order that the assessee in one of the replies before the assessing officer has also mentioned in his reply that since cash of grape farmers of Nasik is snatched by GRP, Lucknow, with ill-motive, therefore, prepared books for showing that cash was being sent to the farmers of Nasik. The above contention of the assessee before the authorities below at different levels clearly suggests that the assessee has not only explained the possession of cash of Rs. 1,80,000 with his employee but also challenged the jurisdiction of the police to seize the cash. Therefore, it being an important issue is decided by us.
11. Though none of the parties has taken up the issue with regard to the powers of the police to seize the cash during the course of argument but we find from the order under section 132(5) of the Income Tax Act, dated 19-8-1994, copy of which is filed in the paper book, that the assessee in his reply before the IT authorities, challenged the jurisdiction of GRP on the ground that it had no right to seize the cash from any businessman. The plea of the assessee was rejected as this plea is not relevant for income-tax proceedings. We also find from the assessment order that the assessee in one of the replies before the assessing officer has also mentioned in his reply that since cash of grape farmers of Nasik is snatched by GRP, Lucknow, with ill-motive, therefore, prepared books for showing that cash was being sent to the farmers of Nasik. The above contention of the assessee before the authorities below at different levels clearly suggests that the assessee has not only explained the possession of cash of Rs. 1,80,000 with his employee but also challenged the jurisdiction of the police to seize the cash. Therefore, it being an important issue is decided by us.
12. Section 102 of Code of Criminal Procedure provides the power to the police officer to seize certain properties and sub-section (1) provides that any police officer may seize any property which may be alleged or suspected to have been stolen or which may be found under circumstances which create suspicion of the commission of any offence. Therefore, power is given to the police under Cr.P.C. to seize any property if it is suspected to have been stolen or if it creates suspicion of the commission of any offence. It is the discretion vested in police to seize the property in appropriate cases. Therefore, police should have exercised the discretion in lawful manner as it would curtail the right of the party. It is not the case of anybody that the cash was stolen. It is also not clear from the assessment order in which report of the police is incorporated as to in what way Nadimul Haque was suspected of commission of any offence. However, to the contrary, it is mentioned in the police report that the amount might be from evasion of sales-tax and income-tax. Nadimul Haque explained that he was to deliver the cash at Nasik. The police authorities, therefore, should have verified the fact before seizing the cash from him and, before exercising the discretion. Carrying on cash by any businessman is not always connected with the commission of offence. It is not the duty of the police officer to seize cash without any valid reason in the aid of the sales-tax or IT authorities, unless warranted by law. It is not the duty of the police to see in what way sales-tax or income-tax is evaded. No such powers are given to the police either in the Criminal Procedure Code or in the Income Tax Act to verify the evasion of sales-tax or income-tax. Unless the police has a reason to believe that the amount is stolen or that the circumstances give suspicion of commission of offence, the police should not have seized the cash from the businessman. It is settled law that police could investigate only cognizable offence. No blanket powers are given to the police under section 102 of Criminal Procedure Code to seize the cash without any reasons in accordance with law. Therefore, in this case, discretion to seize cash has not been lawfully exercised by the police authorities. In this case, the initiation of the income-tax proceedings started from seizure of the cash which itself is bad in law and should not have been seized by the police. Since the initiation itself is bad, therefore, it would vitiate the entire proceedings as the assessee explained the above issue properly. Considering the above, we do not appreciate the action of the police in the matter as the requirements of section 102 of the Criminal Procedure Code are not satisfied in this case. The police could provide the assistance to Income Tax Authorities whenever their help is required in certain circumstances. Therefore, in this case, the discretion exercised by the police was clearly violative of right of a citizen to carry lawful cash for business purposes. Accordingly, the appeal of the revenue is dismissed.
12. Section 102 of Code of Criminal Procedure provides the power to the police officer to seize certain properties and sub-section (1) provides that any police officer may seize any property which may be alleged or suspected to have been stolen or which may be found under circumstances which create suspicion of the commission of any offence. Therefore, power is given to the police under Cr.P.C. to seize any property if it is suspected to have been stolen or if it creates suspicion of the commission of any offence. It is the discretion vested in police to seize the property in appropriate cases. Therefore, police should have exercised the discretion in lawful manner as it would curtail the right of the party. It is not the case of anybody that the cash was stolen. It is also not clear from the assessment order in which report of the police is incorporated as to in what way Nadimul Haque was suspected of commission of any offence. However, to the contrary, it is mentioned in the police report that the amount might be from evasion of sales-tax and income-tax. Nadimul Haque explained that he was to deliver the cash at Nasik. The police authorities, therefore, should have verified the fact before seizing the cash from him and, before exercising the discretion. Carrying on cash by any businessman is not always connected with the commission of offence. It is not the duty of the police officer to seize cash without any valid reason in the aid of the sales-tax or IT authorities, unless warranted by law. It is not the duty of the police to see in what way sales-tax or income-tax is evaded. No such powers are given to the police either in the Criminal Procedure Code or in the Income Tax Act to verify the evasion of sales-tax or income-tax. Unless the police has a reason to believe that the amount is stolen or that the circumstances give suspicion of commission of offence, the police should not have seized the cash from the businessman. It is settled law that police could investigate only cognizable offence. No blanket powers are given to the police under section 102 of Criminal Procedure Code to seize the cash without any reasons in accordance with law. Therefore, in this case, discretion to seize cash has not been lawfully exercised by the police authorities. In this case, the initiation of the income-tax proceedings started from seizure of the cash which itself is bad in law and should not have been seized by the police. Since the initiation itself is bad, therefore, it would vitiate the entire proceedings as the assessee explained the above issue properly. Considering the above, we do not appreciate the action of the police in the matter as the requirements of section 102 of the Criminal Procedure Code are not satisfied in this case. The police could provide the assistance to Income Tax Authorities whenever their help is required in certain circumstances. Therefore, in this case, the discretion exercised by the police was clearly violative of right of a citizen to carry lawful cash for business purposes. Accordingly, the appeal of the revenue is dismissed.
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Title

Dy. Cit vs Mohd. Farooq

Court

High Court Of Judicature at Allahabad

JudgmentDate
30 June, 2004