SHYAM LAL GURJAR S/O MANGU RAM vs. PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX

Facts

The petitioners, Shyam Lal Gurjar and Jahabar Mal, filed a writ petition challenging the retention of seized cash amounting to Rs. 19,35,000/- by Income Tax authorities. The cash was initially seized by the Police and subsequently requisitioned by the Income Tax department under Section 132A of the Income Tax Act, 1961. The petitioners argued that the seizure was without authority of law and that no proceedings had been concluded despite the seizure occurring on April 10, 2024. A coordinate bench had previously directed provisional release of the cash upon furnishing a bank guarantee, but the petitioners sought modification of this condition due to financial hardship. They had also filed an application for release of cash with the Competent Revenue Officer.

Held

The High Court observed that the seized cash had been with the respondents since April 10, 2024, and the petitioners' application for its release was already pending before the Competent Authority. No useful purpose would be served by keeping the writ petition pending. Therefore, the Court directed the Competent Authority to treat the writ petition, read with the application at Annexure-6, as the petitioners' representation for the release of the seized cash. The Competent Authority was instructed to afford the petitioners an opportunity of personal hearing and pass a reasoned order within four weeks from the date of uploading the order. The remaining prayers were left open to be agitated in appropriate proceedings if the occasion arose. The petition was disposed of in these terms.

Key Issues

1. Whether the retention of seized cash by the Income Tax authorities, requisitioned under Section 132A of the Income Tax Act, 1961, is illegal and without authority of law, particularly when no proceedings have been concluded. 2. Whether the condition of furnishing a bank guarantee for the provisional release of seized cash is onerous for agriculturists facing financial hardship. Assessee's Arguments: The petitioners contended that the seizure was without the authority of law as the possession of cash was not against any provision, and no proceedings were drawn or concluded. They also argued that they are agriculturists in financial hardship and cannot furnish a bank guarantee of the equivalent amount. Revenue's Arguments: The respondents submitted that the cash was seized from the Police authority and requisitioned under Section 132A of the Act. They prima facie found that the cash was being carried for a transaction where such a cash amount was not permissible under Section 269ST of the Act. They also pointed out that the petitioners had already moved the Competent Revenue Officer for a similar relief.