K.G.JIJO vs. DIRECTOR OF INCOME TAX(INVESTIGATION)

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WP(C)/28231/2019HC KeralaKLHC01073486201918 November 2019Author: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR4 pages
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What did the High Court hold?

The High Court of Kerala disposed of the Writ Petition by directing that the Income Tax department shall release the seized cash amount of Rs. 90,00,000/- to the petitioner. This release is conditional upon the petitioner furnishing an unconditional and irrevocable bank guarantee for the same amount in favour of the Director of Income Tax (Investigation). The understanding is that this bank guarantee can be encashed by the respondents if any amounts are found to be due from the petitioner pursuant to the assessment order. The Court considered the rival submissions and found this arrangement to be a suitable resolution, balancing the petitioner's need for the cash and the department's interest in securing potential tax liabilities. No issue was expressly left undecided.

What were the facts?

The petitioner, K.G. Jijo, had his residential and business premises searched by the Income Tax Authorities. During the search, Rs. 90,00,000/- in cash was seized by the Director of Income Tax (Investigation). The petitioner approached the High Court of Kerala seeking the release of this seized cash. He proposed to furnish an unconditional and irrevocable bank guarantee for the same amount, which he believed would satisfy the department's requirements while allowing him to retrieve the cash. The assessment proceedings following the search were expected to be completed by March 2020.

What were the issues?

1. Whether the petitioner is entitled to the release of Rs. 90,00,000/- seized cash upon furnishing a bank guarantee for the equivalent amount? (Question of law and fact, concerning the powers of the Income Tax Department regarding seized cash and the adequacy of alternative security). Assessee's Contention: The petitioner argued that he is willing to provide an unconditional and irrevocable bank guarantee for Rs. 90,00,000/-, which should be sufficient for the department, and therefore, the seized cash should be released to him. Revenue's Contention: The Income Tax department, through its Standing Counsel, submitted that assessment proceedings would be completed by March 2020. They indicated that the cash could be released against a bank guarantee if the petitioner agreed to its encashment by the department in case any amounts were found due by way of income tax, penalty, or interest.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR MONDAY, THE 18TH DAY OF NOVEMBER 2019 / 27TH KARTHIKA, 1941 WP(C).No.28231 OF 2019(D) PETITIONER: K.G.JIJO AGED 50 YEARS KOCHUPURACKAL HOUSE, MUDAVOOR P.O., VAZHAPPALLY, MUVATTUPUZHA. BY ADVS. SRI.DEEPU THANKAN SMT.UMMUL FIDA SMT.LAKSHMI SREEDHAR RESPONDENTS: 1 DIRECTOR OF INCOME TAX(INVESTIGATION) 3RD FLOOR, ARYA BHANGI PINNACLE BUILDING, S. A. ROAD, ERNAKULAM, KOCHI - 682 020. 2 INCOME TAX OFFICER (TDS) INCOME TAX OFFICE, CENTRAL REVENUE BUILDING, KOCHI - 682 018. R1-2 BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18.11.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No.28231 OF 2019(D) 2

JUDGMENT The petitioner, whose residential and business premises were subjected to a search by the Income Tax Authorities, has approached this Court seeking a release of an amount of Rs.90,00,000/- that was seized by the 1st respondent in cash from the premises of the petitioner. It is the case of the petitioner that he is willing to furnish an unconditional and irrevocable bank guarantee for the said sum, which should suffice for the purposes of the respondents, while releasing the cash to the petitioner.

2.

I have heard the learned counsel appearing for the petitioner and also the learned Standing counsel appearing for the Income Tax Authority.

3.

The learned Standing counsel for the Income Tax department Sri.Jose Joseph, would submit that the assessment proceedings, pursuant to the search conducted, will be completed by the respondents by March 2020. It is his submission, however, that if the petitioner agrees for the encashment of the bank guarantee by the department, in the event of amounts being found due from him by way of income tax/penalty/interest, then the cash can be released against such a bank guarantee. On a consideration of the rival submission, I dispose the Writ Petition by directing that, if the petitioner furnishes a bank guarantee in WP(C).No.28231 OF 2019(D) 3 an amount of Rs.90,00,000/- in favour of the 1st respondent, on the understanding that in the event of the said amounts becoming due pursuant to the assessment order, the bank guarantee can be encashed by the respondents, the respondents will release the cash amount of Rs.90,00,000/- against the unconditional and irrevocable bank guarantee to be furnished by the petitioner. A.K.JAYASANKARAN NAMBIAR

JUDGE mns

WP(C).No.28231 OF 2019(D) 4

Appendix — schedule of exhibits
APPENDIX PETITIONER'S/S EXHIBITS: EXHIBIT P1 TRUE COPY OF THE FORM ITR V AND STATEMENT OF INCOME FOR THE YEAR 2016-17. EXHIBIT P2 TRUE COPY OF THE FORM ITR V AND STATEMENT OF INCOME FOR THE YEAR 2017-18. EXHIBIT P3 TRUE COPY OF THE FORM ITR V AND STATEMENT OF INCOME FOR THE YEAR 2018-19. EXHIBIT P4 TRUE COPY OF THE PANCHANAMA AND INVENTORY OF CASH FOUND/SEIZED DATED 14/03/2018. EXHIBIT P5 A TRUE COPY OF THE REQUEST SUBMITTED BY THE PETITIONER TO THE FIRST RESPONDENT DATED 29/05/2018. RESPONDENTS EXHIBITS:NIL //TRUE COPY// P.A TO JUDGE

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