Assessee can’t have custody of robbed cash recovered by police once the Income-tax Dept. has initiated section 132 proceedings: HC

The cash is seized by the police on various occasion where high cash is found or where the source/purpose appears to be not legal.

The relevant provision is Section 132 of the Income-tax Act, 1961 wherever income tax department is involved. Section 132 deals with the Search and seizure and also one may draw the views regarding return of seized cash.

Here is an interesting case on the issue of custody of such cash as under: .

Sampath

[2022] 138 taxmann.com 172 (Madras)

– Assessee ran a jewellery mart

– A robbery was committed upon employees of assessee and a cash being sale proceeds from jewellery articles, was robbed

– Subsequently, robbed amount was recovered by Police and deposited in custody of concerned Court of Judicial Magistrate

 – Assessee filed a petition for return of recovered cash before Judicial Magistrate, which was allowed subject to condition that assessee shall execute a bond

– Thereafter, revenue issued summons to assessee under section 131(1A) and assessee in his statement admitted that recovered cash belonged to him and it was his unaccounted income which had not been reported to tax

 – Whether since proceedings under section 132 was pending, assessee was not entitled to have custody of recovered cash until proceedings against it under section 132 were not concluded and amount due as tax was recovered by department?

The court answered it in affirmative and against the assessee. On this issue as to whether, therefore, order passed by Court of Judicial Magistrate to return recovered cash to assessee was to be set aside, the court again answered it in affirmative and against the assessee.

Conclusion:

It may be noted that where stolen cash was recovered and deposited in custody of Judicial Magistrate and assessee admitted that same was part of his unaccounted income, such cash could not be claimed by assessee until proceedings against it under section 132 were not concluded and amount due as tax was recovered by department