INCOME TAX OFFICER Vs. SHAJAHAN

JUDGEMENT

(1.) THESE are appeals taken by the Revenue from the judgment in O.P. Nos. 2453, 2467 and 2467 of 1975 which were allowed by the judgment under appeals in these cases. By that judgment an order which has been produced in O.P. No. 2453 of 1975 (W. A. 291 of 1975) as Ext. P -1 purporting to have been passed by the authorised officer under sub -s. (3) of S.132 of the Income -tax Act, 1961, for short, the Act, has been set aside by the learned Judge. The question that arises in these appeals, though they relate three different assessees, is the same; the ambit and scope of the powers of the authority entitled to pass an order under sub -s. (3) of S.132 of the Act.

(2.) BEFORE we proceed further we shall extract the relevant parts of S.132 which are sub -sections (1), (2), (3), (5) and (7): (Section omitted) We shall also read the order Ext. P -1 passed by the 1st appellant:

(3.) ELABORATE arguments had been advance J before the learned judge which were repeated in a more succinct form before us relating to the legal relationship of customer and banker and as to whether the money deposited by the customer in a bank would continue to belong to the customer or to the bank. We need not tally on this aspect of the case because the position seems to be well established that the money deposited in an account in a Bank by a customer, after such deposit, would belong to the bank and that it has full control and has the right to use the money as it liked. The bank was only obliged to honour the cheque issued by the customer if it is a proper cheque and drawn up in a proper manner. We shall therefore proceed on that basis for deciding this case. This means that the monies in deposit as evidenced by the pass -books that have been seized, are the monies that belonged to the 2nd respondent bank in each of these Writ Appeals and they had full liberty to use the money in such manner as they deem fit subject only to the obligation that if the customer demanded payment in the proper manner by the issue of cheques such cheques should be honoured. On this basis counsel for the Ist respondent in each of these Appeals contended that no order could be passed under sub -section (3) of S.132 against the 2nd respondent Bank in these Appeals. His submission was based on the observation in the judgment which we have extracted and he submitted that it is clear on a reading of the section that the whole section will apply only in cases where the person is believed to be in possession of money (leaving out the various other items mentioned in the section, bullion, jewellery or other valuable article or thing with which we are not concerned in these cases) which represented income which had not been disclosed for the purpose of the Indian Income -tax Act. Proceedings under the section will have to be taken against the person so believed to be in possession of such money and it is such money that could be seized. The further action that can be taken under sub -section (3) must also be therefore in relation to such money and not to some other money which though it originally belonged to the person liable to be taxed had become the property of some other person and is in his complete control and custody. We shall consider these aspects.