PRINCIPAL COMMISSIONER OF INCOME TAX Vs. K. INBASAGARAN

JUDGEMENT

(1.) This writ appeal has been directed against the order made in W.P.No.35234 of 2016 dated 13.07.2017.

(2.) The appellant's Department conducted a raid in the residential premises of the first respondent on 13.09.1993 under Section 132 of the Income Tax Act, and found some incriminating records and cash about Rs.30,18,650/-, US Dollars, Gold Biscuits, Fixed Deposits and the Department seized all the above. Based on the seizure, the Department has filed a case against the first respondent in Spl.C.C.No.16 of 1997 on the file of the learned Special Judge I (XI Additional Judge, City Civil Court), which ended in conviction, but, subsequently on an appeal filed by the first respondent before this Court in Crl.A.No.231 of 2000, he was acquitted by this Court, aggrieved against which, the appellant Department has filed an appeal before the Hon'ble Supreme Court, wherein, the judgment of acquittal passed by this Court was confirmed. The Income Tax Officer, vide letter dated 13.01.2016 intimated the first respondent about the refund of tax in the individual case. The first respondent sent a communication dated 28.01.2016 stating that refund has to be given to the second respondent M/s.Silver Shoes Pvt. Ltd., The second appellant rejecting the same, had passed an order dated 30.06.2016 granting refund in the name of the first respondent for a sum of Rs.17,14,640/-. The first respondent returned the cheque and filed petition under Section 154 of the Income Tax Act against the refund order and the same was rejected by the second appellant vide order dated 07.09.2016 as there is no mistake apparent from the record. Thereafter the first respondent filed a writ petition in W.P.No.35234 of 2016 and the learned Single Judge, passed a detailed order dated 13.07.2017, directing the second appellant to pass orders in favour of the second respondent herein. Aggrieved by the order dated 13.07.2017, the Department has filed the present writ appeal.

(3.) The learned Senior Standing Counsel appearing for the appellants submitted that during a search conducted by the Department in the residential premises of the first respondent, some incriminating records and unaccounted money of Rs.30,18,650/-, US Dollors, Gold Biscuits, Fixed Deposits etc., were seized and criminal proceedings was also initiated, which ended in conviction. But, subsequently, the wife of the first respondent had retracted her earlier statement saying that all the seized articles belong to her and not to her husband and hence on an appeal filed by the first respondent, he was acquitted by this Court, which was also confirmed by the Hon'ble Supreme Court. Therefore, refund of tax was rightly made in favour of the first respondent as per Section 132-B (3) of the Income Tax Act , wherein, the Act clearly says that the assets have to be discharged forthwith from whose custody it was seized and there is no reference about the original owner of the assets. The Department has rightly refunded the assets in favour of the first respondent and further, there is no mentioning either in the order of this Court in the criminal appeal or in the order of the Hon'ble Supreme Court, to whom the assets have to be refunded. The wife of the first respondent has filed an affidavit stating that all the seized articles were acquired by her own through sale proceeds of M/s.Silver Shoes Private Limited and M/s.Southern Rims (P) Limited, in which, she was the Director and M/s.A.V.J.Marketing Services, in which she was the Proprietor. The Hon'ble Supreme Court has held that the money seized at the time of search stated to be owned by wife of the first respondent is unaccounted and further it was not stated that as to whether the seized assets and monies were taxed or not and how much belonged to her and how much belonged to the Companies owned by her is also not clearly stated. Under these circumstance, the order of the learned Single Judge directing the appellants to make refund in favour of the second respondent is not justifiable and the same is against law, which warrants interference.