In a recent case, the I-T Department detained a person, even after he had obtained a certificate from the bank concerned for travelling with cash.
T. N. Pandey
The power to conduct search and seizure is defined under Section 132 of the Income-Tax Act, 1961. This can be read alongside Article 19(1)(d) of the Constitution of India, which allows all citizens the right, inter alia, to move freely throughout the territory of India.
In the Maneka Gandhi vs UOI (AIR 1978 SC 597) case, the apex court upheld the right to travel, which is necessary for exercising one's fundamental right of trade or business under Article 19(1)(g).
Right of trade or business, inter alia, includes right to carry cash from one place to another for such purposes. Article 21 postulates that no person shall be deprived of his life or personal liberty except according to procedure established by law. ‘Procedure established by law' means the law prescribed by Parliament at any given point of time.
POWER TO SEARCH
Section 132 authorises specified I-T authorities to make search and seizure if they have reason to believe that circumstances mentioned in clauses (a) to (c) of sub-section (1) of Section 132 exist. Section 132 relates to search and seizure in the context of income-tax assessments.
It does not have any provision for detention. Sub-section(1) of clause (c) of Section 132 authorises the authorities mentioned in the sub-section, if in consequence of information in their possession, they have reason to believe that the circumstances mentioned in clauses (a) to (c) exist. If so, they can order search and seizure operations.
A case decided by the Supreme Court on November 18, 2009 (Rajendran Chingaravelu vs. R.K. Mishra, Addl. CIT & Ors. — 2009 227 CTR SC 520) shows that one RC, who was lucratively employed in US for more than 10 years, returned to India with sufficient money which he deposited in a bank account.
He wanted to purchase a property in Chennai, and travelled by air with cash of Rs 65 lakh from Hyderabad to Chennai, with a certificate from a bank from where cash was withdrawn, certifying the withdrawal. Before boarding the plane, he disclosed to the security staff at the airport that he was carrying such cash. Earlier, he had informed the RBI about this.
On reaching Chennai he was apprehended by the Investigation Wing of the I-T Department, accompanied by the police, and detained for 15 hours for interrogation about the cash he was carrying. The cash was seized despite the evidence regarding its source and was released only after two months, apparently in total disregard of Section 132(1)(c).
To add insult to the injury, wide publicity was given in Chennai newspapers about the big haul of unaccounted money seized despite the fact that the amount was fully accounted for.
RC challenged the unauthorised act of the I-T department in a writ petition before the AP High Court which dismissed it on ground of jurisdiction. In appeal to the Supreme Court, the High Court's decision was found untenable. However, the apex court decided the appeal on merits, holding against RC.
The salient points
The salient aspects of the Supreme Court's decision are as follows:
The officers acted bona fide in public interest in the discharge of their duties. They were authorised to interrogate RC on the ground that money could be (i) black money; (ii) used for illegal activities; (iii) for terrorists use: (iv) for payment as unaccounted money to acquire real estate: (v) for commission of crime.
With utmost respect, it needs to be said that the grounds for detention of RC and seizure of cash are extraneous to Section 132(1)(c) which permits seizure only if the cash is found to be such “which has not been or would not be disclosed for the purposes of the Income-Tax Act”— not on the basis of presumptions and conjectures.
The grounds given may fall in the domain of some other department, say, the Home Ministry, but do not relate to the IT Department whose action of seizure can only be justifiable if the conditions found in Section 132(1)(c) are found to exist which obviously are not in the case of RC.
The Supreme Court itself, in the Vindhya Metal Corp (224 IT 614 SC) case, had declined to interfere with the High Court's decision concerning seizure of cash where it has held that “mere unexplained possession of the amount without anything more, could hardly be said to constitute information which could be treated as sufficient by a reasonable person, leading to an inference that it was income which would not have been disclosed by the person in possession for the purposes of the Act”.
CASE FOR REVIEW
No relief by way of compensation or reprimand to the officers who seized cash contrary to the provisions of Section 132(1)(c) and publicised such unauthorised action in newspapers, greatly tarnishing the image of RC, contrary to the I-T Department's instructions issued in 1986, has been provided, merely because the department expressed regret..
No recompense for illegal detention and keeping the money for two months has been given.
The least, it is respectfully said, that could have been done was to ask the I-T department to express ‘regret' publicly when unauthorised actions for detention and seizure were widely publicised. A citizen of the country was subjected to underserved misery without any fault from his side.
This appears to be a case where a larger Bench of the SC needs to take suo motu notice for review for giving relief to RC, who was unnecessarily harassed and humiliated and deprived of his personal liberty and property by a procedure not established by law.