J. R. MALHOTRA & ANR. versus ADDITIONAL SESSIONS JUDGE, JULLUNDUR & ORS.

Citation: [1976] 2 S.C.R. 993 · Decided: 11-12-1975 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

J 
993 
J. R. MALHOTRA & ANR. 
v. 
ADDITIONAL SESSIONS JUDGE, JULLUNDUR & ORS. 
December 11, 1975 
[A. N. RAY, C. J., M. H. BEG, R. S. SARKARIA AND 
P. N. SHINGHAL JJ.] 
J11cnme tax-Money seized from assessee suspecting offence-Prosecution 
dropped for want of eridence-Right of Revenue to keep money seized from 
assessee without valid order df assessment. 
Under a search warrant issued under s. 132, Income Tax Act, 196 l, the 
Income Tax Authorities seized certain documents and money from the respond-
ent. The Police also registered a criminal case against him. Thereafter, the 
Income Tax Officer assessed him to tax and adjusted the money seized against 
the tax due. The respondent moved the High Court, and the High Court held 
that the search and seizure were illegal and directed the Revenue authoritie9 to 
hand over the money and documents to the Police to enable them to proceed 
in accordance with Jaw. 
The Police. however, dropped the proceedings (filed as 
untraced) against the respondent for want of evidence. 
The respondent then moved the Magistrate for return of the documents and 
the money, alleging that the Police had not filed any challan against him for a 
long time, while the Revenue Authorities applied for retaining . them. The 
Magistrate directed their return to the Police. The order was confirmed by the 
Sessions Court The High Court, in revision, set aside the order of the Sessions 
Court and remanded the matter to the Magistrate to decide whether the adjust-
ment of the amount against tax was permissible and valid. 
Meanwhile, the respondent had appealed against the order of assessment 
and Appellate Assi9tant Commissioner stayed the rewvery of the tax assess-
ed. 
The Magistrate after remand held that the amount seized be retained by the 
Revenue in partial satisfaction of the tax due from the respondent, but the 
Additibnal Sessions Judge in revision directed the Income Tax Authorities to 
return the documents and money to the respondent. 
A writ petition filed by the Revenue challenging the order was dismissed by 
the High Court. 
Dismissing the appeal to this Court, 
A 
B 
c 
D 
E 
F 
HELD : After the prosecution against the respondent was dropped f'or want 
of evidence, the authorities had no right to keep the money seized from him 
under any p~ovision ~f Jaw. 
There is also no question of its adjustment, be-
cause, there IS no valtd order of assessment and there is no demand for tax. 
In fact, the Appellate Assistant Commissioner finally held that there is no order 
of assessment and that there was no demand for income tax. The Revenue 
G 
Authorities cannot indirectly keep, the money on the plea that there will be a 
demand and that, therefore, they should be allowed to keep the money. 
There 
must be authority of law under which the monev can be kept. but in this case 
there was no legal order to keep the money. [997-C-D] 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 999 of 1975. 
Appeal by special leave from the Judgment and order dated the 
6th May 1975 of the Punjab and Haryana High Court at Chandigarh 
H 
in Civil Writ Petition No. 2292 of 1975. 
S. P. Nayar for the appellant. 
994 
SUPREME COURT REPORTS 
[1976] 2 s.c.R. 
A 
B. Datta and Harbans Singh for respondents 2-4. 
B 
c 
D 
The Judgment of the Court was delivered by 
RAY, C.J. This appeal is by special leave from the order dated 6 
l\fay 1975 of the High Court of Punjab and Haryana dismissing in 
limihe the writ petition of the appellant. 
The appellant filed a writ petition in the High Court challenging 
the order dated 4 January 1975 of the Additional Sessions Judge, Jul-
lundur who allowed the revision petition of the respondent Romesh 
Chander and dismissed the petition of the appellant. 
The facts leading to the order are these : On 6 August. 1971 the 
respondent Romesh Chander was travelling in a car. 
His car was 
intercepted by the police. 
A sum of Rs. 1,61,411/- was found in a 
bag in his hands. 
The respondent Romesh Chander was taken to the 
police station. 
A criminal case was registered against him under sec-
tions 411, 413 and 414 of the Indian Penal Code and under sections 
4, 5, 6 and 8 of the Foreign Exchange Act, 1947. The Commissioner 
of Income Tax issued a warrant of authorisation empowering certain 
officers under section 132 of the Income Tax Act to conduct a search 
and seizure. 
Pursuant to that authorisation the :rnthorised officer 
seized the sum of Rs. 1,61,411/- and certain books and documents. 
T

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