High Court · 2025

Petition under section 492 of cr.p.c., praying that in the circumstances -u. stated in the affidavit fired in support .of the peiition, the High cor.t ,,rv pleased to stay afl further proceeiings in pursuance of the corimon order dlted 12-01-2021 in Crr.M.p.No.808 0t 201b and cd.M.p.asl of 2019 in crime No. 47 ot 2o19l1l of P.s.R.P.s., warangar on the fire of the Hon'bre Vr Additionar JACM, Warangal in the interest of justice pending disposal of the above Crl.R.C. Counsel for the Petitioner: SRI B NARASIMHA SHARMA Counsel for the Respondent No.l: SRI ANIRUDH REDDY Counsel for the Respondent No.2: SRI D ARUN KUMAR, ADDITIONAL PUBLIC PROSECUTOR The Court made the following: ORDER ,t71 IN THE HIGH COURT FOR THE STATE OF TELI NGANA AT HYDERABAD THE HONOURABLE SMT WSTICE K. SUJ,A NA CRIMINAL REVISI ON CASE No.4L4 of 2Ar. L 28th DAY OF NOVEMBER 2()25 Betseen: Deputy Director of [ncome Tax (Inv) Unit II(1), Aayakar Bhavan, Hyderabad. AND E.Sampath Kumar, And another. PT TITIONER RESi] ONDENTS ORDER This Crtnrirtal Revision Case is filed before his Court, being aggricvecl by common order dated t2'Ol'2otl passed in Crl.MP.No.808 ot 20 i9 and Crl MP.No.SSI of 2O l ) in Crime No.47 of 20 l () ()n the file oi the VI Additio:r rl Judicial Magistrate of Ii'.irst Class, Warangal.

2. The bricl ftrcts of the case are that on l5-O3-2O19' during frisking at l)latform No. 2 of Warangal Railr ay Station, i I I 2 the Railway Police intercepted an individual carrying unexplained cash of Rs.3O lakhs in Rs.2,O0O and Rs'SOO denominations, seized the amount under a panchanama, and deposited it before the JACM, Railways, Khazipet' Based on the Raitway Police report dated 2O-03-2O19, the Income Tax Department initiated proceedings under Section 132A of the lncome Tax Act, 1961 and hled Crt.M.P. No. 8O8/2O19 before the Vt Additional JACM, Warangal seeking interim custody of the seized cash for further investigation, assessment of taxability, and tracing of unreported financial transactions' Simultaneously, the first respondent filed Crl'M'P' No' 851l2}lg claiming ownership of the money. Despite repeated summons, the first respondent failed to produce evidence of the legitimate source o[ the cash, and the Department relied on supporting case law asserting its entitlement to custody for investigation. However, by order d,ated, l2-Ol-2O21, the Court dirccted that the cash remain with it and required the Income Tax Department to issue noticrs and complete assessment u'ithin thrce months, failing which the respondent u'oulcl bc: entitted to the money after deduction of tax, prompting the Department to challenge the order as illegal, with()ut jurisdiction, and contrary to the record. ,7,/ /) 3

3. Heard Sri B.Narasimha Sharma, learned t ounsel for revision petitioner, Sri Anirudh Reddy, learned ' ounsel for respondent NO.1, and Sri D. Arun Kumar, learnec Additional Public Prosecutor, appearing for respondent No'2 State' I I

4. tearned counsel for the petitioner submitt d that the impugned order is iltegat, unjust, without juris< iction, and contrary to law and thc material on record, as it wrongly directed the Income Tax Department to complet( lssessment without granting custody of the seized cash and urther held that the first respondent would be entitled to the e mount after deducting tax, which is wholly contrary to the s. reme of the Income Tax Act, 196 1. Hc contended that the tnaI Court erred in holding that Section l32A applie s only to r r Ofhcer or Authority and not to thc Court, and further errec in rejecting the Department's requcsL lor custody of the seized cash despite such custodv being essential foI completing investigation and ertabltt'tg thc Assessing Ofhc': to proceed under Sections l 3(3)/ 147 ll53A. He lamented t rat the trial Court acted illegally by prescribing a timeline fc - completing assessment, although such timelines are exclusi'ely governed by Section 153 of the Act, and asscssment proce< lings cannot 4 be triggered unless the Department first obtains custody of the asset pursuant to a warrant issued under Section 132A(1)(c). Therefore, prayed this Court to set aside impugned order, directing the custody of the seized cash be handed over to the Income Tax Department to enable completion of investigation and subsequent assessment.

5. On the other hand, the learned counsel for respondent No. 1, and learned Additional Public Prosecutor, respe{tively, opposed the submissions made by learned counsel for petitioner and submitted that the trial Court committed no error in refusing to hand over the seizrd cash to t]re Income Tax Departmcnt and rightly directed the Department to fir-st complete the assessment proceedings in accordance with law before seeking custody. They contended that the Income Tax Depar[ment can not automatically claim custody under Section l32A of the lncome Tax Act witlrout demonstrating prima facie sa[isfaction o[ the statutory conditions, and that the Department lailed to establish any tangible material linking the seized amount to undisclosed income of respondcnt No- l, apart from relying o{t mere suspicion. It was further submitted that the scheme of Section 132A does not / / 5 mandate that the criminal Court must part with :ustody of seized property in every case, particularly when 'l e criminal proceedings under Section 1O2 Cr.P.C., are still p nding and the ownership of the cash is disputed. They ar6nr d that the trial Court's direction to complete assessment wit I r r a specifrc time frame was only to balance the interests of bot r sides and prevent indefinite retention of the seized amount, : 'ld that the petitioner cannot take advantage of its own fai[, -e to issue timely notices or complete the statutory proc(rs: Asserting that the trial Court's order is well-reaso I :d, within jurisdiction, and passed to protect the rip I ts of the respondent pending adjudication, they pral'cr that the Criminal Revision Case be dismissed.

6. Having regard to the rival submissions m: ( e, on golng through the material placed on record, it is nt 't :d that the petitioner contends that thc impugncd order is rllt 3al, without jurisdiction, and contrary to thc Income Tax A(rl. as the trial Court wrongly directed completion of assessmenl uithout hrst granting custody of the seized cash, mis-interplted Section 132A, and imposed timelines govcrned exclusir'< I ' by Section 153, despite custody being essential [or invokint assessment 6 provisions, whereas, the respondents contend that the trial Court rightly refused custody since the Departrn€nt failed establish the statutory prerequisites under Section l32A or any link between the seized cash and undisclosed income, that proceedings under Section 1O2 Cr.P.C., are still pending, and that the order is lawful, balanced, and warrants dismissal of the revision.

7. At this stage, it is imperative to note that in the judgments rendered in the cases of R. Ravirajan v. State of ferafai and Union of India v. state of Kerala2, it was held that without entrusting interim custody of the seized cash to the Income-tax Department in accordance with the provisions of the Income-tax Act, lurLhcr proceedings under sections 132A, l32B and l53A cannot effeclively be carried out. That being so, and revcrling to thc facts of the present case, this Court is of the opinion that thc impugned order is liable to be set aside.

8. Accordingly, this Criminal Revision Case is allowed, setting aside the orcler dated l2.O i .2O2 1 passed by the trial '[(zoza)+zr rrn r:r] t (zozz) aa: rrn r rzl 7 Court in Crl.MP.No.8O8 of 2Ol9 and Crl'MP No'85 1 rf 20 19 in Crime No.47 of 2019, directing the trial Court to I elease tl-e seized cash and grve its custody to thr petiLioner/ Income-tax Department, subject to the 'r :ecution of an undertaking to complete the assessment p roceedings within the stipulated period prescribed under scr: on 153 of revision the Act. There shall be no order as to costs. Miscellaneous applications, if any pending, ;hall stand closed- \ : D/- v.HARr PRASAD-- T EPUTY REGISTRAR //TRUE COPY// ,, ^ \ SECTION OFFICER To, 1 2 3 4 5 6 The Vl Additional Judicial First Class Magistrate, Whra rgal The Station House Officer, RPS Warangal Two CCs to Public Prosecutor, High Court for the S tate of Telangana at Hyderabad [OUTJ One CC to Sri Anirudh Reddy, Advocate [OPUC] One CC to Sri B Narasimha Sharma, Advocate [OPUC] Two CD Copies ABK iPSL AYr- i t i I i I i I I i i HIGH COURT DATED: 2811112025 t E s 14 c o^i\, .4.'(\ \l Ia) 6 e ) Tlr * ORDER CRLRC.No.414 of 2021 o .J -t .'7. \)..1 a ALLOWING THE CRLRC Ir-a ztfefroz5