Telangana High Court directs Income Tax Authority to Refund Seized Cash of Rs. 5 Cr with 12% interest [Read Order]

The Telangana High Court directed the Income Tax Authority to refund seized cash of Rs. 5 crores with 12% interest and release the employee of the petitioner.

The petitioner has been a proprietary concern carrying on the business of the purchase of agricultural lands and agricultural products throughout the country and claims that it has 46 branches at different places all over the country having an employee strength of about 300. It also deals as a wholesale trader of agricultural products, vegetables, fruits, and post-harvest crop activities.

The petitioner contended that it has a large turnover and it handles large quantities of cash which are also disclosed to the Income Tax Department. According to it, there are no proceedings of reopening of assessment pending before the Income Tax Department.

The petitioner states that it has business transactions in the State of Telangana also and that it entrusted a sum of Rs.5 Crores to its employee Vipul Kumar Patel for its business purposes.

The petitioner stated that the employee, his friends, the cash of Rs.5 Crore together with the vehicle and another car and two-wheelers were detained illegally from August 23, 2019, onwards by the Telangana State Police.

The petitioner contended that the very seizure of cash from Vipul Kumar Patel without valid authorization under Section 132 is illegal. The petitioner’s cash book, the balance sheet shows a sufficient quantity of cash in hand from which the sum of Rs. 5 Crores could have been made available by the petitioner to its employee and the money, therefore, has to be returned to the petitioner with interest and heavy costs must be imposed on the respondents for the illegality committed by them.

The division bench of Justice Ramachandra Rao and Justice T. Amarnath Goud held that the action of the respondents in conducting panchnama and seizing cash of Rs.5 crores from Vipul Kumar Patel, an employee of the petitioner, and retaining it till date, is illegal and ultra vires the provisions of the Income Tax Act, 1961 and also violative of Article 14 and 300-A of the Constitution of India.

The court further directed the respondents to forbear from conducting any further enquiry pursuant to the panchanama and they shall refund within 4 weeks from the date of receipt of a copy of this order the said cash of Rs.5 crores to the petitioner with interest at 12% per annum from August 28, 2019, till the date of payment to the petitioner.

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