Delay In Issuing Requisition U/S 132A Of Income Tax Act Due To Investigation By Department Can Be Condoned: Delhi HC

The provision contemplates powers to requisition books of account, etc. It stipulates that where a search has already been conducted by any authority under any other law, the Income Tax authority shall authorize the Assessing Officer to make requisition to that authority to deliver books of accounts and assets seized to the AO.

A division bench of Acting Chief Justice Vibhu Bakhru and Justice Swarana Kanta Sharma observed,

“...there has been some delay in issuance of the impugned requisition, however, the Income Tax Department has explained that the said delay was on account of investigations conducted by it. In the given circumstances, we are unable to accept that the impugned requisition is liable to be rejected on the ground of delay. ””

In the case at hand, ₹98,00,000/- cash was seized by the CBI pursuant to a search conducted at the premises of the Petitioner, in connection with an alleged bribe offered to the then Chief of Army Staff, now the Governor of Mizoram- General VK Singh.

Petitioner claimed that the seized cash belonged to a company of which he was a Director and moved the Court for its release.

CBI stated that it did not intend to pursue the case further and did not require to retain the seized funds, however the matter was under investigation by the Income Tax Department.

The Income Tax Authority thereafter issued a warrant of authorization to CBI under Section 132A(1)(c), for handing over the seized documents and cash to the Requisitioning Officer.

The Special CBI Court rejected the Petitioner's request for release of the seized funds, compelling the Petitioner to approach the High Court.

The Petitioner contended that the impugned requisition of 2016 was inordinately delayed as the Income Tax Department was fully aware of the seizure of the cash in the year 2012.

It was also contended that there was possibly no reason to believe that the petitioner's income had escaped assessment and therefore the impugned requisition was issued without authority of law.

At the outset, the High Court rejected the Petitioner's contention on delayed requisition. It observed,

“Undisputedly, the information regarding seizure of the funds in question was received by the Income Tax Department on 02.01.2013. However, at the material time, CBI was conducting its investigation.”

Coming to Petitioner's next contention that there was no reason to proceed against him, the Court found that the Department had examined Petitioner's income tax returns and found that the same did not reconcile with his possession of a huge amount of cash.

It held that even the explanation provided by the petitioner failed to give any particulars as to how the cash landed up with him. It said,

“No credible documents were produced to support the petitioner's explanation… there are many gaps that remain unexplained, for instance, why the cash received was not deposited in the bank account or why the same was not received through banking channels…Given the nature of explanation, we find no infirmity with the decision of the Income Tax Authorities in not accepting the same. ”

Nonetheless, noting that the time for making an assessment under Section 153A of the Act had already expired and there is no outstanding demand against the Petitioner yet, the High Court held “the Income Tax Authorities would have no justification in retaining the seized cash.”

Appearance: Mr. Ved Jain, Mr. Nischay Kantoor and Ms. Soniya Dodeja, Advocates for Petitioners; Mr. Indruj Singh Rai, SSC, Mr. Sanjeev Menon, JSC, Mr. Rahul Singh, JSC and Mr. Anmol Jagga, Advocate for Revenue Mr. Rajesh Kumar, SPP with Ms. Mishika Pandita and Mohd. Changez Khan, Advocates for CBI.

Case title: Gautam Thadani v. Director Income Tax (Investigation) And Anr.

Citation: 2025 LiveLaw (Del) 26

Case no.: W.P.(C) 10960/2016

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