1. This is a petition under Articles 226 and 227 of the Constitution of India and is directed against the order of the income-tax department dated 10th May, 1972, passed under Section 132 of the Income-tax Act, 1961, and Rule 112(11) of the Income-tax Rules, 1962.
2. The relevant facts are simple. On the 23rd August, 1970, at about 5 a.m., the petitioner, Tarsem Kumar, was travelling in an Ambassador car No. DHA 561 alleged by him to be belonging to his brother, Satish Kumar, from Ambala to Batala. He was intercepted near the Beas river by the Customs officer and was forcibly taken along with the driver, Gurnam Singh, to the Customs House at Amritsar at 6 a.m. The petitioner was searched and so also his driver and the customs people took into possession Rs. 93,500 in Indian currency, 10 gold sovereigns and the car. On the 24th August, 1970, the petitioner was produced before a Duty Magistrate at Amritsar and was granted bail. In the meantime, the Customs department took proceedings under Section 110(2) and extended the period of issuing of the show-cause notice under Section 124 of the Customs Act, 1962. These proceedings were challenged in this court in Civil Writ No. 1645 of 1971 and the order of the Custom authorities under Section 110(2) was quashed by Tuli J. by his order dated 24th April, 1972. Against this decision, two Letters Patent Appeals were preferred, one by Tarsem Kumar, petitioner, and the other by the Custom authorities. Both these appeals (L.P.A.S. Nos. 208 & 233 of 1972) have been dismissed by us to-day.
3. When the order of Tuli J. was psssed, the petitioner approached the Custom authorities for the return of the money and the car. The gold sovereigns were not claimed, because, according to the petitioner, they did not belong to him. This application was made to the Customs authorities on 11th May, 1972. The petitioner, according to him, was directed to come on the following day, i.e., 12th May, 1972, to get back the currency notes and the car. On the 12th May, 1972, the Income-tax Officer, B-Ward, Ambala Cantonment, served the warrant of authorisation, dated 10th May, 1972, obtained under Section 132 of the Income-tax Act, 1961, and Rule 112(11) of the Income-tax Rules, on the petitioner as well as on the Customs department, with the result that only the cash was taken possession of by the income-tax authorities. This led to the present petition by Tarsem Kumar.
4. The contention of the learned counsel for Tarsem Kumar is that the authorisation warrant is illegal, because the money was not in his possession and was in the possession of the Customs authorities. Therefore, no such warrant could be issued to get hold of the money under Section 132 of the Income-tax Act. The second contention, though not set up in the petition, is that the action taken by the income-tax authorities under Section 132 would militate or set at naught the provisions of Section 110(2) of the Customs Act. It is the validity of these contentions that we are called upon to determine.
5. So far as the first contention is concerned, the matter is not res integra. It is in fact concluded by the decision of this court in Commissioner of Income-tax v. Ramesh Chander, [1974] 93 I.T.R. 450, 478-79 (Punj.). The following observations in this case fully support the contention of the learned counsel :
' I have come to the conclusion that the search and seizure warrants issued under Sub-section (1) of Section 132 of the Income-tax Act were illegal, firstly, because the search and seizure warrants were issued in the name of Ramesh Chander and he was in fact not in possession of either the currency notes or account books, and, secondly, the income-tax authorities could not seize the currency notes and account books from the police officer who is duty bound to proceed with the case property in accordance with the provisions of the Code of Criminal Procedure.'
6. In the present case, the cash was in the possession of the Customs authorities and not in the possession of the petitioner and according to Section 110(2), the Customs authorities, after the decision of Tuli J., which has been affirmed by us under Clause 10 of the Letters Patent, were bound in law to return the money to the petitioner. Therefore, both the observations quoted above apply with full force to the facts of the instant case.
7. Mr. Awasthy's contention, on the other hand, is that the Customs authorities were holding the money for Tarsem Kumar particularly in view of the decision of Tuli J. and, therefore, the seizure warrant issued against Tarsem Kumar is valid. We are unable to accept this contention. This contention if accepted would negative the decision of this court in Ramesh Chander's case.
8. Mr. Awasthy then contends that in Ramesh Chander's case, police had registered cases against him and they were pending in a criminal court. Thus the money was case property and had to be dealt with in the manner prescribed in the Code of Criminal Procedure. As such Ramesh Chander's case will not govern the present case. We are unable to accept this contention because the learned judges in that case proceeded to quash the authorisation and search warrants issued under Section 132 of the Income-tax Act on two independent grounds and one of them was that the money was not in the possession of Ramesh Chander. However, the second ground, which also prevailed with the learned judges, namely, that the money was case property, and, therefore, it could not be returned unless the provisions of Chapter XLIII of the Criminal Procedure Code were complied with. This ground is equally available to the petitioner in view of the mandatory provisions of Section 110(2) of the Customs Act. Thus the argument of Mr. Awasthy is untenable.
9. There is another way of looking at the matter. The Customs Act was enacted in the year 1962 and the Income-tax Act is of the year 1961. If, as Mr. Awasthy contends, the provisions of Section 132 must be given effect to irrespective of the provisions of Section 110(2), the result would be that the provisions of Section 132 will render the provisions of Section 110(2) otiose, a result which cannot be envisaged. It is a well-known Rule of construction that a later statute prevails over the earlier one in case there is a conflict. However, as we read Section 132, we find that there is no conflict and each provision will apply in a given set of circumstances. The circumstances prevailing when the order under Section 132 was passed do not justify that order and, therefore, we are unable to accept the contention that the money could legally be taken hold of by the income-tax department from the Customs department.
10. For the reasons recorded above, we allow this petition, quash the search and seizure warrants and direct the income-tax department to hand over the money to the Customs department. Mr. Awasthy points out that it was observed by Tuli J. that a certain amount is due to the income-tax department and the amount taken possession of by the department under Section 132 be refunded minus that amount. It is also pointed out that in his application to the Collector of Customs dated 11th May, 1972, the petitioner stated that an amount of Rs. 26,506 is due to the income-tax department and this amount may be deducted from the amount that was seized and the balance of Rs. 66,994 be given to the petitioner. The learned counsel for the petitioner points out that the petitioner has cleared the dues of the income-tax department. If this is so, no deduction can be made, But if this is not so, our direction then is that the amount of income-tax, Rs. 26,506, be deducted from the amount of Rs. 93,500 and the balance, i.e., Rs. 66,994, be handed over by the income-tax department to the Customs department. This course is consistent with the observations of Tuli J. in Civil Writ No. 1645 of 1971, which decision has been affirmed by us under Clause 10 of the Letters Patent. There will be no order as to costs.