A.S. Bains, J.
1. This appeal by the Revenue is directed against the order dated August 6, 1977, passed by the learned Special Judge, Kapurthala, by which the application moved by the I. T. authorities under Section 226(4) of the I. T. Act, 1961 (hereinafter referred to as ' the Act '), claiming the custody of the case money was rejected.
2. The facts giving rise to this appeal are as under ;
A sum of Rs. 10,50,000 in Indian currency was seized from one Assa Ram (accused in the case), by the police at Phagwara Railway Station on April 27, 1970. A case was registered against the said Assa Ram vide First Information Report No. 65, dated April 27, 1970, by the Government Railway Police, Jullundur, under Sections 411 and 414 of the I.P.C. He was prosecuted under Section 5(1)(e) read with Section 5(2) of the Prevention of Corruption Act and was convicted and sentenced to one year's rigorous imprisonment and a fine of Rs. 1,000 or in default of payment of fine, to undergo a further six months' rigorous imprisonment, by the learned Special Judge, Jullundur. On appeal, by the said Assa Ram, his conviction was maintained by me with some alteration in the sentence of imprisonment vide myjudgment dated November 20, 1979, passed in Criminal Appeal No. 837 of 1977 (Assa Ram v. State of Punjab). That appeal was not argued on merits by the counsel for Assa Ram and only prayer for reduction in sentence was made.
3. During the pendency of the trial of Assa Ram, the ITO moved an application under Section 226(4) of the Act before the Village Magistrate, Phagwara, with a request that the amount seized from Assa Ram lying with the State Bank of Patiala at Phagwara be ordered to be paid to the I.T. Department towards the tax demand of Rs. 10,50,755 created against him for the assessment year 1971-72. But, later on, when the case under Section 5(2) of the Prevention of Corruption Act, against the said Assa Ram was taken up by the learned Special Judge, Kapurtala, the ITO moved another petition before him under Section 516A of the Cr. PC (Act V of 1898) read with Section 226(4) of the Act for ordering the payment of the amount seized from Assa Ram, accused, to the I.T. Dept. towards the demand created against him. Both these applications were dealt with by the Special Judge, Kapurthala, in his judgment dated August 6, 1977, and he dismissed the claim of the I.T. Dept. and ordered the confiscation of the aforesaid amount to the State.
4. Another person by the name of Ghansham Dass also moved an application before the learned Special Judge for the delivery of the amount of Rs. 10,50,000, but his application was also dismissed. Hence, this appeal on behalf of the Revenue. Ghansham Dass has not filed any appeal nor Assa Ram accused has claimed the said money.
5. It was urged by Mr. Awasthi, learned counsel for the appellant, that the money in question was found in possession of Assa Ram (accused) and, therefore, he is presumed to be the owner of the said money until the contrary is proved and that since there is a valid tax claim of the I.T. Dept, against him, the Department is entitled to the money seized from the possession of Assa Ram. I am unable to agree with this contention of Mr. Awasthy. The money recovered from the possession of Assa Ram was the case property and the Special Judge has found that the money did not belong to Assa Ram and as he could not explain its sources, he was convicted under Section 5(1)(c) read with Section 5(2) of the Prevention of Corruption Act. Therefore, the contention of the Revenue that the money belonged to Assa Ram is not warranted by the facts on the record. Perusal of the statement of Assa Ram under Section 313, Criminal Procedure Code, would show that he took the stand that the money belonged to one Ghansham Dass son of Gulzari Lal of Alwar and Ghansham Dass, while appearing as the court witness, tried to prove his claim on the money. He stated that a sum of Rs 19,75,000 was advanced by Maharaja of Alwar, but he did not produce any agreement or any receipt in respect of the moneytaken from the Maharaja of Alwar and the explanation of Ghansham Dass that he was a heart patient and, therefore, he requested Assa Ram accused to take the money to Phagwara is belied by the fact that he followed him in the car the same day and then knowing that the accused had been arrested on that very day, he kept mum over the matter till October 15, 1970, when he first made a claim in the Court of the Magistrate at Phagwara. The money, according to Ghansham Dass, was to be paid in connection with some bargain. However, in his cross-examination he admitted that there was no bargain for payment on that day. For all these reasons, the learned Special Judge rejected the claim of Ghansham Dass, as the cock and bull story put forward by Ghansham Dass was not at all convincing. Assa Ram never stated that the money belonged to him. Hence, the claim of the I.T. Dept. that the money belonged to Assa Ram accused is untenable.
6. It is necessary to peruse Section 452 of the Code of Criminal Procedure, 1973 (No. 2 of 1974) according to which the case property is to be disposed of. This provision is in the following terms:
' 452. (1) When an inquiry or trial in any Criminal Court is concluded, the Court may make such order as it thinks fit for the disposal by destruction, confiscation or delivery to any person claiming to be entitled to possession thereof or otherwise, of any property or document produced before it or in its custody, or regarding which any offence appears to have been committed; or which has been used for the commission of any offence.
(2) An order may be made under Sub-section (1) for the delivery of any property to any person claiming to be entitled to the possession thereof, without any condition or on condition that he executes a bond, with or without sureties, to the satisfaction of the Court, engaging to restore such property to the Court if the order made under Sub-section (1) is modified or set aside on appeal or revision.
(3) A Court of Session may, instead of itself making an order under Sub-section (1), direct the property to be delivered to the Chief Judicial Magistrate, who shall thereupon deal with it in the manner provided in sections 457, 458 and 459.
(4) Except where the property is livestock or is subject to speedy and natural decay, or where a bond has been executed in pursuance of Sub-section (2), an order made under Sub-section (1) shall not be carried out for two months, or when an appeal is presented, until such appeal has been disposed of.
(5) In this section, the term ' property ' includes, in the case of property regarding which an offence appears to have been committed, not only such property as has been originally in the possession or under the controlof any party, but also any property into or for which the same may have been converted or exchanged, and anything acquired by such conversion or exchange, whether immediately or otherwise. '
7. From a reading of this provision, it is plain that the court concerned has to pass orders regarding the disposal of the case property. As observed earlier, the case property has not been claimed by the accused Assa Ram, Ghansham Dass has already failed to establish his claim, and in view of the legal provisions the claim of the I.T. Dept. cannot be sustained with regard to the case property. Section 226(4) of the Act is in the following terms :
' 226. (4) The Income-tax Officer may apply to the court in whose custody there is money belonging to the assessee for payment to him of the entire amount of such money, or, if it is more than the tax due, an amount sufficient to discharge the tax. '
8. From the reading of this provision, it is clear that the ITO can lay a claim and file an application to the court in whose custody the money is lying belonging to the assessee for payment to him (the ITO) of the entire amount of such money. Admittedly, Assa Ram was not an assessee before the money was recovered from him. It was during the trial under Section 5(1)(e) read with Section 5(2) of the Prevention of Corruption Act that the ITO issued to him a notice under Section 139(2)/175 of the Act on April 27, 1970, which was served on him on May 11, 1970, an ex parte assessment order was passed on June 1, 1970, thereby creating a demand of Rs. 10,50,775 against him. In such a situation, the Department, in my considered view, can lay no claim to the money seized from Assa Ram accused, which is a case property. It may also be stated that no tax was outstanding against Ghansham Dass or Assa Ram accused as a result of any assessment made prior to the taking into possession of this money. Assa Ram, who was posted as a Draftsman Grade III in the Office of the Superintendent, Surveyor of Central P.W.D., 4th Floor, Inderprastha Bhavan, New Delhi, was travelling by Kashmir Mail and when it steamed in at Phagwara Railway Station at 4.55 a.m. on April 27, 1970, and as he was about to get out of the exit gate of the Railway Station, he was apprehended by S.I. Baldev Singh. According to the own showing of the I.T. Dept. the present assessment was made after the recovery of the amount of Rs. 10,50,000 from Assa Ram. Learned counsel for the Revenue could not show me any law on the point that any such demand made on the basis of the assessment made during the pendency of the trial could be adjusted against the case property. He, however, relied upon an authority of the Bombay High Court reported in J.S. Parkar v. V.B. Palekar : 94ITR616(Bom) . This authority is not at all relevant to the facts of the present case. In that case, the petitioner was an assessee and a carrier by sea. On April 24, 1981, the Central Excise authorities seized 4,999 biscuits of gold weighing ten tolas each from the launch' Lakshmi ' belonging to the petitioner. The Collector of Central Excise ultimately confiscated the gold so seized by order dated September 18, 1981. The petitioner and some others were tried before a magistrate for offences under s. I20B of the IPC, Section 167(9) of the Sea Custom Act, 1878, and Section 23 of the Foreign Exchange Regulation Act of 1947 and convicted and sentenced to two years' imprisonment. Their convictions and sentences were confirmed by the High Court and the Supreme Court. In the assessment of the petitioner for the assessment year 1962-63, the ITO, after hearing the assessee, assessed the total income of the assessee atRs. 70,38,834, out of which Rs. 70,78,584 was added by way of ' investment in acquisition of gold as income from undisclosed sources'. On appeal, the AAC virtually confirmed the findings of the ITO, but reduced the value of the gold involved from Rs. 70,78,574 to Rs. 47,19,056. The assessee's appeal to the Income-tax Appellate Tribunal was dismissed and his application to refer certain questions of law to the High Court was also rejected. The petitioner, therefore, filed a writ petition in the High Court. The contention of the petitioner was that the assessment order could not have been founded on the judgment of, and the evidence produced before the criminal court, and that that material did not establish the petitioner's ownership of the gold in question, and as such, the value of such gold could not be treated as the income of the assessee from undisclosed sources. His further contention was that when the smuggled goods had been confiscated, he was entitled to claim the loss suffered thereby as deductible loss while computing his net profits or was entitled to set off the same against the alleged undisclosed income. This contention of the petitioner did not find favour and the writ petition was dismissed as being incompetent. This authority is of no help to the Revenue, rather, to some extent, it goes against the Revenue. No other authority was brought to my notice by the counsel for the Revenue and he could not show any law on the point that the money in question belonged to Assa Ram.
9. The basic question which is to be determined in disposing of such application is that where the money lying in the custody of the court belongs to the accused Assa Ram, then such money can be handed over to the Department not otherwise. In the present case, as observed earlier, the money recovered from Assa Ram was not claimed by him. It was not his money. Ghansham Dass also did not claim the money earlier, but when he appeared as a court witness he made the claim, but he has also not filed any appeal against the dismissal of his claim. The Revenue does not come in the picture at all. It was a case property and under Section 452 of the Cr. PC, 1973, it has been righty confiscated to the State.
10. In B. Ram Lal v. State, : AIR1954All758 , it was observed by their Lordships of the Allahabad High Court as under (p. 762):
' It is in the public interest that the property that the offender acquired through the commission of an offence should be taken away from him. It is a reasonable restriction that a person should not be allowed to retain in his possession the property acquired by him through commission of offence. Nobody can claim a right to hold a property, the possession over which has been acquired by him through the commission of an offence. '
11. The real owner, in the present case, seems to have remained behind the screen and has not come forward to claim the property.
12. No other point is urged.
13. For the reasons stated above, I find no merit in the appeal of the Revenue, the order of confiscation of the property in question to the State as recorded by the learned Special Judge is affirmed and the appeal is dismissed.