New Delhi, May 30, 2017

A bench of the Delhi High Court upheld a raid conducted by the income tax department on a Delhi businessman, and the seizure of monies deposited in bank accounts of eight companies and an alleged associate.

The income tax department has powers to seize unexplained monies lying in bank accounts not owned by a person being probed if the department is satisfied that it was an undisclosed income, the Delhi high court has ruled.

“A person could be in possession of undisclosed income not only in his or her own account but in someone else’s account,” said a bench of Justice S Muralidhar and Justice Chander Shekhar.

The bench upheld a raid conducted by the department on a Delhi businessman in February — one of the first post-demonetisation, and the seizures of monies deposited in bank accounts of eight companies and an alleged associate of the businessman.

The department claimed that the businessman, Mohnish Mohan Mukkar, was “controlling multiple companies through a complex web of holdings and cross holdings”.

Pursuant to the search, the department proceeded to search and seize not only valuable things found in the premises of Mukkar but also those in the accounts of the eight companies and the alleged associate.

The court noted that the department “could do so as long as they were satisfied that what constitutes Mukkar’s undisclosed income was in the accounts of the eight companies and alleged associate Veena Singh.

Following the seizures, the eight companies and Veena Singh had moved the high court contending that they were not named in the department survey.

Represented by Congress leader and senior advocate P Chidambaram, the eight companies contended that they have no relation to Mukkar “in his personal capacity, and Mukkar is neither a shareholder nor a Director in the said companies”.

But the department said that during the search and survey proceedings, incriminating documents and evidences including digital evidence such as emails, phone data, hard drives etc were found and seized.

Taking note of the submission, the high court said, “Prima facie there appears to be a strong case made by the department that the money in the said bank accounts is, in fact, the undisclosed income of Mukkar. There appears to be sufficient justification at this stage for the Department to proceed to attach the bank accounts”.

The high court also held the eight companies and Veena Singh guilty of deliberately making “false statements on oath” and suppressing “material facts in the pleadings before this Court with a clear attempt to mislead the court”. It directed the Registrar General to initiate a written complaint before the appropriate court in this regard.

The court also imposed a fine of Rs 1 lakh on the companies and Singh.

[The Hindustan Times]