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31 May 2017

High Court: I-T dept. can seize unexplained money from bank-accounts

War on black money

The Delhi High Court has ruled that the income-tax department has power to seize unexplained money lying in the bank-account of a person, even if he isn't under investigation.

The department must have reason to believe that the income is undisclosed.

The court upheld an I-T raid on a Delhi businessman and seized funds deposited in accounts of 8 companies and a business associate.

In context

War on black money

What the court ruled

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

I-T dept. alleged companies had Mukkar's undisclosed income

Case details

I-T dept. alleged companies had Mukkar's undisclosed income

The I-T department alleged that businessman Mohnish Mohan Mukkar was "controlling multiple companies through a complex web of holdings and cross holdings."

This prompted it to seize not just the valuables found on Mukkar's premises but also the money in bank accounts of eight other companies and his alleged associate Veena Singh.

The department was satisfied that these accounts held Mukkar's undisclosed income.

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Court disagrees

Companies claim Mukkar wasn't their shareholder or director

The eight companies and Singh, represented by Congress leader and senior advocate P. Chidambaram, moved High Court after the seizures claiming they weren't named in the department survey.

They contended that they had no relations to Mukkar and that "in his personal capacity, and Mukkar is neither a shareholder nor a Director in the said companies."

The court ruled in the I-T department's favor.

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