[Opinion] Tax Order Frozen, Bank Locker Unfreezed

Meenakshi Subramaniam – [2024] 168 taxmann.com 285 (Article)

When the bank locker of famous film music director R.D.Burman was opened, everyone was stunned. There were just five rupees in it. Bank lockers throw up unexpected surprises. But, the income tax department was in for a real jolt as the Supreme Court in Hdfc Bank Ltd. v. State of Bihar [2024] 167 taxmann.com 600 allowed taxpayer to open bank locker despite a prohibitory order, saw nothing wrong in cooperation of bank officials and freed the bank manager from criminal charges.

[2024] 167 taxmann.com 600 (Supreme Court)
HDFC Bank Ltd.
v.
State of Bihar

On October, 2021, Smt. Priyanka Sharma, Deputy Director of Income Tax (Investigation), Unit-2(2), Respondent No. 5 in the present proceedings, conducted a search and seizure operation in the case of several income-tax assessees including Shri Sunil Khemka (HUF), Smt. Sunita Khemka and Smt. Shivani Khemka at the third floor of Khataruka Niwas, South Gandhi Maidan, Patna.

During the search it was found that Smt. Sunita Khemka held a bank locker bearing No. 462 in the appellant-bank at Exhibition Road, Patna. On the basis of the said operation, on 5th October, 2021, an order under Section 132(3) of the IT Act was served upon the Branch Manager of the appellant-bank by the concerned Authorized Officer, thereby directing the branch of the appellant-bank to stop the operation of any bank lockers, bank accounts and fixed deposits standing in the names of Shri Sunil Khemka (HUF), Smt. Sunita Khemka and Smt. Shivani Khemka, among several other individuals and entities, with immediate effect. It was further clarified that contravention of the order would render the Branch Manager liable under Section 275A of the IT Act and the same would result in penal action.

In compliance of the order, the appellant-bank stopped the operation of the bank accounts, bank lockers and fixed deposits of the individuals/entities mentioned in the order. Further, on 7th October, 2021, the appellant-bank blocked the bank accounts of the income-tax assesses named in the order and also sealed the bank locker bearing No. 462 belonging to Smt. Sunita Khemka.

Subsequently, on 1st November, 2021, Respondent No. 5 issued an order to the Branch Manager of the appellant- bank, thereby directing the appellant-bank to revoke the restraint put on the bank accounts of Smt. Sunita Khemka and three other persons, in view of the restraining order dated 5th October, 2021 passed under Section 132(3) of the Act. Accordingly, the said persons, including Smt. Sunita Khemka, were to be allowed to operate their bank accounts. The said order was received by the concerned Branch Manager of the appellant-bank of 8th November, 2021 at 4:00 p.m. However, on 2nd November, 2021 at 11:24 a.m., an email was sent to the Branch Manager which contained the same order.

Thereafter, on 9th November, 2021, the concerned branch of the appellant-bank allowed Smt. Sunita Khemka to operate her bank locker bearing No. 462 and proper entries recording the operation of the said locker were made in the bank’s records.

Subsequently, on 20th November, 2021, Respondent No. 5 conducted a search and seizure operation at the bank locker in the concerned bank branch wherein it was found that Smt. Sunita Khemka had operated her bank locker with the assistance of the concerned officers of the appellant-bank. This was validated by the entry made in the bank’s records and the CCTV footage of the bank. Resultantly, the concerned officials of the appellant-bank were found to have breached the restraining order dated 5th October, 2021.

Accordingly, on 20th November, 2021, Respondent No. 5 issued summons under Section 131(1A) of the IT Act to Abha Sinha-Branch Manager, Abhishek Kumar-Branch Operation Manager and Deepak Kumar-Teller Authoriser being the concerned officials of the appellant-bank.

These officials attended the office of Respondent No. 5 and their statements were recorded wherein Abha Sinha and Abhishek Kumar stated that there had been an inadvertent error on the part of the bank officials and they had misinterpreted the order dated 1st November, 2021. Since the said order pertained to the bank accounts of the concerned individuals including Smt. Sunita Khemka, the bank officials had misread the order to understand/assume that the revocation of the restraint extended to the bank lockers as well. Having misunderstood the order, the bank officials under a bona fide assumption that bank locker had been released as well, allowed Smt. Sunita Khemka to operate the same.

The statement of Smt. Sunita Khemka had also been recorded wherein she stated that her accountant Surendra Prasad, after speaking with Deepak Kumar, had informed her that the restraint on the bank locker had been revoked and she could operate the said locker. This was specifically denied by Deepak Kumar in his statement.

Dissatisfied with said explanations, Respondent No. 5 submitted a written complaint to the SHO, Gandhi Maidan Police Station seeking to register an FIR against Smt. Sunita Khemka and the concerned bank officials on the ground that the order dated 5th October, 2021 had been violated owing to the unlawful operation of the locker.

On the basis of the said complaint, on 22nd November, 2021, an FIR being Case No. 549 of 2021 came to be registered against Smt. Sunita Khemka and the staff of the appellant-bank at branch for the offences punishable under Sections 34, 37, 120B, 201, 207, 217, 406, 409, 420 and 462 of the IPC at the police station.

Aggrieved, the appellant-bank preferred a Criminal Writ Jurisdiction Case thereby invoking the inherent power of the High Court under Section 482 of the Code of Criminal Procedure, 1973 for the quashing of the FIR. The High Court dismissed the writ petition finding it to be devoid of merit.

This appeal challenges the judgment and order dated 8th June, 2022 passed by the learned Single Bench of the High Court of Judicature at Patna.

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