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March, 14th 2013
%                                    Judgment delivered on: 12.03.2013

+       W.P.(C) 7551/2012

        S. K. JAIN                                                 .......Petitioner

        NEW DELHI & ORS.                                         .......Respondents
Advocates who appeared in this case:
For the Petitioner  :        Mr Mukesh Gupta, Advocate.
For the Respondent  :        Ms Suruchi Aggarwal, Sr. Standing Counsel for Revenue.
                             Ms Archana Gaur, Advocate.




1.      The writ petition is admitted to hearing and with the consent of the

counsel for both sides the matter was heard finally for disposal.

2.      The petitioner is assessed to income tax. On 16.02.2005 a search

under section 132(1) of the Income Tax Act, 1961 (hereinafter referred to

as ,,the Act) was conducted at his residential premises in the course of

which cash amounting to `8,83,800/- was found. Out of the cash found

an amount of `6,33,800/- was seized. The petitioner attempted to explain

W.P.(C) 7551/2012                                                         Page 1 of 7
the source of the cash found in his letters to the income tax authorities.

The returns filed on 08.09.2006 for the assessment years 1999-2000 to

2004-05 were accepted and assessments were completed under section

153A of the Act. There was no tax liability pursuant to the assessments.

3.      The petitioner again wrote to the assessing officer reminding him

about the application filed earlier and sought release of the cash seized on

the ground that it was disclosed to the income tax department. This

reminder was rejected by the assessing officer by order dated 21.09.2006

in which he held that till the finalisation of the proceedings under section

153A of the Act, it was not possible to ascertain whether the cash seized

was out of disclosed cash or otherwise.

4.      On 30.10.2005 the petitioner filed his return of income for the

assessment year 2005-06. An assessment was completed under section

143(3) on 26.12.2006 in which the cash of `8,83,800/- found during the

search was held unexplained.      Thereupon the petitioner wrote to the

assessing officer/ CIT, New Delhi to adjust the cash seized against the

existing tax liability as envisaged by the provisions of 132B of the Act.

However, the request of the petitioner was not accepted.

5.      The petitioner had filed an appeal to the CIT (Appeals) against the

W.P.(C) 7551/2012                                                Page 2 of 7
assessment order for the assessment year 2005-06.         By order dated

10.04.2008, the CIT (Appeals) confirmed the addition of the cash found.

The petitioner preferred a further appeal to the Income Tax Appellate

Tribunal. By order dated 21.03.2005 the Tribunal held that the cash

found from the possession of the assessee actually belonged to M/s. S. K.

Industries Pvt. Ltd. The assessing officer gave effect to the order of the

Tribunal and revised the assessment which resulted in a nil tax demand.

6.      After the aforesaid order passed by the assessing officer, the

petitioner made further requests to the CIT seeking release of the cash

seized since there was no demand outstanding against him. While these

letters were pending, the appeal preferred by the revenue against the order

of the Tribunal was dismissed by this Court by order dated 23.05.2011

passed in ITA No.79/2011.

7.      It appears that on the very next day i.e. 24.05.2011, the seized

amount of `6,33,800/- was released to the petitioner. Thereafter, the

petitioner wrote letters to the CIT on various dates from May, 2011 to

April, 2012 asking for interest on the seized cash as per law for the

inordinate delay in releasing the amount under section 132B(3) of the

Act. Since these requests have not borne fruit the petitioner has moved

W.P.(C) 7551/2012                                                Page 3 of 7
the present writ petition seeking the following reliefs: -

        "(i) Issue a writ of mandamus or any other writ/ direction
        or order to grant the interest for inordinate delay in releasing
        the amount amounting to `6,33,800/- u/s 132B(3) of the Act
        seized during the course of search u/s 132(1) of the Act on
        17.2.2005 as per the provisions of Sec. 132B(4)(a)(b) &
        244A(1)(b) or under any other relevant provisions of the law
        along with interest on interest due till the date of payment.

        (ii) Pass such other order or orders, as this Honble Court
        may deem fit and proper in the circumstances of the case. "

8.      The mainstay of the argument of the learned counsel for the

petitioner is an order passed by a Division Bench of this Court on

28.08.2012 in W.P. (C) No.876/2012 in G.L. Jain v. CIT & Ors., which

is stated to be the case of the assessees brother. In that case, this Court,

applying the ratio of the judgment of the Supreme Court in the case of

Sandvik Asia Ltd. v. CIT & Ors.: (2002) 280 ITR 643 and the judgment

of a Division Bench in Ajay Gupta v. CIT: (2008) 297 ITR 125, directed

that it would be reasonable and equitable to order interest to be paid at the

rate of 12% on the cash seized, in respect of the period beyond the date

on which the assessment was completed.

9.      Section 132B provides for the application of seized or requisitioned

assets.     Under sub-section (3), any assets or proceeds thereof which

W.P.(C) 7551/2012                                                   Page 4 of 7
remain after the liabilities of the assessee are discharged, shall have to be

"forthwith made over or paid to the persons from whose custody the

assets were seized". Sub-section (4) provides for the payment of simple

interest at the rate of half percent every month or part thereof on the

amount by which the aggregate amount of money seized under section

132, as reduced by the amount of money released to the assessee and the

amount of the proceeds, if any, of the assets towards the discharge of the

existing liability of the assessee, exceeds the aggregate of the amount

required to meet the liabilities of the assessee. The interest shall run from

the date immediately following the expiry of the period of 120 days from

the date on which the last of the authorisations for the search was

executed, to the date of completion of the assessment under section 153A

of the Act. This interest is to be paid to the assessee without any demand

from him. In the petitioners case, there is no dispute that he is entitled to

this interest. The dispute is only whether the petitioner is entitled to any

interest on the seized cash of `6,63,800/- from the date on which the

assessment was completed under section 153A of the Act i.e. 26.12.2006

till it was actually released to him on 24.05.2011, and if so, at what rate.

It is common ground that in respect of this period, that is, from the day

W.P.(C) 7551/2012                                                 Page 5 of 7
next following the completion of the assessment till the cash was actually

released to the petitioner, no interest has been provided under section

132B(4) of the Act.

10.     In an identical situation, this Court in its order dated 28.08.2012 in

W.P. (C) No.876/2012 (supra) has directed the revenue to grant interest

@ 12%. In that case certain amounts had been returned to the petitioner

(in that case) and accordingly adjustments were directed to be made in

respect of those payments while quantifying the amount on which the

interest was directed to be paid. However, so far as the period for which

the interest was payable to the petitioner in that case is concerned, there is

no dispute that the direction of this Court was that it should be paid from

the day next following the day on which the assessment was completed

till the amount was actually released to the petitioner.        Interest was

directed to be paid @ 12% in respect of this period on varying amounts as

quantified in paragraph 19 of the order.

11.     The only argument of the revenue was that the judgment of the

Supreme Court in the course of Sandvik Asia Ltd. (supra) has been

doubted in a later case before the Supreme Court in CIT V. Gujarat

Flouro Chemicals: (SLP (C) No.11406/2008 decided on 23.08.2012) and

W.P.(C) 7551/2012                                                  Page 6 of 7
the matter has been directed to be placed before the Chief Justice of India

on the administrative side for appropriate orders. A copy of the above

order of the Supreme Court passed on 23.08.2012 was filed before us.

However, the judgment of the Supreme Court in Sandvik Asia Ltd.

(supra) holds the field as of now. It was this judgment which was applied

by a Division Bench of this Court in the case of Ajay Gupta (supra) that

was invoked by the Division Bench of this Court in the case of G.L. Jain

(supra). We, therefore, do not see any reason to take a view different

from the one taken by this Court in the case of G.L. Jain (supra).

12.     In the result, we hold that the petitioner is entitled to be paid

interest @ 12% in respect of the amount of `6,33,800/- for the period

from 27.12.2006 to 24.05.2011 and a writ of mandamus directing the

payment of the interest is accordingly issued. The respondent shall pay

the interest within a period of six weeks from today. The writ petition is

allowed in the above terms. No costs.

                                                        R.V.EASWAR, J

                                        BADAR DURREZ AHMED, J
MARCH 12, 2013

W.P.(C) 7551/2012                                                Page 7 of 7
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