S. K. JAIN Vs. COMMISSIONER OF INCOME TAX-XI, NEW DELHI & ORS.
March, 14th 2013
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 12.03.2013
+ W.P.(C) 7551/2012
S. K. JAIN .......Petitioner
COMMISSIONER OF INCOME TAX-XI,
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.
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V.EASWAR
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
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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
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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
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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
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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
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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.
BADAR DURREZ AHMED, J
MARCH 12, 2013
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