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2021 (4) TMI 1312 - HC - Income TaxSeeking release of cash seized in search u/s 132 - Interest towards compensation/damages for the delayed period - petitioners seek an order and direction against respondents to pay interest at the rate of 12% p.a. from 01.11.2017 to 01.12.2020 on cash amount of Rs. 9, 35, 000/- and interest at the rate of 12% p.a. from 01.11.2017 till its final realization of the amount - whether this Court can award interest or compensation having found delay on the part of the revenue in releasing the cash amount seized by the revenue from the petitioners while carrying out the assessment though delay was attributed on the part of the respondents and not on the petitioners from the date of assessment order till payment or not? - HELD THAT - There is no doubt that the said Section 132-B (4) (b) provides that interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment under Section 153A or under Chapter XIV-B. In our view the said provision does not indicate any bar from awarding payment of interest or compensation in a situation where Court finds any delay on the part of the revenue in releasing the amount within time specifically prescribed under the provisions of law for no fault of the assessee. The Hon ble Supreme Court in a case of Sandvik Asia Ltd. Vs. Commissioner of Income Tax-1 Pune 2006 (1) TMI 55 - SUPREME COURT while dealing with the claim for payment of interest under Section 214 of the Act 1961 made by the petitioner whether there was gross delay on the part of the revenue ranging from 12 to 17 years held that there is no question of the delay being justifiable as is argued and in any event if the revenue takes an erroneous view of the law that cannot mean that the withholding of monies is justifiable or not wrongful . In our view the principles laid down by the Hon ble Supreme Court of India in a case of Sandvik Asia Ltd. Vs. Commissioner of Income Tax-1 Pune (supra) would apply to the facts of this case. The respondents were solely responsible for the gross delay in not releasing the cash amount of the petitioners under Section 132-B (4) (b) of the Act 1961 and thus cannot refuse the payment of compensation to the petitioners for wrongfully withholding the said amount from the date of assessment order till payment. In this case it is not the case of interpretation of Section 132-B(4)(b) of the Act 1961 or under the said provision the Courts would restrict obligation and liability of the revenue to pay interest or compensation upto the date of payment. The question for consideration of this Court raised by the petitioners is whether the respondents can refuse to compensate the petitioners for wrongfully withholding the cash amount of the petitioners though by the assessment order the liabilities of the petitioners were declared as nil beyond the date of assessment order. Though in this case the petitioners have prayed for interest at the rate of 12% p.a. from 01.11.2017 to 01.12.2020 on cash amount of Rs. 9, 35, 000/- and compensatory interest at the same rate from 24.12.2019 till 01.12.2020 on the amount of cash released of Rs. 14, 36, 000/- the petitioners have restricted their prayer for compensatory interest at the rate of 6% p.a. on these two amounts and also on Rs. 24, 29, 000/-. In our view though Delhi High court had awarded interest at the rate of 9% p.a. towards compensation/damages for the delayed period since the petitioners in this case have restricted their claim for compensation/damages at the rate of 6% p.a. for the delayed period we are inclined to allow the claim for the interest by way of compensation/damages at the rate of 6% p.a. for delayed period already quantified in the chart submitted by the petitioners. ORDER - The respondents are directed to pay interest by way of compensation/damages for the period from 03.03.2018 to 23.12.2019 as prayed under Section 132-B(4) of the Act 1961 at the rate of 6% p.a. totaling to Rs. 5, 99, 780/- after giving credit of the interest already paid by the revenue for the period from 01.03.2018 to 13.12.2019 in the sum of Rs. 2, 06, 360/- within a period of four weeks from the date of this order.
Issues Involved:
1. Release of the remaining cash amount of Rs. 24,29,000. 2. Payment of interest on the released cash amount. 3. Compensation for delayed payment of the seized cash. Detailed Analysis: 1. Release of the Remaining Cash Amount of Rs. 24,29,000: The petitioners sought an order under Article 226 of the Constitution of India directing respondent no.3 to release the remaining cash amount of Rs. 24,29,000 as per the order dated 17.11.2020. The search at the residence of the petitioners was conducted on 31.10.2017 under Section 132 of the Income Tax Act, 1961, and Rs. 48,00,000 along with gold jewelry were seized. Despite the assessment orders passed on 23.12.2019 and 26.12.2019 assessing the income at nil, the respondents only released Rs. 23,71,000 on 17.11.2021, retaining the remaining amount unlawfully. 2. Payment of Interest on the Released Cash Amount: The petitioners claimed interest at the rate of 6% p.a. from 03.03.2018 to 23.12.2019 and compensatory interest at the rate of 12% p.a. from 24.12.2019 till 01.12.2020 on the amount of Rs. 14,36,000 released on 17.11.2020. They also sought interest at the rate of 12% p.a. from 01.11.2017 to 01.12.2020 on the cash amount of Rs. 9,35,000 and from 01.11.2017 till final realization on Rs. 24,29,000. The petitioners argued that as per Section 132(B)(4)(a & b), they were entitled to interest since 120 days had expired on 02.03.2018. The respondents, however, contended that interest liability was only up to the date of the assessment order. 3. Compensation for Delayed Payment of the Seized Cash: The petitioners argued that the respondents could not withhold the amount payable to them for alleged future liability and that any delay in payment should be compensated. They relied on judgments from the Delhi High Court and the Supreme Court, which held that in cases of wrongful withholding of amounts, the revenue must compensate the assessee. The Court agreed with the petitioners, noting that the respondents were responsible for the delay in releasing the cash and that compensation was warranted for the period beyond the assessment order. Reasons and Conclusions: The Court found that the respondents delayed releasing the cash amount seized from the petitioners and did not make the payment within the stipulated 120 days. The Court held that the principles laid down by the Supreme Court in Sandvik Asia Ltd. Vs. Commissioner of Income Tax-1, Pune, which recognized the need to compensate for wrongful withholding of amounts, applied to this case. The Court also referred to the Delhi High Court's judgments in Ajay Gupta Vs. Commissioner of Income Tax and G. L. Jain Vs. Commissioner of Income Tax, which supported the petitioners' claims for compensation. Orders: The Court directed the respondents to pay interest by way of compensation/damages for the period from 03.03.2018 to 23.12.2019 at the rate of 6% p.a., totaling Rs. 5,99,780, after giving credit for the interest already paid. The writ petition was allowed, and the rule was made absolute with no order as to costs.
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