2007 (10) TMI 261 - HC - Income Tax

Application seeking release of the seized cash of Rs.1.14 crores evidence that seized cash belonged to third party - explanation given by the petitioner regarding the nature and source of acquisition of the sum has not been found unsatisfactory - Once the explanation given by the petitioner regarding the nature and source of acquisition of the seized cash is correct then the amount of Rs.1.14 crores which belongs to third party could not be retained by the department

Summary

Issues:
Release of seized cash amounting to Rs.1.14 crores under section 132B(1)(i) of the Income Tax Act, 1961.

Detailed Analysis:

1. Background and Seizure of Cash:
The petitioner, conducting business as M/s. Bipinson Jewellers, had cash amounting to Rs.1,28,34,090 seized during a survey on 29/12/2006. It was explained that Rs.1.14 crores belonged to M/s. Vimalson Jewellers, leading to a search at their premises. Despite matching sales and stock records, Rs.1,20,00,000 was seized from Bipinson Jewellers.

2. Legal Proceedings and Initial Petitions:
An application under section 132B(1)(i) was made on 29th January, 2007 seeking release of the Rs.1.14 crores. Writ Petitions were filed by both the petitioner and M/s. Vimalson Jewellers. The court directed the respondent to dispose of the application as per law.

3. Impugned Order and Challenge:
The respondent No.2 rejected the release application on 3rd September, 2007, leading to the filing of the present petition challenging this decision.

4. Petitioner's Argument:
The petitioner contended that the seized amount belonged to M/s. Vimalson Jewellers, and the respondent had no grounds to retain it. They argued that the presumption under section 292C of the Act had been rebutted, citing a relevant judgment.

5. Revenue's Defense:
The revenue, represented by learned counsel, supported the decision, stating that the seized cash is to satisfy liabilities post-assessment under section 153A of the Act.

6. Court's Evaluation and Decision:
The court analyzed section 132B(1)(i) of the Act, emphasizing the provision for releasing seized assets upon satisfactory explanation within 30 days of seizure. As the petitioner's explanation was verified and undisputed, the court found no grounds for retention by the respondent. The court highlighted the absence of evidence suggesting the cash represented undisclosed income, leading to the quashing of the impugned order and directing the release of the seized cash to the petitioner with interest.

7. Final Ruling:
The court made the rule absolute, ordering the release of the seized cash amounting to Rs.1.14 crores to the petitioner with 6% interest per annum from the date of seizure till payment, with no costs imposed.

This detailed analysis provides a comprehensive overview of the legal judgment, covering the issues involved, the arguments presented, the legal provisions applied, and the court's final decision in the matter.