9911796707
TMI Blog2012 (9) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... , upon receipt of the notice under Section-153A, the writ petitioner filed a return of income tax for assessment of block years 1999-2000 to 2004-2005 on 19.09.2006. The assessment was completed on 27.12.2006 for this year resulting in NIL tax demand. Apparently, the writ petitioner kept on representing to the AO as well as CIT by various letters dated 2.1.2007, 9.1.2007, 29.1.2007, 2.12.2010 and 16.3.2011 to release the cash amount but to no avail. 5. In the meanwhile, a sum of Rs.33,72,907/- was adjusted against the demand outstanding against the petitioner's brother vide letter dated 23.02.2007. Eventually, on 9.3.2011, Rs.54,09,793/- was released to the petitioner; balance of Rs.5 Lac was released on 5.4.2011. After these events, the petitioner made a series of representation on 11.4.2011, 3.5.2011, 6.5.2011 and 1.12.2011 for grant of interest in respect of the amount which has been withheld for about 6 years. 6. It is submitted that by virtue of the provisions under Section-132B (4) read with Section 244A, the writ petitioner is entitled to interest for the entire period on the sum of Rs.92,82,700/- which was illegally withheld. Learned counsel also urged that the adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; Rs.7,42,616/- Interest allowed by the department Seized amount Rs.92,82,700/- Less: adjusted against the demand u/s 132B (1) (i) Rs.33,72,907/- --------------------- Balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the parties. Section-132 B (4) provides that the Central Government is obliged to pay simple interest @ ½ % for every month or part thereof - on the amount of which aggregate sum of money seized under Section-132 as reduced by the amount of money, if released, under the first proviso to Section-132 B1 (i) and proceeds, if any, of the assets sold towards discharge of interest liability exceeds aggregate amount required to made the liability referred in that provision. Clause-(b) to sub-Section (4) enacts that interest shall be calculated from the "day immediately following the expiry of the period of 120 days from the date on which the last of the authorization for search under Section-132....... was executed to the date of completion of assessment under Section-153A". In this case, there is no dispute about the fact that the last date of authorization was 2.5.2005; consequently, 120 days period ended on 2.9.2005 i.e. the commencement of the period for purposes of calculation in terms of Section-132 B (4) (b). The terminus quo for this period is the date of completion of assessment; in this case it was 26.12.2006. At this stage, it would also be essential to notice that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by learned counsel for the Respondent in the course of his final arguments. We must take note of the fact that the Department has tendered interest of the sum of Rs.2,09,753/- calculated for the period 1.11.2002 to 30.7.2004, i.e. the date of the Assessment Order for the Block Period starting from 1.4.1996 to 1.7.2002. However, it has failed to pay interest from 1.8.2004 to 27.9.2004, for no justifiable reasons. Predicated on the said Assessment Order dated 30.7.2004, after deducting the income-tax and penalty from the seized sum of Rs. 33 lakhs, there was no further justification not to release the balance sum of Rs.17,33,529/- forthwith. In the event, this sum was actually released after some delay under cover of the Department's letter dated 27.9.2004. As has been noted above, interest at the rate of 0.66 per cent per month was tendered for the period 1-11- 2002 upto 31-08-2003. It appears to us that this may have been for the reason that by virtue of the Taxation Laws (Amendment) Ordinance, 2003, subsequently cemented by the Taxation Laws (Amendment) Act, 2003, the rate of interest stood reduced to 0.5 per cent per month with effect from 8-9-2003. Accordingly, interest at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6% p.m 8-9-2003 6% p.a 0.5% p.m 2006 6% p.a 0.5% p.m 11. Even though the rate of interest payable under Section 132B (4) (a) and Section 244A is the same since 2002 there was a difference prior thereto. This was obviously for the reason that Parliament considered Search proceedings to be distinct from ordinary assessment proceedings. We have already observed that carrying out a Search is an invasion of the privacy of a citizen. It is for good reason that the IT Act imposes stringent safeguards and restrictions on the conduct of Searches. For these very reasons Parliament was mindful of setting down a comparatively short period of 120 days within which it expected summary proceedings relating to Searches to be completed. In fact this period has been successively reduced by Parliament, since Section 132B as originally inserted into the Act by Income Tax (Amendment) Act, 1965 specified the period to be six months. This period was thereafter reduced to 120 days by virtue of Finance Act, 2002. Obviously, Parliament is mindful of the fact that where assets and money belonging to a citizen are taken into custody by the Department consequent upon a Search, a decision should be taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Sandvik Asia's matter, the restitutionary principle was recognized and the Court mandated that in such circumstances, 18% interest is payable. 15. Turning to the facts of this case, the position of the respondents in adjusting Rs.33,72,907/- even for the purpose of payment of interest liability is clearly unwarranted. As noticed in the earlier part of this order, the assessment was completed on 26.12.2006. Therefore, while calculating the interest, the respondents were clearly alive to this specific fact and in fact it worked out to a sum of Rs.7,42,616/-. In these circumstances, the Court sees no justification in reducing that amount on the basis of the later event i.e. the adjustment under Section-132B (i) - made on 23.02.2007. The liability as on 26.12.2006 was in respect of the whole amount of Rs.92,82,700/-. This Court, therefore, holds that the petitioner was entitled to the entire interest calculable for the said period, i.e., 7,42,616/-. The balance payable after making an adjustment of Rs.4,72,783/- would, therefore, have to be made over to the writ petitioner. 16. As far as the main claim with regard to the interest for the period after assessment is concerned, this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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