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2015 (5) TMI 687 - ALLAHABAD HIGH COURT

2015 (5) TMI 687 - ALLAHABAD HIGH COURT - TMI - Payment of interest on the money seized - assessee has prayed for a direction for renewal of seized investments in shape of Indira Vikash Patras and Kishan Vikash Patras and deposits with the banks with interest on the prevailing rates on the maturity value till the assets were appropriated/released - Held that:- The Kishan Vikash Patras, Indira Vikash Patras, Fixed Deposit Receipts etc. would have earned interest in normal course of things, if the .....

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, on the face value of the aforesaid documents, under the provisions of the Income Tax Act had the investments revalidated/renewed been encashed by the department.

In the facts and circumstances of the case on record we are satisfied that the order of the Assistant Commissioner of Income Tax insofar as it refuses to make payment of interest under Section 132B of the Act, 1961 on the ground that Kishan Vikash Patras, Indira Vikash Patras, Fixed Deposit Receipts etc. had not been encash .....

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n four weeks from the date a certified copy of this order is filed before him. All consequential action shall be taken immediately thereafter.

So far as the refund of the interest paid under Section 220 of Act, 1961 is concerned, we find no reason to interfere with the order of the Commissioner of Income Tax dated 21st May, 2007. - Decided partly in favour of assesse. - Writ Tax No. - 566 of 2011 - Dated:- 28-4-2015 - Hon'ble Arun Tandon And Hon'ble Dr. Satish Chandra,JJ. Fo .....

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, 1994 a search was made at Bank of the petitioner. ₹ 2,59,900/- from the Saving Bank Account in the name of the son of the petitioner along with certificates of investments/deposits worth ₹ 3,45,997/- were seized under Section 132 (1) (iii) of the Act, 1961. An order under Section 132 (5) of the Act, 1961 was passed by the Assessing Officer for retaining the aforesaid assets on 13th March, 1995. An appeal under Section 132 (11) of the Act, 1961 was filed by the petitioner before the .....

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n 148 of the Act return of income for the assessment year 1992-1993 showing an income of ₹ 3,466/- was filed. Assessment order was made under Section 143/148 of the Act, 1961 for the assessment year 199201993, income was determined at ₹ 84,959/- under the head of other source and ₹ 16,50,000/- under the head of long term capital gains. No credit was given to the petitioner-assessee by the Assessing Officer for the money retained under Section 132 (5) of the Act, 1961. Not being .....

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1961 before the High Court being Income Tax Appeal No. 92 of 2005, which remained pending. In pursuance to the order of the Tribunal, fresh order was passed by the Assessing Officer on 19th April, 2005. Petitioner filed an appeal before the Commissioner of Income Tax (Appeals) on 31st August, 2005, which was partly allowed by the Commissioner of Income Tax vide order dated 17th January, 2006. On 18th January, 2007, an intimation was given by the assessing officer about the seized money. Petitio .....

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the time permitted by the High Court. The Assessing Officer under order dated 8th February, 2011 has refused to release the seized assets and to make payment of the interest as claimed by the petitioner. Not being satisfied the petitioner has approached this Court by means of the present writ petition. The High Court after hearing the learned counsel for the parties vide its order dated 23rd May, 2013 recorded that prima facie there is no justification for seized assets being not released. Learn .....

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he maturity date had expired and the value has been transferred to unclaimed account. However, there is no issue in that regard before this Court as the counsel for the department has assured the assessee-petitioner to do the needful so that certificates are encashed. The dispute between the parties before us is confined to the payment of interest on the money seized on 22nd November, 1994 till the date the tax liability of capital gains of ₹ 3,71,653 for the assessment year 1992-1993 was .....

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Learned counsel for the petitioner submitted that as per the order of retention under Section 132 (5) of Act, 1961, the seized assets comprise of cash, Indira Vikash Patras, Kishan Vikash Patras etc. of ₹ 3,45,997/-, they were retained against the liability of ₹ 5,81,133/- treating them as undisclosed income and ₹ 67,038/- against existing liability. This order of retention was a summary order subject to regular assessment under Section 143 (3) of Act, 1961, which was made on .....

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ars without authority of law, therefore, the assessee must be compensated for loss of interest. In the alternative, it is submitted that the Revenue could have appropriated the seized amount in April, 1996 against the demand notice dated 29th March, 1996, no interest under Section 220 (2) of Act, 1961 could have been levied. The Revenue is liable to pay statutory interest under Sections 132B (4) and 244A of the Act, 1961. He explained that the Revenue cannot indirectly keep the money on the plea .....

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that the total loss is ₹ 17,50,000/0. It is also stated that interest on ₹ 1,49,183/- was wrongly charged under Section 220 (2) of the Act, 1961, which be deleted and the amount so recovered to be returned with interest under Section 244A (1) of the Act, 1961. Learned counsel for the petitioner has relied upon the judgment of the Apex Court in the case of Chironjilal Sharma Huf vs. Union of India & Others reported in (2014) 360 ITR 237 (SC) for the proposition that liability as .....

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6) 2 SCC 508, wherein it has been held that if a person can be taxed in accordance with law and hence where excess amount is collected or any amounts are withheld wrongfully, the revenue must compensate the assessee. (Reference paragraph-30 of the judgment). In paragraph nos. 31 and 41 of the said judgment, it has been explained that any amount becoming due to the assessee under Section 240 of the Act, 1961 would encompass interest also. Sri Dhanajay Awashthi, learned counsel for the respondent- .....

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elief for refund of the same, as prayed, appears to be misconceived. We have considered the submissions made by the learned counsel for the parties and have gone through the records of the present writ petition. From the records of the present writ petition it is apparent that seizure was affected in the year 1994. The assessment was completed in the year 1996, the cash seized was adjusted against tax demands. Fixed Deposit Receipts, Kishan Vikash Patras and Indira Viaksh Patras, which were seiz .....

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payable only in respect of seized assets, which are converted into money. No interest is payable in respect of assets, which remain unsold. In support of her conclusion, the officer has referred to sub-Section 4 of Section 132B of the Act, 1961. It is not in dispute that seized Kishan Vikash Patras, Indira Vikash Patras etc. continued to be retained by the Income Tax Department even after conclusion of the assessment proceedings in the year 1996 unreasonably for long duration. There is absolutel .....

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ment for its own purposes, which fact can be inferred as the Vikash Patras etc. were never encashed. The issue before us is as to whether the assessee is to suffer in respect of loss of interest on these Kishan Vikash Patras, Indira Vikash Patras etc. for the inaction on the part of the department especially when the money lay with the Union of India itself. We are of the considered opinion that the facts of this case are more or less identical to those in the case of Chironjilal Sharma Huf and .....

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interest, Revenue must compensate and the same is not payment of interest on interest. (Reference paragraph 7 of the judgment). In the case of South Eastern Coalfields Ltd. vs. State of M.P. & Others reported in (2003) 8 SCC 648, in paragraph 29 the Apex Court has laid down as follows: "29. Once the doctrine of restitution is attracted, the interest is often a normal relief given in restitution. Such interest is not controlled by the provisions of the Interest Act of 1839 or 1978." .....

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erest on the aforesaid investment, in the shape of Kishan Vikash Patras, Indira Vikash Patras, Fixed Deposit Receipts etc. The loss has been caused to the assessee for no fault of his. The Kishan Vikash Patras, Indira Vikash Patras, Fixed Deposit Receipts etc. would have earned interest in normal course of things, if they had been revalidated/encashed as per the option available to the Revenue. If the Revenue has failed to do so and the money all along continued to remain deposited with the Unio .....

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