TMI Blog2007 (4) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... vide Assessment Order dated 30.7.2004 According to the Department, the Assessee's undisclosed income aggregated Rs.12,43,232/-, attracting a tax demand of Rs.7,83,236/- together with a penalty of Rs.7,83,236/- under Section 158BFA(2) of the IT Act, thus raising a total demand of Rs.15,66,471. Pursuant to this Order, the balance amount of Rs.17,33,529 was 'released' on 27.9.2004 as stated in the Affidavit of the Assistant Commissioner of Income Tax (Central Circle 5, New Delhi). Upon appeal against the Assessment Order, the CIT(A) vide its Order dated 15.12.2004 deleted Rs.12,43,232 as undisclosed income assessable to tax along with the penalty imposed. The Assessing Officer (AO) gave effect to the Order-in-appeal and framed 'nil income' assessment on 24.12.2004, releasing the remaining amount of Rs.15,66,471/-. Thus, the entire Seizure of Rs.33 lakhs was ordered to be released (in contradistinction to 'refunded') to the Petitioner. 2. With respect to the payment of interest, it has been stated in the Affidavit by the Assistant Commissioner that as per the provisions of Section 132B(4) of the IT Act, interest was paid on the sum of Rs.17,33,529/- as follows: (a) 01-11-02 to 31.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een offered as to why interest has not been given upto the date when payment was actually tendered. The Department cannot be exonerated or excused from payment of interest for the period of two months, being the hiatus between the passing of the Assessment Order and the date on which the interest was tendered. 6. Let us now revert to the statutory provisions which apply to the conundrum before us. The provision of Section 132B(i) appear to us to be of far-reaching dimensions, if not of draconian nature. It permits assets seized under Section 132 or requisitioned under Section 132A to be adjusted against existing liability. The assumption must be that the Search and Seizure provision under Section 132 or the Requisition proceedings under Section 132A will not be lightly or obliquely resorted to by the Department. In other words, the highly invasive action under Section 132A of the Act, in which the privacy of a citizen is rent asunder, should not be employed as a surrogate of Section 226 of the Act for effecting recoveries of tax dues from litigious assesses. 7. In the present case we are not concerned with this aspect of the statute since it is Section 132B(4)(b) that is at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the higher rate should have been calculated upto 8-9-2003. However, since this point had not been urged by the Petitioner, we leave the matter to rest. 9. In our opinion the purpose of stipulating the period of 120 days cannot be over-emphasised. What the statute expects is that where a Seizure has taken place consequent upon a Search, the decision declining to release or return the amount to the Assessee must be taken with extreme expedition. This is evidently how the Department understood the provisions of the IT Act since it has itself computed interest commencing from the expiry of the said period of 120 days, that is, 1.11.2002. Perhaps it would have been logical for Parliament to clarify that if a decision to hold or withhold monies/assets discovered d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 promptly as to what portion thereof is to be retained. 12. At first blush, therefore, in our understanding, it must logically be expected that the rate of interest payable under Section 132B(4) should be higher than that prescribed in other provisions, with the expectation that the component of interest would act as a deterrent to dilatory decision by the Department in the context of Searches. On further consideration, it is equally unacceptable for the Revenue to drag its feet or create obstacles or delays for refunding monies to assessees. In fact, in Union of India through Commissioner of Customs (Import and General) -vs- Honda Siel Cars India Ltd, MANU/DE/0258/2007, we have taken serious note of this deleterious and objectionable practice which has become rampant in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which is found in Chapter-XIX dealing with Refunds. A reading of Sections 237 and 238 makes it clear that it pertains to amounts of tax paid by the Assessee or on its behalf. It cannot cover or be equated to involuntary acts such as seizure of assets in the course of a Search conducted under Section 132 of the IT Act which events are covered in the fasciculous of Chapter XIII-C. Section 153A is to be found in Chapter-XIV prescribing the procedure for assessment in case of search and requisition, and has been dealt with as a distinct subject even in that Chapter. Similar is the position so far as reference to Chapter XIV-B is concerned. None of these provisions prescribe the period from which interest is payable. In the event it is found that there is no justification for the retention of the items seized by the Department in the cases of a Search, the procedure for assessment should not be confused with provisions stipulating the time within which a summary decision is to be taken in respect of money or assets seized during a Search. 15. Our attention has also been rightly drawn to the decisions in K.A. Karim -vs- Commissioner of Income-Tax, [1990] 186 ITR 97 and Manohar Lal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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