TMI Blog2019 (2) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is not there. However, though the Revenue did not accept the declaration made by the petitioner in its return of advance tax, the fact is that the petitioner claimed it to be tax. Therefore, on the date the demand notice under Section 156 of the Act was issued, there was an excess amount with the Revenue which the Petitioner was claiming to be tax. Therefore, in terms of the Explanation to Section 244A(1)(b) of the Act the amount of ₹ 35 lakhs was the excess tax (on change of its character from seized amount to tax paid), the petitioner is entitled to interest of ₹ 35 lakhs w.e.f. 16th December, 2016 on the passing of assessment order. - Interest @6% allowed. - Decided partly in favor of assessee. - WRIT PETITION NO.2836 OF 2018 - - - Dated:- 24-1-2019 - AKIL KURESHI M.S. SANKLECHA, JJ. Mr. Ryan Saldanha, for the Petitioner. Mr. N. C. Mohanty, for the Respondents. P.C: At the request of the parties, the Petition is taken up fo final disposal at the stage of admission. 2. This Petition under Article 226 of the Constitution of India, seeks following reliefs: (i) set aside the order dated 28th June, 2018 of Respondent No.1 (Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 2017, 4th April, 2017 and 1st May, 2017 by communication addressed to the Respondent No.1, sought to refund ₹ 35 being on the cash seized along with interest thereon. However, there was no response by the Respondents to the above requisition made by the Petitioner; (vii) On 31st May, 2017, Respondent No.1 passed an order, imposing penalty of ₹ 3.50 lakhs (being 10% of the undisclosed income of ₹ 35 lakhs) under Section 271(AAB) of the Act. This penalty was imposed in respect of the Assessment Year 2015-16. In terms of the above order, the penalty was payable within 30 days i.e. on or before 30th June, 2017. (viii) In response, Petitioner addressed a communication to Respondent No.1, requesting it to set off the penalty, amount of ₹ 3.50 lakhs, out of the available seized cash of ₹ 35 lakhs. This, the Respondent accepted and on 5th March, 2018, the Commissioner of Income Tax being Respondent No.2 has passed an order under Section 132 (B) (3) of the Act, directing refund /release of the balance amount of ₹ 31.50 lakhs (after adjustment of penalty)from the seized cash of ₹ 35 lakhs to the petitioner. On 7th March, 2018, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that no interest will be granted, if order is not passed under Section 153(A)and/or Chapter XIVB of the Act; (iv) The Respondents be directed to pay interest on ₹ 35 lakhs for the period 5th February, 2015 to 30th June, 2017 and under Section 132B(4) of the Act read with Section 244A of the Act. Further, the Respondent be directed to pay interest on ₹ 31.50 lakhs under Section 244A of the Act for the period from 1st July, 2017 to 6th March, 2018; and (v) Without prejudice to the above, in any view of the matter, it was pointed out that while filing its return of income on 22nd September, 2015, the Petitioner had shown the seized cash of ₹ 35 lakhs as advance tax and claimed consequent refund. This, therefore, being a payment of tax, the Petitioner would be entitled to interest in terms of Section 244(A)(1)(a) of the Act or in any event, under Section 244(A)(b) of the Act as this was a payment of tax. 6. On the other hand, Mr. Mohanty, learned Counsel for the Revenue submits that : (i) As the assessment was not done under Section 153(A) of the Act but under Section 143(3) of the Act, the provisions of Section 132(B)(4) of the Act, mandating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, to the person from whose custody the assets were seized; Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorizations for search under section 132 or for requisition under section 132A, as the case may be, was executed; (ii) . . . . (iii) . . . . (2) . . . . 3. Any assets or proceeds thereof which remain after the liabilities referred to in clause (i) of sub-section (1) are discharged shall be forthwith made over or paid to the persons from whose custody the assets were seized. 4.(a) The Central Government shall pay simple interest at the rate of [one half per cent for every month or part of a month] on the amount by which the aggregate amount of money seized under section 132 or requisitioned under section 132A, as reduced by the amount of money, if any, released under the first proviso to clause (i) of sub-section (1), and of the proceeds, if any, of the assets sold towards the discharge of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of tax or penalty means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. (1A) to (4) . . . . . 8. It is an undisputed position that ₹ 35 lakhs was seized on 9th October, 2014 when the Officers of the Revenue searched Petitioner's premises. It is also undisputed position that consequent to the seizure of ₹ 35 lakhs, the assessment was done not under Section 153A of the Act, but under Section 143(3) of the Act in respect of Assessment Year 2015-16. In terms of Section 132(B)(4) of the Act, the occasion to pay the interest on the money seized under Section 132 of the Act would only arise when an assessment has been made under Section 153(A) or Chapter XIV-B of the Act. 9. Admittedly, the assessment for the Assessment Year 2015-16 has not been done under Section 153(A) or Chapter XIV-B of the Act. It has been done under Section 143(3) of the Act. Therefore, on a plain and strict reading of Section 132B(4) of the Act, no interest can be granted under Section 132B(4) of the Act, as it only provides for grant of interest by fixing the termination date fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the interest on the demand raised which would not have happened if the Petitioner's contention that ₹ 35 lakhs be treated as advance tax paid to the Revenue, was accepted. In the above circumstances, the character of the seized cash underwent a change to becoming an advance tax. This is more particularly so as for the subject assessment year, it has been accepted as income. Therefore, it is submitted that interest is payable on the advance tax under Section 244A(1)(a) of the Act. We note that interest on advance tax is payable under Section 244A(1)(a) of the Act, when the refund of advance tax has been paid by tax deducted at source or payment is by way of advance tax or treated as paid under Section 199 of the Act. In this case, the payment is not by any of these modes, therefore, Section 244A(1)(a) of the Act will not have any application. Thus, interest cannot be directed under Section 244A(1)(a) of the Act. 12. It was next submitted that interest be granted under Section 244A(1)(b) of the Act as it is a residuary provision. Therefore, it would cover interest on any amounts retained by the Revenue, without justification. In opposition, the Revenue submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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