TMI Blog2022 (8) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court challenging the criminal proceedings arising out of Section 457 Cr.P.C. that the papers related to the writ-applicant were placed before the Revenue Department, which culminated into the reopening proceedings u/s 148 - Court further finds that the reopening proceedings in the case of the writ-applicant has been carried out in terms of Section 143(3) read with Section 147 of the Act rather than Section 153C of the Act. Again, there is no challenge to the order declaring the seized cash in the hands of Bhuraram Patel as unaccounted income of the searched person. Even, there is no challenge to the order of penalty and the seized cash being adjusted towards the same. We find that there is no irregularity or illegality in the order passed by the Assessing Officer, treating the seized cash as unaccounted income in the hands of the searched person Bhuraram Patel.. This Court does not find any fault with the department of having refused to release the seized amount at the relevant point of time or even the refund thereafter. At the same time, declaring the income in the case of the writ- applicant being not taxable, will not ipso facto result into refund of the seized c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership firm registered under the Partnership Act, 1932 (for short, the Act 1932 ). There are in all nine partners in a partnership firm. 2.2. The partnership firm is engaged in the business of Angadia (courier service). 2.3. It appears from the materials on record that two employees of the partnership firm, namely Bhuraram and Ganpat Singh, were travelling to Ajmer on 24/06/2009. It is the case of the writ-applicant that they were asked to go to Ajmer for the purpose of purchasing a property in the form of office/shop on behalf of the firm. It is also the case of the firm that it had handed over an amount of Rs.24,50,000/- (Twenty-Four Lakh Fifty Thousand) in cash to the two employees referred to above for the purpose of payment towards the purchase of shop-cum-office. 2.4. There is a strong assertion on the part of the firm that the cash referred to above belongs to the firm. The two employees named above were detained by the police near the Clock Tower, Ajmer, and the cash referred to above was seized. 2.5. It appears that upon seizure the firm filed an application under Section 457 of the Code of Criminal Procedure for the release of the cash. The said applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad, and an addition of Rs.24,50,000/- was made in the hands of Bhuraram M. Patel. 2.10. The DCIT-CC-1(2), Ahmedabad, thereafter vide order dated 07/03/2013, levied penalty of Rs.7,35,000/- under Section 271(1)(c) of the Act for concealment of the income in case of Bhuraram. A notice under Section 148 of the Act dated 21/03/2013 came to be issued to the firm. On 01/07/2013, the CIT-Ahmedabad dismissed the appeal of Bhuraram. On 01/01/2014, the assessment order was passed under Section 143(3) read with Section 147 of the Act. The Assessing Officer concluded that out of Rs.24,50,000/- shown by way of an entry, Rs.13,00,000/- stood explained and an amount of Rs.11,50,000/- was treated as the unexplained cash seized on 24/06/2009. 3. At this stage, we must look into the assessment order dated 01/01/2014 referred to above in the case of the firm for the Assessment Year 2010-2011, more particularly, para-4 of the said order. 4. During the course of assessment proceedings, it is seen from the books of account produced that the assessee has shown withdrawal of Rs.24.50 Lac on 23.06.2009 and the description is narrated as Chief Judicial Magistrate Court Ajmer Ganpat Singh B. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Penalty proceeding u/s.271(1)(c) is initiated separately for concealment the particulars of its income or furnishing inaccurate particulars of such income (Addition Rs.11,50,000/-) Subject to the above remarks and date made available, the total income of the assessee is computed as under: Total income as per return : Rs. 82,000/- Add: As per para 4 above : Rs.11,50,000/- Total income : Rs.12,32,000/- Assessed u/s 143(3) r.w.s. 147 of the I. T. Act. Give credit for pre-paid taxes, if any, after due verification. Charge interest u/s. 234A, 234B, 234C, 234DF as the case may be. Issue demand notice and challan. Penalty proceeding u/s.271(1)(c) is initiated separately for concealment the particulars of its income or furnishing inaccurate particulars of such income. 4. Thus, it appears from the aforesaid that the assessment in the case of the firm proceeded on the footing of the entry of Rs.24.50 lakh in the books of account on 23/06/2009, wherein the description is narrated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of Rs.93,744/- to Bhuraram. The order reads thus: 4. The assessee has applied for rectification vide dated 24.10.2017 for the A.Y. 2010-2011 and requested for issue of interest u/s. 132B(4)(b) of the Act. The balance amount of Rs.7,49,956/- was issued from PD A/c. Of Principal Commissioner of Income Tax (Central-1), Ahmedabad to the assessee vide Cheque No.717887 dated 02,.01.2015 and same was received by assessee on 02.01.2015. Accordingly, after due verification, order u/s.154 of the Act dated 267/02/2018 was passed resulting into a refund of 63,746/- (interest u/s. 132B(4)(b) of the Act) and rejecting claim of refund u/s.244A of the Act stating that granting of refund out of seized cash is governed by section 132B(4)(b) of the Act and the manual refund of Rs.63,746/- was issued to the assessee on 09.03.2018 with the prior approval of the Jt. CIT, Range-1(2), Ahmedabad vide approval letter No.Jt.Cit/Range-1(2)/Manual refund/2017-18 dated 08.03.2018. The working of interest u/s. 132B(4)(b) is as under: 132B(4)(b) Interest Date of requisition u/s.132A of seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ward-1(2)(1), Ahmedabad 7. We have heard Mr.Jaimin Dave, learned counsel appearing for the writ-applicant firm and Mr.M.R.Bhatt, learned senior counsel appearing for the respondents. 8. Mr.Jaimin Dave, the learned counsel would submit that the department could not have appropriated the seized cash towards the income tax liabilities of Bhuraram and further could not have paid the balance cash to Bhuraram, more particularly, when the department was very well aware that the writ-applicant was claiming ownership of the seized cash since the year 2009. He would submit that the Revenue could not have appropriated the seized cash towards the income tax liabilities of Bhuraram, more particularly, when the Revenue has assessed the seized cash in the hands of the writ-applicant firm. Mr. Dave, the learned counsel would submit that the Assessing Officer made addition of Rs.11,50,000/- based on the seized cash vide order dated 01/01/2014 which, ultimately, the CIT(A) deleted vide order dated 04/03/2016. Mr.Dave, the learned counsel would submit that in none of the proceedings as above, the department took the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm. The cash was in the hands of Bhuraram. He would submit that the notice under Section 153(A) of the Act was issued to Bhuraram and not to the firm. During the course of the post-search proceedings as well as the assessment proceedings, Bhuraram admitted that the cash seized belongs to him and not to the firm. The addition in respect of the seized cash was made in the hands of Bhuraram for the A.Y. 2010- 2011 while finalizing the order under Section 143(3) read with Section 153(A) of the Act. He would submit that the penalty under Section 271(1)(c) of the Act was also levied in the case of Bhuraram on concealment of the income of Rs.24,50,000/-. The refund of the balance amount after set-off of the other tax liabilities was also issued to Bhuraram in view of the proceedings under sub-section 3 of Section 132(B) of the Act. 12. In the last, Mr.Bhatt submitted that the notice under Section 153(A) was issued to Bhuraram and not to the firm. The addition in respect of the seized cash was made in case of Bhuraram. The penalty under Section 271(1)(c) of the Act was also levied in case of Bhuraram. The refund of the balance amount after the set-off of the other liabilities was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c findings that the accumulation of huge cash of Rs.11.50 lakh (Rs.24.50 lakh (-) Rs.13 lakh) is not found justifiable and the cash book appears to be drafted one to justify the source of cash seized . It further transpires that the authorized representative of the writ- applicant firm was given an opportunity to produce the evidence in support of their assertion. However, the only explanation tendered by the writ-applicant was that the cash withdrawal was out of cash available with the assessee firm. It is in this peculiar facts that the Assessing Officer concluded that so far as the remaining amount of Rs.11.50 lakh is concerned, in absence of any material, the same to be treated as unexplained income and is required to be added to the total income of the assessee. Further directions were issued for separate proceeding under Section 271(1)(c). 17. Thereafter, in the appeal before the Commissioner of Income Tax (Appeals) 4, Ahmedabad, the writ-applicant firm, for the first time, placed on record the extract of the balance-sheet as on 31/03/2009 along with the ITR for the F.Y. 2008-09 corresponding the A.Y. 2009-10 with the photograph of acknowledgment slip. The writ-applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the cash. The legitimate question arises to be answered by the writ-applicant is, as to at what point of time Bhuraram severed off the master-servant relationship ? Nothing is forthcoming on record. On one hand the writ-applicant went on asserting that the cash belongs to it, and on the other hand, Bhuraram took the stance that he was the lawful owner of the cash. 21. Under the Income Tax Act, Section 132B provides for the procedure for application of the assets seized under Section 132 or requisitioned under Section 132A and release of the assets thereunder. As per Section 132B(1), an assessee has to make an application for release of the seized assets within a period of thirty days. The reference to the word existing liability authorises the officer to realise the amount of the existing liability by way of recovery from such seized assets. The closed examination of Sections 132 to 132B of the Act embodies an integrated scheme laying down the procedure comprehensively for the search and seizure and the power of the authorities making the search and seizure to order confiscation of the assets seized. Section 132A of the Act confers power to the authorities to requisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in an application under Section 457 of Cr.P.C., chose not to approach the Revenue seeking release of the seized cash under Section 132B of the Act. The Revenue had categorically taken the stance that the department has proceeded under Section 132 of the Act. Admittedly, the writ-applicant chose to submit application seeking refund of the cash seized before the respondent department for the first time on 17/03/2016 followed by an applications-cum-reminders dated 24/09/2017, 07/08/2018 and 11/10/2018 respectively. (3) Further, the writ-applicant had approached the concerned JMFC Court at Ajmer under Section 457 of the Code of Criminal Procedure for release of the seized cash in July, 2009. The said application under Section 457 of Cr.P.C. came to be rejected by the concerned trial court vide order dated 16/09/2009, against which even a revision was preferred by the writ-applicant, which also came to be rejected on 3/1/2011. Therefore, the seized cash came to be transferred by the ADIT (Inv.) - 1, Jodhpur, to the CIT (Central) Jaipur on 24/02/2011, which ultimately came to be transferred to the CIT (Central), Ahmedabad, in the year 2012 for initiation of appropriate block assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2), Ahmedabad, levying the penalty of an amount of Rs.7.35 lakh. The appeal preferred by the said assessee - Bhuraram Patel against the aforesaid order of penalty came to be rejected by the CIT(A), Ahmedabad, vide order dated 01/01/2014. The CIT(A) found the story of the said assessee not believable as except for the affidavit no other cogent material or evidence were brought on record and, therefore, confirmed the order passed by the Deputy Commissioner levying the penalty under Section 270(1)(C) of the Act. Thus, as on date of the passing of the order dated 01/01/2014 in the case of the writ-applicant firm, the proceedings under Section 153A against the searched person Bhuraram Patel had already concluded in view of the order dated 31/10/2012 passed by the Assessing Officer, treating the cash in the hand of said assessee as unaccounted income . In fact, the matter travelled in appeal and even penalty proceedings had already been started. On the other hand, when the assessment proceedings were initiated against the writ-applicant firm and were heard, the writ-applicant had failed to furnish the aforesaid details before the Assessing Officer. 23. It is pertinent to note th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s act wholly without jurisdiction, or in excess of jurisdiction, or in violation of principles of natural Justice, or refused to exercise jurisdiction vested in them, or there is error apparent on the face of record which has resulted in manifest injustice. In the case of Sangram Singh vs. Election Tribunal, Kotah, AIR 1955 SC 425, in para 14 of the judgment the Supreme Court has observed as under : That, however, is not to say that the jurisdiction will be exercised whenever there is an error of law. The High Courts do not, and should not, act as courts of appeal under Article 226. Their powers are purely discretionary and though no limits can be placed upon that discretion it must be exercised along recognized lines and not arbitrarily ; and one of the limitations imposed by the Courts on themselves is that they will not exercise jurisdiction in this class of case unless substantial injustice has ensued, or is likely to ensue. They will not allow themselves to be turned into courts of appeal or revision to set right mere errors of law, which do not occasion injustice in a broad and general sense, for, though no Legislature can impose limitations on these constitutional power ..... X X X X Extracts X X X X X X X X Extracts X X X X
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