TMI Blog2024 (3) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... orders may remain to be passed by the Assessing Authority within the timeline provided u/s 132 B (1) (i) of the Act. Payability of interest may arise only in a case where the order may have remained to be passed within a time stipulation provided under the second proviso to Section 132 B (1) (i) of the Act. If, the nature and source of acquisition of a seized asset is wholly explained and it may not be required for recovery of any outstanding demand or demand of tax that may arise under the assessment proposed to be made consequent to the search giving rise to the seizure itself, the same may be released. The provisions does not stipulate any consequence of automatic release. It would first have to be invoked by the assessee by filing a proper application. Then if conditions are fulfilled, an order recording that satisfaction may be passed. It is for that purpose a timeline of 120 days is contemplated on a non-imperative basis. In the event of delay in making the decision the revenue has been saddled with interest liability @ 18 % per annum. On the contrary under Section 132 (8) of the Act [as considered in Cowasjee Nusserwanji Dinshaw [ 1987 (3) TMI 106 - GUJARAT HIGH COURT ], a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Saumitra Dayal Singh And Hon'ble Surendra Singh-I JJ. For the Petitioner : Ram Narain Yadav,Suyash Agarwal,Sr. Advocate For the Respondent : A.S.G.I.,Gaurav Mahajan,Gopal Verma ORDER 1. Heard Sri Rakesh Ranjan Agarwal, learned Senior Advocate assisted by Sri Ram Narain Yadav, learned counsel for the petitioner and Sri Gaurav Mahajan, learned counsel for the revenue. 2. Present writ petition has been filed to quash the seizure of Rs. 36,12,000/- dated 13.09.2022, effected under Section 132B(1)(i) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). Further relief has been sought to release the said amount detained since 01.09.2022, together with due interest payable under Section 132(B)(4) read with Rule 119 (A) of the Income Tax Rule, 1961 (hereinafter referred to as 'the Rules'). 3. Learned Senior Counsel for the petitioner submits, petitioner is a jeweller. He regularly filed his income tax returns since 2012-2013. In the year 2022, he set out to acquire stock of gold jewellery for the oncoming Dushehra and Diwali festivities. He thus handed over Rs. 36,12,000/- to his worker Om Prakash Bind on 31.08.2022 alongwith railway ticket requiring hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the end of month in which assets/money was seized), that period of 120 days would expire not beyond mid January, 2023. Since no decision was made within that time, the petitioner has become absolutely entitled to release of that money. 8. Reliance has been placed on the decisions of the Gujarat High Court in Mitaben R. Shah vs. Deputy Commissioner of Income-Tax And Another; (2011) 311 ITR 424 (GUJ) as followed in Mul Chand Malu (HUF) vs. Assistant/Deputy Commissioner of Income Tax; (2016) 69 Taxmann.com 437 (Gauhati) and as also followed by the Gujarat High Court in Nadim Dilip Bhai Panjvani vs. Income-tax Officer, Ward No.3; (2016) 66 Taxmann.com 124 (Gujarat) and Ashish Jayantilal Sanghavi vs. Income-tax Officer; (2022) 139 Taxmann.com 126 (Gujarat) . 9. Second, referring to the provisions of Section 132 B (4) read with Rule 119 A of the Rules, it has been submitted, the petitioner is entitled to monthly interest at the rate one-half percent, to be computed strictly in accordance with Rule 119 A of the Rules. 10. Thus, it has been submitted, the word 'shall' used in the second proviso to Section 132 B (1) (i) of the Act is a legislative mandate. It comes into force on its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is [deemed to be in default, or the amount of liability arising on an application made before the Settlement Commission under subsection (1) of section 245C, may be recovered out of such assets] 14. Undoubtedly, the first proviso to the said sub-section allows the person searched, an opportunity to make an application for release of a seized assets, if nature and source of its acquisition, is explained. The money Rs. 36,12,000/- seized from Om Prakash Bind is clearly an asset that has been seized. Therefore, subject matter of seizure fell within the scope of provisions of Section 132 B (1) (i) of the Act. 15. Second it is also not in doubt that the petitioner applied for release of that asset/cash Rs. 36,12,000/- within a time stipulated for that purpose i.e. 30 days from the last authorization. That, the revenue does not dispute. 16. Then, a presumption exists that under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the contrary, the Act stipulates, such assets may be released in favour of the person searched at the initial stage itself subject however to the exception that there may not be any outstanding recovery of tax against such a person and such asset may not be required to recover the demand of tax likely to arise upon assessment to be made as consequent to the search. 20. Seen in that light, we come to the core issue involved in the present case. It is whether in such facts where the petitioner had made an application to release seized asset/cash of Rs. 36,12,000/- in terms of the first proviso to Section 132 B (1) (i) of the Act and the Assessing Authority failed to record any satisfaction within '120 days' stipulated under the second proviso to the above noted provision, the petitioner became absolutely entitled in law to obtain release of those assets. 21. To decide that issue, we have to interpret the word 'shall release' appearing in the second proviso to Section 132 B (1) (i) of the Act. If those words express mandatory intent, it cannot be denied that the petitioner would remain entitled to refund of Rs. 36,12,000/-, upon the Assessing Authority's failure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not render the proceeding invalid. In that connection, the following quotation from Crawford on Statutory Construction Article 261 at p. 516, is pertinent: The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other (emphasis supplied) 24. Then, in the case Banwarilal Agarwalla vs. The State of Bihar And Others; AIR 1961 SC 849 , another five Judge bench of the Supreme Court as under: 6. It was not disputed before us that when the Regulations were framed, no Board as required under Section 12 had been constituted, and so, necessarily there had been no reference to any Board as required under Section 59. The question raised is whether the omission to make such a reference makes the rules invalid. As has been recognised again and again by the courts, no general rule can be laid down for deciding whether any partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublic officer to perform a public duty is directory or mandatory has been examined earlier by the courts as well. A question arose before the Privy Council in respect of irregularities in the preliminary proceedings for constituting a jury panel. The Municipality was expected to revise the list of qualified persons but the jury was drawn from the old list as the Sheriff neglected to revise the same. It was in these circumstances, the decision of the jury drawn from the old list became the subject-matter of consideration by the Privy Council. It was thus held that it would cause greater public inconvenience if it were held that neglecting to observe the provisions of the statute made the verdicts of all juries taken from the list ipso facto null and void so that no jury trials could be held until a duly revised list had been prepared. 10. The Constitution Bench of this Court held that when the provisions of a statute relate to the performance of a public duty and the case is such that to hold acts done in neglect of this duty as null and void, would cause serious general inconvenience or injustice to persons who have no control over those entrusted with the duty, the practice of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court examined the effect of non-publication of final electoral rolls before the time of acceptance of nomination papers. The Court held as under : (SCC p. 516, para 48) 48. Furthermore, even if the statute specifies a time for publication of the electoral roll, the same by itself could not have been held to be mandatory. Such a provision would be directory in nature. It is a well-settled principle of law that where a statutory functionary is asked to perform a statutory duty within the time prescribed therefor, the same would be directory and not mandatory. (emphasis supplied) 26. Then, the Supreme Court further considered the law laid down by a five Judge Constitution Bench of the Supreme Court in New India Assurance Company vs. Hilli Multipurpose Cold Storage (P) Ltd; (2020) 5 SCC 757 . It observed: 15. A recent Constitution Bench held that the provisions of the Consumer Protection Act granting 30 days' time to file response by the opposite party or such extended period not exceeding 15 days is mandatory as the object of the statute is for the benefit and protection of the consumer. It observed that such Act had been enacted to provide expeditious disposal of consumer di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Senior Counsel for the petitioner is contained in Section 132 B (4) of the Act. That provision of law reads as below: 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 existing liability referred to in clause (I) of sub-section (1), exceeds the aggregate of the amount required to meet the liabilities referred to in clause (I) of sub-section (1) of this section. (b) Such interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment [or reassessment or re-computation] 29. Thus, the only consequence of non-compliance of Section 132 B (1) (i) of the Act is by way of payment of intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not be made to wait endlessly for release of valuable assets that may have been seized during the course of search. If, the nature and source of acquisition of a seized asset is wholly explained and it may not be required for recovery of any outstanding demand or demand of tax that may arise under the assessment proposed to be made consequent to the search giving rise to the seizure itself, the same may be released. The provisions does not stipulate any consequence of automatic release. It would first have to be invoked by the assessee by filing a proper application. Then if conditions are fulfilled, an order recording that satisfaction may be passed. It is for that purpose a timeline of 120 days is contemplated on a non-imperative basis. In the event of delay in making the decision the revenue has been saddled with interest liability @ 18 % per annum. On the contrary under Section 132 (8) of the Act [as considered in Cowasjee Nusserwanji Dinshaw (supra)] , a statutory duty was cast on the seizing authority to itself record reasons to detain seized documents beyond 180 days and the consequence of its nonadherence was also provided by way of release of the same. Therefore, in ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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