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TMI Blog2024 (3) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 him to undertake the rail journey to Kolkata to buy jewellery. On 31.08.2022, said Om Prakash Bind was apprehended by the Government Reserved Police (GRP) at Railway Station, Mirzapur. In the course of that search by the police authorities, Rs. 36,12,000/- was recovered from his bag. Later, that information was passed on to the Income Tax Authority who arrived on the scene on 01.09.2022 and subjected the cash recovered from Om Prakash Bind to proceeding under Section 132 (1-A) of the Act. 4. In the course of proceedings statements of the petitioner as also Om Prakash Bind were recorded. In that, according to the petitioner, a consistent story emerged that the cash Rs. 36,12,000/- recovered from Om Prakash Bind, belonged to the present petitioner. 5. The petitioner further claims, during the course of that investigation, petitioner had produced regular books of accounts and details of his income tax returns filed for the past A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 own, upon expiry of time. Thus, at most, the revenue may hold the seized money for 120 days. During that period upon application filed, the assessing authority would become obligated to apply his mind-if money is duly accounted for and also if such money may be applied to satisfy any existing demand or demand likely to arise from the seizure itself. In the present facts, there was no pre-existing demand against the petitioner. Therefore, the revenue authority could only have examined if the seized amount Rs. 36,12,000/- was accounted for and it it was required to satisfy the likely demand of tax. The petitioner produced his books of accounts and clearly established that the entire money was duly accounted for. In absence of any adverse inference drawn within the permissible time limitation of 120 days, the petitioner is entitled to refund of that money, by operation of law. 11. On the other hand, Sri Gaurav Mahajan, le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. 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 the Act, an asset seized from a person belongs to that person at the same time that presumption remains rebuttable in law. Therefore, it was open to the petitioner to make such an application even though the cash had not been seized from his person or from him. At the same time, it may have remained open to the respondent/authority to issue notice to Om Prakash Bind on that application made by the petitioner and pass appropriate order, thereafter. 17. Here, it is not disputed to the revenue that in the course of investigation arising from seizure made, the said Om Prakash Bind did participate in the investigation and at present, the record appears to suggest that he made a statement indicating petitioner's ownership in the money Rs. 30,12,000/-. In any case, we are not required to draw any final conclusion in that regard, at present, since that exercise had to be made by the assessing authority. Yet, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpret 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 to decide the petitioner's application dated 15.09.2022 within the stipulated time of 120 days. On the other hand, if those words express directory intent, the application would survive for consideration by the Assessing Authority, in terms of first proviso to Section 132 B (1) (i) of the Act. 22. In grammar, the words 'shall' and 'may' indicate different intent. The word 'shall' is normally used to indicate to cause a mandatory effect whereas 'may' indicates action to be taken as per the doers volition. In usage, the difference may also indicate the degree of politeness invoked by the user. However in law though application of the rules of grammar is not excluded, at the same time interpretation in law as to mandatory or directory nature of the word 'shall' is not to be decided solely on the strength of rules of grammar. Well recognized principle in that reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 particular provision in a statute is mandatory, meaning thereby that non-observance thereof involves the consequence of invalidity or only directory, i.e., a direction the non-observance of which does not entail the consequence of invalidity, whatever other consequences may occur. But in each case the court has to decide the legislative intent. Did the legislature intend in making the statutory provisions that non-observance of this would entail invalidity or did it not? To decide this we have to consider not only the actual words used but the scheme of the statute, the intended benefit to public of what is enjoined by the provisions and the material danger to the public by the contravention of the same. In the present case we have to determine therefore on a consideration of all these matters whether the legislature intended that the provisions as regards the reference to the Mines Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt 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 courts should be to hold such provisions as directory. In a seven-Bench judgment, this Court was considering as to whether the power of the Returning Officer to reject ballot papers is mandatory or directory. The Court examined well-recognised rules of construction to observe that a statute should be construed as directory if it relates to the performance of public duties, or if the conditions prescribed therein have to be performed by persons other than those on whom the right is conferred. 11. In a judgment reported as Remington Rand of India Ltd. v. Workmen , Section 17 of the Industrial Disputes Act, 1947 came up for consideration. The argument raised was that the time limit of 30 days of publication of award by the Labour Court is mandatory. This Court held that though Section 17 is mandatory, the time-limit to publish the award within 30 days is directory inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions 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 disputes. In this case, an individual was called upon to file his written statement in contradiction for a pubic authority to decide the issue before it" (emphasis supplied) 27. Upon, that discussion of the law, the Supreme Court then concluded (in C Bright vs. District Collector And Others: (2021) 2 SCC 392) as below: "21. The Act was enacted to provide a machinery for empowering banks and financial institutions, so that they may have the power to take possession of secured assets and to sell them. The DRT Act was first enacted to streamline the recovery of public dues but the proceedings under the said Act have not given desirous results. Therefore, the Act in question was enacted. This Court in Mardia Chemicals, Transcore and Hindon Forge (P) Ltd. has held that the purpose of the Act pertains to the speedy recovery of dues, by banks and financial in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undred 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 interest at the highest rate provided by the legislature i.e. @ of 18 % per annum. The period for which such interest may become payable has also been specified under that provision. By imposing the levy of interest on the revenue, a plain reading of sub section (4) of Section 132 B (1) (i) of the Act, the legislature itself contemplated cases where orders may remain to be passed by the Assessing Authority within the timeline provided under Section 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. 30. That being the only consequence provided, we find it difficult to persuade ourselves to the reasoning of the Gujarat High Court in Mitaben R. Shah vs. Deputy Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility @ 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 absence of statutory intent shown to exist, it may not be inferred through the process of legal reasoning-that if no order is passed within a time of 120 days, seized assets must be released notwithstanding its impact on the recovery of existing and likely demands. 33. As noted above, similar stipulations of time provided under different enactments have been interpreted to be directory and not mandatory. Therefore, we are unable to pursue ourselves to subscribe to the reasoning that has found its acceptance by the Gujarat High Court in the case of Mitaben R. Shah vs. Deputy Commissioner of Income-Tax And Another (supra), Ashish Jayantilal Sanghavi vs. Income-tax Officer (supra),Nadim Dilip Bhai Panjvani vs. Incometax Officer, Ward No.3 (supra) and Gauhati High Court in the case of Mul Chand Malu (HUF) vs. Assistant/Deputy Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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