Assessee entitled to Interest on cash seized during search for the period after completion of Assessment

The petitioner is assessed to income tax. On 16.02.2005 a search under section 132(1) of the Income Tax Act, 1961was conducted at his residential premises in the course of which cash amounting to Rs. 8,83,800/- was found. Out of the cash found an amount of Rs. 6,33,800/- was seized. The petitioner attempted to explain the source of the cash found in his letters to the income tax authorities. The returns filed on 08.09.2006 for the assessment years 1999-2000 to 2004-05 were accepted and assessments were completed under section 153A of the Act. There was no tax liability pursuant to the assessments.

Section 132B provides for the application of seized or requisitioned assets. Under sub-section (3), any assets or proceeds thereof which remain after the liabilities of the assessee are discharged, shall have to be ^{“forthwith made over or paid to the persons from whose custody the assets were seized”. Sub-section (4) provides for the payment of simple} interest at the rate of half percent every month or part thereof on the amount by which the aggregate amount of money seized under section 132, as reduced by the amount of money released to the assessee and the amount of the proceeds, if any, of the assets towards the discharge of the existing liability of the assessee, exceeds the aggregate of the amount required to meet the liabilities of the assessee. The interest shall run from the date immediately following the expiry of the period of 120 days from the date on which the last of the authorisations for the search was executed, to the date of completion of the assessment under section 153A of the Act. This interest is to be paid to the assessee without any demand from him. In the petitioner‟s case, there is no dispute that he is entitled to this interest. The dispute is only whether the petitioner is entitled to any interest on the seized cash of Rs. 6,63,800/- from the date on which the assessment was completed under section 153A of the Act i.e. 26.12.2006 till it was actually released to him on 24.05.2011, and if so, at what rate. It is common ground that in respect of this period, that is, from the day next following the completion of the assessment till the cash was actually released to the petitioner, no interest has been provided under section 132B(4) of the Act.