HIGH COURT OF MADHYA PRADESH
Om Prakash Agrawal
Union of India
W.P. No. 6094 OF 2008
NOVEMBER 5, 2012
1. Petitioner has sought following reliefs:-
“A. The Hon’ble Court may be pleased to direct the respondent to release the cash of Rs. 60,000/- which was seized during the course of search on 13.12.02 alongwith interest as provided u/s 132(B) of the Income Tax Act.
B. Any other relief, which this Hon’ble Court deems fit, may also be granted.Online GST Certification Course by TaxGuru & MSME- Click here to Join
C. Costs of the petition.”
Facts of the case are:-
2. That a search was conducted in the premises of the petitioner on 12.12.2002 under the warrant of authorisation dated 12.12.2002. During the search, a cash amount of Rs. 60,000/- was seized from the premises of the petitioner on 13.12.2002. The assessment proceedings took place and ultimately on 27.12.2004, an assessment order was passed by the respondent no. 3 by which it was found that the petitioner was liable to make payment of tax to a tune of Rs. 1,77,749/-. An appeal against this order was filed, which was allowed by the Commissioner of Income Tax (A-I), Jabalupr on 15.12.2005, by which all the additions which were made by the respondent No. 3 were deleted and no liability on the petitioner was found. Meaning thereby that immediately after 15.12.2005, the petitioner was entitled for refund of the amount which was seized during search and seizure.
3. Thereafter, petitioner moved various applications to the respondents for refund of the amount alongwith interest. On 6.9.2006, an order was passed by the Assistant Commissioner of Income Tax Circle-1(1), Jabalpur by which the appellate order was to be given effect to.
4. As no action was taken by the respondents for refund of the aforesaid amount, the petitioner filed this petition on 13.5.2008 claiming aforesaid relief and during pendency of this petition, the seized amount Rs. 60,000/- has been refunded to the petitioner on 31.7.2008. Now only question remains in respect of payment of interest on the seized amount as per provisions of Section 132(B) (4)(a)(b) of the Income Tax Act, 1961.
The learned counsel for petitioner submitted that petitioner is entitled for statutory interest from the date of seizure till the date the aforesaid amount was refunded. As per statement made by the respondents, a cheque has been issued by the respondents. The petitioner submitted that the aforesaid cheque has not been received by the petitioner till this time. It is submitted that the petitioner is entitled for the statutory interest on the aforesaid amount from the date of seizure till its payment to the petitioner. The petitioner also prays for interest on the amount of interest which fell due on 31.7.2008 from the respondents.
Shri Sanjay Lal, learned counsel appearing for department opposed the aforesaid contentions and submitted that as per provisions of Section 132(B)(4)(a)(b) of the Act, petitioner was entitled for interest immediately after 120 days till date of assessment order and not thereafter which amount has been calculated and paid to the petitioner. That after payment of Rs. 6,300/-, the department is not liable to make any further amount to the petitioner. This contention is opposed by the petitioner who has submitted that not only aforesaid amount but also interest till 31.7.2008 and thereafter interest on the amount of interest, petitioner is entitled as per aforesaid provisions.
5. To appreciate aforesaid contentions, we have perused the relevant provisions. For ready reference, sub-section (4) of section 132B of the Income Tax Act, 1961 is referred which reads thus:-
Section 132B. Application of seized or requisitioned assets:
(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 provision 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 last of the authorisations for search under section 132 or requisition under Section 132A was executed to the date of completion of the assessment under section 153A or under Chapter XIV-B.
From the perusal of the aforesaid provisions, it is apparent that after the assessment order is passed, the assessee is entitled not only for the refund but also simple interest on the amount as has been provided under sub-section 4(a) and (b) of the Act. Sub-section 4(b) provides that 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 was executed to the date of completion of the assessment. The assessment proceedings were completed by an order passed by the CIT(A) in Appeal on 15.12.2005, the petitioner was entitled for refund of aforesaid amount alongwith interest forthwith, but it appears that aforesaid amount was not paid and the petitioner was compelled to file a writ petition before this Court and during pendency of the petition, the amount was paid on 31.7.2008 and the interest has been directed to be paid to the petitioner. But when the amount was due to be refunded on 15.12.2005 and it was not refunded to the petitioner within a reasonable period, petitioner was entitled for interest on the aforesaid amount. As per provisions as are contained in sub-section (4) of Section 132 of the Act, it was liability of the authority to give effect to the order and to make payment of aforesaid amount forthwith. There is no provision in the Act requiring the petitioner to move an application to the authority for giving effect to the order. When the order was passed in appeal and in absence of any challenge to the order, the competent authority was under an obligation to give effect to the order. A citizen cannot be deprived of his money when he is not liable to pay the revenue and if the money of a citizen/assessee has been retained by the department, the department/Central Government is liable to make payment of interest as is provided under sub-section (4) of Section 132B of the Act.
In view of aforesaid, this petition is finally disposed of with following directions:-
(1) Respondents are directed to calculate the statutory interest on the amount of Rs. 60,000/- immediately after 120 days from the date of seizure i.e. 13.12.2002 till its refund to the petitioner and the aforesaid amount be paid to the petitioner within a period of 60 days from today. In case any amount towards interest has been refunded to the petitioner, that amount shall be deducted from the aforesaid amount. In case, aforesaid amount is not paid within a period of 60 days, petitioner thereafter shall be entitled for interest on the aforesaid amount also at the rate of 6% per annum till its actual payment to the petitioner.
(2) Considering the fact that inspite of request by the petitioner to the respondent authorities, neither the petitioner was refunded the amount nor interest was paid, and during pendency of the this petition, aforesaid amount has been paid, we direct the respondents to pay costs of this petition, which we quantify to Rs. 10,000/- payable by the respondents to the petitioner.