Case Law Details
DECIDED BY: HIGH COURT OF ALLAHABAD, IN THE CASE OF: Gopal Das Khandelwal Vs. Union of India, APPEAL NO: Civil Misc. Writ Petition No. 1654 of 2006, DECIDED ON March 30, 2010
________JUDGMENT_______
All the five petitioners of this writ petition are related to one another.
A search and seizure under Section 132 of the Income Tax Act, 1961 (hereinafter referred to as an Act) was conducted on 9.5.2003 and 24.5.2003 on the business and the residential premises of respondent no. 5 Purshottam Das Khandelwal who happened to be the proprietor of the firm M/S Suraj Bhan Purshottam Das engaged in money lending business. During the aforesaid search jewellery worth Rs. 34.33 lakhs was seized. Respondent no. 5 on 16.9.2003 applied for release of the aforesaid seized jewellery on the ground that the same belonged to third parties and was in custody of the firm as pawned articles. The Commissioner of Income Tax (Central) Kanpur vide order dated 7.11.2003 directed the assessing authority to release the same on Bank Guarantee of Rs. 34,00,000/- for a period of one year subject to renewal. Respondent no.5 offered certain fixed deposits of the petitioners which were with the respondent no. 4, as security for furnishing Bank Guarantee. Respondent no. 4 Bank on the basis of the aforesaid fixed deposits belonging to the petitioners executed a deed of guarantee on 22.11.2003 in favour of the Commissioner of Income Tax (Central) Kanpur for an amount not exceeding Rs. 34,00,000/- for a period of one year only expiring on 21.11.2004 in respect of liability of direct tax arising out of relevant assessment proceedings concerning block assessment only. The period of the aforesaid guarantee was extended by one another year expiring on 21.11.2005. No extension or any fresh guarantee was given thereafter. Respondent no.5 was subjected to block assessment under Section 158 BC of the Act vide order dated 30.5.2005 and a tax liability of Rs. 8,82,236/- was determined. The assessing authority accordingly vide notice dated 19.9.2005 issued under Section 226 (3) of the Act directed the Bank to pay the aforesaid amount of tax with interest, total amounting to Rs.9,08,702/- as part of the Bank Guarantee furnished by it. A sum of Rs. 10,08,476/- by encashing some of the fixed deposits was accordingly paid to respondents no. 2 and 3. Thereafter without any further demand of any tax, the Commissioner of Income Tax (Central) Kanpur on 18/21.11.05 issued directions under Section 281B/226(3) of the Act to the Bank for the attachment of the remaining fixed deposits under the Bank Guarantee to the extent of the balance amount of Rs. 24,91,298/-. The request of the petitioners in writing to release the fixed deposits on the expiry of the period of guarantee was not considered. Ultimately, on 1.11.06 the said amount was released by the Bank in favour of the Commissioner of Income Tax (Central) Kanpur after encashing the remaining fixed deposits of the petitioners in view of the penalty order dated 18.10.2006 imposing penalty of Rs. 22,36,172/- upon respondent no. 5. The petitioners are aggrieved by the encashment and release of the fixed deposits aforesaid. It is in the above back-drop that the petitioners have invoked writ jurisdiction of this Court for issuance of the following directions:-
“(i) a suitable writ, order or direction in the nature of mandamus directing the Assessing Officer, respondent no.3 to forthwith refund the amount of the STDRs/FDRs to the petitioners, encashed and paid by the State Bank of India, Aonla Branch, Bareilly to the Income Tax Department on 1.11.2006 together with the interest at the rate of 15% per annum from 22.11.2005 upto the date of the payment of the said refund to the petitioners.
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