Kamal Kumar Khetawat Vs Union of India (Jharkhand High Court)
The Jharkhand High Court considered a petition that, after release of the seized cash of ₹9,00,000 during the pendency of proceedings, was confined to the claim for interest on the refunded amount. The search and seizure under Section 132 of the Income Tax Act took place on 30.04.2019/01.05.2019, and no assessment proceedings were initiated within 120 days. Referring to Section 132B(4), the Court held that interest at one-half per cent per month (6% per annum) was payable from the expiry of 120 days from 01.05.2019 until the refund on 05.06.2026. The Court observed that the absence of assessment could not be used by the Revenue to deny interest and stated that the Court’s jurisdiction under Article 226 was not precluded from awarding compensatory interest where refunds were unduly delayed despite no assessment. The Court rejected the contention that the pending vigilance reference justified withholding interest, directed payment of the interest within six weeks, and ordered that failure to do so would attract interest at 12% per annum. It also clarified that the vigilance proceedings could continue independently and would not be affected by the order.
Issue: Whether interest is payable on cash seized under Section 132 where no assessment proceedings are initiated and the seized amount is refunded after several years?
