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

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HIGH COURT OF DELHI AT NEW DELHI

Judgment delivered on: 12.03.2013

W.P.(C) 7551/2012

S. K. JAIN

versus

COMMISSIONER OF INCOME TAX
 

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.
In an identical situation, this Court in its order dated 28.08.2012 in W.P. (C) No.876/2012 (supra) has directed the revenue to grant interest @ 12%. In that case certain amounts had been returned to the petitioner (in that case) and accordingly adjustments were directed to be made in respect of those payments while quantifying the amount on which the interest was directed to be paid. However, so far as the period for which the interest was payable to the petitioner in that case is concerned, there is no dispute that the direction of this Court was that it should be paid from the day next following the day on which the assessment was completed till the amount was actually released to the petitioner. Interest was directed to be paid @ 12% in respect of this period on varying amounts as quantified in paragraph 19 of the order.
. In the result, we hold that the petitioner is entitled to be paid interest @ 12% in respect of the amount of Rs. 6,33,800/- for the period from 27.12.2006 to 24.05.2011 and a writ of mandamus directing the payment of the interest is accordingly issued. The respondent shall pay the interest within a period of six weeks from today.