Rajasthan High Court
Kawaljeet Kaur Wife Of Late Shri Surjeet ... vs Deputy Director Of Income Tax ... on 21 August, 2024
Bench: Pankaj Bhandari, Praveer Bhatnagar
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HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Writ Petition No. 5706/2024
1. Kawaljeet Kaur Wife Of Late Shri Surjeet Singh Sethi,
Resident Of C-35, Anand Vihar, Railway Colony,
Jagatpura, Jaipur
2. Anandeep Singh Sethi, Son Of Late Shri Surjeet Singh
Sethi, Resident Of C-35, Anand Vihar, Railway Colony,
Jagatpura, Jaipur
----Petitioners
Versus
Deputy Director Of Income Tax (Investigation-3), Jaipur Having
Its Address At New Central Revenue Building, Statue Circle,
Bhagwan Das Road, Jaipur
----Respondent
For Petitioner(s) : Mr. Siddharth Ranka, Adv.with
Ms. Apeksha Bapna, Adv.
For Respondent(s) : Mr. Siddharth Bapna, Adv.with
Mr. Meyhul Mittal, Mr. Sarvesh Jain
HON'BLE MR. JUSTICE PANKAJ BHANDARI
HON'BLE MR. JUSTICE PRAVEER BHATNAGAR
Order
Reportable
21/08/2024
1. Petitioners have preferred this writ petition inter alia
praying that the illegally seized cash in hand of Rs.34,02,005/- be
released.
2. Succinctly stated, the facts of the case are that an
amount of Rs.34,02,005/- was seized by the respondent from the
bank locker belonging to the petitioners. After the seizure,
petitioners applied within 30 days explaining their source of
acquisition of such assets and prayed for release of money.
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Petitioners had disclosed to the respondent about the cash in their
lockers prior to the seizure vide letters dated 17.01.2023 and
21.08.2023. The seizure took place on 21.09.2023. Petitioners
had filed application on 09.10.2023 and 06.11.2023 before the
authorities for release of the cash, however, the respondent has
not passed any orders on the same. Consequently, the petitioners
were forced to file the present writ petition claiming refund of the
cash seized by the respondent.
3. It is contended by Mr. Siddharth Ranka, Advocate
appearing for the petitioners that under Section 132B of the
Income Tax Act (for short 'the Act'), in the first proviso, it is
mentioned that where the person concerned makes an application
to the Assessing Officer within thirty days from the end of the
month in which the asset was seized, for release of asset and the
nature and source of acquisition of any such asset is explained to
the satisfaction of the Assessing Officer, the amount of any
existing liability referred to in this clause may be recovered out of
such asset and the remaining portion, if any, of the asset may be
released, with the prior approval of the [Principal Chief
Commissioner or] Chief Commissioner or [Principal Chief
Commissioner or] Commissioner, to the person from whose
custody the assets were seized. It is contended that the second
proviso is mandatory in nature as the same provides that such
asset or any portion thereof as is referred to in the first proviso
shall be released within a period of one hundred and twenty days
form the date on which the last of the authorizations for search
under Section 132 or for requisition under Section 132A, as the
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case may be, was executed. It is argued that since there is a
mandate provided under second proviso to Section 132B of the
Act, the cash should have been released after the expiry of 120
days from the date of authorization under Section 132 or
requisition under Section 132A of the Act.
4. Counsel for the petitioners has placed reliance on M/s
Harish Forex Services Pvt. Ltd. vs. Assistant Director of
Enforcement D.B. Civil Writ Petition No.14857/2022 decided
by the Division Bench of this Court on 03.01.2024, wherein
Division Bench has held that the second proviso to Section 132B
of the Act is mandatory in nature and the respondents in that case
were directed to pass orders for release of the assets pursuant to
the search conducted within four weeks. Counsel has also placed
reliance on Mitaben R. Shah Vs. DCIT 2010 (2) TMI 684
(Gujarat High Court), Ashish Jayantilal Sanghavai (Prop. Of
M/S Vir Impex) Vs. ITO 2022 (4) TMI 1285 (Gujarat High
Court), Khem Chand Mukim Vs. Pr. Director of Income Tax
(Inv.) 2020 (1) TMI 1114 (Delhi High Court), wherein High
Courts have held that the second proviso to Section 132B of the
Act is mandatory in nature and the assets seized have to be
released if the application is not decided within 120 days.
5. Counsel appearing for the respondent- Mr. Siddharth
Bapna has opposed the writ petition. It is contended that second
proviso to Section 132B of the Act was considered by the Division
Bench of Allahabad High Court in Dipak Kumar Agarwal Vs.
Assessing Officer: [2024] 298 taxman 578 (Allahabad),
wherein it has been held that the provisions does not stipulate any
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consequence of automatic release. It was also held that under
Section 132B(4)(b) of the Act, the Central Government is liable to
pay interest after the expiry of 120 days. On this ground, it is
argued by Mr. Siddharth Ranka- counsel for the petitioners that
there is no mandate to return the assets to the assessee and if the
assets are not returned, there is liability on the Central
Government to pay interest for the delay in refund or release of
the assets seized. It is also argued by counsel for the respondent
that under Section 153B of the Act, for any seizure made, an
assessment order has to be made within a time bound manner as
fixed by the statute.
6. We have considered the contentions.
7. Relevant provision of the Act pertaining to the present
matter reads as under:-
Section 132B: Application of seized or requisitioned
assets.
"[Provided that where the person concerned makes an
application to the Assessing Officer within thirty days from the
end of the month in which the asset was seized, for release of
asset and the nature and source of acquisition of any such
asset is explained] to the satisfaction of the Assessing Officer,
the amount of any existing liability referred to in this clause
may be recovered out of such asset and the remaining
portion, if any, of the asset may be released, with the prior
approval of the [Principal Chief Commissioner or] Chief
Commissioner or [Principal Chief Commissioner or]
Commissioner, to the person from whose custody the assets
were seized:
Provided further that such asset or any portion thereof as is
referred to in the first proviso shall be released within a period
of one hundred and twenty days from the date on which the
last of the authorisations for search under section 132 or for
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requisition under section 132-A, as the case may be, was
executed;
(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 132-A, as reduced by the amount of money, if any,
released under the first proviso 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 the last of the authorisations for
search under section 132 or requisition under section 132-A
was executed to the date of completion of the assessment [or
reassessment or recomputation.
8. A bare perusal of Section 132B of the Act, the first
proviso and second proviso would reveal that the second proviso
would come into play only when an application is made to the
Assessing Officer and the Assessing Officer is satisfied that such
asset or part of the asset after recovering the liability may be
released with prior approval of appropriate authorities to the
person from whose custody the assets were seized. Thus, for
applying the second proviso, there has to be some satisfaction of
the Assessing Officer. This clearly goes to show that once the
Assessing Officer has arrived at a satisfaction with regard to the
existing liability and with regard to the return of the assets, then
the second proviso would apply and the assets or part of the
assets as the case may be shall be released within a period of 120
days. Thus, the second proviso is mandatory and the same would
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come into play only after the satisfaction of the Assessing Officer
and the determination by him and after approval of the
appropriate authorities.
9. In the present case in hand, the application was filed
within thirty days before the Assessing Officer, but the Assessing
Officer has not passed any order with regard to the liability or with
regard to the return of the assets. Thus, the second proviso would
not come into play. Further, the first proviso does not give any
time line and the second proviso is applicable only when there is
an assessment by the Assessing Officer.
10. As far as factual aspects of the case are concerned, it is
not disputed that the seizure was made on 21.09.2023 and an
application for release of the cash seized from the lockers of the
petitioners was made on 09.10.2023 and 06.11.2023, which have
not been decided by the respondent. Thereafter, prior to the
seizure by the respondent, the petitioners vide letters dated
17.01.2023 & 23.08.2023 had disclosed that their bank lockers
were having cash to the tune of around Rs.37 lac.
11. As to whether the second proviso to Section 132B of
the Act should be considered to be mandatory and whether the
assets seized have to be released after the expiry of 120 days,
came up for consideration before the Division Bench of this Court
in Harish Forex Services Pvt. Ltd. (supra) and the Division Bench
held that the provision is mandatory and the assets have to be
released after the expiry of 120 days. Similar controversy arose
before the Division Bench of Allahabad High Court in Dipak Kumar
Agrawal (supra) and the Allahabad High Court held that the
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second proviso to Section 132B is not mandatory as in absence of
statutory intent shown to exist, it may not be inferred through the
process of legal reasoning-that if no order is passed within a
period of 120 days, seized assets must be released
notwithstanding its impact on the recovery of existing and likely
demands. Division Bench of Allahabad High Court has dealt with
the judgments given by Gujarat High Court and has not
subscribed to the reasoning given by Gujarat High Court and
Gauhati High Court. Division Bench of Allahabad High Court held
that the provision does not stipulate any consequence of
automatic release as the assets would first have to be invoked by
the assessee by filing a proper application, then if conditions are
fulfilled, an order recording that satisfaction may be passed. It is
for that purpose a timeline of 120 days is contemplated on a non-
imperative basis. In the event of delay in making the decision, the
revenue has been saddled with interest liability @ 18 % per
annum. The Allahabad High Court also held that there was no
statutory boundation for releasing all the assets and as the
Government has been saddled with interest, the consequence
would be that if the assets are not released within 120 days, then
interest would be payable under Section 132B(4)(a) & (b) of the
Act.
12. In none of the judgments cited by counsel for the
petitioners- Mr. Siddharth Ranka, Section 132B (4)(a) & (b) of the
Act have been dealt with.
13. We are of the considered view that second proviso to
Section 132B of the Act would apply only after the Assessing
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Officer has determined the liability and has come to the conclusion
that the nature and source of acquisiton has been explained by
the person concerned. In the present case, since the Assessing
Officer has not decided the application, the second proviso to
Section 132B of the Act would not come into play. We are of the
considered view that the second proviso is mandatory, however,
this will come into play only when the Assessing Officer has
determined the liability. The purpose behind the proviso was that
after determination of the liability, the assets and goods should
not be retained by the department.
14. Division Bench of this Court in the judgment of Harish
Forex Services Pvt. Ltd. (supra), has not discussed
Section 132B (4)(a) & (b) of the Act and on bare reading of the
proviso to Section 132B, the same was held to be mandatory. The
said judgment is per incuriam as provisions of Section 132B (4)(a)
& (b) of the Act has not been dealt with by the Division Bench.
Division Bench in Harish Forex Services Pvt. Ltd. (supra) has also
not considered the fact that second proviso has been made
subject to the first proviso.
15. We are of the considered view that the judgment of the
Allahabad High Court has dealt with Section 132B (4)(a) & (b) of
the Act and has rightly come to the conclusion that the second
proviso to Section 132B of the Act does not contemplate
automatic release on expiry of 120 days.
16. Consequently, the prayer of the petitioners for refund
of the amount cannot be granted. However, since cash has been
recovered from Bank locker and even prior to recovery, petitioners
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have informed the income tax authorities about cash lying in
locker, we deem it proper to direct the authorities to decide the
application of the petitioners within four weeks from the date of
receipt of this order by a reasoned and speaking order after
hearing the petitioners. It goes without saying that if the
petitioners are able to satisfy their source, the amount has to be
refunded with interest as provided under Section 132B (4)(a)& (b)
of the Act.
17. In view of the above, the writ petition is accordingly,
disposed. All pending applications stand disposed.
(PRAVEER BHATNAGAR),J (PANKAJ BHANDARI),J
CHANDAN /53
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