Section 132(5) proceedings lapse after regular assessment, and a bank guarantee cannot be insisted on for release of seized assets.

Proceedings under section 132(5) of the Income-tax Act, 1961 are summary in nature and remain subordinate to the regular assessment. Once the regular assessment is completed, those proceedings cease to have justification and cannot be relied on to insist on a bank guarantee for release of seized assets. Any lawful tax recovery must thereafter proceed under Schedule II of the Act. The demand for a bank guarantee was therefore unsustainable, and release of the seized goods was directed in favour of the assessee.

---

---

Issues: Whether proceedings under section 132(5) of the Income-tax Act, 1961, survived after completion of regular assessment, and whether the Department could insist on a bank guarantee for release of the seized goods.

Analysis: Proceedings under section 132(5) are summary and remain subject to the regular assessment. Once the regular assessment is completed, those summary proceedings cease to have justification. In that situation, the Department cannot demand a bank guarantee of Rs. 20 lakhs for release of the seized assets. Recovery of any lawful tax dues, if due, has to be pursued in accordance with Schedule II of the Income-tax Act, 1961.

Conclusion: The demand for a bank guarantee was unsustainable and the order was set aside. The relief for release of the seized goods was granted in favour of the assessee.

Final Conclusion: The writ petition succeeded, and the seized goods were directed to be released.

Ratio Decidendi: After completion of regular assessment, proceedings under section 132(5) of the Income-tax Act, 1961, being summary in nature, lapse and cannot be used to justify a demand for bank guarantee for release of seized assets.

---