12% Interest Granted on Seized Amount Under Income Tax Act

The court granted the petitioner interest at 12% on the seized amount from 2006 to 2011 under section 132B(3) of the Income Tax Act, following a Division Bench order and the Supreme Court's precedent in Sandvik Asia Ltd. v. CIT & Ors. The court upheld the interest entitlement despite revenue's objections, issuing a writ of mandamus for payment within six weeks.

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Issues:
1. Release of seized cash and interest entitlement under section 132B(3) of the Income Tax Act, 1961.

Analysis:
The petitioner, assessed to income tax, had cash seized during a search under section 132(1) of the Act. The petitioner sought release of the seized cash, explaining its source to the income tax authorities. Assessments were completed under section 153A with no tax liability. Despite requests, the cash was not released due to uncertainty about its source until the assessment for the year 2005-06. The Tribunal later determined the cash belonged to another entity, resulting in nil tax demand for the petitioner.

Following subsequent appeals and court orders, the seized amount was eventually released to the petitioner. However, the petitioner sought interest under section 132B(3) for the delay in releasing the cash. The petitioner moved a writ petition seeking interest on the seized amount from the completion of the assessment in 2006 until its release in 2011, citing relevant provisions of the law.

The petitioner relied on a Division Bench order directing interest payment at 12% beyond the assessment completion date, following the Supreme Court's judgment in Sandvik Asia Ltd. v. CIT & Ors. The court analyzed section 132B, which mandates interest payment without demand to the assessee. The court determined the petitioner's entitlement to interest at 12% on the seized amount for the period in question, as per the precedent set in a similar case.

The revenue argued against the interest payment based on a subsequent Supreme Court case, but the court upheld the earlier judgment's validity. Consequently, the court granted the petitioner interest at 12% on the seized amount from 2006 to 2011, issuing a writ of mandamus for the payment within six weeks. The writ petition was allowed with no costs incurred.

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