Seized asset adjustment under tax law requires crystallised liability and statutory compliance before release or sale can be ordered.

Seized gold bars could not be released or sold for adjustment against tax liability before the assessment was completed under section 132B of the Income-tax Act. The provision allows seized or requisitioned assets to be applied only towards an existing liability or a liability determined on completion of assessment, and an existing liability means one already crystallised. The first proviso operates only where the assessee applies within time and satisfactorily explains the nature and source of acquisition to the Assessing Officer. As those conditions were not met, a direction to dispose of the asset outside the statutory framework was not warranted, and writ relief had to remain within the statute.

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Issues: Whether seized gold bars could be released or sold and the proceeds adjusted against tax liability before completion of assessment under section 132B of the Income-tax Act, 1961.

Analysis: Section 132B permits seized or requisitioned assets to be applied only towards existing liability or liability determined on completion of assessment, including assessment under section 153A or block assessment under Chapter XIV-B. The expression existing liability refers to a liability that has already crystallised, and the liability becomes determinable only upon completion of the assessment. The first proviso applies only where the assessee applies within time and satisfactorily explains the nature and source of acquisition of the asset to the Assessing Officer. In the present case, those conditions were not satisfied, and the request sought a course beyond the statutory framework. The Court also held that in exercise of writ jurisdiction, any direction regarding seized assets must remain within the confines of the governing statute.

Conclusion: The request for sale or release of the seized asset before crystallisation of liability was not maintainable, and the impugned rejection was upheld.

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