Mandatory time limit for release of seized cash under tax law was breached, requiring release with interest.

Section 132B(1)(i) permits seizure to be adjusted against liabilities, but its provisos require timely consideration of a release application and release where the assessee explains the nature and source of the assets to the Assessing Officer's satisfaction. The further proviso's 120-day limit for release of seized assets is a mandatory safeguard, not a directory guideline, because treating it otherwise would permit indefinite retention of property. As the release application was filed within time but decided more than one year later, the Assessing Officer failed to act within the prescribed period, and the impugned order was unsustainable; the seized cash had to be released with interest as per law.

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Issues: Whether the Assessing Officer was bound to decide the application for release of seized cash within the time prescribed in the further proviso to section 132B(1)(i), and whether failure to do so required release of the cash.

Analysis: Section 132B(1)(i) permits seized assets to be adjusted against existing liabilities and liabilities determined on assessment, but the first proviso allows release where the application is made within time and the nature and source of acquisition are explained to the satisfaction of the Assessing Officer. The further proviso requires release of such asset or portion thereof within 120 days from execution of the last authorisation. The time limit cannot be treated as directory, for that would allow indefinite retention of seized assets and dilute the statutory safeguard. Since the application for release was made within time but was decided more than one year later, the Assessing Officer failed to act within the prescribed period.

Conclusion: The impugned order was unsustainable, and the seized cash had to be released in favour of the petitioner with interest as per law.

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