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of <h1>Court orders release of seized cash to petitioner due to Assessing Officer's failure to meet statutory time limits</h1> <h3>Nadim Dilipbhai Panjvani Versus Income Tax Officer Ward-3, Or His Sucessors To Office</h3> The court ruled in favor of the petitioner, finding that the Income Tax Department's seizure of cash was lawful but emphasized the mandatory nature of ... Seizure of Cash - Statutory time limit provided in sub-section (1) of Section 132B - whether the petitioner was able to satisfy the source of the asset? - Held that:- The Courts attach considerable importance to the time frame provided under Sections 132A and 132B of the Act when it comes to a question of retention of books of accounts or of seized assets. We cannot read the time limit provided in further proviso to Clause (i) of sub section (1) of Section 132B of the Act as being merely directory. Any such view would substantially water down the rigors of the statutory provisions and would give an unlimited authority to the Assessing Officer to retain the seized assets awaiting finalization of future possible liability for indefinite period without deciding the application of the person concerned who may be perfectly legitimately in a position to explain the source of the asset so seized. Facts, noted above, are rather glaring. The application of the petitioner for the purpose of releasing of the seized asset, which was made on 17.04.2014, came to be decided only on 20.07.2015 i.e. over one year later. In the meantime, the petitioner had sent two reminders. Action of the Assessing Officer cannot be countenanced. Impugned order dated 20.07.2015 is set aside. The seized cash shall be released in favour of the petitioner alongwith interest as per the statute. Issues Involved:1. Legality of the seizure of cash by the Income Tax Department.2. Compliance with statutory time limits under Section 132B of the Income Tax Act, 1961.3. Satisfaction of the source of the seized asset.4. Application of judicial precedents.Issue-wise Detailed Analysis:1. Legality of the Seizure of Cash by the Income Tax Department:The petitioner was intercepted by police while carrying cash of Rs. 20,07,000/- during the election period. The police, after determining the cash was unrelated to the election, informed the Income Tax Department, which seized the cash on 25.03.2014. The petitioner claimed the cash belonged to a friend and sought its release. The Income Tax Department's action of seizing the cash was within its jurisdiction following the police's referral.2. Compliance with Statutory Time Limits under Section 132B of the Income Tax Act, 1961:The petitioner applied for the release of the seized cash on 14.04.2014, which was filed on 17.04.2014. Despite reminders, the decision was made only on 20.07.2015, well beyond the statutory 120-day period stipulated in the further proviso to Clause (i) of sub-section (1) of Section 132B. The court emphasized that the time limit for the release of assets is mandatory, not merely directory. The failure of the Assessing Officer to decide within the prescribed period necessitates the release of the asset.3. Satisfaction of the Source of the Seized Asset:The respondent authority rejected the petitioner's application for release on the grounds that the petitioner failed to satisfactorily explain the source of the cash. The court, however, chose not to delve into this disputed question, focusing instead on the statutory time limit issue. The court held that if the Assessing Officer does not decide within the stipulated time, the asset must be released regardless of the source explanation.4. Application of Judicial Precedents:The court referred to the case of Mitaben R. Shah vs. Deputy Commissioner of Income Tax and anr., where it was held that assets must be released within the statutory period, failing which the retention is unlawful. Additionally, the court cited Cowasjee Nusserwanji Dinshaw vs. Income Tax Officer, reinforcing the importance of adhering to statutory time limits for retaining seized assets. The court concluded that the Assessing Officer's delayed decision violated statutory provisions, mandating the release of the seized cash along with interest.Conclusion:The court set aside the impugned order dated 20.07.2015 and directed the release of the seized cash to the petitioner, along with statutory interest. The petition was disposed of with this direction.
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