Court orders interest payment on delayed cash release, citing need to compensate for wrongful withholding.

The Court ordered the respondent to pay interest as compensation for the delayed release of seized cash, totaling Rs. 5,99,780, from 03.03.2018 to 23.12.2019 at a rate of 6% p.a. The petitioners' claim for compensation was upheld, citing precedents emphasizing the need to compensate for wrongful withholding of amounts. The Court referred to relevant judgments supporting the petitioners' position and directed the respondent to comply with the order. The writ petition was allowed, and no costs were awarded.

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Issues Involved:
1. Release of the remaining cash amount of Rs. 24,29,000.
2. Payment of interest on the released cash amount.
3. Compensation for delayed payment of the seized cash.

Detailed Analysis:

1. Release of the Remaining Cash Amount of Rs. 24,29,000:
The petitioners sought an order under Article 226 of the Constitution of India directing respondent no.3 to release the remaining cash amount of Rs. 24,29,000 as per the order dated 17.11.2020. The search at the residence of the petitioners was conducted on 31.10.2017 under Section 132 of the Income Tax Act, 1961, and Rs. 48,00,000 along with gold jewelry were seized. Despite the assessment orders passed on 23.12.2019 and 26.12.2019 assessing the income at nil, the respondents only released Rs. 23,71,000 on 17.11.2021, retaining the remaining amount unlawfully.

2. Payment of Interest on the Released Cash Amount:
The petitioners claimed interest at the rate of 6% p.a. from 03.03.2018 to 23.12.2019 and compensatory interest at the rate of 12% p.a. from 24.12.2019 till 01.12.2020 on the amount of Rs. 14,36,000 released on 17.11.2020. They also sought interest at the rate of 12% p.a. from 01.11.2017 to 01.12.2020 on the cash amount of Rs. 9,35,000 and from 01.11.2017 till final realization on Rs. 24,29,000. The petitioners argued that as per Section 132(B)(4)(a & b), they were entitled to interest since 120 days had expired on 02.03.2018. The respondents, however, contended that interest liability was only up to the date of the assessment order.

3. Compensation for Delayed Payment of the Seized Cash:
The petitioners argued that the respondents could not withhold the amount payable to them for alleged future liability and that any delay in payment should be compensated. They relied on judgments from the Delhi High Court and the Supreme Court, which held that in cases of wrongful withholding of amounts, the revenue must compensate the assessee. The Court agreed with the petitioners, noting that the respondents were responsible for the delay in releasing the cash and that compensation was warranted for the period beyond the assessment order.

Reasons and Conclusions:
The Court found that the respondents delayed releasing the cash amount seized from the petitioners and did not make the payment within the stipulated 120 days. The Court held that the principles laid down by the Supreme Court in Sandvik Asia Ltd. Vs. Commissioner of Income Tax-1, Pune, which recognized the need to compensate for wrongful withholding of amounts, applied to this case. The Court also referred to the Delhi High Court's judgments in Ajay Gupta Vs. Commissioner of Income Tax and G. L. Jain Vs. Commissioner of Income Tax, which supported the petitioners' claims for compensation.

Orders:
The Court directed the respondents to pay interest by way of compensation/damages for the period from 03.03.2018 to 23.12.2019 at the rate of 6% p.a., totaling Rs. 5,99,780, after giving credit for the interest already paid. The writ petition was allowed, and the rule was made absolute with no order as to costs.

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