Compensatory interest on seized cash may be awarded for wrongful retention beyond the statutory period.

Wrongful retention of seized cash beyond the statutory period under section 132B(4) can justify compensatory interest on restitutionary principles even where the statute specifies only the basic interest period. The Bombay High Court's approach, as noted here, is that completion of assessment does not bar relief if the revenue continues to hold money after liabilities are determined as nil and the assessee is not at fault. Strict construction of fiscal provisions does not exclude a separate claim for compensation for delayed release. The result is that interest may be awarded for the post-period delay to restore the assessee for the deprivation of funds.

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Issues: Entitlement to compensation or interest on seized cash retained beyond the assessment stage, despite the statutory interest period under section 132B(4) of the Income-tax Act, 1961 ending with completion of assessment.

Analysis: The seized cash remained with the revenue after expiry of the statutory period and after assessment orders had determined the liabilities as nil. The statutory scheme under section 132B(4) fixes the period for payment of interest, but it does not create a bar against awarding compensation where the revenue wrongfully withholds money beyond the time prescribed and the assessee is not at fault. The Court applied the restitutionary principle and followed the view that an assessee deprived of money due to delayed release by the revenue can be compensated for the subsequent period of delay. The revenue's reliance on strict construction of fiscal statutes did not answer the separate question of compensation for wrongful retention after the statutory period.

Conclusion: The petitioners were entitled to compensation by way of interest for the delayed period after the statutory interest period, and the revenue was directed to pay interest at 6% per annum for the quantified period.

Final Conclusion: Wrongful retention of seized cash after the statutory period justified compensation, and the writ petition succeeded with a direction to pay the quantified interest amount.

Ratio Decidendi: Where seized money is retained by the revenue beyond the period fixed by the statute and the assessee bears no fault for the delay, the court may award compensatory interest on restitutionary principles even if the statute itself specifies only the basic interest period.

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