Seized cash release under Section 132B requires assessment officer's liability determination before 120-day timeline triggers

The HC held that the second proviso to Section 132B mandating release of seized assets within 120 days applies only after the AO determines liability and assesses the nature and source of acquisition. Since the AO had not decided the petitioners' application for release of cash seized from bank lockers, the second proviso was not triggered. The court noted petitioners had disclosed the cash before seizure but rejected automatic release after 120 days. The HC directed authorities to decide the application within four weeks through reasoned order, stating refund with interest must follow if source is satisfactorily explained.

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Issues:
1. Seizure of cash from bank locker
2. Application for release of seized cash
3. Interpretation of Section 132B of the Income Tax Act
4. Mandatory nature of second proviso of Section 132B
5. Legal precedent on release of seized assets
6. Assessment order timeline under Section 153B

Analysis:

1. The petitioners filed a writ petition seeking the release of illegally seized cash amounting to Rs. 34,02,005 from their bank locker. They had previously disclosed the cash in their lockers to the respondent before the seizure.

2. The petitioners applied for the release of the cash within 30 days of seizure, explaining the source of acquisition. However, the respondent did not pass any orders on the application, leading to the filing of the writ petition by the petitioners for the refund of the seized cash.

3. The contention was made under Section 132B of the Income Tax Act, focusing on the first and second provisos. The second proviso mandates the release of seized assets within 120 days from the date of authorization under Section 132 or requisition under Section 132A.

4. Legal precedent from various High Courts was cited to support the mandatory nature of the second proviso to Section 132B. The judgments emphasized that assets must be released if the application is not decided within 120 days.

5. The respondent argued against the writ petition, citing a different interpretation of the second proviso based on a judgment from the Allahabad High Court. The Allahabad High Court held that the provision does not stipulate automatic release and that interest liability on the Central Government is incurred after 120 days.

6. The High Court analyzed the provisions of Section 132B and concluded that the second proviso is mandatory but only applicable after the Assessing Officer determines the liability and source of acquisition. Since the Assessing Officer had not decided on the application, the second proviso did not come into play.

7. The judgment highlighted the need for the Assessing Officer's determination before the second proviso applies. The court directed the authorities to decide on the application within four weeks and refund the amount with interest if the petitioners satisfy the source of the cash.

8. Ultimately, the writ petition was disposed of, with the court emphasizing the importance of timely assessment and determination of liabilities under the Income Tax Act.

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