2010 (4) TMI 766

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....he petitioner. The block assessment for the period 1989-90 to 1999-2000 was completed under section 158BC of the Income Tax Act, 1961 on 22.12.2000. A sum of Rs.12,87,660/= was determined as amount of tax payable by the petitioner. The said tax liability was adjusted from and out of the monies seized from the petitioner. The balance of Rs.4,62,340/= was refunded to the petitioner on 4.4.2001. The petitioner prayed for interest vide his representation dated 17.4.2001 invoking the provision under section 132B of the Income Tax Act. The respondent passed the impugned order dated 16.6.2001 rejecting the claim of interest made by the petitioner. It is submitted by the petitioner that as the Department had the benefit of the money of Rs.4,62,340/....

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....rise only when the respondent had to deal with the money seized in the search which was held prior to 1st July 1995. As the search was held on 4.2.1998 under section 132 of the Income Tax Act in the residential and business premises of the petitioner, the question of payment of interest as adumbrated under section 132B(4)(a) and (b) would not arise. It is his further submission that the provision under section 158BC(d) stipulates that the assets seized under section 132 shall be dealt with in accordance with the provisions of section 132B. The provision under section 132BH speaks about the application of other provisions of the Income Tax Act with respect to the assessment made under Chapter XIV-B except as otherwise provided in the said ch....

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....ter on introduced to the Income Tax Act, 1961. Admittedly, the search in the residential and business premises of the petitioner was conducted under section 132 of the Income Tax Act on 4.12.1998. It is true that the respondents retained an excess amount till the order of assessment was passed under section 158BC read with section 143(3) of the Income Tax Act.   7. A new Chapter viz., XIV-B to deal with the procedure for assessment of search cases was inserted by the legislature by the Finance Act, 1995 with effect from 1.7.1995. Section 158BA (1) would read that where a search is initiated under section 132 after the 30th July 1995, the Assessing Officer shall proceed to assess the undisclosed income in accordance with the provisio....

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....lity found during the block period after the search and seizure was made under section 132 of the Income Tax Act. The major part of the amount seized during the search by the authority of the Income Tax Department was adjusted towards the tax liability of the petitioner. A small portion viz., a sum of Rs.4,62,340/= was refunded to the petitioner after making adjustment of the major portion of the amount seized by the Department from the petitioner. Therefore, the question of applying the general law for payment of interest on the amount excessively retained by the Department beyond the cut off date viz., 1.7.1995 contemplated under the provision of section 132(5) of the Income Tax Act does not arise for consideration.   11. The lear....