TaxTMI 
TaxTMI 
2011 (1) TMI 1171
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....or lower price and sells at higher price and makes his profit. The shares held by him accordingly form part of the working capital of his business without retaining liquid cash. According to him, in the nature of business of a stock broker, such shares are equivalent to cash since the amounts are realized within 10 days of sale. (a) There was a search and seizure conducted by the Income-tax Department in the office and residential premises of the petitioner on July 15, 1992, and during the course of the said operation, cash, shares and jewellery were seized from the.petitioner and his family members and also shares and debentures in the form of documents kept on behalf of the clients were also seized. The market value of the shares seized from the residential premises of the petitioner on the date of seizure amounts to Rs.107 lakhs and the value of shares seized from the office amounts to Rs.36 lakhs and in addition to that, certain jewellery and cash were also seized from the residential house. (b) As per the provisions of section 132 of the Income-tax Act, when the Department enters into residential and office premises of the assessee and seizes the books of accou....
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....was filed on February 2, 1993, before the Commissioner of Income-tax for release of the seized shares. (e) According to the petitioner, the shares are equivalent to money for the purpose of business. However, the Income-tax Department did not release the shares, while disposing of the application under section 132(5) of the Income-tax Act. It was after prolonged representations, the Depart- ment having realized that the retention of the said assets were needed for adjusting any possible tax liability, released the shares on various dates, viz., March 16, 1993, June 3, 1993, February 4, 1994, February 10, 1995, November 27, 1996, and January 24, 1997. The market values of the shares of the petitioner and his family members represented Rs. 49,50,732, Rs.24,16,174, Rs. 5,53,455, Rs. 1,22,200, Rs. 2,15,000 and Rs. 25,08,439 totalling a sum of Rs. 1,07,66,000. (f) On September 5, 1994, the petitioner and his brothers filed an application before the Settlement Commission for settlement of cases relating to the assessment years 1991-92, 1992-93 and 1993-94. The Settlement Commission passed an order on January 23, 1995, under sec- tion 245D(1) of the Income-tax Act, thereby....
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.... income-tax authorities returned the shares after coming to a conclusion that the reten- tion of shares is not needed for adjustment against the possible tax liability and, therefore, it should be treated as "money" and under section 132B(4) of the Income-tax Act the Central Government is bound to pay interest at 15 per cent per annum. In the absence of the definition of the word "money" under the Income-tax Act by referring to the term under the Corpus Juris Secundum, it is his submission that the true meaning of "money" should be construed taking into account the context and, there- fore, the word has got more than one meaning to be interpreted and in the context of the present case, according to the learned counsel, the term, "money" cannot be restricted to the word "cash". 5. On the other hand, Mr. T. Narayanasamy, learned counsel for the respondents would submit that under the taxation law, one has to construe the terms of the provisions of the Act strictly as per the terms and there is no scope for going beyond the words of the statute. According to the learned counsel, when section 132B(4) of the Income-tax Act makes it abundantly clear that the amount of interest pa....
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....e Commissioner of Income-tax reported that the application was suitable for settlement. Accordingly, the order was passed by the first respondent on January 23, 1995, with necessary direction to the Commissioner of Income-tax. 8. By that time, the search and seizure effected by the Income-tax Depart- ment under section 132 of the Act was pending. Since the shares were seized from the petitioner on July 15, 1992, and July 16, 1992, to the value of Rs. 107 lakhs and odd, stated to be the shares dealt with by the peti- tioner as a jobber, viz., share broker, who purchased shares for a lesser price and sold the same for higher price, thereby earning profit. The said shares which were seized in July, 1992, were released on various dates as given by the petitioner in the form of the following particulars in the affi- davit filed by him. Sl. No Date of release Market value of shares of the petitioner Market value of shares of fami1y members of the petitioner Total (Rs.) 1 16th March, 1993 5,69,151 43,81,581 49,50,732 2 3rd June, 1993 2,34,695 21,81,479 24,16,174 3 4th February, 1994 0 5,53,455 5,53,455 4 10th February, 1995 0 1,22,200 1,22,200 5 2....
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....,- (i) estimating the undisclosed income (including the income from the undisclosed property) in a summary manner to the best of his judgment on the basis of such materials as are available with him ; (ii) calculating the amount of tax on the income so estimated in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act ; (iia) determining the amount of interest payable and the amount of penalty imposable in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act, as if the order had been the order of regular assessment ; (iii) specifying the amount that will be required to satisfy any existing liability under the Act and any one or more of the Acts specified in clause (a) of sub-section (1) of section 230A in respect of which such person is in default or is deemed to be in default, and retain in his custody such assets/or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in clauses (ii), (iia) and (iii) and forthwith release the remaining portion, if any, of the assets to the person from whose custody they were seized : Provided t....
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....under the first proviso to clause (i) of sub-section (1), and of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in clause (i) of sub-section (1), exceeds the aggregate of the amount required to meet the liabilities referred to in clause (i) of subA-section (1) of this section. (b) Such interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment under section 153A or under Chapter XIV-B." 13. The said provision imposes an obligation on the part of the Central Government to pay simple interest in respect of retention of aggregate amount of money seized under section 132 or as requisitioned under sec- tion 132A, as reduced by the amount of money. Therefore, in respect of the obligation of the Government to pay simple interest in respect of delayed release under section 132B(4)(a) of the Act, a bare reading of the said pro- vision makes it clear that it relates to only money seized under section ....
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....(a) imposes an obligation on the Government to pay interest only in respect of those seized matters which are either money or being reduced into the amount of money. The term "money" is not defined in the Income-tax Act. In respect of payment of advance tax under section 234B of the Act, the assessee is liable to pay interest on the amount of tax. The word, "amount" used under the said provision has to be necessarily construed to mean "cash". Such cash seized under section 132(1) of the Act, if not utilized even for payment of advance tax, which falls due after seizure of cash, also would come within the term "money" for the purpose of enabling the assessee to claim interest under section 132B(4)(a) of the Act. Therefore, in the absence of the words like, assets or shares which are capable of being reduced into the value of money, specifically incorporated in the said provision, it is not possible to accept the contention of the learned counsel for the petitioner that the shares seized should also be treated as money. Therefore, the construction for the purpose of payment of interest under the said provision, viz., section 132B(4)(a) shall be only in respect of money which has been....