TaxTMI 
TaxTMI 
1993 (7) TMI 31
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....d as explained but the explanation regarding acquisition of jewellery valued at Rs. 1,22,211 was rejected thereby treating the investment as income from undisclosed sources. The liability under the Act towards tax, penalty and interest was estimated at Rs. 1,73,528. While making the regular assessment for the assessment year 1980-81, the Assessing Officer valued the jewellery at Rs. 1,22,211. He accepted the explanation for jewellery worth Rs. 1,12,211 only. Accordingly, he added Rs. 20,800 being cash seized and Rs. 10,000 against jewellery as income from undisclosed sources under section 69A of the Act to the assessed income. Finally, on appeal, the said additions were deleted as is evident from the appellate order dated November 6, 1987 (annexure "6"). On finalisation of the regular assessment, the petitioners requested the respondents for releasing the jewellery in their favour on the plea that if the amount of cash seized is adjusted against their liabilities arising under the Act, then the retention of the jewellery cannot be said to be justified in law. But the respondents did not accede to the prayer. In the present writ application, a counter-affidavit has been filed by ....
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....sment Amount of tax Nature of No. year liability demand --------------------------------------------------------------------------------------------------------------------------------------------- Rs. I/1522 1978-79 132 interest under section 220 I/1523 1979-80 400 penalty under section 273 I/1524 1982-83 17,128 income-tax and interest under sections 139(8), 215 and 220 I/1525 1981-82 7,128 -do.- --------------------------------------------------------------------------------------------------------------------------------------------- From the above, it is clear that so far as the assessment year 1980-81, which is relevant to the seizure in question is concerned, the liability of petitioner No. 1 has been shown as Rs. 670 towards tax and Rs. 339 towards the interest under section 220(2) of the Act and there is no outstanding liability of petitioner No. 2. In these backdrop of facts, the questions that have emerged from the submissions made at the Bar are as to : (i) whether the retention of seized assets can be continued on grounds other than those set out under section 132(5) of the Act ; (ii) whether the income-tax authorities can levy interest ....
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....nterest payable in connection with such assessment or reassessment) and in respect of which he is in default or is deemed to be in default may be recovered out of such assets. . . . (2) Nothing contained in sub-section (1) shall preclude the recovery of the amount of liabilities aforesaid by any other mode laid down in this Act. (3) Any assets or proceeds thereof which remain after the liabilities referred to in clause (i) of sub-section (1) are discharged shall be forthwith made over or paid to the persons from whose custody the assets were seized. (4) (a) The Central Government shall pay simple interest at the rate of twelve per cent. per annum on the amount by which the aggregate of money retained under section 132 and of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in clause (iii) of sub-section (5) of that section exceeds the aggregate of the amounts required to meet the liabilities referred to in clause (i) of sub-section (1) of this section. (b) Such interest shall run from the date immediately following the expiry of the period of six months from the date of the order under sub-section (5) of section 132 to....
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....ffidavit, the said liability has been found to be only to the extent of Rs. 670 and Rs. 339 towards tax and interest, respectively. Therefore, at best, Rs. 1,009 can be said to be the amount which can be recovered out of the seized assets, namely, Rs. 20,800 being cash and jewellery valued at Rs. 1,22,000 on the date of the seizure, i.e., an December 4, 1979. It is so because under section 132B(1) the seized assets can be applied only for discharging the existing liability referred to in section 132(5)(iii) and the amount of liability to be determined on completion of regular assessment or reassessment for all the assessment years relevant to the previous years to which the income referred to in section 132(5)(i) relates, namely, the undisclosed income assessed on the basis of the seized assets. It is elementary that the income pertaining to the seized assets can be only of the previous years prior or relating to the date of seizure. Therefore, the tax and incidental liabilities arising under the Act for the assessment years relating to the period subsequent to the date of seizure cannot be realised out of the seized assets. As stated above, the value of the assets being much in ex....