TaxTMI 
TaxTMI 
2022 (8) TMI 963
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....nt amount; 9(d) Any other and further relief, which is just and proper, may kindly be granted as may be deemed expedient by this Hon'ble Court in the facts and circumstances of the case; 9(e) Award cost of the present petition." 2. The facts giving rise to this writ-application may be summarized as under : 2.1. The writ-applicant is a partnership firm registered under the Partnership Act, 1932 (for short, the 'Act 1932'). There are in all nine partners in a partnership firm. 2.2. The partnership firm is engaged in the business of Angadia (courier service). 2.3. It appears from the materials on record that two employees of the partnership firm, namely Bhuraram and Ganpat Singh, were travelling to Ajmer on 24/06/2009. It is the case of the writ-applicant that they were asked to go to Ajmer for the purpose of purchasing a property in the form of office/shop on behalf of the firm. It is also the case of the firm that it had handed over an amount of Rs.24,50,000/- (Twenty-Four Lakh Fifty Thousand) in cash to the two employees referred to above for the purpose of payment towards the purchase of shop-cum-office. 2.4. There is a stro....
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....lver. However, Bhuraram was not able to produce those two purchasers before the Income Tax authorities for interrogation. Bhuraram further accepted the said cash as his undisclosed income and requested the department to deduct the corresponding tax from the seized amount. On 31/10/2012, the assessment of Bhuraram was completed under Section 143(3) read with Section 153(A) of the Act by the ACIT, CC-1(2), Ahmedabad, and an addition of Rs.24,50,000/- was made in the hands of Bhuraram M. Patel. 2.10. The DCIT-CC-1(2), Ahmedabad, thereafter vide order dated 07/03/2013, levied penalty of Rs.7,35,000/- under Section 271(1)(c) of the Act for concealment of the income in case of Bhuraram. A notice under Section 148 of the Act dated 21/03/2013 came to be issued to the firm. On 01/07/2013, the CIT-Ahmedabad dismissed the appeal of Bhuraram. On 01/01/2014, the assessment order was passed under Section 143(3) read with Section 147 of the Act. The Assessing Officer concluded that out of Rs.24,50,000/- shown by way of an entry, Rs.13,00,000/- stood explained and an amount of Rs.11,50,000/- was treated as the unexplained cash seized on 24/06/2009. 3. At this stage, we must look into t....
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....e case it is concluded that out of Rs.24.50 Lac which were seized by the SHO, Clock Tower, Police Station, Ajmer only Rs.13.00 Lac are found to be explained on being withdrawn from the bank account and the rest of the amount of Rs.11.50 Lac is required to be added to the total income of assessee. Hence, Rs.11.50 Lac is treated as unexplained cash seized on 24.06.2009 and same is added to the total income of the assessee. Penalty proceeding u/s.271(1)(c) is initiated separately for concealment the particulars of its income or furnishing inaccurate particulars of such income (Addition Rs.11,50,000/-) Subject to the above remarks and date made available, the total income of the assessee is computed as under: Total income as per return : Rs. 82,000/- Add: As per para 4 above : Rs.11,50,000/- Total income : Rs.12,32,000/- Assessed u/s 143(3) r.w.s. 147 of the I. T. Act. Give credit for pre-paid taxes, if any, after due verification. Charge interest u/s. 234A, 234B, 234C, 234DF as the case may be. Issue demand notice and challan. Penalty proceeding u/s.271(1)(c) is initiated separately for concealment the particulars of its income or ....
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.... of the Act. On 15/03/2019, Bhuraram preferred an application for grant of interest under Section 244(A) of the Act on the refunded amount of Rs.7,49,956/-. On 25/04/2019, the Income Tax Officer, Ahmedabad, passed an order under Section 154 of the Act granting interest of Rs.93,744/- to Bhuraram. The order reads thus: "4. The assessee has applied for rectification vide dated 24.10.2017 for the A.Y. 2010-2011 and requested for issue of interest u/s. 132B(4)(b) of the Act. The balance amount of Rs.7,49,956/- was issued from PD A/c. Of Principal Commissioner of Income Tax (Central-1), Ahmedabad to the assessee vide Cheque No.717887 dated 02,.01.2015 and same was received by assessee on 02.01.2015. Accordingly, after due verification, order u/s.154 of the Act dated 267/02/2018 was passed resulting into a refund of 63,746/- (interest u/s. 132B(4)(b) of the Act) and rejecting claim of refund u/s.244A of the Act stating that granting of refund out of seized cash is governed by section 132B(4)(b) of the Act and the manual refund of Rs.63,746/- was issued to the assessee on 09.03.2018 with the prior approval of the Jt. CIT, Range-1(2), Ahmedabad vide approval letter No.Jt.Cit/Range....
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....sp; Income-Tax Officer, Ward-1(2)(1), Ahmedabad" 7. We have heard Mr.Jaimin Dave, learned counsel appearing for the writ-applicant firm and Mr.M.R.Bhatt, learned senior counsel appearing for the respondents. 8. Mr.Jaimin Dave, the learned counsel would submit that the department could not have appropriated the seized cash towards the income tax liabilities of Bhuraram and further could not have paid the balance cash to Bhuraram, more particularly, when the department was very well aware that the writ-applicant was claiming ownership of the seized cash since the year 2009. He would submit that the Revenue could not have appropriated the seized cash towards the income tax liabilities of Bhuraram, more particularly, when the Revenue has assessed the seized cash in the hands of the writ-applicant firm. Mr. Dave, the learned counsel would s....
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....of the writ-applicant firm was made by the Income Tax Officer, Ward-2(2), Ahmedabad, vide order dated 01/01/2014 on the basis of the details forwarded by the ACIT-CC-1(2) Ahmedabad, whereas the refund application of the writ-applicant was rejected as no amount was seized in the hands of the firm. The cash was in the hands of Bhuraram. He would submit that the notice under Section 153(A) of the Act was issued to Bhuraram and not to the firm. During the course of the post-search proceedings as well as the assessment proceedings, Bhuraram admitted that the cash seized belongs to him and not to the firm. The addition in respect of the seized cash was made in the hands of Bhuraram for the A.Y. 2010- 2011 while finalizing the order under Section 143(3) read with Section 153(A) of the Act. He would submit that the penalty under Section 271(1)(c) of the Act was also levied in the case of Bhuraram on concealment of the income of Rs.24,50,000/-. The refund of the balance amount after set-off of the other tax liabilities was also issued to Bhuraram in view of the proceedings under sub-section 3 of Section 132(B) of the Act. 12. In the last, Mr.Bhatt submitted that the notice under Section ....
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....gh the writ-applicant had offered the explanation for the whole seized amount of Rs.24.50 lakh under the description of "Chief Judicial Magistrate Court", Ajmer, Ganpat Singh B.Rajput, Bhuraram Ganchi Makan Milkat Mate", the Assessing Officer had assigned cogent reasons by recording specific findings that the "accumulation of huge cash of Rs.11.50 lakh (Rs.24.50 lakh (-) Rs.13 lakh) is not found justifiable and the cash book appears to be drafted one to justify the source of cash seized". It further transpires that the authorized representative of the writ- applicant firm was given an opportunity to produce the evidence in support of their assertion. However, the only explanation tendered by the writ-applicant was that the cash withdrawal was out of cash available with the assessee firm. It is in this peculiar facts that the Assessing Officer concluded that so far as the remaining amount of Rs.11.50 lakh is concerned, in absence of any material, the same to be treated as unexplained income and is required to be added to the total income of the assessee. Further directions were issued for separate proceeding under Section 271(1)(c). 17. Thereafter, in the appeal before the Commis....
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....as the writ-applicant doing ? When the learned counsel appearing for the writ-applicant was confronted with this question, the only reply was that it was not within the knowledge of the writ-applicant that Bhuraram was pursuing the matter with the Revenue, as if Bhuraram was the lawful owner of the cash. The legitimate question arises to be answered by the writ-applicant is, as to at what point of time Bhuraram severed off the master-servant relationship ? Nothing is forthcoming on record. On one hand the writ-applicant went on asserting that the cash belongs to it, and on the other hand, Bhuraram took the stance that he was the lawful owner of the cash. 21. Under the Income Tax Act, Section 132B provides for the procedure for application of the assets seized under Section 132 or requisitioned under Section 132A and release of the assets thereunder. As per Section 132B(1), an assessee has to make an application for release of the seized assets within a period of thirty days. The reference to the word 'existing liability' authorises the officer to realise the amount of the existing liability by way of recovery from such seized assets. The closed examination of Sections 132 to 132....
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....ic query was raised as regards the claim of the writ- applicant firm which was categorically denied by the said Bhuraram Patel (searched person). (2) It is pertinent to note that though the writ-applicant being aware about the objection raised by the Revenue while opposing release of the cash in an application under Section 457 of Cr.P.C., chose not to approach the Revenue seeking release of the seized cash under Section 132B of the Act. The Revenue had categorically taken the stance that the department has proceeded under Section 132 of the Act. Admittedly, the writ-applicant chose to submit application seeking refund of the cash seized before the respondent department for the first time on 17/03/2016 followed by an applications-cum-reminders dated 24/09/2017, 07/08/2018 and 11/10/2018 respectively. (3) Further, the writ-applicant had approached the concerned JMFC Court at Ajmer under Section 457 of the Code of Criminal Procedure for release of the seized cash in July, 2009. The said application under Section 457 of Cr.P.C. came to be rejected by the concerned trial court vide order dated 16/09/2009, against which even a revision was preferred by the writ-applica....
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....14 had dismissed the appeal, thereby confirming the order passed by the Assessing Officer of the unexplained income of Rs.24.50 lakh. Even the penalty order under Section 27(1)(C) of the Act, 1961, came to be passed against the said searched person on 07/03/2013 by the Deputy Commissioner of Income Tax, Central Circle-I (2), Ahmedabad, levying the penalty of an amount of Rs.7.35 lakh. The appeal preferred by the said assessee - Bhuraram Patel against the aforesaid order of penalty came to be rejected by the CIT(A), Ahmedabad, vide order dated 01/01/2014. The CIT(A) found the story of the said assessee not believable as except for the affidavit no other cogent material or evidence were brought on record and, therefore, confirmed the order passed by the Deputy Commissioner levying the penalty under Section 270(1)(C) of the Act. Thus, as on date of the passing of the order dated 01/01/2014 in the case of the writ-applicant firm, the proceedings under Section 153A against the searched person Bhuraram Patel had already concluded in view of the order dated 31/10/2012 passed by the Assessing Officer, treating the cash in the hand of said assessee as 'unaccounted income'. In fact,....
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....eing not taxable, will not ipso facto result into refund of the seized cash, which has otherwise been realized from the searched person. 25. It is well-settled legal position that prerogative writs under Article 226 of the Constitution can be issued only in grave cases where the subordinate tribunals or bodies or officers act wholly without jurisdiction, or in excess of jurisdiction, or in violation of principles of natural Justice, or refused to exercise jurisdiction vested in them, or there is error apparent on the face of record which has resulted in manifest injustice. In the case of Sangram Singh vs. Election Tribunal, Kotah, AIR 1955 SC 425, in para 14 of the judgment the Supreme Court has observed as under : "That, however, is not to say that the jurisdiction will be exercised whenever there is an error of law. The High Courts do not, and should not, act as courts of appeal under Article 226. Their powers are purely discretionary and though no limits can be placed upon that discretion it must be exercised along recognized lines and not arbitrarily ; and one of the limitations imposed by the Courts on themselves is that they will not exercise jurisdiction in this ....