TaxTMI 
TaxTMI 
2024 (2) TMI 1148
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.... section 132 of the Act was conducted at the premises of the appellants on 18.03.2010. During the course of search, Cash and Fixed Deposit Receipts [FDRs] were seized, the details are as under: S. No. Name of the Appellants Cash (Rs.) FDRs (Rs.) 1 Shri Nune Trimurtulu Rayudu 5,39,000/- 99,99,999/- 2 Smt. Binaben M. Patel -- 2,00,00,000/- 3 Shri Madhubhai Bhagwanbhai Patel -- 1,20,00,000/- 4 Smt. Dinaz Adil Sethna -- 1,10,12,221/- 5 Smt. N. Sujatha Rani -- 2,99,99,997/- 6 Shri Adil Faramroz Sethna 3,50,000/- 5,15,01,000/- 2.1. The appellants vide letter dated 28-04-2010 submitted before the AO on 30-04-2010, requesting for release of disclosed Cash and FDRs seized during the course of search in terms of section 132B of the Act which clearly states that as on date, there is no disputed demand that has not been paid by the assessee and the assessee is not an assessee in 'default' as defined in the Act and therefore all the disclosed FDRs, Cash and Deed of Immovable property sought to be released and returned immediately to the assessee. It is further contended by the appellants that the seized C....
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....ays is over in terms of section 132B of the Act and charge interest u/s. 234B of the Act by observing as follows: " ... 7.2 It is an undisputed fact that no specific request has been made for adjustment of seized Cash/FDRs against tax liability in I.T.A Nos. 526 to 531/Rjt/2012 and Ors. A.Y. 2010-11 Page No Shri Nune Trimutulu Rayudu and Ors. vs. ACIT 6 these cases prior to the date of filing returns of income. In the present cases, however, request for release of assets i.e, Cash/FDRs was made vide letter dt. 28-04-2010 within the allowed period of 30 days from the end of the month in which the assets were seized, explaining the source of acquisition of such assets seized. Further, subsequent reminders were also given. However, it is contended by the appellants that no action has been taken by the AO within the allowed period of 120 days for the release of such seized assets after adjustment against tax liability as per section 132B (1)(i) of the Act. In this connection, the reliance of the appellants on the decision of Hon'ble Gujarat High Court in the case of Mitaben R. Shah v. DCIT (2010) 42 DTR (Guj) 124 is quite relevant. As per the said decision, it is held that....
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....of the above, the AO is directed to give credit to the appellants for the payment of self-assessment tax out of the seized cash/FDRs with effect from the date on which 120 days gets over in terms of section 132B of the Act after due verification and charge interest u/s. 234B of the Act after making above adjustments. Accordingly, this ground of appeal is partly allowed subject to above findings." 4. Aggrieved against the common appellate orders, the assessees are in appeals before us raising the following Grounds of Appeal in ITA No.526/Rjt/2012: 1. The Ld. CIT(A) IV grossly erred in Law and on the facts of the case in not adjudicating the ground of appeal with respect to the illegality of the search & seizure operation u/s. 132 and consequential illegality of the assessment order u/s. 143(3) dated 11/03/2011 which was passed pursuant to such illegal search & seizure operation. a) That the impugned assessment order u/s 143(3) was passed on the basis of a search carried out u/s 132 of the Income Tax Act, 1961 at the business premises of the appellant assessee on 18/03/2010, which action has no sanctity in the eyes of law for the reason that no warrant of authori....
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....d be adjusted immediately when assessee expressly in writing lawfully instructed for adjustment of FDR's towards Income Tax Liability. Therefore, the learned CIT(A) is not justified in confirming the interest charged u/s 234B for the period up to 15.09.2010. It is therefore prayed that the interest charged u/s 234B may please be deleted. 3.1 The Learned CIT(A) grossly erred in Law and facts of the case in not directing the AO to release the seized Cash/FDRs which are still retained by the department despite the fact that the assessment proceedings & penalty proceedings for all the assessment years covered by the search u/s 132, including the assessment for A.Y.2010-11 had been finalized and concluded. 3.2 The Learned CIT(A) grossly erred in Law and facts of the case in not directing the AD to release the seized Cash/FDRs in accordance with the second proviso to section 1328 of the Income Tax Act which provides that the assets are required to be released within a period of 120 days from the date on which the last of the authorization for search u/s 132 was executed. It is therefore prayed that the assessing officer may please be directed to re....
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.... (v) Nikka Mal Babu Ram vs. ACIT- (2010) 41 SOT 407 (Chandigarh); 6.2. As far as the issue of insertion of Explanation 2 to S.132B w.e.f. 01.06.13 being "prospective" in nature by the following Circular and judicial decisions: (i) CBDT's Circular No.20/2017 dated 12.06.17 (ii) CIT vs. Cosmos Builders & Promoters Ltd. - (2016) 76 taxmann.com 374 (P&H); (iii) CIT vs. Cosmos Builders & Promoters Ltd.(2016) 76 taxmann.com377 (SC)-SLP dismissed; (iv) CIT vs. Sunil Chandra Gupta- (2016) 76 taxmann.com 372 (All): (v) CIT vs. Sunil Chandra Gupta- (2016) 76 taxmann.com 373 (SC)- SLP dismissed. 7. Per contra, Ld. CIT-DR Shri Shramdeep Sinha appearing for the Revenue supported the orders passed by the Ld. CIT(A) and requested to up hold the same. 8. We have given our thoughtful consideration and perused the materials available on record. The details of Cash and FDRs seized I.T.A Nos. 526 to 531/Rjt/2012 and Ors. A.Y. 2010-11 Page No Shri Nune Trimutulu Rayudu and Ors. vs. ACIT 11 at the time of search, Returned and Assessed Income of the assessees, applicable Income Tax and Interest charged by the AO are as follows: Name of th....
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....rd his satisfaction and prior approval from the Competent Authority for release of seized goods. 9.3. The second proviso to section 132B(1)(i) makes it clear that the assets are required to be released within a period of 120 days from the date on which the last of the authorizations for search under section 132 or for requisition under s. 132A, as the case may be, was executed. In the present cases last date of search action concluded on 15-05-2010 and the outer time period of 120 days expired on 15-09-2010, but the Ld AO has not acted upon the Application for release of the seized goods and thereby retained the seized Cash and FDRs beyond the period of 120 days prescribed in the 2nd Proviso to section 132B(1)(i) of the Act. 9.4. Now coming to the main section 132B(1) of the Act, which prescribes that the assets seized u/s. 132 can be adjusted against any "existing liability" as per IT, WT or the amount of liability determined on the completion of regular assessment or reassessment including any penalty levied or interest payable in connection with such assessment or reassessment. As per this sub- section, the Ld AO ought to have adjusted against the tax liability of Rs. 6,39....
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....n the case of the assessee, notice of demand u/s. 156 was issued on 13.08.2012 and seized FDRs were apportioned against the self- assessment liabilities of the assessee on 11-03-2011 as per Hon'ble CIT(A) order and refund granted of Rs. 11,816/-. The refund amount was below the ten per cent of the tax as determined as per the order of Hon'ble CIT(A)'s order. Therefore, the claim of the assessee for interest u/s. 244A of the IT Act is not sustainable and accordingly no interest u/s. 244A of the IT Act is payable in the case of the assessee. 3. The assessee's submission with regard to interest u/s. 132B(4) of the IT Act is also considered. The same was not dealt with while giving effect to appeal order as the same was not subject matter of appeal before the CIT(A)-IV, Ahmedabad. Therefore, not granting interest u/s. 132B(4) of the IT Act while giving effect to appeal order cannot be said to be mistake apparent from records. However, the issue relating to allowbility of interest u/s. 132B(4) of the IT Act is also considered. The FDRs were seized from the premises of the assessee on 18-03-2010. The period of 120 days expires on 20-07- 2010. The payment....
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....ul perusal of the section indicates that interest has to be paid on the aggregate amount of money seized u/s 132 "Money' is a separate and distinct entity as per the Income Tax Act, 1961. In s.132(1)(c) reads "Any person is in possession of any money, bullion, jewellery or other valuable article". Hence, money is different from bullion, jewellery or other valuable article. In the case of Anilkumar Kedia vs. Settlement Commission 33 taxmann.com 624, the Hon'ble Madras High Court has held as under: "Therefore, while the powers given to the authorities under sections 132(1) and 132A are wider relating to the seizure of I.T.A Nos. 526 to 531/Rjt/2012 and Ors. A.Y. 2010-11 Page No Shri Nune Trimutulu Rayudu and Ors. vs. ACIT 17 money and other assets, section 132B(4)(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 in liable to pay interest on the amount of tax. The word, "amount" used under the said provision has to be nec....
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.... When the FDs were receiving the interest from the bank and not lying idle, they definitely cannot be construed to be money as contemplated in s.132B(4). By mere seizure of the FDs, the appellant has not suffered any pecuniary loss by way of loss of interest. Therefore, no interest u/s. 132B(4) can be granted to the appellant. This point has not been considered by the Ld. CIT(A) in the appellant's group cases in the appeal order on this issue and therefore I respectfully beg to differ from the ratio decidindi of that order. The A.O's action of rejecting the application u/s. 154 is upheld. The grounds of appeal are dismissed." 15. Aggrieved against the appellate orders, the assessees are in appeals before us raising the following Grounds of Appeal in ITA No. 138/Rjt/2015: 1. The Ld. CIT(A) has erred in law and on facts of the case in confirming the actions of Ld. AO in not granting interest u/s 132B(4) of the Act on seized asset viz. FDR as per the law. 2. The Ld. CIT(A) ought to have appreciated the fact that seized FDR was encashed and adjusted towards the liability determined on completion of assessment of the year relevant to the previous year in whi....