TaxTMI 
TaxTMI 
2025 (1) TMI 1770
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...., pursuant to the registration of a crime. After due procedure, the income tax department declared the currency notes and the seized gold as income in the hands of the petitioner under the provisions of the Income Tax Act, 1961, (for short 'the Act'). Thereafter, a claim petition was filed before the Magistrate's Court and custody of the currency notes was granted to the Income Tax Department on 04.11.2015 in view of orders issued under section 132A of the Income Tax Act, 1961. Subsequently, an order of assessment dated 08.12.2017 was issued assessing the total income of the petitioner at Rs. 1,86,80,000/- for the assessment year 2016-17. 3. Consequent to the enactment of the Direct Tax Vivad Se Vishwas Act, 2020 (for short 'VSV Act') petitioner had, on 08.01.2021, filed a declaration under section 4 of the said Act which was accepted and the amount payable by the petitioner was determined. Thereafter, a certificate dated 24.11.2021, in Form 5, stating the amount of penalty due from the petitioner was issued. Since out of the currency notes seized from the petitioner, an amount of Rs. 42,82,185/- was retained by the respondents, by a proceeding dated 29.11.2023, an order was iss....
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....ner's claim for interest on refund is without any merit. The learned counsel further pointed out that petitioner's reliance upon the judgment of the Bombay High Court is not correct as the said judgment related to the amount due under the IT Act while the petitioner had not paid any amount under the IT Act and instead the issue arose out of the seizure of currency notes. 8. I have considered the rival contentions. 9. Pursuant to the seizure of currency notes and gold from the petitioner, an assessment for the year 2016-2017 was completed under section 143(3) of the IT Act, determining a total income of Rs. 1,86,18,000/- and a demand of Rs. 24,65,540/- was raised towards tax due from the petitioner. A penalty of Rs. 56,04,000/- was also imposed on the petitioner under section 271AAB of the IT Act. The penalty order was challenged by the petitioner before the Appellate Authority. 10. While the aforesaid appeal was pending, the VSV Act, was enacted providing for resolution of disputed tax and for connected matters. The said statute contemplates a declaration to be submitted under section 4, before the date prescribed, by the declarant, offering to pay a particular amount to o....
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....istry of Finance had issued a Central Action Plan for 2021-22, which stipulated in clause 9 that, consequential orders pursuant to Form 5 issued upto 30.06.2021 should be issued latest by 31.07.2021 and for all subsequent issue of Form 5, i.e., from 01.07.2021 onwards, the consequential orders must be issued by Jurisdictional Assessing Officers within 30 days. The said plan is binding upon the Officers of the Department. 12. In the instant case, since Form 5 certificate was issued to the petitioner on 24.11.2021, the consequential order granting a refund ought to have been issued by 23.12.2021. However, as seen from Ext.P4, the consequential order was issued only on 29.11.2023, i.e., almost after 23 months. 13. Section 7 of VSV Act stipulates that no interest is payable on the amount of refund. The said provision is relied upon by the department to deny petitioner's claim for interest. For the purpose of comprehension, the said provision is extracted as below: "S.7. No refund of amount paid.-Any amount paid in pursuance of a declaration made under section 4 shall not be refundable under any circumstances. Explanation.-For the removal of doubts, it is hereby ....
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....mpensate the other. Thus, the period from 24.11.2021, (i.e. expiry of 30 days from the date of issue of Form 5), till 29.11.2023, (the date of order of refund), cannot be protected by the explanation in section 7 of VSV Act. 17. In the decision in Union of India v. Tata Chemicals Limited (2014) 6 SCC 335 the Supreme Court had observed that even in the absence of express statutory provision for payment of interest on the refund of excess amount, the Government cannot shrug off its obligation to reimburse lawful money with accrued interest for the period of undue retention of such money. It was further observed that the State having received the money without right and having retained and used it, is bound to make the party good just as an individual would be under like circumstances and the obligation to refund the money received and retained without right implies and carries with it the right to obtain interest. 18. Further, in a similar situation, the Bombay High Court had, in UPS Freight Services India Private Limited v. Deputy Commissioner of Income Tax [2023 SCC OnLine Bom 2960], held that the refund ought to have been processed in that case by 31.7.2021 but was paid only....