2004 (4) TMI 57 - HC - Income Tax

Search and seizure withholding of bonds/securities - Whether the pendency of the appeal will authorise and/or justify the Revenue to withhold the aforesaid Reserve Bank bonds or not - whether as on today or even on the date of filing of the writ petition whether there was any existing liability within the meaning of section 132B or whether such liability has been determined or not - Application of seized or requisitioned assets - Held that in order to withhold the security the Revenue should have made an application for stay before the Tribunal so that they could have retained seized RBI bonds. I think the Revenue is not interested in this matter seriously - Rather they are interested in obtaining adjournment - Under such circumstances, I do not find any reasons for withholding the securities by the Revenue. Accordingly, I direct the Revenue to release these securities

Summary

Issues:
Release of Reserve Bank of India Bonds withheld by Revenue pending appeal before Tribunal.

Analysis:
The matter involved the withholding of Reserve Bank of India Bonds valued at Rs. 7.2 crores by the Revenue on the grounds of a deemed dividend, despite completion of block and regular assessments. The petitioner contended that the securities should be released as there was no existing liability determined. The Commissioner of Income-tax (Appeals) had set aside the Assessing Officer's order, but the liability was pending determination by the Tribunal. The key issue was whether the pendency of the appeal justified withholding the securities.

The Court referred to relevant legal provisions, including Section 132B, which outlines the application of seized assets. It was noted that the mere filing of an appeal does not automatically stay the order appealed against, as established by the Supreme Court and followed by various High Courts. The Court emphasized that the Revenue should have obtained a stay order from the Tribunal to withhold the securities lawfully.

Considering the lack of promptitude by the Revenue in pursuing the appeal and obtaining multiple adjournments, the Court found no valid reason for withholding the securities. The Court directed the Revenue to release the securities within eight weeks, subject to any orders passed by the Tribunal during that period. The decision was made in line with the consistent legal precedents and the provisions of Section 132B, ensuring compliance with due process and fair treatment.

In conclusion, the Court's judgment highlighted the importance of following legal procedures, obtaining necessary orders for withholding assets pending appeal, and acting promptly in legal proceedings. The decision aimed to uphold fairness and justice while ensuring compliance with relevant laws and established legal principles.