2015 (9) TMI 226 - HC - Income Tax

Jurisdiction under section 132A to continue to seize the cash - writ prayed directing the respondents to release cash of 32, 64, 560/- with interest at the rate of 15% per annum from the date of seizure till the date of payment - Held that - When the petitioner failed to disclose the source of the aforesaid huge amount of cash and even his explanation was found to be incorrect and/or the petitioner could not substantiate his initial claim that the said amount was received by him from his father and family members by selling jeweleries and thereafter after recording the reasons when the amount has been requisitioned after valid authorisation it cannot be said that the authorisation under section 132A of the IT Act is illegal unauthorised and/or contrary to the provisions of the Act. So far as the prayer of the petitioner to release the balance amount after deducting tax on the aforesaid amount of 32, 64, 560/- treating the said amount as undisclosed income of the petitioner in the AY 2014-15 is concerned as such considering section 153A of the IT Act the same is not required to be granted. In any case application of the petitioner for release of the cash is pending before the appropriate authority / concerned AO Palanpur office and considering proviso to section 132B of the IT Act it is ultimately for the concerned AO to pass appropriate order on the application of the petitioner for release of the cash. It appears that no order has been passed by the concerned AO on the application submitted by the petitioner for release of the cash seized / requisitioned. Under the circumstances the concerned AO is to be directed to pass appropriate order in accordance with law and on merits on the application submitted by the petitioner for release of the cash seized / requisitioned considering proviso to Sub-section (1) of Section 132(B) of the IT Act.However considering the fact that no order has been passed by the concerned AO on the application submitted by the petitioner to release the cash requisitioned / seized considering the proviso to section 132B of the AO (Palanpur office) is hereby directed to pass appropriate order on the said application in accordance with law and on merits considering proviso to section 132B of the IT Act within a period of 12 weeks from today.

Summary

Issues Involved:
1. Legality of the seizure of cash under section 132A of the Income Tax Act, 1961.
2. Petitioner's request for the release of seized cash with interest.
3. Petitioner's explanation of the source of the seized cash.
4. Requirement for the Assessing Officer (AO) to pass an order on the petitioner's application for release of the seized cash.

Issue-wise Detailed Analysis:

1. Legality of the Seizure of Cash under Section 132A of the Income Tax Act, 1961:
The petitioner challenged the legality of the seizure of Rs. 32,64,560/- under section 132A of the Income Tax Act, 1961, arguing that the respondents had no jurisdiction to continue to seize the cash. The court noted that the petitioner failed to disclose the source of the cash satisfactorily. Initially, the petitioner claimed that the cash was given by his father and family members after selling jewelry to start a new business. However, this explanation was found to be incorrect, and the petitioner later admitted that the amount was unaccounted income. Consequently, the court held that the authorization under section 132A was valid, legal, and in accordance with the law, as the petitioner could not substantiate his initial claim.

2. Petitioner's Request for the Release of Seized Cash with Interest:
The petitioner requested the release of the seized cash along with interest at the rate of 15% per annum from the date of seizure until the date of payment. The court did not grant this request directly but directed the concerned AO to pass an appropriate order on the petitioner's application for the release of the cash, considering the proviso to section 132B of the Income Tax Act. The court emphasized that no order had been passed by the AO on the application submitted by the petitioner, and it was necessary for the AO to address this application in accordance with the law and on its merits.

3. Petitioner's Explanation of the Source of the Seized Cash:
The petitioner initially explained that the cash was from his father and family members, who had sold jewelry to provide funds for starting a new business. However, upon investigation, the petitioner could not produce any evidence to support this claim. The petitioner later admitted that the amount was unaccounted income and agreed to treat it as income for the current financial year 2013-2014. The court found that the petitioner's initial explanation was unsatisfactory and that the subsequent admission of unaccounted income justified the seizure under section 132A.

4. Requirement for the Assessing Officer (AO) to Pass an Order on the Petitioner's Application for Release of the Seized Cash:
The court noted that the petitioner's application for the release of the seized cash was pending before the AO. The court directed the AO (Palanpur office) to pass an appropriate order on the application within 12 weeks, considering the proviso to section 132B of the Income Tax Act. If the proceedings were transferred to another AO, the concerned AO at Palanpur was instructed to transfer the application to the new AO, who would then pass an appropriate order on the application.

Conclusion:
The court dismissed the petition challenging the authorization under section 132A of the Income Tax Act and the requisition/seizure of Rs. 32,64,560/-. However, the court directed the AO to pass an appropriate order on the petitioner's application for the release of the seized cash within 12 weeks, considering the proviso to section 132B of the Income Tax Act. The petition was disposed of concerning the prayer for the release of the cash, while the challenge to the authorization under section 132A was dismissed.