2015 (9) TMI 751 - HC - Income Tax

Attachment orders - Liability to release the balance amount after meeting the liabilities - Held that - Once the provisions of Income Tax Act provide to release the balance assets/amount after satisfying the liability, there is no occasion for the respondents to retain the same under the executive Instructions. Therefore, at this stage, we feel it appropriate to issue direction to the Principal Commissioner of Income Tax (Central Circle), Lucknow to take decision on the petitioner s representation within fifteen days from the date of communication of this order.

Summary

Issues:
1. Attachment and seizure of savings bank account under Section 132 of the Income Tax Act, 1961.
2. Discrepancy in the assessed liability and the seized amount.
3. Failure to release the balance amount under Section 132-B.
4. Interpretation of CBDT Instruction No. 11/2006 regarding seized cash and liability retention.
5. Judicial intervention for the release of balance assets.

Analysis:
1. The judgment addressed the issue of the attachment and seizure of a savings bank account under Section 132 of the Income Tax Act, 1961. The petitioner's account was attached during a search and seizure operation, leading to the seizure of a significant amount of cash. The petitioner argued that the assessed liability by the Assessing Officer was lower than the seized amount, creating a discrepancy.

2. The discrepancy in the assessed liability and the seized amount was a crucial point of contention. The petitioner highlighted that the total demand against them was less than the amount seized from the bank account. This raised concerns about the failure to release the balance amount under Section 132-B of the Income Tax Act, which mandates the release of excess assets after satisfying the liability.

3. The judgment delved into the failure to release the balance amount as required by Section 132-B. Despite representations to the Commissioner of Income Tax, the petitioner did not receive the balance amount from the seized account. The court acknowledged the statutory obligation to release excess assets once liabilities are settled, emphasizing the importance of timely action by tax authorities.

4. The interpretation of CBDT Instruction No. 11/2006 played a significant role in the judgment. The instruction outlined procedures for dealing with seized cash, including the retention of funds to cover potential penalties. The Revenue argued for the retention of the amount pending penalty proceedings, citing the instruction. However, the court emphasized that statutory provisions should prevail over executive instructions, directing the release of the balance amount.

5. Lastly, the judgment involved judicial intervention for the release of balance assets. The court, while acknowledging the pending penalty proceedings, emphasized the statutory obligation to release excess assets once liabilities are met. Consequently, the Principal Commissioner of Income Tax was directed to decide on the petitioner's representation promptly, ensuring compliance with statutory provisions and timely resolution of the matter.