2017 (4) TMI 1414 - HC - Income Tax

Refund of amount seized and withheld by the respondent no. 1 alongwith interest payable under Section 244A - Held that - When there was no tax liability, and/or after the order of assessment for A.Y 201-2012 ie., 31st December 2012, there was no justification at all to retain the balance amount of ₹ 13,51,714/ . The said amount ought to have been returned to the petitioner immediately. Despite number of reminders and requests, the respondents have not returned the balance amount of ₹ 13,51,714/ to the petitioner. Under the circumstances, the respondents are required to be directed to return the said amount of ₹ 13,51,714/ which has been illegally withheld by the respondents for no reason. Therefore, the petitioner shall also be entitled to interest as per the Income-tax Act from 1st April 2013 i.e., after three months from the date of order of assessment for Assessment Year 2011- 2012. The present writ petition succeeds. The respondents are directed to return amount of ₹ 13,51,714/ with interest on and from 1st April 2013 till the actual amount is refunded/returned. The aforesaid amount with interest shall be returned to the petitioner within a period of four weeks from today. Rule is made absolute to the aforestated extent with cost, which is quantified at ₹ 5,000/ ; as for no reason, an amount of ₹ 13,51,714/ came to be withheld by the Revenue and despite number of reminders, the same was not returned and thereafter, the petitioner is constrained to prefer the present writ petition.

Issues:
Petition for refund of seized amount with interest under Section 244A of the Income-tax Act, 1961.

Analysis:
1. The petitioner sought a writ for the refund of a seized amount of ?13,51,714 along with interest under Section 244A of the Income-tax Act, 1961. The cash was seized from the petitioner's wife during a search operation, and a portion was withheld by the Department. The petitioner contended that after the assessment order was passed, there was no tax liability, and thus, the balance amount should have been returned.

2. The petitioner's advocate argued that retaining the amount of ?13,51,714 after the tax liability was adjusted and subsequent deletion of the addition by the CIT [A] was illegal and arbitrary. The advocate emphasized that there was no tax liability, and the petitioner was entitled to the balance amount along with interest from the date of the assessment order.

3. On the other hand, the Revenue's advocate stated that the tax liability was determined based on the addition made by the Assessing Officer. However, after the CIT [A] deleted the addition and the Department refunded a portion of the seized amount, the balance amount was to be returned. The Revenue mentioned that the petitioner would be entitled to interest from the date of the Tribunal's order dismissing the appeal.

4. The Court noted that after the assessment order, the tax liability was adjusted, and there was no further amount due from the petitioner. The CIT [A] had deleted the addition, and the Department had refunded a portion of the seized amount. Despite this, the balance amount of ?13,51,714 was not returned to the petitioner, leading to the Court directing the respondents to refund the said amount with interest from a specified date.

5. The Court held that there was no justification for withholding the balance amount after the tax liability was settled. The respondents were directed to return the amount with interest, and a timeline of four weeks was set for the refund. The Court also imposed costs on the Revenue for wrongfully withholding the amount and necessitating the writ petition.

This comprehensive analysis of the judgment highlights the key arguments presented by both parties and the Court's decision in favor of the petitioner for the refund of the seized amount with interest.

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