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2016 (5) TMI 550 - HC - Income TaxRetention of seized assets - Held that - Section 132B was discussed and interpreted by a Division Bench of the Gujarat High Court in Mitaben R. Shah vs. Deputy Commissioner of Income Tax and another (2010 (2) TMI 684 - Gujarat High Court) like in the case at hand, no decision was taken by the Revenue Department within 120 days from the date on which the last authorization for search under Section 132 was executed despite filing of an application within 30 days for release of seized assets. And the Revenue Department later dismissed the application for release of assets after the expiry of 120 days on numerous grounds. The Court held that when an application is made for the release of assets under first proviso to Section 132B(1)(i) of the Act explaining the nature and source of the seized assets and if no dispute was raised during the permissible time of 120 days by the Revenue Department, it had no authority to retain the seized assets in view of the mandate contained in second proviso to Section 132B(1)(i) of the Act. This decision does not seem to have been challenged by the Revenue Department before the Supreme Court. For the reasons stated in the decision, we too find ourselves in complete agreement with the view taken by the Division Bench of Gujarat High Court. Thus direct the respondents to immediately release the seized assets of the petitioners.
Issues:
Release of assets seized under Section 132 of the Income Tax Act - Delay in decision-making by Revenue Department - Application under first proviso to Section 132B(1)(i) of the Act - Centralization of cases with CIT (Central) 3, New Delhi - Interpretation of Section 132B(1) - Similarity with Mitaben R. Shah case. Analysis: The petitioners sought a direction to release assets seized under Section 132 of the Income Tax Act. The petitioners, a Hindu Undivided Family, were subject to search under Section 132 of the Act, resulting in the seizure of valuable items. Despite applying for the release of assets within the stipulated time frame, the Revenue Department failed to make a decision within 120 days, as required by law. The jurisdictional issue arose when the petitioners' cases were centralized with CIT (Central) 3, New Delhi, leading to a delay in the decision-making process. The Revenue Department's failure to act within the prescribed time frame was evident from the communication between the Principal Commissioner of Income Tax, Guwahati, and the Additional Commissioner of Income Tax, Guwahati. The communication highlighted the delay in disposing of the application for the release of assets, as per the provisions of Section 132B(1)(i) of the Act. The Assessing Officer's report detailed the assets seized and the liabilities against the assesses, emphasizing the need for a timely decision. In a significant reference to legal precedents, the judgment cited the decision of the Hon'ble Gujarat High Court in the Mitaben R. Shah case, which set a precedent for releasing seized assets within a specific timeframe. The Court emphasized that if no dispute was raised by the Revenue Department within the permissible 120-day period, it had no authority to retain the seized assets. This interpretation aligned with the mandate of the second proviso to Section 132B(1)(i) of the Act. Drawing from the Gujarat High Court's decision, the High Court of Gauhati concurred with the interpretation of Section 132B(1) and directed the immediate release of the petitioners' seized assets. The judgment underscored the importance of timely decision-making by the Revenue Department and upheld the petitioners' right to have their assets released within the legal framework provided by the Act. Ultimately, the judgment highlighted the significance of adherence to statutory timelines and the obligation of the Revenue Department to promptly process applications for the release of seized assets under the relevant provisions of the Income Tax Act.
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