2020 (1) TMI 693 - HC - Income Tax

Release of cash - cash seized in search at railway station - The proceedings before the said authority are pending adjudication - jurisdiction of Assessing officer - Cash is deposited in the PD account - HELD THAT - AO is the final authority to release the amount subject to the conditions referred to therein. The proceedings before the said authority are pending adjudication. Further, Section 132B of the Act relates to procedure for applications and release of assets seized under Section 132 or requisitioned under Section 132A of the Act, and the matter is pending before the concerned assessing officer. Having regard to the guidelines issued by the Central Board of Direct Taxes and Section 132B of the Income Tax Act, the assessing officer shall take into account the advance tax paid, the documents filed along with the returns and pass appropriate orders in connection with the assessment at the earliest, preferably within a period of 3 months from today in accordance with law and release the cash to the extent permissible with interest if the petitioners are otherwise entitled to, after making necessary adjustments as required under law.

Issues Involved:
1. Legality of the seizure of cash by the Respondents.
2. Compliance with procedural requirements under the Income Tax Act.
3. Authority and responsibility for the release of seized cash.
4. Petitioners' entitlement to the release of cash and interest thereon.

Detailed Analysis:

1. Legality of the Seizure of Cash by the Respondents:
The petitioners sought a Writ of Mandamus declaring the seizure of Rs. 1,50,00,000/- as illegal and arbitrary. The cash was seized by the Railway Police at Mahaboobnagar Railway Station on 24.02.2019, and a case was registered under Section 102 of Cr.P.C. The petitioners argued that they were carrying the cash to Chennai for the purchase of gold due to a bank holiday on 23.02.2019, and the shops in Hyderabad were closed. The respondents, however, disputed the petitioners' explanation and maintained that no satisfactory explanation was provided during the investigation.

2. Compliance with Procedural Requirements under the Income Tax Act:
Summons were issued under Section 131(1A) of the Income Tax Act on 27.02.2019, requiring the petitioners to produce necessary documents. The petitioners responded to the summons and submitted various documents, including sales data and books of accounts. Despite this, the respondents continued to withhold the cash, leading to the filing of the writ petition. The respondents argued that the cash was requisitioned under Section 132A of the Income Tax Act and that a confidential appraisal report was prepared and forwarded to the jurisdictional assessing officer.

3. Authority and Responsibility for the Release of Seized Cash:
The respondents contended that the jurisdictional assessing officer is the final authority to release the seized cash, as per Section 132B of the Income Tax Act. The Central Board of Direct Taxes (CBDT) issued instructions on the release of cash deposited in PD accounts, stating that the assessing officer must adjust the cash against any existing liability and release the balance, if any, within the stipulated time frame. The court noted that the proceedings before the assessing officer were pending adjudication.

4. Petitioners' Entitlement to the Release of Cash and Interest Thereon:
The petitioners claimed that the seized cash was part of their business transactions and urged that any due amount could be adjusted, with the balance released. They relied on Section 132B of the Income Tax Act, which outlines the procedure for the release of seized assets. The court directed the assessing officer to consider the advance tax paid and the documents filed with the returns, and to pass appropriate orders within three months. The court also instructed that the cash be released with interest, if the petitioners are entitled to it, after making necessary adjustments as required by law.

Conclusion:
The writ petition was disposed of with directions to the assessing officer to adjudicate the matter within three months, taking into account the advance tax paid and the documents submitted by the petitioners. The assessing officer was instructed to release the cash with interest, if applicable, after making necessary adjustments. No order as to costs was made, and any pending miscellaneous petitions were closed.

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