2021 (3) TMI 87 - HC - Income Tax

Validity of seizure / requisition by income tax authority - assessment proceedings initiated by the jurisdictional Assessing Officer at Kolkata - HELD THAT - Assessment proceedings have been opened before the jurisdictional Assessing Officer of the petitioner at Kolkata in respect of the seized money. The proceedings would lead to a conclusion as to whether petitioner or any other person is its rightful claimant. This Court in writ jurisdiction is not in a position to determine a question of fact as to whom does the money belong to lawfully. Respondent department has on instructions fairly stated that assessment proceedings would be concluded within a time-frame and if the assessment proceedings leads to a finding that the amount in question falls within the taxable income of a concerned person/assessee and the tax thereupon stands paid or partly paid, the admissible amount or part of it could be refunded to the person / assessee concerned. This Court is of the opinion that the stand of the respondent department is fair. In those circumstances, the assessment proceedings initiated by the jurisdictional Assessing Officer at Kolkata be concluded within a time-frame of preferably 3 (three) months. Petitioner and any other person including Mr. Sanjay Agarwal and Mr. Sashi Kant Jha should appear and cooperate in the proceedings. Let this petitioner and others be noticed to appear on 10th of March, 2021 before the jurisdictional Assessing Officer at Kolkata. On conclusion of the assessment proceedings against the respective persons and the petitioner herein, in case the Assessing Officer finds that the amount in question has rightly been claimed by the petitioner or any other person, and that the income tax or part of the tax have already been paid, and that refund is admissible as the case may be, the same be refunded to the concerned person in accordance with law and as per the provisions of Chapter XIX of the Act without any delay thereafter, with statutory interest, if any.

Summary

Issues:
Petitioner seeking return of seized amount under Income Tax Act, 1961 - Legality of seizure/requisitioning - Jurisdiction of income tax authority - Compliance with Section 132A and Rule 112D of the Act and Rules - Source and genuineness of seized amount - Assessment proceedings under Sections 133 (6), 133A, 132 (9A), 153-C, and 153A of the Act - Claim for refund by petitioner - Locus standi of petitioner challenged by department - Delay in refund affecting petitioner's business - Filing of FIR in connection with seizure - Determination of rightful claimant of seized money - Conclusion of assessment proceedings within a specified timeframe - Refund process as per Chapter XIX of the Income Tax Act, 1961.

Analysis:
The petitioner, a company assessed to income tax, approached the High Court seeking the return of ?91,35,000 seized by the income tax authorities, questioning the legality and jurisdiction of the seizure under Section 132A of the Income Tax Act, 1961. The seizure was made from an individual who claimed the cash was given to him by the petitioner's temporary employee. The respondent department alleged the money was being misused during an election, while the petitioner asserted it belonged to the company operating a crusher. Various sections of the Act were invoked, including 133 (6), 133A, and 132 (9A), leading to assessment proceedings handed over to the Assessing Officer at Kolkata.

The department informed that assessment proceedings were ongoing and would be concluded expeditiously, challenging the petitioner's locus standi to claim the money at this stage. The Court emphasized that it couldn't determine the rightful owner of the cash in the writ proceedings, directing the assessment proceedings to be completed within three months, with all concerned parties cooperating. The Court stressed that if the assessment found the money to be rightfully claimed and taxes paid, refunds should be processed promptly as per Chapter XIX of the Act, with statutory interest if applicable.

Regarding the delay in refund affecting the petitioner's business, the Court highlighted the importance of concluding the assessment proceedings efficiently. The State clarified that no FIR was filed in connection with the seizure, while the petitioner argued for the immediate return of the money to prevent hindrance in business operations. The Court left the issue of the legality of seizure open, as it wasn't necessary to address it in the writ proceedings initiated by the petitioner. The writ petition was disposed of with directions for the assessment proceedings and refund process, emphasizing compliance with legal provisions and timely resolution of the matter.