2022 (9) TMI 114 - HC - Income Tax

Seizure of cash - undisclosed income of the petitioner u/s 69/69A - HELD THAT - This matter has been listed for hearing on several occasions and the Standing counsels have been directed to provide clarity on the assessment proceedings in the name of Bilash Khatiwada and the fate of the balance amount after adjustment of a portion of the amount in the hands of Bilash Khatiwada. Income tax authorities concerned, at Delhi, have also been impleaded in the hope that some clarifications and updates will be forthcoming on the aforesaid issues. However, though the impugned order makes it clear that a portion of the amount seized has, according to the Department, been assessed in the hands of Bilash Khatiwada, as to the balance, the respondents are unable to provide any clarity and, learned standing counsels say that there has been response to their communications in this regard from their counterparts in Delhi. We see merit in the request of the petitioner to challenge order by way of appeal against the non-grant of credit of a sum of Rs.50,00,000/- as directed by the Commissioner of Income Tax (appeals) in order - The appellate authority would be better positioned, seeing as the issue in this matter relates, prima facie, the double taxation of the amount once in the hands of the petitioner and secondly, in the assessment of Bilash Khatiwada. The petitioner is granted liberty to avail of appellate remedy within four weeks from today and appeal, if filed as aforesaid, shall be entertained by the Commissioner (Appeals) without reference to limitation.

Issues:
1. Challenge to order dated 12.09.2018 passed by respondent
2. Seizure of cash amounting to Rs.50,00,000
3. Assessment under the Income Tax Act, 1961
4. Appeal against the order of assessment
5. Direction for credit of the seized amount
6. Compliance with the appellate authority's order
7. Failure to comply with the direction to grant credit
8. Representation seeking credit for the seized amount
9. Writ petition seeking mandamus for disposal of representation
10. Impugned order dated 12.09.2018
11. Clarifications on assessment proceedings and balance amount
12. Impleading Income tax authorities at Delhi
13. Challenge to order dated 26.09.2016 by way of appeal
14. Possibility of double taxation issue

Analysis:

1. The petitioner challenged the order dated 12.09.2018 passed by the respondent, which was in compliance with a previous court order. The petitioner sought credit for a seized amount of Rs.50,00,000.

2. An employee of the petitioner was apprehended with Rs.50,00,000 in cash by Income Tax Department officials. This led to an assessment under the Income Tax Act, 1961, with a focus on the seizure of the cash.

3. During the assessment, it was noted that the source of the funds for the employee was not identified. Consequently, the entire amount was treated as undisclosed income of the petitioner under Section 69 of the Income Tax Act.

4. The petitioner initially appealed against the assessment order but later withdrew the challenge and requested credit for the amount against tax demands.

5. The appellate authority directed the assessing officer to credit the sum of Rs.50,00,000 against the tax demand, a decision that was upheld and finalized.

6. Despite cross-appeals and subsequent orders, the assessing officer did not comply with the directive to grant credit for the seized amount, leading to a representation by the petitioner.

7. The representation seeking credit remained pending, prompting the petitioner to file a writ petition seeking a mandamus for its disposal, which was granted.

8. The impugned order dated 12.09.2018 clarified the status of the seized cash and the inability to process the credit request due to certain circumstances.

9. The court directed the standing counsels to provide clarity on the assessment proceedings and the fate of the balance amount after adjustments, involving the Income tax authorities at Delhi.

10. Given the lack of clarity on the balance amount and the potential issue of double taxation, the court allowed the petitioner to appeal the non-grant of credit against the order dated 26.09.2016.

11. The petitioner was granted liberty to file an appeal within four weeks, which would be entertained without reference to limitation and disposed of by the Commissioner (Appeals) in accordance with the law.

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