Section 132B - Application of seized or requisitioned assets - Income-tax Act, 1961

1 [Application of seized or requisitioned assets. 132B. (1) The assets seized under section 132 or requisitioned under section 132A may be dealt with in the following manner, namely:- ( i ) the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the Gift-tax Act, 1958 (18 of 1958) 13 [ the Interest-tax Act, 1974 (45 of 1974.) and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015.) ] , and the amount of the liability determined on 11 [ 2 [ completion of the assessment or reassessment or recomputation ] and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be ] (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is 10 [deemed to be in default, or the amount of liability arising on an application made before the Settlement Commission under sub-section (1) of section 245C, may be recovered out of such assets]: 3 [Provided that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained ] to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the 9 [Principal Chief Commissioner or] Chief Commissioner or 9 [Principal Commissioner or] Commissioner, to the person from whose custody the assets were seized: Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed; ( ii ) if the assets consist solely of money, or partly of money and partly of other assets, the Assessing Officer may apply such money in the discharge of the liabilities referred to in clause ( i ) and the assessee shall be discharged of such liability to the extent of the money so applied; ( iii ) the assets other than money may also be applied for the discharge of any such liability referred to in clause ( i ) as remains undischarged and for this purpose such assets shall be deemed to be under distraint as if such distraint was effected by the Assessing Officer or, as the case may be, the Tax Recovery Officer under authorisation from the 9 [Principal Chief Commissioner or] Chief Commissioner or 9 [Principal Commissioner or] Commissioner under sub-section (5) of section 226 and the Assessing Officer or, as the case may be, the Tax Recovery Officer may recover the amount of such liabilities by the sale of such assets and such sale shall be effected in the manner laid down in the Third Schedule. (2) Nothing contained in sub-section (1) shall preclude the recovery of the amount of liabilities aforesaid by any other mode laid down in this Act. (3) Any assets or proceeds thereof which remain after the liabilities referred to in clause ( i ) of sub-section (1) are discharged shall be forthwith made over or paid to the persons from whose custody the assets were seized. (4) ( a ) The Central Government shall pay simple interest at the rate of 4 [ 5 [ one-half per cent for every month or part of a month ] on the amount by which the aggregate amount of money seized under section 132 or requisitioned under section 132A, as reduced by the amount of money, if any, released under the first proviso to clause ( i ) of sub-section (1), and of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in clause ( i ) of sub-section (1), exceeds the aggregate of the amount required to meet the liabilities referred to in clause ( i ) of sub-section (1) of this section. ( b ) Such interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment 12 [ or reassessment or recomputation ] . 7 [ Explanation 1 ] .- In this section,- ( i ) block period shall have the meaning assigned to it in clause ( a ) of section 158B; ( ii ) execution of an authorisation for search or requisition shall have the same meaning as assigned to it in Explanation 2 to section 158BE.] 8 [ Explanation 2 .-For the removal of doubts, it is hereby declared that the existing liability does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII.] -------------------- Notes :- 1. Substituted by the Finance Act, 2002, w.e.f. 1-6-2002. See rule 112C. Prior to its substitution, section 132B, inserted as section 132A by the Income-tax (Amendment) Act, 1965, w.e.f. 12-3-1965 and renumbered as 132B by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-10-1975, and later on amended by the Taxation Laws (Amendment) Act, 1967, w.e.f. 1-10-1967, Finance Act, 1972, w.e.f. 1-4-1972, Taxation Laws (Amendment) Act, 1984, w.e.f. 1-10-1984 and Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988/1-4-1989, read as under: 132B. Application of retained assets.- (1) The assets retained under sub-section (5) of section 132 may be dealt with in the following manner, namely :- (i) The amount of the existing liability referred to in clause (iii) of the said sub-section and the amount of the li ability determined on completion of the regular assessment or reassessment for all the assessment years relevant to the previ ous years to which the income referred to in clause (i) of that sub-section relates (including any penalty levied or interest payable in connection with such assessment or reassessment) and in respect of which he is in default or is deemed to be in de fault may be recovered out of such assets. (ii) If the assets consist solely of money, or partly of money and partly of other assets, the Assessing Officer may apply such money in the discharge of the liabilities referred to in clause (i) and the assessee shall be discharged of such li ability to the extent of the money so applied. (iii) The assets other than money may also be applied for the discharge of any such liability referred to in clause (i) as remains undischarged and for this purpose such assets shall be deemed to be under distraint as if such distraint was effected by the Assessing Officer or, as the case may be, Tax Recovery Officer under authorisation from the 9 [Principal Chief Commissioner or] Chief Commissioner or 9 [Principal Commissioner or] Commissioner under sub-section (5) of section 226 and the Assessing Officer or, as the case may be, Tax Recovery Officer may recover the amount of such liabilities by the sale of such assets and such sale shall be effected in the manner laid down in the Third Schedule. (2) Nothing contained in sub-section (1) shall preclude the recovery of the amount of liabilities aforesaid by any other mode laid down in this Act. (3) Any assets or proceeds thereof which remain after the liabilities referred to in clause (i) of sub-section (1) are discharged shall be forthwith made over or paid to the persons from whose custody the assets were seized. (4) (a) The Central Government shall pay simple interest at the rate of fifteen per cent per annum on the amount by which the aggregate of money retained under section 132 and of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in clause (iii) of sub-section (5) of that section exceeds the aggregate of the amounts required to meet the liabilities referred to in clause (i) of sub-section (1) of this section. (b) Such interest shall run from the date immediately following the expiry of the period of six months from the date of the order under sub-section (5) of section 132 to the date of the regular assessment or reassessment referred to in clause (i) of sub-section (1) or, as the case may be, to the date of last of such assessments or reassessments. 2. Substituted for under Chapter XIV-B for the block period by the Finance Act, 2003, w.e.f. 1-6-2003. 3. Substituted for Provided that where the nature and source of acquisition of any such asset is explained by the Finance Act, 2003, w.e.f. 1-6-2003. 4. Word six substituted for eight by the Taxation Laws (Amendment) Act, 2003, w.e.f. 8-9-2003. 5. Words one-half per cent for every month or part of a month shall be substituted for six per cent per annum by the Finance Act, 2007, w.e.f. 1-4-2008. 6. Inserted by the Finance Act, 2003, w.e.f. 1-6-2003. 7. Explanation numbered as Explanation 1 vide the Finance Act 2013, w.e.f. 1st day of June, 2013 8. Inserted vide the Finance Act 2013, w.e.f. 1st day of June, 2013 9. I nserted vide THE FINANCE (No. 2) ACT, 2014 w.e.f. 1st day of June, 2013 10. Substituted vide THE FINANCE ACT, 2015 w.e.f. 1st day of June, 2015, before it was read as, deemed to be in default, may be recovered out of such assets 11. Substituted vide Finance Act, 2022 w.e.f. 01-04-2022 before it was read as, ''completion of the assessment 2 [ under section 153A 12. Substituted vide Finance Act, 2022 w.e.f. 01-04-2022 before it was read as, 6 [under section 153A or] under Chapter XIV-B 13. Substituted vide Section 40 of the Finance (No. 2) Act, 2024 dated 16-08-2024 w.e.f. 01-10-2024 before it was read as, and the Interest-tax Act, 1974 (45 of 1974)