2013 (12) TMI 71 - SC - Income Tax

Interest on refund - Held that - In the regular assessment done by the Assessing Officer, the tax liability for the relevant period was found to be higher and, accordingly, the seized cash under Section 132 of the Act was appropriated against the assessee s tax liability - The order of the Assessing Officer was changed by the Tribunal finally on 20.2.2004 - The interest for the post assessment period i.e. from 4.3.1994 until refund on the excess amount has already been paid by the department to the assessee - Section 132B(4) deals with preassessment period in the matters of search and seizure and section 240 deals with post assessment period as per the order in appeal - Decided in favour of assessee.

Summary

Issues involved:
1. Entitlement to interest under Section 132B(4)(b) of the Income Tax Act for a specific period.

Analysis:
The judgment concerns the entitlement of interest under Section 132B(4)(b) of the Income Tax Act, 1961. The appellant claimed interest for the period from the expiry of six months from the date of the order under Section 132(5) to the date of the regular assessment order. The appellant contended that the interest was due from 1.12.1990 to 4.3.1994, based on the relevant provisions of the Act.

The Court examined Section 132B(4)(b) which mandates the payment of simple interest at the rate of fifteen percent per annum from the date following the expiry of six months from the order under Section 132(5) to the date of the regular assessment. The Court emphasized that this provision applies when the amount retained under Section 132 exceeds the amount required to meet the liability under Section 132B(1)(i). Despite the Assessing Officer appropriating the seized cash against the tax liability, the Tribunal overturned this decision in 2004.

The Court noted that the interest for the post-assessment period had already been paid to the appellant by the department. The department contended that the refund of the excess amount was governed by a different section and that Section 132B(4)(b) did not apply. However, the Court clarified that Section 132B(4)(b) pertains to the pre-assessment period in matters of search and seizure, without conflicting with other relevant sections like Section 240 or 244(A).

Ultimately, the Court allowed the appeal, setting aside the impugned order and ruling in favor of the appellant's entitlement to simple interest under Section 132B(4)(b) from 1.12.1990 to 4.3.1994. The revenue was directed to calculate and pay the interest due to the appellant within two months from the date of the judgment, with no costs awarded in the matter.