2014 (5) TMI 223 - HC - Income Tax

Validity of authorization u/s 132A of the Act Seizure of cash Held that - There was no reason to interfere in the order as the Court has already held that the same matter has already tested thus, any such challenge cannot be entertained. Refusal of the prayer to release cash u/s 132B of the Act Held that - The assessee has been taking contradictory stand regarding the source of the amount - Before the police authorities, he had stated that the amount was out of his personal savings and income from brokerage of diamonds but, before the Department, he stated that the amount was received from his father and other relatives to enable him to set up his business the assessment was not completed the AO found that the cash cannot be released in terms of section 132B(1)(i) of the Act - expression the nature and source of acquisition of any such asset is explained to the satisfaction of the AO is therefore crucial - the AO held that there were inherent contradictions in the stand of the assessee regarding the source of the asset - the source of the asset was not explained as required under the first proviso to section 132B(1)(i) of the Act thus, there was no infirmity in the order Decided against Assessee.

Summary

Issues:
Challenge to authorization under section 132A of the Income Tax Act, 1961; Request for release of seized cash under section 132B of the Act.

Challenge to Authorization under Section 132A:
The petitioner challenged the authorization under section 132A of the Income Tax Act, 1961, after cash amounting to Rs.32.64 lacs was seized by the Income Tax Department. The petitioner initially failed to explain the source of the cash, claiming it was given by family members for a new business but later admitted it was undisclosed income. The court dismissed the challenge to the authorization, stating that the authorization was valid as the petitioner failed to prove the source of the cash. The court directed the concerned authority to pass an appropriate order on the petitioner's application for cash release within 12 weeks.

Request for Release of Seized Cash under Section 132B:
The petitioner sought the release of the seized cash, arguing that he was willing to deposit the maximum tax liability. However, the Assistant Commissioner rejected the release application under section 132B, citing contradictions in the petitioner's statements regarding the source of the cash. The Assistant Commissioner noted that the assessment proceedings were incomplete and that penalties could be levied on the undisclosed income. The Assistant Commissioner concluded that the seized amount might not be sufficient to cover the liabilities. The court upheld the Assistant Commissioner's decision, stating that the source of the cash was not adequately explained as required by the law, and therefore, the cash could not be released. The court dismissed the petition, finding no infirmity in the Assistant Commissioner's order.