2019 (11) TMI 523 - HC - Income Tax

Release the Jewellery as seized during the course of search and recorded in Panchanama - whether the petitioner is entitled for issue of Mandamus, as sought for in this writ petition? - HELD THAT - As on date, there is no tax arrears payable by the petitioner. However, the revenue seeks to rely upon Section 132B for retaining the seized assets. Perusal of Section 132B indicates that the same is applicable only in the case where an amount of any existing liability is arrived by the Revenue. It is also to be noted that sub-section (i) of Section 132B(1) also reads that such existing liability can be derived only on completion of the assessment under Section 153A. In this case, it is an admitted fact that the assessment has not been completed in respect of Assessment Year 2013-14. Therefore, in my considered view the Revenue is not justified in relying upon Section 132B to retain the asset, when admittedly, as on date there are no arrears of tax due from the petitioner and that the assessment for 2013-14 is not yet completed and the liability is arrived. In such view of the matter, this Court finds that the petitioner is entitled for return of the jewels retained by the Revenue. Accordingly, this writ petition is allowed and the respondent is directed to return the jewellery, which were seized from the petitioner under the Panchanama dated 19.04.2012. Such exercise shall be done by the respondent within a period of four weeks from the date of receipt of a copy of this order.

Summary

Issues:
Mandamus to release seized jewellery, Application of Section 132B for retaining assets, Entitlement of petitioner for the return of jewellery.

Analysis:
The petitioner filed a writ petition seeking a Mandamus to direct the respondent to release the jewellery seized during an Income Tax Act search operation. The petitioner's assets, including gold, diamond jewellery, and ornaments, were seized on a specific date, and assessments were conducted subsequently. Appeals filed by the petitioner led to the assessments being set aside and restored for re-adjudication. The Revenue withdrew appeals citing low tax effect, resulting in dismissal. The petitioner requested the return of jewels multiple times, but the respondent delayed citing pending assessments for certain years.

The respondent argued that despite no current tax arrears from the petitioner, assets were being retained under Section 132B due to pending assessment for a specific year. The court examined Section 132B, which applies when an existing liability is determined post-assessment under Section 153A. As the assessment for the relevant year was incomplete, the court found the Revenue unjustified in relying on Section 132B to retain assets when no tax arrears were due from the petitioner at present. Consequently, the court ruled in favor of the petitioner, directing the respondent to return the seized jewellery within four weeks from the date of the order, emphasizing the lack of tax liability and incomplete assessment for the relevant year as key factors in the decision.

In conclusion, the court allowed the writ petition, granting the petitioner's entitlement to the return of the seized jewellery based on the absence of current tax arrears and incomplete assessment for the relevant year. The respondent was directed to return the jewellery within a specified timeframe, highlighting the inapplicability of Section 132B in the absence of tax liability and completed assessment for the relevant year.