2021 (10) TMI 1021 - HC - Income Tax

Illegal retention of seized money - petitioner is aggrieved by the failure of the respondents/revenue in not refunding sum retained illegally, after adjusting the tax and penalty due, out of the money seized by them - HELD THAT - As revenue, says that, the petitioner, ordinarily, should have moved an application for rectification under Section 154 of the Income Tax Act, 1961 but having regard to the fact that, several years have passed since the adjustment was made, the best course would be to remit the matter to the AO with a direction to pass a speaking order, qua the grievances articulated by the petitioner in the writ petition. Given the circumstances obtaining in the case, that, indeed, would be the best way forward. Writ petition is disposed of with the following directions - (i) The writ petition will be treated as the petitioner s representation/application. (ii) The AO, after hearing the petitioner and/or his authorised representative, will pass a speaking order. This exercise will be completed by the AO at the earliest, though not later than 6 weeks from the date of the receipt of a copy of this order. (iii) The petitioner will file a copy of the writ petition along with the annexures appended herein, with the AO. (iv) The AO will issue a prior written notice to the petitioner, indicating the date and time for hearing. The AO will have the discretion to hear the petitioner and/or his authorised representative, via video-conferencing mechanism.

Summary

Issues involved:
Petitioner seeks refund of seized money, interest on retained amount, and relief from failure to refund. Respondents suggest rectification under Section 154 of the Income Tax Act, 1961.

Analysis:
The petitioner, an advocate, sought relief from the failure of the respondents/revenue to refund ?3,09,520 retained after adjusting tax and penalty from seized money of ?1,13,50,000. Additionally, interest on the retained amount was requested. The respondents proposed rectification under Section 154 of the Income Tax Act, 1961, considering the time elapsed since the adjustment. The Court agreed with the respondents' suggestion, directing the matter to be remitted to the Assessing Officer (AO) for a speaking order on the petitioner's grievances.

The High Court disposed of the writ petition with specific directions: treating it as the petitioner's representation/application, instructing the AO to pass a speaking order after hearing the petitioner within 6 weeks, requiring the petitioner to file a copy of the writ petition with the AO, and allowing video-conferencing for the hearing. The petitioner was granted the liberty to seek further legal remedies if the AO's order was adverse. Both parties were instructed to act on the digitally signed copy of the order, and the case papers were consigned to record.