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TMI Blog2011 (6) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount became available at the hands of the petitioner - Held that: the respondent would not be justified in levying interest, as the amount of advance tax payable by the petitioner for these assessment years could be adjusted from the amount lying with the Department in the petitioner's own account. interest on refundable amount - After giving effect to the orders of the Settlement Commission, the excess amount was not refunded to the petitioner - On this count, the petitioner has demanded interest under Section 132A of the Act - The petitioner would, thus, be entitled to interest under Section 244A of the Act from the date of amount transferred into the account of AO from PD account after adjusting Rs.49,86,500/-, which was the tax due/payable - The amount shall be calculated accordingly. - W.P. (C) No. 21428 of 2005 - - - Dated:- 3-6-2011 - A.K. Sikri and M.L. Mehta, JJ C.S. Gupta, Adv. for the Petitioner Sanjeev Sabharwal, Sr. Standing Counsel for the Revenue JUDGMENT A.K. Sikri, J 1. The petitioner is a proprietor of M/s Foto Traders, a firm started in the year 1993 to trade in gold, silver and bullion. Income Tax Department conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01-03-1999 60,00,000 29-10-1999 25,00,000 05-11-1999 25,00,000 15-11-1999 25,00,000 22-11-1999 25,00,000 26-11-1999 44,00,000 14-12-1999 24,00,000 16,00,000 14-02-2000 50,00,000 05-04-2000 30,50,000 Total 4,20,50,000 Cash seized and retained on 04-02-1995 49,86,500 Grand Total 4,70,36,500" 3. The necessary consequence of the aforesaid developments/orders was that against deposit of Rs.4,70,36,500/- lying with the Department, liability of the petitioner was ascertained to Rs.17,22,608/- and thus, he was entitled to refund of the balance amount along with interest. To give effect of the orders of the Settlement Commission, the Deputy Commissioner of the Income Tax [Investigation Circle, 20 (1)] passed the orders dated 11.03.1999 under Section 250 of the Act. The net demand after giving effect was arrived at Rs.3,57,73,695/- including interest under Section 234A of Rs.10,63,883/-, interest under Section 234B of the Act of Rs.1,27,66,599/-, interest under Section 234C of the Act of Rs.6,142/-, intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct in respect of these assessment years. 6. While this was pending, the Income Tax Settlement Commission finally disposed of settlement application preferred by the petitioner vide order dated 07.07.2003 passed under Section 245D(4) of the Act. Vide this order, income of the petitioner for the assessment year 1995-96 was assessed at Rs.43,69,023/- on which tax was of Rs.1,78,430/-. After this order was passed, the petitioner again requested for release of the amount as the final tax payable for the assessment year 1995-96 was only Rs.17.22 lacs. The petitioner approached various authorities in this behalf including the ITO, CBDT, Commissioner of Income Tax, etc. He even faced claim from one M/s. Inter Gold (India) Limited, his supplier whom he could not make payment who filed OMP No.61 of 2004. In that OMP, this Court directed the Department to issue refund due to the petitioner by making the payment of Rs.4,20,00,000/- to the said M/s. Inter Gold (India) Limited. 7. Ultimately, order dated 27.09.2004 was passed by the AO giving effect to the orders of the Income Tax Settlement Commission. As per this order, refund payable to the petitioner was Rs.4,69,50,288/- and since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat under Section 132B of the Act, he is entitled to interest after six months from the date of order passed under Section 132(5) of the Act on initial seized amount of Rs.49,86,500/- minus tax due/payable and on further deposits in P.D. Account from the date of such deposit. In this backdrop, following reliefs are sought by the petitioner in this petition: "a.(i) Issue appropriate writ, direction or order to the respondents declaring that no interest could be charged on such alleged demands raised for Assessment Years 1995-96, 1999-2000, 2000-01, 2001-02, 2002-03 and 2003-04 in view of the sufficient amount lying and deposited with the Income Tax Department since 1995. a(ii) Issue appropriate writ, direction or order to the respondent to quash and/or set aside impugned actions of respondents in levying interest charged for Assessment years 1995-96, 1999-2000, 2000-01, 2001-02, 2002-03, 2003-04 in view of sufficient amount lying and deposited with the Income Tax Department since 1995. a(iii) Issue appropriate writ, direction or order to the respondents that they should refund an amount of Rs.48,16,066/- as being interest illegally recovered (as per statement marked as A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was even confirmed by the CIT (A) vide order dated 17.03.1999 and only thereafter, adjustments from P.D. Account of M/s. Foto Traders beginning from 31.03.1999 were made. Therefore, as per the Department, there was a dispute about the amounts seized and/or rotational payments either belonged to M/s. Foto Traders or Mr. Khanna in his personal capacity. That dispute was ultimately settled vide order under Section 245D(4) of the Act dated 07.07.2003 passed by the Income Tax Settlement Commission. Hence, no amount was available for adjustment of the demands raised in the case of Shri V.N. Khanna upto 07.07.2003. 12. Under Section 234B of the Act, interest is payable by the assessee if there is default in payment of advance tax. Likewise, under Section 234C of the Act, interest can be charged for deferment of advance tax. On the other hand, when the income is assessed and the tax is payable for which notice of demand under Section 156 of the Act is issued and the tax payable is not deposited within 30 days of the service, the assessee would be deemed in default. 13. Taking shelter of all these provisions, the Department has levied the interest. It is not in dispute that when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent would not be justified in levying interest, as the amount of advance tax payable by the petitioner for these assessment years could be adjusted from the amount lying with the Department in the petitioner's own account. ISSUE NO.(2): 16. Insofar as the petitioner's entitlement to interest on the amount which became refundable after giving effect to the orders passed by the Settlement Commission, it cannot be disputed that the petitioner is entitled to interest on such an amount under Section 132D (4) of the Act. This provision clearly mandates the Central Government to pay simple interest @ 1 % for every month on amount by which the credit money seized under Section 132, etc. of the Act. Clause (b) sub-Section (4) of Section 132B of the Act stipulates that such interest shall run from the date immediately following the expiry of the period of 120 days from the date on which the last of the authorizations for search under Section 132 or requisition under Section 132A was executed to the date of completion of the assessment. In accordance with this provision, from the date of search and seizure of the gold, 120 days would be calculated and from the expiry of this per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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