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TMI Blog2011 (1) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest, no illegality in the order of the first respondent, writ petition fails and the same is dismissed - 600 of 2003 - - - Dated:- 20-1-2011 - JYOTHIMANI P. J. JUDGMENT P. Jyothimani J.- 1. The writ petition is directed against the order of the first respondent, Settlement Commission of Income-tax and Wealth-tax, dated October 25, 2002 in so far as it relates to the portion of the order rejecting the claim of the petitioner for payment of interest on the shares retained beyond the period of six months from the date of order under section 132(5) of the Income-tax Act and for direction against the first respondent to allow the claim of the petitioner for such interest. 2. The petitioner is a member of the Madras Stock Exchange, carrying on the business as a share broker in the trade name, "Viswanath Anil Kedia" in his individual capacity. As a stock broker, he buys and sells shares in the stock exchange on behalf of his clients apart from selling and purchasing in his own name. While carrying on the purchase and sale of shares in his name, he is known as "jobber" who buys shares for lower price and sells at higher price and makes his profit. The shares held b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1995, estimating the income-tax and penalty payable by the petitioner at Rs. 1.93 crores and, therefore, the assets and shares having market value of Rs. 1.46 crores were retained under the said provision. The open docu- ments seized from the office premises of the petitioner were released after representation on September 30, 1992, on the petitioner's father and mother providing their house property as security for a period of six months. (d) On November 23, 1992, the petitioner, on his behalf and on behalf of his family members, filed application under section 132(11) of the Income-tax Act before the Commissioner of Income-tax raising objections to the orders passed under section 132(5) of the Income-tax Act dated November 12, 1992. The objections were that the seized shares were duly accounted in the books of account and being a stock broker, the shares are the working capital, of the business and the market value of the shares fluctuates and, therefore, the shares seized caused lot of difficulties since the petitioner was unable to carry on his business. A further representation was filed on February 2, 1993, before the Commissioner of Income-tax for release of the seized s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g valued in terms of money, especially when the term "money" has not been defined under the Act, that as per section 132B(4), the term, "money" includes not only cash, but also shares by referring to various definitions of the term "money" defined in the Corpus Juris Secundum, that in view of the undis- puted facts and settled legal position that the seized shares represented working capital of the business of the petitioner which would be converted into cash within a week's time, the seized shares which were duly accounted for in the accounts, would not represent undisclosed income ; that the seized shares were released without adjusting any tax liability of the petitioner and that the specific request of the petitioner was to release the shares in order to use the sale proceeds for payment of tax. 3. The respondents have not filed any counter-affidavit. 4. It is the contention of the learned counsel for the petitioner that inas- much as the shares seized formed part of the working capital of the business of the petitioner as a jobber, and ultimately, the income-tax authorities returned the shares after coming to a conclusion that the reten- tion of shares is not needed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Assessing Officer, the manner in which such income has been derived, the additional amount of income-tax payable on such income and such other particulars as may be prescribed, to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided : Provided that no such application shall be made unless- (i) the additional amount of income-tax payable on the income disclosed in the application exceeds three lakh rupees ; and (ii) such tax and the interest thereon, which would have been paid under the provisions of this Act had the income disclosed in the application been declared in the return of income before the Assess- ing Officer on the date of application, has been paid on or before the date of making the application and the proof of such payment is attached with the application." for the assessment years 1991-92 to 1993-94. As per the requirements of section 245D(1) of the Act, the Settlement Commission proceeded to enquire and in fact, the Commissioner of Income-tax reported that the application was suitable for settlement. Accordingly, the order was passed by the first respondent on Jan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery or other valuable articles were seized as per section 132(1) or (1A) of the Act based on the search effected before July 1, 1997, by the Income-tax Officer, after giving reasonable opportunity to the person concerned and within 120 days of the seizure, he must make an order with the approval of the Joint Commis- sioner estimating the undisclosed income in a summary manner, calculat- ing the amount of tax on the income estimated, apart from interest payable on the amount, and penalty and also specifying the amount that is required to satisfy the existing liability under the Act. The said section 132(5), which stood as on the said date, is as follows : "132.(5) Where any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) is seized under subA-section (1) or sub- section (1A), as a result of a search initiated or requisition made before the 1st day of July, 1995, the Income-tax Officer, after affording a reasonable opportunity to the person concerned of being heard and making such enquiry as may be prescribed, shall, within one hundred and twenty days of the seizure, make an ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32B of the Act. Under sec- tion 132B(1) of the Act, the assets thus retained under section 132(5) are to be applied for the amount of existing liability under the Income-tax Act or the Wealth-tax Act, the Expenditure-tax Act, the Gift-tax Act and the Interest-tax Act. Section 132B(3) contemplates that after dealing with the said seized assets for adjusting the tax stated under section 132B(1) and after discharging such liability, any further assets remain, the same shall be forthwith returned to the person from whose custody the assets were seized. Section 132B(3) is as follows : "132B.(3) Any assets or proceeds thereof which remain after the liabilities referred to in clause (i) of sub-section (1) are discharged shall be forthwith made over or paid to the persons from whose custody the assets were seized." 12. The crucial section that is relevant for the purpose of this case is section 132B(4) of the Act which is as follows : "132B.(4)(a) The Central Government shall pay simple interest at the rate of six per cent. per annum on the amount by which the aggregate amount of money seized under section 132 or requisitioned under section 132A, as reduced by the amount of mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1922 (11 of 1922), or this Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force." relates to the assets to be handed over to the requisitioning officer having powers under section 132A(3) which is as follows : "132A.(3) Where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of subA-sections (4A) to (14) (both inclusive) of section 132 and section 132B shall, so far as may be, apply as if such books of account, other documents or assets had been seized under subA-section (1) of section 132 by the requisitioning officer from the custody of the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of this section and as if for the words 'the authorised officer' occurring in any of the aforesaid subA-sections (4A) to (14), the words 'the requisitioning officer' were substituted." 14. Therefore, while the powers given to the authorities under sections 132(1) and 132A are wider relating to the seizure of money and other assets, section 132B(4) (a) imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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