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TMI Blog2012 (9) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... t under Section-132B (i) made on 23.02.2007. The liability as on 26.12.2006 was in respect of the whole amount of Rs.92,82,700/-. Thus the petitioner is entitled to interest for the period of 16 months on the total amount of Rs.92,82,700/- which works out to Rs.7,42,616/- after adjusting the sum of Rs.4,72,783/- paid on 11.5.2012. The balance shall be paid over to the writ petitioner within a period of four weeks from date of Order - in favour of assessee. The petitioner is entitled to interest @ 12 % p.a. on the balance sum of Rs.59,09,793/- for the period 1.3.2007 till 1.3.2011. These amounts shall be paid over to the petitioner within six weeks from date of Order - in favour of assessee. The concerned AO/Commissioner shall give a hearing to the petitioner with regard to the adjustment made under Section-132 B (1) (i) in respect of the sum of Rs.33,72,907/- by order dated 23.02.2007 and make a speaking order within two months from date of Order -in favour of assessee for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... search (2.5.2005) which came to 2.9.2005 till the date of assessment i.e. 26.12.2006. The calculation and reasons in support of the interest paid by the respondents was furnished to the Court through counsel. It reads as follows: - "XXX XXX XXX (ii) Section 132B (4) (a)/(b) provides for granting interest at the rate of 1/2 % for every month or part of a month from date of immediately following the expiry of the period of 120 days from the date on which the last of the authorization for the search under section 132 or requisition 132A was executed to the date of completion of assessment. The interest shall be provided on the amount of money seized u/s 132, as reduced by the amount of money, if any, released under the first proviso to the clause (i) of sub section (1) of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in clause (i) of sub section (1), exceeds the aggregate of the amount required to meet the liabilities referred to in clause (i) of sub section (1) of section 132. The existing liability as per clause (i) of sub section 91) includes the liability determined on completion of the assessment (under section 153A and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions made to the Court relied upon the ruling of the Division Bench of this Court in Ajay Gupta v. CIT, 297 ITR 125 as well as judgment of the Supreme Court in Sandvik Asia Ltd. v. CIT & Ors., 280 ITR 643. Counsel for the respondents, however, argued that the ratio of neither of these decisions is applicable in the facts of this case since the Court in these cases was concerned with refund of tax amount in the course of regular assessment. In this case, however, the cash amount was seized as a result of search proceedings and the Court should adopt a different approach. 10. This Court has considered the submissions of the parties. Section-132 B (4) provides that the Central Government is obliged to pay simple interest @ ½ % for every month or part thereof - on the amount of which aggregate sum of money seized under Section-132 as reduced by the amount of money, if released, under the first proviso to Section-132 B1 (i) and proceeds, if any, of the assets sold towards discharge of interest liability exceeds aggregate amount required to made the liability referred in that provision. Clause-(b) to sub-Section (4) enacts that interest shall be calculated from the "day immed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immediately following the expiry of six months from the Order under sub- section (5) of Section 132." It is also worth emphasizing that seized assets for which a valid explanation has been furnished and which therefore do not partake of the nature of undisclosed income or assets cannot be retained even if there are outstanding tax-dues. 8. Since the Search was conducted on 2.7.2002, the Petitioner has claimed interest commencing from the expiry of a period of 120 days thereof, i.e., 1.11.2002. It is noteworthy that the relevant provisions, i.e. Section 132B (4) make no reference to Section 244A on which reliance has been placed by learned counsel for the Respondent in the course of his final arguments. We must take note of the fact that the Department has tendered interest of the sum of Rs.2,09,753/- calculated for the period 1.11.2002 to 30.7.2004, i.e. the date of the Assessment Order for the Block Period starting from 1.4.1996 to 1.7.2002. However, it has failed to pay interest from 1.8.2004 to 27.9.2004, for no justifiable reasons. Predicated on the said Assessment Order dated 30.7.2004, after deducting the income-tax and penalty from the seized sum of Rs. 33 lakhs, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pletion of the assessment relating to the Search. In the present case, since the Petitioner has claimed interest only from the date on which the Search was conducted, we shall assume that that was also the day on which the last authorisation for the Search was recorded. The following Table will elucidate that the rate of interest payable in Search cases was not always the same as interest payable on delayed Refunds under Section 244A, to which our attention has been drawn by learned counsel for the Revenue: S.132B(4)(a) S.244A 1989 15% p.a 1.5% p.m 1991 15% p.a 1% p.m 2001 15% p.a 0.75% p.m 2002 8% p.a 0.66% p.m 8-9-2003 6% p.a 0.5% p.m 2006 6% p.a 0.5% p.m 11. Even though the rate of interest payable under Section 132B (4) (a) and Section 244A is the same since 2002 there was a difference prior thereto. This was obviously for the reason that Parliament considered Search proceedings to be distinct from ordinary assessment proceedings. We have already observed that carrying out a Search is an invasion of the privacy of a citizen. It is for good reason that the IT Act imposes stringent safeguards and restrictions on the conduct of Searches. For these very reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Sandvik Asia's matter (supra) too the Supreme Court was dealing with the situation of payment of interest in a statutory vacuum as it were. The statute in this case i.e. the Section-132 B (4) and 244A visualizes only two or three limited situation where the Central Government through the Income Tax Department is made liable to pay interest on specified amount for specified period. That, however, does not mean that a citizen whose property or asset which may include cash are subject to seizure which ultimately turns out to be unjustified is penalized in the sense that he is disentitled to any such claim. 14. In Sandvik Asia's matter, the restitutionary principle was recognized and the Court mandated that in such circumstances, 18% interest is payable. 15. Turning to the facts of this case, the position of the respondents in adjusting Rs.33,72,907/- even for the purpose of payment of interest liability is clearly unwarranted. As noticed in the earlier part of this order, the assessment was completed on 26.12.2006. Therefore, while calculating the interest, the respondents were clearly alive to this specific fact and in fact it worked out to a sum of Rs.7,42,616/-. In these cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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