9911796707
TMI Blog2005 (12) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ority concerned was of the view that the tax liability comes to more than the value of the assets seized and, consequently, it ordered retention of the assets seized by the Department, so that in the event of liability being created by the final order, the same may be paid from the seized assets. However, in the regular assessment proceedings for the assessment years 1967-68 to 1976-77, the Income-tax Officer framed the assessment order against the petitioner and created the net liability to the tune of Rs. 14,946 only for the aforesaid assessment years. The gold ornaments thereafter were returned to the petitioner. The cash worth Rs. 46,006 which was seized and was lying with the Department was refunded to the petitioner by means of cheque dated May 5, 1980, after adjusting the demand created in pursuance of the aforesaid assessment orders. The petitioner laid the claim of interest for the excess amount which remained with the Department and was seized in the aforesaid search after completion of the regular assessment orders and till the date of the refund, i.e., for the period January 31, 1977 to May 5, 1980. The petitioner laid claim of interest under section 244 of the Act on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... December 31, 1977 (for the period of twenty months) which works out to Rs. 6,212 has been accepted. The petitioner is aggrieved by para. 2(ii) of the impugned order through which his claim of payment of interest from April 1, 1978 to May 1, 1980, and onward has been denied. Section 132 of the Act empowers, upon fulfilment of the conditions laid therein to search and seize the documents, books of account, assets, etc. Section 132, on the face of it, is intended to achieve two limited objectives: (i) to get hold of the evidence bearing a tax liability of a person which the said person is seeking to withhold from the assessing authority, and (ii) to get hold of assets representing income believed to be undisclosed income and applying so much of them as may be necessary in discharge of the existing and anticipated liability of such person, vide C. Venkata Reddy v. ITO [1967] 66 ITR 212 (Mys). The assessing authority after affording a reasonable opportunity of hearing to the person concerned shall make such enquiry as may be prescribed within 120 days of the seizure. He will make an order with the previous approval of the authority concerned estimating the undisclosed income in a summa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Recovery Officer may recover the amount of such liabilities by the sale of such assets and such sale shall be effected in the manner laid down in the Third Schedule. (2) Nothing contained in sub-section (1) shall preclude the recovery of the amount of liabilities aforesaid by any other mode laid down in this Act. (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. (4)(a) The Central Government shall pay simple interest at the rate of fifteen per cent, per annum on the amount by which the aggregate of money retained under section 132 and of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in clause (iii) of sub-section (5) of that section exceeds the aggregate of the amounts required to meet the liabilities referred to in clause (i) of sub-section (1) of this section. (b) Such interest shall run from the date immediately following the expiry of the period of six months, from the date of the order under sub-section (5) of section 132 to the date of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and section 244 operate in different fields, inasmuch as they relate to the payment of interest for different periods. There is no overlapping. To put it differently section 132B(4) deals with the liability of the Central Government to pay interest up to the date prior to the framing of the assessment or reassessment order. Section 244 of the Act deals with the liability of the Central Government to pay interest for the subsequent stage which comes into existence after the completion of the assessment/reassessment order. At this stage, learned standing counsel has placed reliance upon section 240 of the Act and submitted that in view of the words "except as otherwise provided in this Act" disentitles the petitioner to claim interest under Chapter XIX which deals with "refunds". Elaborating the argument it was submitted that the provisions relating to search and seizure as contained in Chapter XIII-C contain special provision dealing with the matter relating to search and seizure. The legislature have made necessary provisions for grant of interest on the amount of refund, wherever they have thought fit. Chapter XIX relating to "refund" contains provisions of refund relating to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the words 15 per cent, with effect from October 1, 1984. The procedure for calculating the interest is prescribed in rule 119A of the Income-tax Rules. A conjoint reading of sections 243 and 244 clearly shows the liability of the Central Government to pay interest in the present case at the rate of 12 per cent, per annum for the period after three months of the end of the month in which the total income is determined under the Act. The assessment order was framed on December 31, 1977, the liability of interest would start running after three months, i.e., from April, 1978, till the date of payment. We, therefore, hold that the petitioner is entitled and the respondents are liable to pay interest under section 244 of the Act on a sum of Rs. 31,060 for the period commencing from April 1, 1978 to the date of actual payment of excess/refund amount. It is not in dispute that the petitioner has made requests for payment of interest by means of repeated applications/representations such as dated June 10, 1983, and May 7, 1985 (annexures 1 and 2 to the writ petition). The petitioner has been deprived of his legitimate claim of interest and was obliged to approach this court by means of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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