9911796707
TMI Blog2004 (10) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment and order dated April 5, 2004, passed by the learned single judge on the writ application filed by respondent No. 1 herein, being W.P. No. 2445 of 2003. By the said judgment and order the learned single judge disposed of the writ petition and directed the Revenue authorities to release to the writ petitioner/respondent 9 per cent. R.B.I. Relief Bonds, valued at Rs. 7.2 crores which had been seized during the search and seizure operation under section 132 of the Income-tax Act, 1961, conducted at the residence of the writ petitioner/respondent No. 1, 2/2, Justice Dwarkanath Road, Kolkata 700 020, on August 24, 2000. An application for stay of the said directions contained in the order of the learned single judge has been filed in the appeal and has been taken up for consideration upon due notice to the writ petitioner/respondent. As will appear from the facts disclosed during the course of the hearing and also set out in the stay application, after the search and seizure operation, the assessing authority initiated assessment proceedings against the writ petitioner/respondent, hereinafter referred to as "the assessee", by issuing notice under section 158BC of the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... munication of the order. On behalf of the Revenue it was submitted that the learned single judge had erred in directing release of the securities during the pendency of the appeal preferred by the Revenue before the Income-tax Appellate Tribunal as in the event the appeal succeeds the Revenue will be prevented from realising its dues from the seized security. It was also urged on behalf of the Revenue that a regular assessment under section 143(3) had been made by the Assessing Officer for the assessment year 2000-01, and in the said assessment order no addition had been made with regard to the deemed dividend under section 2(22)(e) of the aforesaid Act. Inasmuch as, the said order was prejudicial to the interests of the Revenue, the Commissioner of Income-tax initiated proceedings under section 263 of the aforesaid Act for inclusion of the deemed dividend income in the total income of the assessee. A second writ application was filed by the assessee challenging the initiation of the proceedings under section 263 of the Act. By an order dated January 21, 2004, the learned single judge gave liberty to the Commissioner of Income-tax to proceed with the notice issued under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by directing release of the securities without giving any protection to the Revenue authorities in the matter of realization of tax in respect of the assessment which was the subject-matter of appeal before the Appellate Tribunal. It was urged that the learned single judge ought to have made release of the security dependant upon the final outcome of the pending appeal before the Appellate Tribunal. Appearing for the writ petitioner/respondent No. 1, Mr. N.K. Poddar, learned senior counsel, submitted that the appeal preferred by the Revenue was without any merit whatsoever and was liable to be dismissed. It was urged by him that the question of retention of the seized R.B.I. Bonds would have to be considered keeping in mind the fact that the seized Bonds were disclosed assets and could not be retained for the purposes of section 132B of the Income-tax Act, 1961. Mr. Poddar urged that the provisions of section 132B had no application as such in respect of the seized bonds, inasmuch as, there was no existing liability on account of which the said bonds could be retained for recovery of any dues. Referring to the provisions of clause (i) of section 132B(1) of the Income-tax Act, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 132A, as the case may be, was executed;" Mr. Poddar urged that the second proviso was, in fact, substituted in place of section 132(5) of the above Act whereunder the Income-tax Officer could previously make an interim assessment regarding the undisclosed income in respect of the seized goods and to calculate the amount of tax on the income so estimated, together with interest and penalty payable thereupon, and specify the amount that would be required to satisfy any existing liability and retain in his custody such assets or part thereof as was in his opinion sufficient to satisfy the aggregate of the amounts referred to and to release the remaining portion, if any, of the assets to the person from whose custody they were seized. Mr. Poddar submitted that the second proviso to clause (i) of section 132B(1) contemplates release of any seized asset or portion thereof within one hundred and twenty days from the date on which the last of the authorisations for search under section 132 was executed. Mr. Poddar urged that, in any event, even if the seized articles were not disclosed assets, the income-tax authorities were under an obligation to release the same within the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch decision of the Punjab and Haryana High Court in the case of Naresh Kumar Kohli v. CIT reported in [2004] 266 ITR 553, in which the provisions of sub-section (3) of section 132B of the Income-tax Act were under consideration and it was held that once the amount assessed under section 158BC was paid by the assessee, even if an appeal had been preferred from the order under section 158BC, the same could not be a ground for retention of the seized assets. It was observed that no provision had been brought to the notice of the court whereunder the Revenue could keep the release of the seized assets in abeyance during the pendency of an appeal, revision or reference filed by the Revenue. Since the question regarding obtaining a stay from the Income-tax Appellate Tribunal was one of the points raised during the hearing of the appeal, Mr. Poddar submitted that the submission made on behalf of the Revenue that the rules did not provide for any stay application to be filed by the Department was incorrect and that the said question had been considered and settled by the hon'ble Supreme Court as far back as in 1968, in the case of ITO v. M.K. Mohammed Kunhi reported in [1969] 71 ITR 815. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with the said branch of his submissions to the effect that orders passed by the appellate authorities are binding on all the Revenue authorities and that the principles of judicial discipline require that the order of the higher appellate authorities should be followed unreservedly by the subordinate authorities. Mr. Poddar contended that once the Income-tax Commissioner (Appeals) had set aside the block assessment, and a regular assessment had followed, it was no longer open to the authorities of the Revenue to contend that the seized bonds were liable to be retained in the case of future liability of the assessee. It was then urged by Mr. Poddar that there was no provision under the Income-tax Act or the various rules framed thereunder and in connection therewith which permitted the Revenue authorities to retain the seized bonds, which were disclosed assets for realisation of future dues, if any, Mr. Poddar submitted that such an interpretation of section 132B, would render clause (i) of section 132B completely otiose. Mr. Poddar submitted that the filing of the appeal by the Revenue before the Income-tax Appellate Tribunal could not operate as a stay on return of the seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting liability and not otherwise. In the instant case there is no existing liability as far as the assessee is concerned and the pendency of the appeal filed by the Revenue before the Income-tax Appellate Tribunal against the order of the Commissioner of Income-tax (Appeals) cannot be a ground for retention of the seized bonds by the Revenue. As has been pointed out by Mr. Poddar, after the block assessment had been set aside by the Commissioner of Income-tax (Appeals), a regular assessment followed. Even in the assessment made in the proceedings under section 263, it had been indicated by the Assessing Officer that the deemed dividend relating to the seized bonds had no connection with the search and seizure conducted in the assessee's case and the deemed dividend income was rightly taxable in the regular assessment of the assessee made under section 143(3) of the Income-tax Act, 1961. In fact, the said observation of the Assessing Officer makes it quite clear that there is no nexus between the search and seizure for the purposes of block assessment and the seizure of the bonds. There can, therefore, be no justification for the Revenue to retain the said bonds in connection wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
