9911796707
TMI Blog2019 (2) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... this Petition are as under: (i) On 9th October, 2014 a search under Section 132 of the Income Tax Act, 1961 (the Act) was conducted in the office premises of the Petitioner. During the course of the search, cash of Rs. 35 lakhs was seized as recorded in the panchnama dated 9th October, 2014; (ii) On 31st March, 2015, the Petitioner by a communication addressed to Respondent No.1 sought release of cash of Rs. 35 lakhs seized. This release was sought from the Respondent after adjusting tax liability due on the same. However, to no avail. (iii) On 22nd September, 2015, the Petitioner filed its return of income for Assessment Year 2015-16, declaring a total income of R.39.15 lakhs. This also included the cash of Rs. 35 lakhs seized during course of the search. In its computation of income, the Petitioner showed seized cash of Rs. 35 lakhs as advance tax and claimed a refund of Rs. 27.50 lakhs; (iv) On 16th December, 2016, Respondent No.1 passed an assessment order for the Assessment Year 2015-16 under Section 143(3) of the Act. In the above order, Respondent No.1 observed that the cash of Rs. 35 lakhs seized on 9th October, 2014 was included in the total income of the Petitioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest under Section 132(B) of the Act was not payable. So far as refund under Section 244(A) of the Act was concerned, the Respondent No.1 held that since Rs. 35 lakhs was not a refund of tax and/or penalty paid by the Assessee, no interest was payable thereunder. 4. It is the above impugned order dated 28th June, 2016 which is a subject matter of challenge before us. 5. Mr. Saldanha, learned Counsel in support of the Petition submits as under: (i) In terms of Section 132(B)(4) of the Act, the Petitioner is entitled to interest at 6% after the period of 120 days from the last search authorization till the date of completion of assessment under Section 153(A) of the Act. In this case, it is pointed out that the authorization was dated 9th October, 2014. Therefore, the 120 days therefrom expired on 5th February, 2015. The order under Section 143(3) of the Act was passed on 16th December, 2016. Thus, the Petitioner is entitled to an interest at 6% from 5th February, 2015 to 16th December, 2016 on the seized amount of Rs. 35 lakhs; (ii) Further, interest is payable under Section 244A(1)(b) of the Act from the date of the Assessment Order i.e. 16th December,2 016 till the refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation of submission, we reproduce Sections 132(B) and 244 (A)(1)of the Act, which read as under: " 132B:(1) The assets seized under Section 132 or requisitioned under section 132A may be dealt with in the following manner, namely (i) the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure Tax Act, 1987 (35 of 1987), the Gift Tax Act, 1958 (18 of 1958) and the Interest-tax Act, 1974 (45 of 1974), and the amount of the liability determined on completion of the assessment [under section 153A and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is [deemed to be in default, or the amount of liability arising on an application made before the Settlement Commission under sub-section (1) of section 245C, may be recovered out of such asserts]. Provided that where the person concerned makes an application t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following manner, namely( a) where the refund is out of any tax collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period, (i) from the 1st day of April of the assessment year to the date on which the refund is granted, if the return of income has been furnished on or before the due date specified under sub-section (1) of section 139; or (ii) from the date of furnishing of return of income to the date on which the refund is granted, in a case not covered under sub-clause (i); (aa) where the refund is out of any tax paid under section 140A, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period, from the date of furnishing of return of income or payment of tax, whichever is later, to the date on which the refund is granted; Provided that no interest under clause (a) or clause (aa) shall be payable, if the amount of refund is less than ten per cent of the tax as determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad something into the statutory provision, which is not there. 10. Moreover, the submission on behalf of the Petitioner that in any view of the matter, interest on the seized amount has to be granted under Section 244(A)(1)(b) of the Act. This on the ground that it is a residuary clause providing for interest, wherever the Revenue retains the amount belonging to an assessee, it must compensate the assessee for the same. However, this submission completely overlooks the fact that interest under Section 244(A)(1)(b) of the Act can only be of the excess amounts paid as tax or penalty, which is being refunded. In this case, the amount of Rs. 35 lakhs was seized by the Revenue and it was not a case of payment by the Petitioner of tax or penalty. Thus, this submission of the Petitioner also does not merit acceptance. 11. However, we note that the Petitioner had in its return of income filed on 22nd September, 2015 had shown Rs. 35 lakhs being the seized cash, as advance tax. However, while passing the Assessment Order on 16th December, 2016, the Assessing Officer did not adjust the seized cash as advance tax paid on behalf of the Petitioner but directed the Petitioner to pay tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact is that the petitioner claimed it to be tax. Therefore, on the date the demand notice under Section 156 of the Act was issued, there was an excess amount with the Revenue which the Petitioner was claiming to be tax. Therefore, in terms of the Explanation to Section 244A(1)(b) of the Act the amount of Rs. 35 lakhs was the excess tax (on change of its character from seized amount to tax paid), the petitioner is entitled to interest of Rs. 35 lakhs w.e.f. 16th December, 2016 on the passing of assessment order. This payment of interest on the refund of tax is in terms of the Supreme Court decision in M/s. K. Lakshmanya Co. Vs. CIT, 299 ITR 657 on the interpretation put upon Section 244A(1)(b) of the Act. This is not a case, where the petitioner is seeking interest dehors the Act. It is not consequential for amount unlawfully held by the Revenue but interest is sought in terms of Section 246A(1)(b) of the Act. 13. We find support for our view from the following observations of the Hon'ble Supreme Court in Union of India v/s. Tata Chemicals Ltd., 363 ITR 658 as under: " .... .... .... .... ..... The State having received the money without right, and having retained and u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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