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TMI Blog1996 (8) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... earched on August 2, 1975, by the Income-tax Officer and cash amounting to Rs. 25,165 and gold ornaments weighing about 970 kgs. were seized under the provisions of section 132 of the Act. The Income-tax Officer passed an order dated October 29, 1975, in terms of section 132(5) of the Act retaining the ornaments and cash aforesaid. The petitioners preferred an appeal to the Central Board of Direct Taxes, who by order dated September 25, 1975, allowed the appeal and directed the Income-tax Officer to return the ornaments. As regards the cash, it was directed that it will be treated as undisclosed income and the Income-tax Officer will calculate the tax on that income and retain the assets to that extent and release the balance. According to the petitioners, after the aforesaid order of the Central Board of Direct Taxes, the petitioners wrote several letters between 1978 and 1983 to the Income-tax Officer to refund the aforesaid amount, but to no avail. Ultimately, they filed Writ Petition No. 231 of 1984, in this court on February 14, 1984, in which a month's time was granted to counsel for the Income-tax Department for filing a counter-affidavit. The Income-tax Officer without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Act ; (iia) determining the amount of interest payable and the amount of penalty imposable in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act, as if the order had been the order of regular assessment ; (iii) specifying the amount that will be required to satisfy any existing liability under this Act and any one or more of the Acts specified in clause (a) of sub-section (1) of section 230A in respect of which such person is in default or is deemed to be in default, and retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in clauses (ii), (iia) and (iii) and forthwith release the remaining portion, if any, of the assets to the person from whose custody they were seized :" Under sub-section (11) of section 132, as it stood at the relevant time, an appeal against an order under section 132(5) lay to the Board and on such appeal being preferred by the petitioners, an order was passed by the Board in exercise of the powers contained therein. Sub-section (12) of section 132 of the Act reads as under : "(12) On receipt of the application under sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of interest by the Central Government was inserted, for the first time, with effect from October 1, 1975. Such liability for payment of interest was there from the year 1965, that is, from before the seizure of the cash in question and, in any case, even if such a provision was inserted, for the first time, with effect from October 1, 1975, even then liability would extend to all sums that had not already been paid and were outstanding on such date. The reason given by the Income-tax Officer for rejecting the claim of the petitioner was, therefore, in our view, wholly untenable. Sri Bharat Ji Agarwal, learned counsel for the respondents, however, placed reliance on Gulbanu Razack v. Asst. CIT [1990] 186 ITR 226, in which a Division Bench of the Andhra Pradesh High Court held that interest under section 132B(4) was not payable in respect of a refund directed under section 132(11) of the Act. In our view, the exercise of power by the Board or by the Commissioner of Income-tax under section 132(11) or (12) of the Act has little relevance to a claim for interest under section 132B(4). We have reproduced above the language of the relevant provisions of the law. Clause (a) of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) if there was an excess, up to what date, the excess, that is, the amount refundable was retained by the Department, and (iv) what, if any, is the amount of interest payable under section 132B(4) of the Act. Since these facts have not been determined and the impugned order proceeded on an untenable ground, we have to quash the same and direct the Assessing Officer to re-examine the claim of the petitioners for grant of interest under section 132B(4) in accordance with law and to make a speaking order keeping in view our observations, made above. As regards the petitioners' claim for interest under section 244 of the Act, the same has also to be examined by the Assessing Officer in the light of the relevant facts. Section 244 provides that where a refund is due to the assessee in pursuance of an order referred to in section 240 and the Assessing Officer does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at 15 per cent. per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the d ..... 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