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TMI Blog1993 (7) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... bank locker of the petitioners with Vijaya Bank on December 4, 1979, under section 132(1) of the Income-tax Act, 1961 (hereinafter "the Act" only). Subsequently, the said money and jewellery were retained by the Income-tax Officer under his order dated February 18, 1980 (annexure "2"), passed under section 132(5) of the Act. In the said order, the source of cash seized was accepted as explained but the explanation regarding acquisition of jewellery valued at Rs. 1,22,211 was rejected thereby treating the investment as income from undisclosed sources. The liability under the Act towards tax, penalty and interest was estimated at Rs. 1,73,528. While making the regular assessment for the assessment year 1980-81, the Assessing Officer valued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -------------------------------- Rs. I/1545 1980-81 670 income-tax 339 interest under section 220(2) I/1546 1981-82 500 penalty under section 271(1)(b) I/1539 1981-82 4,560 income-tax and interest under section 215 I/1544 1982-83 15,000 penalty under section 271(1)(c) I/1543 1982-83 328 penalty under section 140 1/1542 1982-83 1,680 penalty under section 271(1)(a) I/1540 1982-83 17,074 income-tax and interest under sections 215, 216 and 139(8) I/2004 1988-89 38 interest under section 139(8) --------------------------------------------------------------------------------------------------------------------------------------------- (B) Sri Vinod Poddar (partner), c/o. Messrs. Universal Steel Enterprises, Kankarbag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------ From the above, it is clear that so far as the assessment year 1980-81, which is relevant to the seizure in question is concerned, the liability of petitioner No. 1 has been shown as Rs. 670 towards tax and Rs. 339 towards the interest under section 220(2) of the Act and there is no outstanding liability of petitioner No. 2. In these backdrop of facts, the questions that have emerged from the submissions made at the Bar are as to : (i) whether the retention of seized assets can be continued on grounds other than those set out under section 132(5) of the Act ; (ii) whether the income-tax authorities can levy interest on the demands due to them without adjusting the money seized under the Act against the statutory liabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 :.... 132B.(1) (i) The amount of the existing liability referred to in clause (iii) of the said sub-section and the amount of the liability determined on completion of the regular assessment or reassessment for all the assessment years relevant to the previous years to which the income referred to in clause (i) of that sub-section relates ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer can retain the seized assets in whole or part only to the extent it is necessary to satisfy the aggregate of the amount of the tax estimated, the amount of interest and penalty payable imposable and any existing liability under the Acts referred to in clause (iii). In the present case, it does not appear from the records, as is evident from the order under section 132(5) of the Act (annexure "2"), that there was any "existing liability" within the meaning of the aforesaid provisions on the date of the said order since existing liability under the said provisions can only mean liabilities determined till that date under the respective statutory provisions and in respect whereof the assessee is in default or is deemed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tively. Therefore, at best, Rs. 1,009 can be said to be the amount which can be recovered out of the seized assets, namely, Rs. 20,800 being cash and jewellery valued at Rs. 1,22,000 on the date of the seizure, i.e., an December 4, 1979. It is so because under section 132B(1) the seized assets can be applied only for discharging the existing liability referred to in section 132(5)(iii) and the amount of liability to be determined on completion of regular assessment or reassessment for all the assessment years relevant to the previous years to which the income referred to in section 132(5)(i) relates, namely, the undisclosed income assessed on the basis of the seized assets. It is elementary that the income pertaining to the seized assets ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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