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TMI Blog1990 (8) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... t on June 28, 1980. The Income-tax Officer thereafter passed an order under section 132(5) on September 19, 1980, and retained the above amount of Rs. 5,52,000 to meet the incometax liabilities of the petitioner under the order. The said order of the Income-tax Officer under section 132(5) was set aside by this court and the matter was remanded to the assessing authority for a de novo consideration (vide judgment in 0. P. No. 3643 of 1980 (K. A. Karim and Sons v. ITO [1984] 149 ITR 172 (Ker)). The assessing authority thereafter passed a fresh order under section 132(5) on July 28, 1983 (see exhibit P-6). The assessing authority treated the abovementioned amount as the undisclosed income of the petitioner of the previous year in which it was seized, namely, 1980-81, and, accordingly, made the regular assessment on October 13, 1983, raising a demand for Rs. 5,27,022 which is inclusive of interest under section 215 of the Act. Later, interest under section 215 to the tune of Rs. 94,666 was waived by order dated October 25, 1984. Consequently, the demand as per the regular assessment was reduced to Rs. 4,32,356. The order of assessment was challenged in appeal before the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the assessing authority giving effect to the order of the appellate authority. The claim for interest under section 132B(4), on the facts of the case, cannot be granted. It is all the more so because the retention of the amount cannot be said to be without the authority of law. I shall first deal with the question whether the assessee is entitled to get interest under section 132B(4) on the amount in dispute. The answer depends upon the interpretation of sections 132(5), 132B(1) and (4). Section 132(5) empowers the Income-tax Officer, after affording an opportunity of being heard to the person concerned, to make an order within 90 days of the seizure (this section has subsequently been amended and the amended provision enables the authority to pass the order within 120 days), estimating the undisclosed income in a summary manner to the best of his judgment, i.e., on the basis of such materials as are available with him, and determine the tax liability as also the other liabilities made mention of in clauses (ii), (iia) and (iii) of the said sub-section and retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this section (section 132B(1)). In other words, the Central Government is liable to pay simple interest at the prescribed rate on the amount retained and found to be in excess of the liability the assessee would be called upon to meet on passing the orders under section 132B(1)(i). Clause (b) of sub-section (4) of section 132B says that 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 regular assessment or reassessment referred to in clause (i) of sub-section (1) or, as the case may be, to the date of the last of such assessments or reassessments. Rule 119A of the Income-tax Rules prescribes the mode of calculating such interest. Sub-section (4)(a) of section 132B would further indicate that the claim for simple interest could be entertained only if the asset seized was money or other assets converted into money in the manner indicated in clause (iii) of sub-section (1) of section 132B and not otherwise. The cumulative effect of these sections, therefore, is that the person from whom the money or other assets converted into money is retained, after se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order in appeal or other proceeding : Provided also that where any interest is payable to an assessee under this sub-section, no interest under sub-section (1) shall be payable to him in respect of the amount so found to be in excess." This sub-section provides that an assessee is entitled to interest on the amount directed to be refunded. It is clear from this section that the interest, the Central Government is liable to pay under this section is the interest on the excess amount the assessee paid as tax or penalty on the basis of the order of assessment or order levying penalty which, as the case may be, was later modified or altered by the authorities higher up in the hierarchy of tribunals. The situation warranting payment of this interest is different from the situation justifying payment of interest under section 132B(4). A comparative study of these two sections would make it clear that, in order to claim interest under section 244(1A), the assessee should establish that he paid the tax pursuant to the demand raised on an assessment or paid the penalty in terms of an order levying penalty. But so far as the claim for interest under section 132B(4) is concerned, the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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