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TMI Blog2024 (2) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of the appellants on 18.03.2010. During the course of search, Cash and Fixed Deposit Receipts [FDRs] were seized, the details are as under: S. No. Name of the Appellants Cash (Rs.) FDRs (Rs.) 1 Shri Nune Trimurtulu Rayudu 5,39,000/- 99,99,999/- 2 Smt. Binaben M. Patel -- 2,00,00,000/- 3 Shri Madhubhai Bhagwanbhai Patel -- 1,20,00,000/- 4 Smt. Dinaz Adil Sethna -- 1,10,12,221/- 5 Smt. N. Sujatha Rani -- 2,99,99,997/- 6 Shri Adil Faramroz Sethna 3,50,000/- 5,15,01,000/- 2.1. The appellants vide letter dated 28-04-2010 submitted before the AO on 30-04-2010, requesting for release of disclosed Cash and FDRs seized during the course of search in terms of section 132B of the Act which clearly states that as on date, there is no disputed demand that has not been paid by the assessee and the assessee is not an assessee in 'default' as defined in the Act and therefore all the disclosed FDRs, Cash and Deed of Immovable property sought to be released and returned immediately to the assessee. It is further contended by the appellants that the seized Cash and FDRs are recorded in the books of accounts and accordingly the same are duly accounted for by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized Cash/FDRs against tax liability in I.T.A Nos. 526 to 531/Rjt/2012 and Ors. A.Y. 2010-11 Page No Shri Nune Trimutulu Rayudu and Ors. vs. ACIT 6 these cases prior to the date of filing returns of income. In the present cases, however, request for release of assets i.e, Cash/FDRs was made vide letter dt. 28-04-2010 within the allowed period of 30 days from the end of the month in which the assets were seized, explaining the source of acquisition of such assets seized. Further, subsequent reminders were also given. However, it is contended by the appellants that no action has been taken by the AO within the allowed period of 120 days for the release of such seized assets after adjustment against tax liability as per section 132B (1)(i) of the Act. In this connection, the reliance of the appellants on the decision of Hon'ble Gujarat High Court in the case of Mitaben R. Shah v. DCIT (2010) 42 DTR (Guj) 124 is quite relevant. As per the said decision, it is held that petitioner having made an application within the permissible time limit for release of seized gold ornaments and jewellery explaining the nature and source of acquisition thereof, respondents have no authority to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication and charge interest u/s. 234B of the Act after making above adjustments. Accordingly, this ground of appeal is partly allowed subject to above findings." 4. Aggrieved against the common appellate orders, the assessees are in appeals before us raising the following Grounds of Appeal in ITA No.526/Rjt/2012: 1. The Ld. CIT(A) IV grossly erred in Law and on the facts of the case in not adjudicating the ground of appeal with respect to the illegality of the search & seizure operation u/s. 132 and consequential illegality of the assessment order u/s. 143(3) dated 11/03/2011 which was passed pursuant to such illegal search & seizure operation. a) That the impugned assessment order u/s 143(3) was passed on the basis of a search carried out u/s 132 of the Income Tax Act, 1961 at the business premises of the appellant assessee on 18/03/2010, which action has no sanctity in the eyes of law for the reason that no warrant of authorization u/s 132 was furnished to the appellant assessee till to date and therefore the search u/s 132 and subsequent assessment proceedings are null and void in the eyes of law. The appellant is not aware whether a legally valid warrant of authorization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore prayed that the interest charged u/s 234B may please be deleted. 3.1 The Learned CIT(A) grossly erred in Law and facts of the case in not directing the AO to release the seized Cash/FDRs which are still retained by the department despite the fact that the assessment proceedings & penalty proceedings for all the assessment years covered by the search u/s 132, including the assessment for A.Y.2010-11 had been finalized and concluded. 3.2 The Learned CIT(A) grossly erred in Law and facts of the case in not directing the AD to release the seized Cash/FDRs in accordance with the second proviso to section 1328 of the Income Tax Act which provides that the assets are required to be released within a period of 120 days from the date on which the last of the authorization for search u/s 132 was executed. It is therefore prayed that the assessing officer may please be directed to release the seized cash and FDRs which are still in the custody of the department along- with interest u/s 1328(4) r.w.s. 244A of the Income Tax Act and such interest may be granted upto the date of release of the seized assets. 4 The appellant craves leave to add, amend, alter, delete, change, modify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ann.com 374 (P&H); (iii) CIT vs. Cosmos Builders & Promoters Ltd.(2016) 76 taxmann.com377 (SC)-SLP dismissed; (iv) CIT vs. Sunil Chandra Gupta- (2016) 76 taxmann.com 372 (All): (v) CIT vs. Sunil Chandra Gupta- (2016) 76 taxmann.com 373 (SC)- SLP dismissed. 7. Per contra, Ld. CIT-DR Shri Shramdeep Sinha appearing for the Revenue supported the orders passed by the Ld. CIT(A) and requested to up hold the same. 8. We have given our thoughtful consideration and perused the materials available on record. The details of Cash and FDRs seized I.T.A Nos. 526 to 531/Rjt/2012 and Ors. A.Y. 2010-11 Page No Shri Nune Trimutulu Rayudu and Ors. vs. ACIT 11 at the time of search, Returned and Assessed Income of the assessees, applicable Income Tax and Interest charged by the AO are as follows: Name of the Appellants Returned Income Assessed Income Tax and Edu. Cess 234BC Interest Sri Nune Trimu tulu Rayudu 22,76,780 22,76,780 6,39,620 46,176 Smt. Binaben M. Patel 22,56,080 22,56,080 6,38,419 89,718 Shri Madhubhai Bhagwan Patel 33,39,320 33,39,320 9,77,036 1,40,190 Smt. Dinaz Adil Sethna 17,69,320 17,69,320 4,44,750 34,682 Smt. N. Sujatha Rani 53,41,420 53,41,420 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time period of 120 days expired on 15-09-2010, but the Ld AO has not acted upon the Application for release of the seized goods and thereby retained the seized Cash and FDRs beyond the period of 120 days prescribed in the 2nd Proviso to section 132B(1)(i) of the Act. 9.4. Now coming to the main section 132B(1) of the Act, which prescribes that the assets seized u/s. 132 can be adjusted against any "existing liability" as per IT, WT or the amount of liability determined on the completion of regular assessment or reassessment including any penalty levied or interest payable in connection with such assessment or reassessment. As per this sub- section, the Ld AO ought to have adjusted against the tax liability of Rs. 6,39,620/- while framing the regular assessment as against the seized Cash of Rs. 5,39,000/- and FDRs of Rs. 99,99,999/-. In that event also, the assessee is entitled for release of surplus FDRs seized by the Department as per section 132B [3] of the Act and therefore there is no question of levy of interest under section 234 B and C of the Act. Thus in our considered view, the Ld AO miserably failed to adhere to the provisions of section 132B[1] of the Act and the Ld CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable in the case of the assessee. 3. The assessee's submission with regard to interest u/s. 132B(4) of the IT Act is also considered. The same was not dealt with while giving effect to appeal order as the same was not subject matter of appeal before the CIT(A)-IV, Ahmedabad. Therefore, not granting interest u/s. 132B(4) of the IT Act while giving effect to appeal order cannot be said to be mistake apparent from records. However, the issue relating to allowbility of interest u/s. 132B(4) of the IT Act is also considered. The FDRs were seized from the premises of the assessee on 18-03-2010. The period of 120 days expires on 20-07- 2010. The payment has been deemed as self-assessment tax liability and substantial relief in interest u/s. 234B of the IT Act has also been granted as per the directions of the CIT(A). Since the said FDRs are deemed to have been apportioned against the self-assessment tax liability of the assessee, prior to expiry of 120 days, from the date of seizure, interest u/s 132B(4) of the IT Act is not allowable. Therefore, also the claim of the assessee for interest u/s. 132B(4) of the IT Act is not sustainable and accordingly no interest u/s. 132B(4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 132(1) and 132A are wider relating to the seizure of I.T.A Nos. 526 to 531/Rjt/2012 and Ors. A.Y. 2010-11 Page No Shri Nune Trimutulu Rayudu and Ors. vs. ACIT 17 money and other assets, section 132B(4)(a) imposes an obligation on the Government to pay interest only in respect of those seized matters which are either money or being reduced into the amount of money. The term "money" is not defined in the Income-tax Act In respect of payment of advance tax under section 234B of the Act, the assessee in liable to pay interest on the amount of tax. The word, "amount" used under the said provision has to be necessarily construed to mean "cash". Such cash seized under section 132(1) of the Act. if not utilized even for payment of advance tax which falls due after seizure of cash, also would come within the term "money" for the purpose of enabling the assessee to claim interest under section 132B(4)(a) of the Act. Therefore, in the absence of the words like, assets or shares which are capable of being reduced into the value of money, specifically incorporated in the said provision, it is not possible to accept the contention of the learned counsel for the petitioner that the shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 154 is upheld. The grounds of appeal are dismissed." 15. Aggrieved against the appellate orders, the assessees are in appeals before us raising the following Grounds of Appeal in ITA No. 138/Rjt/2015: 1. The Ld. CIT(A) has erred in law and on facts of the case in confirming the actions of Ld. AO in not granting interest u/s 132B(4) of the Act on seized asset viz. FDR as per the law. 2. The Ld. CIT(A) ought to have appreciated the fact that seized FDR was encashed and adjusted towards the liability determined on completion of assessment of the year relevant to the previous year in which search is initiated and such liability is covered u/s 132B(1) of the Act. 3. The Ld. CIT(A) ought to have appreciated that any surplus created out of adjustment of seized asset after discharging liability u/s 132B(1) shall be eligible for interest u/s 132B(4) of the Act. 4. Without prejudice to the above the Ld. CIT(A) has erred in law and on facts of the case in holding that FDR is not included within the definition of "money". 5. Alternatively and without prejudice to the above if the above claim is accepted the appellant is entitled to interest u/s 132B(4) for Rs. 3,68,829/- instead o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, jewellery or other valuable article or things. Seized FDRs cannot be treated as "Money", but only as "Other Valuable Article or Things". As per section 132B[4][a] of the Act, the assessee is entitled to interest on the amount by which the aggregate amount of "Money" seized after 120 days. Thus the arguments of the assessee are not in consonance to the provisions of law and the same is liable to be rejected. The case law of Ajay Gupta-Vs-CIT relied by the assessee is not relating to seizure of FDRs but of "Money" and hence not applicable to the facts of the present case. Whereas the Madras High Court judgment in the case of Anil Kumar Kedia (cited supra) which was relied by the Ld. CIT(A) is squarely applicable to the facts of the present case. Thus we do not any infirmity in the orders passed by the lower authorities and the same does not require any interference and the assessee appeals are hereby dismissed. 19. In the result the appeal filed by the assessee is hereby dismissed. 20. In ITA Nos. 136 to 138/Rjt/2015 filed by the assessees, wherein identical issue is involved, therefore the decision rendered in ITA No. 135/Rjt/2015 will be squarely applicable to the present ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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