HEMAL DILIPBHAI SHAH Vs. ASSISTANT COMMISSIONER OF INCOME

JUDGEMENT

(1.) By this petition under Article 226 of the Constitution of India, the petitioner seeks a direction to the respondent to release the cash of the petitioner amounting to Rs. 15,84,020/- with interest forthwith.

(2.) The petitioner who is assessed in the capacity of an individual derives income from salary and interest. On 16th February, 2012, Rs. 26,00,000/- in cash came to be seized by the Department from one Vinod Shankarlal Sen, a resident of Raipur (Rajasthan) under Section 132A of the Income Tax Act, 1961 (hereinafter referred to as the "Act "?). In his statement recorded on oath, Shri Vinod Sen stated that the cash did not belong to him but belonged to the assessee - Shri Hemal D. Shah of Surat. Such statement of Shri Vinod Sen was also confirmed by the petitioner vide his statement dated 7th March, 2012. The petitioner filed return of income for assessment year 2012-13 on 30th July, 2012 declaring total income of Rs. 27,52,100/- including the income declared of Rs. 21,73,000/- on account of unexplained cash. The petitioner filed an application dated 14th June, 2012 to the Jurisdictional Assessing Officer to adjust the tax liability from the seized amount. On 21st October, 2013, the assessment order came to be passed under section 143(3) wherein the petitioner was assessed at a total income of Rs. 31,79,100/- against the returned income of Rs. 27,52,100/-. A penalty order dated 1st November, 2013 was also passed levying penalty on additions made amounting to Rs. 1,31,940/-. On request made by the petitioner for rectification, an order dated 4th November, 2013 came to be passed under section 154 of the Act revising the total demand in quantum proceedings to Rs. 8,84,040/-. Thereafter, the petitioner made an application to the Assessing Officer which was received by him on 2nd December, 2013 for release of the seized amount along with interest after adjusting the demand. By a communication dated 17th December, 2013, the Assessing Officer informed the petitioner that the Department is not in a position to issue the refund until completion of the assessment of Shri Vinod Sen. The petitioner made two more representations dated 31st December, 2013 and 31st January, 2014 to the Assessing Officer requesting that the cash be released. However, since there was no response thereto, the petitioner has filed the present petition seeking release of the amount of Rs. 15,84,020/- with interest.

(3.) Mr. Hardik Vora, learned advocate for the petitioner submitted that the approach adopted by the respondent is arbitrary, inasmuch as, the respondent cannot withhold the excess cash after adjusting the tax liability once assessment and penalty proceedings are completed and the liability is determined. It was submitted that the liability has already been discharged which has been accepted by the respondent in the order under section 154 of the Act and hence, the excess cash of Rs. 15,84,020/- must be returned forthwith in view of the provisions of section 132B(3) of the Act. It was, accordingly, urged that the petition deserves to be allowed by granting the relief as prayed for therein. In support of his submissions, the learned advocate placed reliance upon the decision of the Punjab and Haryana High Court in the case of Rajinder Kumar Verma v. Union of India, (2009) 181 Taxman 215 (P &H) , for the proposition that where there is no dispute that the seized articles belonged to the petitioner and in fact, in the order passed by the Income Tax Officer itself, this fact has been acknowledged, and that even the person from whom the articles were seized took the same stand, in such a situation when there is no dispute about the title of the petitioner to the seized goods, the provisions of section 132B(3) cannot be applied. The court held that a procedural provision cannot defeat the substantive rights of a person and that the said provision was intended to apply in case of a dispute of title or absence of title and not where the title of the party is undisputed. It was submitted that the above decision would be squarely applicable to the facts of the present case, inasmuch as there is no dispute about the ownership of the seized cash, and hence, the respondents are not justified in not returning the same to the petitioner.