VINOD PODDAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE present writ application has been filed by the petitioners for commanding the respondents to make over the jewellery seized from their possession on December 4, 1979, as evidenced by the panchnama (annexure 1)..

(2.) THE relevant admitted facts may be stated in short. Petitioner No. 2, Smt. Pratibha Poddar, is the wife of Sri Vinod Poddar, petitioner No. 1; the jewellery referred to above and a sum of Rs. 20,800 in cash were seized and taken custody of from a 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 the jewellery at Rs. 1,22,211. He accepted the explanation for jewellery worth Rs. 1,12,211 only. Accordingly, he added Rs. 20,800 being cash seized and Rs. 10,000 against jewellery as income from undisclosed sources under section 69A of the Act to the assessed income. Finally, on appeal, the said additions were deleted as is evident from the appellate order dated November 6, 1987 (annexure 6). On finalisation of the regular assessment, the petitioners requested the respondents for releasing the jewellery in their favour on the plea that if the amount of cash seized is adjusted against their liabilities arising under the Act, then the retention of the jewellery cannot be said to the justified in law. But the respondents did not accede to the prayer..

(3.) FURTHER, turning to the provisions of section 132B, the seized assets can be applied only in satisfying the existing liability as they stood on the date of passing of the order under section 132(5) and the liabilities respecting the assessment years relevant to the previous years to which the income referred to in section 132(5)(i) relates. The assessment years for these provisions can be the assessment year relevant to the previous years till the date of seizure during which the income-tax authorities could have estimated undisclosed income. If thereafter, as provided under section 132B(3) of the Act, after due satisfaction of the aforesaid liabilities, any assets or proceeds thereof remain, then those need to be forthwith handed over or paid to the person from whose custody the assets were seized. Under sub-section (4), the Central Government has been made liable to pay interest at the rate prescribed therein, if the amount retained is found to be in excess of the aggregate amount referred to in sub-section (1) (i) of this section..