Manohar Lal vs Commissioner of Income Tax and Another

A.M. Sapre, J.—The petitioner by filing this writ under Articles 226/227 of the Constitution of India, claims the following relief :

"A writ, direction or order in the nature of mandamus be issued to the respondents to compel the respondents to pay interest of Rs. 2,55,320 as shown in para. 11(ii) above together with interest thereon from October 21, 1992, up to the date of the actual payment."

The aforesaid relief is claimed on the strength of Section 244A(1)(b) of the Income Tax Act, 1961.

In substance, the case of the petitioner is that there was a raid (search and seizure) conducted by the Income Tax authorities u/s 132 of the Income Tax Act on May 22, 1988. This resulted in seizure of several movable properties which included some cash also. Eventually after completing all the assessment proceedings determining the liability arising out of the raid, a sum of Rs. 6,54,570 which was seized was refunded to the petitioner. It is this amount on which the petitioner has claimed interest complaining that the same was refunded late and hence the petitioner has become entitled to claim interest on the said amount from the date on which the liability was determined till it is refunded. As stated supra the claim for interest on the said amount is based on Section 244A(1)(b) of the Act.

The Revenue has denied the claim of the petitioner u/s 244A(1)(b). According to the Revenue, the petitioner was entitled to interest u/s 132B and the same was paid.

Heard Shri B. A. Chitale, learned counsel for the petitioner. Shri Arun Patnakar, learned counsel for the respondents.

Having heard learned counsel for the parties and having perused the record of the case, 1 find no merit in the writ. In a case of this nature which arises out of Section 132, the provisions of Section 244A(1)(b) on which the petitioner has placed reliance will have no application. In other words, Section 132 is a self-contained code and it also provides for payment of interest. By virtue of Section 132(6) of the Act, the assets seized in search operations have to be dealt with in accordance with Section 132B. Section 132B(4) in clear terms provides for payment of simple interest at the rate of 15 per cent, on the amount retained.

In the present case, the amount seized u/s 132 if returned late then it will attract the applicability of Section 132B(4) and the petitioner will be entitled to claim interest. In other words, it is for the petitioner to make out a case falling within the mischief of Section 132B(4)(a) and (b) then alone the petitioner can claim interest on the assets retained and refunded late.

In my opinion, reliance placed on Section 244A(1)(b) by learned counsel for the petitioner for claiming interest on the seized assets u/s 132 is misplaced. As observed supra Section 244A has no application while dealing with the cases of seized assets u/s 132 because the same is specifically governed by Section 132B(4)(a) and (b) of the Act.

Accordingly, and in view of the aforesaid discussion, I find no merit in the writ. It is dismissed.

No costs. Security amount if deposited, be refunded to the petitioner as per the rules.