DHARAMRAJ PRASAD BIBHUTI V. COMMISSIONER OF INCOME TAXCEN

CWJC/9799/2010

AI Insights

The case revolves around a dispute between Dharamraj Prasad Bibhuti, the petitioner, and the Income Tax Department, concerning a time deposit receipt of Rs. One lakh found during a search and seizure operation on January 29, 2002. The petitioner argued that the Department should adjust the amount of the deposit against his outstanding tax dues, as the deposit was effectively seized and remained unreturned, preventing him from renewing it. The Department contended that the deposit was not seized and was only provisionally attached, which automatically vacated after six months, and thus, they were not liable for its renewal or for adjusting the amount against the petitioner's dues.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 751506 (HC-PATNA)
• Appeal Type: Others
• Pronouncement Date: 18-10-2012
• Assessment Year: misc
• Laws Referred To: Article 226 of the Constitution, Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: HARSHWARDHAN PRASAD; ARCHANA SINHA; SAHVIND KUMAR SHARMA
• Assessee Lawyers: D V PATHY; UTTAM KUMAR MISHRA; ABHI SARKAR
• Keywords: Adjustment of Dues; Income Tax; Provisional attachment; Search and seizure; Time deposit
• Section: 226(3); 281B

Judgement Text

"IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.9799 of 2010 ====================================================== Dharamraj Prasad Bibhuti S/O Late Rambrichh Sah R/O Machuatoli, P.O. Machuatoli and P.S. Kadamkuan, Distt.- Patna .... .... Petitioner Versus 1. Commissioner Of Income Tax (Central) having its Office at 3rd Floor, Central Revenue Building, Birchand Patel Path, P.O. GPO, P.S. Kotwali, Patna-800001 2. Deputy Commissioner of Income Tax, Central Circle-2 having its Office at 6th Floor, Central Revenue Building (Annexee), Birchand Patel Path, P.O. GPO, P.S. Kotwali, Patna-800001 3. Union of India through Post Master, Machuatoli Post Office, Machuatoli, Patna .... .... Respondents ====================================================== Appearance: For the Petitioner : Mr. D.V. Pathy, Advocate Mr. Uttam Kumar Mishra, Advocate and Mr. Abhi Sarkar, Advocate For the Respondent/ Revenue: Mr. Harshwardhan Prasad, Sr.S.C. and Mrs. Archana Sinha, Jr.S.C. For the Respondent UoI : Mr. Sahvind Kumar Sharma, C.G.C. ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE BIRENDRA PRASAD VERMA CAV ORDER The 18th October 2012. (Per: HONOURABLE THE CHIEF JUSTICE) This petition under Article 226 of the Constitution is filed by the assessee against the Commissioner of Income Tax, Central, Patna and others (hereinafter referred to as “the Patna High Court CWJC No.9799 of 2010 (21) dt. 18-10-2012 2 / 7 2 Department”) to adjust the outstanding dues of the petitioner against the cash, Bank and other valuable assets seized by the Department during the operation of search and seizure conducted on 29th January 2002. After long drawn arguments stretching over a period of one year, ultimately the matter has precipitated to a time deposit worth Rs. One lakh made by the petitioner in the Machhuatoli Post Office, Patna. The petitioner has relied upon the Assessment Order dated 24th February 2006 made pursuant to the aforesaid search and seizure. The Assessing Officer has categorically recorded seizure of time deposit receipt worth Rs. One lakh. Nevertheless, it is the case of the Department that the time deposit receipt, though was found in the search operation, was not seized by the Department. The Department is, therefore, not responsible either to return the time deposit receipt or for its renewal. Learned advocate Mr. D.V. Pathy has appeared for the petitioner. Mr. Pathy has drawn our attention to the above referred Assessment Order dated 24th February 2006; particularly, paragraph 12.1 thereof. In the said order, the Assessing Officer has expressly referred to the investment of Rs. One lakh and Rs. Ten thousand in Machhuatoli Post Office which were found and seized. Mr. Pathy has submitted that the aforesaid instrument which was found and seized by the Department as early as on 29th January 2002 has not been returned to the petitioner till the date. In absence of the instrument, the petitioner is not able to renew the said deposit. On one hand the petitioner does not earn interest on the investment, on the other hand the petitioner is required to pay interest on the Patna High Court CWJC No.9799 of 2010 (21) dt. 18-10-2012 3 / 7 3 outstanding dues of the Department. He has submitted that had the Department adjusted the said Rs. One lakh against the outstanding dues of the petitioner, the liability of the petitioner would have been considerably reduced. Mr. Pathy has also submitted that the Department had sent a communication to the Machhuatoli Post Office in respect of attachment of the deposits under Section 281B of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟). He has submitted that since it is the Department which has attached the time deposit account of the petitioner, the Department is liable to indemnify the petitioner. Learned counsel Mr. Harshwardhan Prasad has appeared for the Department. He has contested the writ petition. Mr. Prasad has categorically denied that the disputed instrument of time deposit of Rs. One lakh was ever seized by the Department. To buttress this submission, Mr. Prasad has relied upon the annexures `O‟ & `O1‟ to the seizure memo. Copies of the said two annexures have been produced by the Department with the affidavit made on 11th May 2012. He has submitted that the instruments, cash deposits, etc. seized in the search operation on 29th January 2002 are enumerated in the aforesaid annexures `O‟ & `O1‟ to the seizure memo. The seized instruments include certain NSC certificates, fixed deposits with the Bank and the Companies, but the aforesaid deposit of Rs. One lakh is not referred to in either of the said annexures. Mr. Harshwardhan Prasad has relied upon Section 281B of the Act to submit that the attachment under Section 281B of the Act is provisional and is operative for six months. On expiry of the six months, the attachment stands vacated automatically without further reference to the Department. It was Patna High Court CWJC No.9799 of 2010 (21) dt. 18-10-2012 4 / 7 4 for the petitioner to be vigilant and to do the needful after expiry of six months of attachment. It is apparent that the petitioner has failed to exercise his right. The petitioner cannot have any claim against the Department. He has relied upon the communication dated 10th October 2003 (Page 110 of the Paper Book). He has submitted that the concerned Post Master was specifically informed that the account was provisionally attached under Section 281B of the Act. In the submission of Mr. Prasad, once the Department had informed the concerned Post Master that the attachment was provisional under Section 281B of the Act, the Department was no more liable in respect of the said account. He has submitted that the attachment being provisional, limited for a period of six months, it was for the petitioner and the Post Office to ensure that on expiry of the period of six months of attachment either the deposits were encashed or renewed. If the deposits were not encashed or were not renewed, the entire responsibility lay on the petitioner. He has also relied upon the communication dated 16th March 2004 sent by the Assistant Commissioner of Income Tax to the Post Master, Machhuatoli Post Office (Page 107 of the Paper Book). He has submitted that the said communication specifically referred to Section 226(3) of the Act. He has submitted that in spite of the notice for recovery issued under Section 226(3) of the Act, the concerned Post Master did not comply with the said notice. The amount of the time deposit has not been remitted to the Department. The petitioner‟s claim for return of the instrument of deposit or for adjustment of the outstanding dues against the amount of deposit is not tenable. It is evident that on 29th January 2002 the Department did raid the business and the residential premises of Patna High Court CWJC No.9799 of 2010 (21) dt. 18-10-2012 5 / 7 5 the writ petitioner. In course of search, several incriminating documents were found by the respondents. The above referred postal deposit of Rupees One lakh was also one of the documents found in the said search. The question is whether it was seized or not. Learned advocate Mr. Pathy has relied upon the order of assessment made by the Assessing Officer on 24th February 2006. In the said order of assessment, the Assessing Officer has, in paragraph 12.1, categorically recorded, “In addition to that details regarding investments of Rs.50,000/- in FDR on 30/07/1997 in United Bank of India and Rs. 1,00,000/- and Rs. 10,000/- in Machhuatoli Post Office were found and seized.” Mr. Pathy has vehemently argued that the Department did seize the aforesaid postal deposit receipt in the sum of rupees One lakh. The said postal deposit receipt ought to be in the possession of the Department. The Department was, therefore, liable to renew the said deposit on its maturity. In the alternative, he has submitted that since the postal deposit receipt is in the possession of the Department, it should credit the amount of the postal deposit against the outstanding dues of the petitioner. We may note here that although the petitioner has produced the panchnama of the search and seizure on the record of the writ petition, he has not produced annexures to the seizure memo now produced by the Department. The annexures to the seizure memo produced by the Department do establish that although the raiding party had discovered the above referred postal deposit receipt in the sum of rupees One lakh, the same was not seized by it. The Assessing Officer, while making the order of assessment on 24th June 2002, was not accurate in recording the facts. He seems to have recorded the factum of Patna High Court CWJC No.9799 of 2010 (21) dt. 18-10-2012 6 / 7 6 seizure of the aforesaid postal deposit receipt in the sum of rupees One lakh without verifying the record. It is further evident that the said postal deposit was provisionally attached by the respondents under the power conferred by Section 281B of the Act. In absence of the extension of the period of attachment by express order, the said attachment ceased to operate after expiry of the statutory period of six months. Thus, the aforesaid postal deposit receipt was neither seized by the Department nor was it under the order of attachment after expiry of six months from 10th October 2003. The Department, therefore, cannot be held responsible for renewal of the said postal deposit. It further transpires that the Department did seek to recover the aforesaid amount of rupees One lakh from the postal department in exercise of power conferred by Section 226(3) of the Act. However, as stated in the counter affidavit, the notice issued under Section 226(3) of the Act was not complied with by the concerned Post Master. In other words, the postal department did not remit the amount of the said deposit to the Department as required under the notice dated 16th March 2004. The Department having not received the said amount from the post office, the Department is not liable to adjust the said amount against the tax liability of the petitioner. In the aforesaid circumstances, we are of the opinion that the petitioner‟s claim against the Department in respect of the aforesaid postal deposit in the sum of rupees One Lakh cannot be countenanced. For the aforesaid reasons, the writ petition is dismissed. Patna High Court CWJC No.9799 of 2010 (21) dt. 18-10-2012 7 / 7 7 The parties will bear their own costs. NAFR Dilip. Sd/- (R.M. Doshit, CJ) Birendra Prasad Verma, J.- I agree. Sd/- (Birendra Prasad Verma, J) "