Munna Mandle V. Union Of India Through Chairman, Central Board Of Direct Tax and The Principal Commissioner Of Income - Tax and The Joint Commissioner Of Income - Tax and The Assistant Commissioner Of Income - Tax - 2(1)

WPT/38/2021

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The case involves Munna Mandle, who had Rs. 22,19,330 seized under Section 132 of the Income Tax Act during the Chhattisgarh Assembly Elections in 2013. Despite the completion of the assessment in 2016, which determined the tax payable as zero, the seized cash was not released until 2021. Mandle filed a writ petition under Article 226 of the Constitution, seeking the release of the cash along with interest for the delay. The court found that the Income Tax Department had not adhered to the statutory provisions and CBDT instructions regarding the timely release of seized cash and payment of interest.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 800308 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 19-12-2024
• Assessment Year: misc
• Other Referred Cases: Chironjilal Sharma (HUF) vs. UOI, S.K. Jain Vs. CIT-XI, New Delhi
• Laws Referred To: Income Tax Act, 1961, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AJAY KUMARANI
• Assessee Lawyers: S RAO
• Keywords: Assessment; Income Tax; Interest; Seized cash; Writ petition
• Section: 143(3); 132; 153A; 132B

Judgement Text

"1 2024:CGHC:50239 NAFR HIGH COURT OF CHHATTISGARH, BILASPUR Writ Petition(T) No. 38 of 2021 Munna Mandle S/o Shri Kartik Mandle Aged About 57 Years Village Thankhamaria Po­ lice Station - Thankhamaria District Bemetara, Chhattisgarh Pin 491338 --- Petitioner versus 1 - Union Of India Through Chairman, Central Board Of Direct Tax North Block, New Delhi, District : New Delhi, Delhi 2 - The Principal Commissioner Of Income - Tax, Aaykar Bhavan, Civil Lines, Raipur District Raipur Chhattisgarh., District : Raipur, Chhattisgarh 3 - The Joint Commissioner Of Income - Tax, Aaykar Bhavan, New Civic Centre, Bhiali District Durg Chhattisgarh., District : Durg, Chhattisgarh 4 - The Assistant Commissioner Of Income - Tax - 2(1), Bungalow No. 32, 32 Bungalows, Amdi Nagar, H U D C O, Bhilai, District Durg Chhattisgarh., District : Durg, Chhattisgarh --- Respondents ------------------------------------------------------------------------------------------------------------- For Petitioner : Mr. S. Rajeshwara Rao, Advocate For Respondents No. 2 to 4 : Mr. Ajay Kumarani, Advocate appears on behalf of Mr. Amit Chaudhary, Advocate ------------------------------------------------------------------------------------------------------------- Hon'ble Shri Arvind Kumar Verma, Judge Judgment on Board 19.12.2024 1. The present writ petition filed under Article 226 of the Constitution of India for issuance of appropriate writs of mandamus and certiorari and for other suitable writs, directions, etc. by the petitioner being aggrieved by the fact that the respondent Income Tax Department is not releasing cash of Rs. 22,19,330/- seized under Section 132 of the Income Tax Act, 1961 from petitioner’s possession on 30.10.2013 despite 2 completing assessment proceedings on 27.12.2016 and its becoming due for release on 26.10.2017 that is one month after completion of assessment as per Board’s Instructions. 2. Relief sought by the petitioner by way of this petition is as under:- a. To call for relevant records of the respondents for its kind perusal. b. To direct the respondents to release seized cash forthwith along with interest under Section 132B(4) of the Act from the date immediately following expiry of the period of 120 days from the date on which the last day of the authorization for search under Section 132 or requisition under Section 132A was executed till the date of completion of assessment under Section 153A that is 27.12.2016. c. To direct respondents to pay interest @ 12% p.a. for subsequent period from 28.12.2016 till the date of release as directed in other similarly situated cases. d. to direct respondents to pay costs of Rs. 25,000/- towards costs of this petition for constraining the petitioner to re- approach the this High Court. e. To pass such other and/or further order and/or orders as the Hon’ble High Court may deem fit and proper in the facts and circumstances of the case. 3. Facts of the case is such that the petitioner Munshi (Accountant) of Premchand Murarka, is engaged in business, inter alia, of offering brokerage services relating to sale of agriculture produce of farmers. On being informed by the Magistrate Flying Squad, Election Unit, Rajnandgaon, cash amounting to Rs. 22,19,330/- found from the possession of petitioner was seized 3 on 30.10.2013 under Section 132 of the Income Tax Act, 1961 during the Chhattisgarh Assembly Elections, 2013, even after explaining the source and nature of possession. Thereafter petitioner approached this Court by filing writ petition being WPT No. 75/2015 and this Court has been pleased to decide the petition with directions to consider petitioner’s application in accordance with law and pass appropriate order. The respondent Assessing Officer completed assessment and passed assessment order on 27.12.2016 and accepting petitioner’s total income as per return and determined amount of tax payable as zero. As per CBDT Instructions No. 11/2006 read with provisions of section 132B(1)(i) of the act, the respondents are duty bound to release seized cash immediately after one month of passing of assessment order respectively. Looking to the inaction on the part of the respondents the petitioner filed a writ petition. The petitioner filed Income Tax Return for assessment year 2014-15 and declared total income at Rs. 90,000/-. Respondent no. 4 has completed the assessment under Section 143(3) read with Section 153A of the Act vide order dated 27.12.2016. Respondent Assessing officer determined the amount of tax payable post assessment made under Section 143(3) read with Section 153A of the Act as zero. 4 4. Learned counsel for the petitioner most humbly submits that the impugned inaction is illegal and without jurisdiction being contrary to the provisions of the act and circulars issued by the board. For that the respondents erred in not releasing seized cash as per provisions of Section 132B and as per CBDT’s Instruction No. 11/2006 dated 01.12.2006. Respondents are deliberately delaying release of seized cash in gross violation of statutory provisions and binding instructions of respondent no. 1. The respondents did not responded to any of the requests made to them thereby wrongfully denied petitioner’s right of reply and hanged the matter indefinitely in limbo and deliberately caused harassment and humiliation to the petitioner. Respondents are duly bound to release the cash and pay interest as per provisions of sub-section (4) of Section 132(B) of the Act and additional interest @12% per annum as granted by various High Courts in similarly situated cases and charged by respondent department for taxpayer’s defaults. 5. He further contended that the Hon’ble Supreme Court has held in the case of Chironjilal Sharma (HUF) vs. UOI [2014] 41 txamann.com 274(SC) that revenue is liable to pay simple interst at the rate of 15% on expiry of six months from the date of order passed under Section 132(5) of the Act. Various other Hon’ble 5 High Court have also directed the Revenue to pay interest @ 12% from the next date following date of completion of assessment. Further he stated that in the case of S.K. Jain Vs. CIT-XI, New Delhi [2013] 33 taxman.com 36 (Delhi) the Hon’ble Delhi High Court has held that interest should be paid @ 12% per annum from the day next following the day on which assessment was completed till the amount was actually released to the petitioner. The respondents deliberately deprived petitioner of his legitimate right of property without authority of law as enshrined in Article 300A of Constitution and are duty bound to make good the losses inflicted upon him. 6. Learned counsel for respondent no. 2 to 4 filed their written submission in which they have categorically stated that the statement under the oath was recorded from all the three persons from whom the possession of money was found. They have stated that they have received cash from M/s Indian Solvent Industry, Rajnandgaon through self cheque from the accounts of company as sale consideration of soyabean. However, they did not produce any documentary evidence regarding withdrawal of cash from the bank against the self cheque. During investigation, the above mentioned three persons could not produce evidences regarding their actual business or profession. They also did not 6 prove the purchase of the soyabean from the farmers, their transportation to the company, the date and time of the supply of soyabean to the company. On further confrontation, all the three persons admitted in his statement that these amounts were unaccounted and could not explain with documents. Thus, the unexplained cash of Rs. 62,02,930/- was seized under Section 132(1) of the Act from the possession of Shri Dipesh Jain, Shri Sumit Jain, and Shri Munna Mandale after getting the warrant of authorization issued by the DIT (Inv.), Raipur. Therefore, the amount was seized judiciously and fair manner as per the provisions of the Income Tax Act, 1961. As per the appraisal report received from the office of the Joint Director of Income Tax (Inv.), Raipur, all the three assessee’s claimed as traders/brokers, however they do not have bank accounts, books of accounts maintaining for the business and they are not filing any return of income. Only Shri Dipesh Jain has claimed that he has PAN but others do not have PAN. Later on the assessment order under Section 143(3) read with Section 153A of the Act was passed on 27.12.2016 by the ACIT-2(1), Bhilai. Subsequently, in the month of December 2020, the assessee’s have filed application for release of cash. The report was called from the A.O. as per CBDT, New Delhi’s various instructions regarding release of cash. Due to covid 19 pandemic and lock down in Chhattisgarh State, the 7 report was received in the month of June 2021 in the office of the Pr. Commissioner of Income Tax-1, Raipur and as per recommendations of the AO, the cash has been released by this office on 16.07.2021. 7. He contended that the petitioner has failed to produce the relevant para of the act which was submitted from 01.06.2015 as “provided that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the [Principal Chief Commissioner of Income Tax or] Chief Commissioner of Income Tax or [Principal Commissioner or] Commissioner, to the present from whose custody the assets were seized. Petitioner has even failed to quote the clause-(a) of para -5 of CBDT, New Delhi’s instruction no. 11/2006 of 01.12.2006 in the matter of release of cash deposited in PD account, where it has clearly been mentioned that where an application is made in accordance with first proviso to Section 132B(1)(i) for release of seized cash and 8 the nature and acquisition of such cash is explained to the satisfaction fo the Assessing Officer, the seized cash should be released within the time limit provided under that section after adjustment of any existing liability. He also stated that the petitioner has failed to produce any evidence that he has filed application before respondents regarding release of cash before 02.12.2020. Even in his letter the assessee has not mentioned that this is reminder letter of previous correspondence letters. 8. He stated that the case laws mentioned in para 8.11 is completely different from this case as in this case the assessee filed application for release of cash seized in the month of December, 2020. The petitioner filed application on 02.12.2020 and thereafter the department has released the cash to the assessee on 16.07.2021 as per provisions of CBDT Instruction No. 11/2006 dated 01.12.2006, therefore, he prays that the instant petition is unsustainable and is liable to be dismissed in limine with cost. 9. I have heard learned counsel for the respective parties at length and perused the record with utmost circumspection. 10. The case of the petitioner is that on being informed by the Magistrate Flying Squad, Election Unit, Rajnandgaon, cash amounting to Rs. 22,19,330/- found from the possession of petitioner was seized on 30.10.2013 under Section 132 of the 9 Income Tax Act, 1961 during the Chhattisgarh Assembly Elections, 2013. Inventory of cash seized is annexed as - (Annexure P/1). Thereafter the petitioner filed a writ petition bearing WPT No. 75/2015 and this court has directed the respondent to decide the petition with directions to consider petitioner’s application in accordance with law and pass appropriate order (Annexure P/2). The respondent Assessing Officer completed the assessment and passed assessment order on 27.12.2016 and accepting petitioner’s total income as per return and determined amount of tax payable as zero. Assessment order has been annexed as Annexure P/4 and Income Tax Computation as Annexure P/5. 11. As per provisions of Section 132B and CBDT Instructin No. 11/2006 read with provisions of Section 132B(1)(i) of the Act, the respondents are duty bound to release seized cash immediately after expirty of one month of passing of assessment order respectively. 12. Looking to the inaction on the part of respondents, the petitioner filed present writ petition inter alia seeking the following reliefs.:- (i) To call for relevant records of the respondents for its kind perusal. (ii) To direct the respondents to release seized cash forthwith along with interest under Section 132B (4) of the Income tax Act, 1961 10 from the date immediately following expiry of the period of 120 days fromt eh date on which the last day of the authorization for search under Section 132 or requisition under Section 132A was executed, till the date of completion of assessment under Section 153A that is 27.12.2016. (iii) To direct respondents to pay interest at the rate of 12% per annum for subsequent period from 28.12.20126 till the date of release as directed in other similarly situated cases. (iv) To direct respondents to pay costs of Rs. 25,000/- towards costs of this petition for constraining the petitioner to re-approach the Hon’ble High Court. (v) To pass such other and/or further order and/or orders as the Hon’ble High Court may deem fit and proper in the facts and circumstances of the case. 13. List of relevant dates and events is as under:- S.No. Date Event A. 30.10.2023 Cash amount to Rs. 22,19,330/- was seized from the possession of petitioner under Section 132 of the Income Tax Act, 1961. B. 07.01.2014 Petitioner requested the Dy. Director of Income Tax- (Inv)- III, Raipur for supply of seized mateeri­ als, copy of statement and receipt of deposit of seized cash in bank account. But no reply received C. 11.03.2014 Petitioner filed writ petition before Hon’ble High Court inter alia for refund of cash. Advance copy of the petition was served upon the respondents. D. 14.03.2014 Hon’ble High Court has been pleased to decide the petition with directions to petitioners to approach the respondents for release of the cash and the de­ partment to consider the application and pass ap­ propriate order. E. 03.04.2014 Petitioner filed application for release of cash be­ fore Assessing Officer. F. 21.05.2014 Assessing Officer fixed the matter for hearing on 11 04.06.2014. G. 03.06.2014 Petitioner filed application before Assessing Offi­ cer. H. 08.08.2014 Income Tax Officer-02, Rajnandgaon forwarded pe­ titioner’s application to Asstt/Dy. Commissioner of Income Tax, Circle, Bhilai. It has been stated that he had obtained legal opinion from the Sr. Stand­ ing Counsel of Income Tax Department. I. 21.08.2014 Petitioner filed further application before Commis­ sioner of Income Tax, Raipur J. 07.10.2014 Petitioner filed further application before Deputy Commissioner of Income Tax, Raipur. K. 29.12.2014 Dy. CIT has requested to make compliance. L. 02.02.2015 Petitioner made compliance M. 17.04.2015 Petitioner filed reminder before the Assessing Offi­ cer. N. 27.12.2016 Assessment was completed and total income was accepted as per return after due verification of the facts determining amount payable as zero. O. 06.01.2017 Petitioner again filed application for release of cash before assessing Officer. P. 11.01.2017 Petitioner again filed applicatin for release of cash before Pr. Commissioner of Income Tax, Raipur-1 Q. 16.01.2017 Petitioner again filed application for release of cash before Jt. Commissioner of Income Tax, Raipur R. 30.10.2017 Petitioner again filed application for release of cash before Pr. Commissioner of Income tax, Raipur-1 S. 02.12.2017 Petitioner again filed application for release of cash before Assessing officer. 14. As per provisions of Sub-Section (4) of Section 132B of the Act, 12 after considering all existing liabilities the respondent department was required to release the cash and was also required to pay interest at the rate of “one half” percent per month after expiry of 120 days/ 01 month from the date of seizure. Similarly as per mandate of CBDT’s Instruction No. 11/2006 dated December 01, 2006 the seized cash had to be released within one month of passing of search and seizure assessment order after adjustment of existing demand and expected amount of penalty if any. 15. The Hon’ble Supreme Court has held in the case of Chironjilal Sharma (HUF) Vs. UOI [2014] 41 txamann.com 274 ( SC) that revenur is liable to pay simple interest at the rate of 15% on expiry of six months from the date of order passed under Section 132(5) of the Act. Various other Hon’ble High court have also directed the Revenue to pay interest @ 12% from the next date following date of completion of assessment. 16. Therefore, from the above discussion/observations it is crystal clear that the petitioner is entitled for the interest payable as per the provision of Section 132B and the CBDT Instruction No. 11/2006 read with provision of Section 132 B (1)(I) of the Act. Hence the petition is allowed and it is directed that the petitioner is entitled to receive interest at the rate of 0.5% payable per 13 month from the date of 28th of February, 2014 to 27th of December, 2016 as per Section 132B(4) of the Act. As the Income Tax Department has released the seized cash amount on 14th of July, 2021, therefore, for this period the petitioner is entitled for the interest at the rate of 6% for the period from 28.12.2016 to 14.07.2021. Also the petitioner is entitled for an additional interest at the rate of 3% for the period of 28.12.2016 to 14.07.2021 as per Section 244(1)(A) of the Income Tax Act, 1961. 18. Therefore, the present petition is allowed to the above extent. sd/- (Arvind Kumar Verma) alfiza Judge "