SUDHIR KUMAR TIWARY V. PRINCIPAL COMMISSIONER OF INCOME TAX

WPC/3309/2023

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The case involves Sudhir Kumar Tiwary, the petitioner, who sought the release of Rs. 9 lakhs seized by the Income Tax Department at Kolkata Airport in 2014. The Income Tax Department had deducted various amounts from the seized money pertaining to different assessment years. The petitioner contested the retention of these amounts and sought interest on the seized amount until the date of actual payment. The court referenced the Supreme Court's decision in 'Union of India through Director of Income Tax v. Tata Chemicals Limited' to discuss the entitlement to interest on refunded amounts but ultimately decided against the petitioner's broader claim for interest.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 764949 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 27-06-2024
• Assessment Year: misc
• Other Referred Cases: Union of India through Director of Income Tax v. Tata Chemicals Limited, Dipak Kumar Agarwal v. Assessing Officer and Others
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: KUMAR VAIBHAV; ANURAG VIJAY; OM PRAKASH
• Assessee Lawyers: RAHUL LAMBA; ADITYA KHANDELWAL; NILESH MODI
• Keywords: Assessment Year; Income Tax; Interest on Refund; Legal jurisdiction; Seizure
• Section: 143(3); 154; 143(1); 220(2); 132-B(i)

Judgement Text

" IN THE HIGH COURT OF JHARKHAND AT RANCHI (Civil Writ Jurisdiction) WP(T) No. 3309 of 2023 Sudhir Kumar Tiwary, aged about 61 years, son of Shri Shyam Bihari Tiwary, resident of Vardaan, Kilburn Colony, Hinoo, Doranda, PO and PS Doranda, District Ranchi, Jharkhand-834002 …Petitioner Versus 1.Principal Commissioner of Income Tax, Ranchi having his office at Central Revenue Building, 5A, MG Road, PO and PS Chutia, District Ranchi, Jharkhand-834001 2.The Deputy Director of Income Tax (Inv.), Unit-I, Central Revenue Building, 5A, MG Road, PO and PS Chutia, District Ranchi, Jharkhand 834001 3.The Deputy Director of Income Tax (Inv.), Air Intelligence Unit, Aayakar Bhavan, 5th Floor, Chowringhee Square, PO and PS Esplanade, District Kolkata-700069 4.The Assistant Director of Income Tax (Inv.), Air Intelligence Unit, Aayakar Bhavan, 5th Floor, Chowringhee Square, PO and PS Esplanade, District Kolkata-700069 5.The Deputy Commissioner of Income Tax, Circle-3, Central Revenue Building, 5A, MG Road, PO and PS Chutia, District Ranchi, Jharkhand- 834001 6.The Assistant Commissioner of Income Tax, Circle-3, Central Revenue Building, 5A, MG Road, PO and PS Chutia, District Ranchi, Jharkhand- 834001 …Respondents ----- CORAM: HON’BLE THE ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE NAVNEET KUMAR -------- For the Petitioner : Mr. Rahul Lamba, Advocate Mr. Aditya Mohan Khandelwal, Advocate Mr. Nilesh Modi, Advocate For the Respondents : Mr. Kumar Vaibhav, Sr. SC Mr. Anurag Vijay, Jr. SC Mr. Om Prakash, Advocate -------- Order No. 14 / Dated: 27th June 2024 The writ petitioner is seeking a direction for release of Rs. 9 lacs seized by the Income Tax Department at Kolkata Airport while he was returning from Ranchi on 2nd April 2014. 2. During pendency of this writ petition, an amount of Rs. 6,92,948/- was paid to the petitioner. According to the Income Tax Department, different demands pertaining to assessment year 2005-06 for 2 WP(T) No. 3309 of 2023 Rs. 10/- under section 143(1), Rs. 2,00,090/- for assessment year 2018-19 under section 154 and Rs. 6952/- for assessment year 2022-23 under section 220(2) were raised and the same have been deducted from the amount of Rs. 9 lacs. According to the Income Tax Department, Rs.6,92,948/- shall carry interest only upto 25th September 2017 as provided under section 132-B(i). To elaborate upon this stand, Mr. Kumar Vaibhav, the learned Sr. Standing Counsel submits that the interest upon the excess amount paid or recovered by an assessee shall be calculated only till the date of passing of the assessment order under section 143(3) of the Income Tax Department. On the other hand, Mr. Rahul Lamba, the learned counsel for the petitioner refers to “Union of India through Director of Income Tax v. Tata Chemicals Limited” (2014) 6 SCC 335 to submit that the payment of interest should be till the date of actual payment made by the Income Tax Department. The learned counsel for the petitioner has placed reliance on paragraph nos. 38 and 39 of the “Tata Chemicals Limited” wherein the Hon’ble Supreme Court observed as under: “38. Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there-being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course. 39. In the present case, it is not in doubt that the payment of tax made by the resident/depositor is in excess and the department chooses to refund the excess payment of tax to the depositor. We have held that the interest requires to be paid on such refunds. The catechise is from what date interest is payable, since the present case does not fall either under clause (a) or (b) of Section 244-A of the Act. In the absence of an express provision as contained in clause (a), it cannot be said that the interest is payable from the 1st of April of the assessment year. Simultaneously, since the said payment is not made pursuant to a notice issued under Section 156 of the Act, Explanation to clause (b) has no application. In 3 WP(T) No. 3309 of 2023 such cases, as the opening words of clause (b) specifically referred to as “in any other case”, the interest is payable from the date of payment of tax. The sequel of our discussion is the resident/deductor is entitled not only to the refund of tax deposited under Section 195(2) of the Act, but has to be refunded with interest from the date of payment of such tax.” 3. This needs no reiteration that refund of amounts paid as tax or deemed tax or advance tax shall be quite different from an amount seized from the possession of a person in respect thereof the assessment shall be carried in terms of section 143 of the Income Tax Act. Mr. Kumar Vaibhav, the learned counsel for the Income Tax Department refers to 1st proviso to section 132-B(i) to submit that if an application for release is not made within 30 days from the date of authorization no interest shall be payable to the assessee. In the context of 1st proviso to section 132-B(i), the learned counsel refers to “Dipak Kumar Agarwal v. Assessing Officer and Others” 2024 SCC OnLine All 2878 but fairly states that he shall stick to the stand taken by the Department in the counter-affidavit to the extent that interest on the seized amount shall be payable to the assessee till the date of assessment under section 143(3) of the Income Tax Act. 4. In our opinion, the petitioner has failed to make out a case for payment of interest till final payment is made and the judgment in “Tata Chemicals Limited” is also not furthering the case of the petitioner. However, as regards deduction for the assessment year 2018-19 for Rs. 2,00,090/-, we grant liberty to the petitioner to file an appeal against the retention of Rs. 2,00,090/- under section 154 of the Income Tax Act for the financial year 2018-19. 5. In the given facts of this case, we are not inclined to interfere with the decision of the Income Tax Department to pay interest to the petitioner till 25th September 2017 and this writ petition is disposed of with the aforesaid liberty to the petitioner. (Shree Chandrashekhar, A.C.J.) (Navneet Kumar, J.) Tanuj/ "