Vidit Kumar Agarwal V. Assistant Commissioner Of Income Tax Ayeekar Bhawan Civil Lines Jhansi And 2 Others

WTAX/988/2018

AI Insights

The case revolves around the seizure of Rs. 16,00,000 from the petitioner, Vidit Kumar Agarwal, on 03.06.1998, under the provisions of the Income Tax Act, 1961. The money was intercepted by police and later requisitioned by the Income Tax Authorities under Section 132A of the Act. The petitioner initially filed a writ petition in 1999, which led to a directive for the authorities to consider whether the seized amount was disclosed income. Subsequent assessments and appeals led to the quashing of the block assessment order by the Income Tax Appellate Tribunal, a decision upheld by the High Court. The final decision of the court in this writ petition was to grant a refund of the seized amount with interest, citing the lack of any ongoing demand against the petitioner.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 798086 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 06-10-2021
• Assessment Year: misc
• Other Referred Cases: Umang Agarwal vs. Commissioner of Income Tax (Central Circle), Kanpur and others
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SSC; GAURAV MAHAJAN
• Assessee Lawyers: SUYASH AGARWAL; RAKESH AGRAWAL
• Keywords: Block assessment; Income Tax; Interest; Reassessment; Refund; Seizure
• Section: 132A; 244A(1)(b); 132B(4)(b)

Judgement Text

"Court No. - 3 Case :- WRIT TAX No. - 988 of 2018 Petitioner :- Vidit Kumar Agarwal Respondent :- Assistant Commissioner Of Income Tax Ayeekar Bhawan Civil Lines Jhansi And 2 Others Counsel for Petitioner :- Suyash Agarwal,Rakesh Ranjan Agrawal Counsel for Respondent :- S.S.C.,Gaurav Mahajan Hon'ble Naheed Ara Moonis,J. Hon'ble Saumitra Dayal Singh,J. Heard Sri Rakesh Ranjan Agarwal, Advocate assisted by Sri Suyash Agarwal, learned counsel for the petitioner and Sri Gaurav Mahajan, learned counsel for respondent. By means of present writ petition, the petitioner is seeking refund of Rs. 16,00,000/- seized from him on 03.06.1998 under the provisions of Income Tax Act, 1961 (hereinafter referred to as \"the Act\") together with interest. Undisputedly the petitioner-Vidit Kumar Agarwal along with one Ram Krishna Agarwal and Deepak Kumar Agarwal was travelling in a car on 03.06.1998, when the police intercepted those persons and amounts Rs.16,00,000/- (from the petitioner- Vidit Kumar Agarwal), Rs. 8,00,000/- (from Ram Krishna Agarwal ) and Rs. 8,34,600/- (from Deepak Kumar Agarwal), were detained. That information was passed on to the Income Tax Authorities, who recquisitioned the entire money intercepted by the police authorities, under Section 132A of the Act. At the initial stage itself, the present petitioner filed Writ Tax No. 172 of 1999 (Vidit Kumar Agarwal vs. Director of Income Tax, Kanpur and others). It was disposed of by order dated 19.03.1999, with the following observation: \"The case of the petitioner is that the entire amount of Rs. 16,00,000/- is the disclosed income of the petitioner and the same was also disclosed to the respondents. In that view of the matter, the respondents are directed to consider the case of the petitioner carefully and shall also decide the question whether the aforesaid amount which was seized, is the disclosed or undisclosed income of the petitioner first and thereafter, they shall be entitled to proceed in the matter. We further direct that the amount seized from the petitioner shall be entitled to proceed in the matter. We further direct that the amount seized from the petitioner shall be kept in the fixed deposit bearing interest therein. With these observations, the writ petition is disposed of finally. There shall be no order as to costs.\" Petitioner along with Sri Ram Krishna Agarwal and Sri Deepak Kumar Agarwal were subjected to block assessment under the Act vide order dated 29.06.2000 in the status of Association of Persons (A.O.P. in short), at total income Rs. 40,76,000/- including the cash Rs. 32,34,600/- seized from them, on 03.06.1998. The said block assessment order was partly set aside in appeal by the CIT (Appeal) vide its order dated 03.05.2002. The assesses carried the matter in appeal to the Income Tax Appellate Tribunal (hereinafter referred to as the \"Tribunal\"). Vide its order dated 20.01.2005, the Tribunal allowed the appeal and quashed the block assessment order dated 29.06.2000 It disbelieved the case set up by the assessing authority of AOP. Though the aforesaid order of the Tribunal was challenged by the Revenue in further appeal to this Court, filed under Section 260A of the Act, the petitioner's Assessing Authority framed the reassessment order against the petitioner, dated 22.12.2006. However, in view of the fact that the Tribunal had quashed the block assessment order, the CIT (Appeal) set aside the reassessment order dated 22.12.2006. That appellate order was upheld by the Tribunal on 12.10.2012. Also against the order dated 20.01.2005 passed by the Tribunal, this Court dismissed the appeal filed by the Revenue vide its order dated 20.04.2016. Thus the Tribunal's order dated 20.12.2006 and 12.10.2012 have attained finality. It is in the above undisputed fact that the petitioner claims refund of Rs. 16,00,000/-, together with interest. It has been denied. By communication dated 19.06.2015 (Annexure-CA 1 to the counter affidavit), the petitioner has been required to furnish the bank account details of the AOP, so that the amount of Rs. 51,75,506 being the principal amount seized together with statutory interest may be refunded to the A.O.P. Learned counsel for the petitioner has relied on a decision of another Division Bench of this Court in Writ Tax No. 1202 of 2007 (Umang Agarwal vs. Commissioner of Income Tax (Central Circle), Kanpur and others) decided on 06.05.2015 to claim further compensation. Having heard learned counsel for the parties and having perused the record the existence of the AOP had been disbelieved by the Tribunal vide its order dated 20.01.2005 while quashing the block assessment order. That that order has attained finality owing to the further appeal filed by the Revenue being dismissed being below the monetary limit. The reassessment order was also set aside by the CIT (Appeal) vide order dated 31.03.2021. Further appeal filed by the Revenue was dismissed by order dated 12.10.2012. That order has also attained finality. There exists no demand against the petitioner arising from the seizure of the cash. No other demand is claimed to be existing against the petitioner as may allow the revenue authorities to detain any part of that amount. Keeping in mind the provisions of Section 132 B (4) (b) read with Section 244A (1) (b), the petitioner is further found entitled to interest at the rate of 1 and 1/2 per cent per month from the expiry of 20 days from the last authorization issued against him, arising from the seizure/detention of Rs.32,34,600/- made by the police authorities, on 03.06.1998. Thus the petitioner would be entitled to a refund of Rs. 16,00,000/- together with interest as above. The interest at that rate would be applied from that start date, up to the date of actual payment made to the petitioner, on the amount of 16,00,000/- only. As to the balance amount of the other persons namely Sri Ram Kirshna Agarwal (vis-a-vis for seizure of Rs. 8,00,000/-) and Sri Deepak Kumar Agarwal (vis-a-vis for seizure of Rs. 8,34,600) they may remain similarly entitled. We find that interest of justice has been met in the present case inasmuch as the block assessment order arising from the seizure, was made in the status of A.O.P. While that finding may have been erroneous, the Tribunal quashed the entire assessment proceedings, without allowing the revenue authorities to make a regular reassessment. Hence we do not find it a fit case to award any further amount to the petitioner, by way of cost or compensation. The writ petition is thus allowed. No order as to costs. Order Date :- 6.10.2021 Ashish Pd. "