Akil Kureshi, J. - Petitioner has challenged an order dated 16.12.2013 as at Annexure A to the petition, passed by the Assistant Commissioner of Income Tax, Palanpur. Brief facts are as under:
2. On an information received from Dariapur Police Station by the investigating team of the Income Tax Department that the petitioner was detained by the police with cash of Rs.32.64 lacs (rounded off), the Department issued authorization under section 132A of the Income Tax Act, 1961 and seized such cash. Contending that such authorization was wholly illegal, the petitioner filed Special Civil Application No.15274 of 2013. Such petition came to be disposed by this Court by order dated 19.11.2013, in which it was provided as under:
"5.00. Heard Mr.B.S. Soparkar, learned advocate appearing on behalf of the petitioner and Mr.Manish Bhatt, learned counsel appearing on behalf of the respondents.
5.1 At the outset, it is required to be noted that cash amount of Rs.32,64,560/- was found to be in possession of the petitioner which was finally recovered by the Police Sub- Inspector, Dariapur Police Station, Ahmedabad, who informed the Income Tax Authority and thereafter when the petitioner failed to satisfy the Income Tax authority with respect to the source of such a huge amount of cash, after issuing valid authorisation under section 132A of the IT Act, amount of Rs.32,64,560/- is requisitioned.
5.02 At the outset, it is required to be noted that initially the petitioner tried to explain the source of the aforesaid amount by submitting that the same was given by his father and family members to start new business by selling jeweleries, however, the petitioner failed to prove the same and subsequently agreed that it is an undisclosed income which may be added in his income for A.Y. 2014-15.
5.03 In the aforesaid facts and circumstances, when the petitioner failed to disclose the source of the aforesaid huge amount of cash and even his explanation was found to be incorrect and/or the petitioner could not substantiate his initial claim that the said amount was received by him from his father and family members by selling jeweleries and thereafter after recording the reasons when the amount has been requisitioned after valid authorisation, it cannot be said that the authorisation under section 132A of the IT Act is illegal, unauthorised and/or contrary to the provisions of the Act.
5.04. Now, so far as the prayer of the petitioner to release the balance amount after deducting tax on the aforesaid amount of Rs.32,64,560/- treating the said amount as undisclosed income of the petitioner in the AY 2014-15 is concerned, as such considering section 153A of the IT Act the same is not required to be granted. In any case, application of the petitioner for release of the cash is pending before the appropriate authority / concerned AO, Palanpur office and considering proviso to section 132B of the IT Act, it is ultimately for the concerned AO to pass appropriate order on the application of the petitioner for release of the cash. It appears that no order has been passed by the concerned AO on the application submitted by the petitioner for release of the cash seized / requisitioned. Under the circumstances, the concerned AO is to be directed to pass appropriate order in accordance with law and on merits on the application submitted by the petitioner for release of the cash seized / requisitioned considering proviso to Sub-section (1) of Section 132(B) of the IT Act.
6.00. In view of the above and for the reasons stated above, so far as challenge to the authorisation under section 132A of the Act and requisition / seizure of Rs.32,64,560/- is concerned, present petition is dismissed. However, considering the fact that no order has been passed by the concerned AO on the application submitted by the petitioner to release the cash requisitioned / seized, considering the proviso to section 132B of the AO (Palanpur office) is hereby directed to pass appropriate order on the said application in accordance with law and on merits considering proviso to section 132B of the IT Act, within a period of 12 weeks from today. It is observed that, in case, the proceedings are transferred to any other AO, in that case the concerned AO at Palanpur to transfer the application of the petitioner to the concerned AO and the concerned AO to pass appropriate order on the application submitted by the petitioner considering proviso to section 132B of the Act. It is, however, clarified that in any case, appropriate order on the application submitted by the petitioner be passed within a period of 12 weeks from today.
With this present petition is disposed of so far as prayer in terms of para 7(b) is concerned and the present petition is dismissed so far as prayer in terms of para 7(a) i.e. challenge to the authorisation under section 132A of the IT Act, is concerned."
From the above order of the Court, it emerges that the petitioner's challenge to the authorization under section 132A of the Act came to be rejected by this Court. With respect to the request of the petitioner for release of the cash so seized, the Court required the Income Tax Authorities to pass appropriate order on the application already filed by the petitioner within the time prescribed.
3. Pursuant to such order, the Assistant Commissioner passed the order dated 16.12.2013 which is impugned in this petition.
4. Learned counsel Shri Soparkar for the petitioner submitted that the authorization under section 132A itself was illegal. In any case, the Assistant Commissioner, pending further proceedings in terms of section 132B of the Act, should have released the cash since the petitioner was ready and willing to deposit the entire maximum tax liability even after considering the seized cash as his undisclosed income.
5. In the impugned order, the Assistant Commissioner referred to the provisions of section 132B of the Act and observed as under:
"From the above, it is clear that release of assets is possible only after determination of the amount of liability determined on completion of assessment u/s 153A. In this case the assessment proceedings are not complete. As regards the First proviso of the above section if the person concerned makes an application within thirty days of the end of the month in which the asset was seized, the asset can be released only if the nature and source of acquisition of such assets is explained to the satisfaction of the assessing officer. In this case neither the nature nor the source of acquisition has been explained by the assessee because in your statement u/s 131 of the I.T. Act recorded before Income Tax Officer (Inv.) Unit II, Ahmedabad on 16.08.2013 you have stated that the amount in question i.e. Rs.32,64,560/- was sent to you by your father after selling jewelery of your family members, but no evidence for sale of jewellery has been brought on record.
2. In your statement before the police authorities recorded you had admitted that the amount of Rs.32,64,560/- was out of your personal savings and brokerage income of diamonds, but later on your shifted your stand and explained the sale of jewellery as the source of this amount. Therefore, there is an inherent contradiction in your submissions.
3. You have in your submissions dated 12.12.2013 before the undersigned at point No.10 mentioned that "I am subject to income tax on unexplained source and I am ready to pay tax". When you yourself are admitting that the source of above funds is unexplained then how can the source be considered as explained as per the First Proviso of section 132B(1)(i) of the I.T. Act 1961.
4. In this case the tax liability can be determined only after completion of assessments from A.Y.2008-09 to A.Y. 2013-14 u/s.153A of the I.T. Act 1961 and also regular assessment of A.Y.2014-15.
5. In this case penalty proceeding may also be initiated u/s 271AAB wherein penalty could be levied not less than thirty percent and not more than 90 per cent of the undisclosed income and u/s 271(1)(c) of the I.T. Act which is hundred to three hundred percent of tax. Therefore, the seized amount may not be enough to discharge the liability determined/determinable in your case.
Keeping in view the above facts and circumstances of the case release of seized assets is not permissible as per law in this case. Your application u/s 132B (First Proviso) is thus hereby rejected."
6. We see no reason to interfere with the said order. Firstly, insofar as the validity of the authorization under section 132A is concerned, the same was already tested previously by the petitioner in Special Civil Application No.15274 of 2013 when this Court, as noted above, did not entertain any such challenge. We, therefore, cannot reopen such an issue. The sole question that survives for our consideration is regarding the validity of the order passed by the Assistant Commissioner refusing even the prayer of the petitioner for releasing the cash in terms of section 132B of the Act.
Relevant portion of section 132B reads as under:
"132B. Application of seized or requisitioned assets.—(1) The assets seized under section 132 or requisitioned under section 132A may be dealt with in the following manner, namely—
(i) |
the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the Gift tax Act, 1958 (18 of 1958) (and the Interest tax Act, 1974 (45 of 1974) and the amount of the liability determined on completion of the assessment under section 153A and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be (including the penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is deemed to be in default, may be recovered out of such assets: |
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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 cause 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 Chief Commissioner or Commissioner, to the person from whose custody the assets were seized. |
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Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorisations for search under section132 or for requisition under section 132A as the case may be, was executed. |
(ii) |
If the assets consist solely of money, or partly of money and partly of other assets, the Assessing Officer may apply such money in the discharge of the liabilities referred to in clause (i) and the assessee shall be discharged of such liability to the extent of the money so applied. |
(iii) |
The assets other than money may also be applied for the discharge of any such liability referred to in clause (I) as remains undischarged and for this purpose such assets shall be deemed to be under distraint as if such distraint was effect by the Assessing Officer, or as the case may be, the Tax Recovery Officer under authorisation from the Chief Commissioner or Commissioner under sub-section (5) of section 226 and the Assessing Officer or as the case may be, the Tax Recovery Officer may recover the amount of such liabilities by the sale of such assets as such sale shall be effected in the manner laid down in the Third Schedule." |
7. From the record it emerges that the petitioner has been taking contradictory stand regarding the source of the amount. Before the police authorities, he had stated that the amount was out of his personal savings and income from brokerage of diamonds. Later on, before the Department, he changed his version and stated that the amount was received from his father and other relatives to enable him to set up his business. Such amounts, his relatives had raised by selling their jeweleries and ornaments.
8. It was on account of such shift in the stand by the petitioner that the Assistant Commissioner in the impugned order observed that there was inherent contradiction in his statements. Sub-section (1) of section 132B pertains to the manner in which the assets seized under section 132 or requisitioned under section 132A may be dealt with. Clause (i) thereof provides that the amount of any existing liability determined on completion of the assessment under section 153A, etc. may be recovered out of such assets. Thus the amount that can be adjusted from such seized cash would not only be the existing liability, but those liabilities that may be determined on completion of assessment under section 153A of the Act. In the present case, such assessment was not completed. It was therefore, that the Assessing Officer found that the cash cannot be released in terms of clause (i) of sub-section (1) of section 132B. Proviso to clause (i) however enables the Assessing Officer to release such an asset with the prior approval of the Commissioner or the Chief Commissioner on an application made by the person concerned, if the nature and source of acquisition of any such asset is explained to the satisfaction of the Assessing Officer. The expression "the nature and source of acquisition of any such asset is explained to the satisfaction of the Assessing Officer" is therefore crucial. In the present case, the Assessing Officer held that there were inherent contradictions in the stand of the assessee regarding the source of the asset. He, therefore, held that the source of the asset was not explained as required under the first proviso to section 132B(1)(i) of the Act. We are broadly in agreement with such a conclusion.
9. In that view of the matter, we find no infirmity in the order impugned. The petition is, therefore, dismissed.