By TIOL News Service

AHMEDABAD, JULY 19, 2016: THE issue is - Whether assessee is entitled for release of amount with interest after adjustment of tax due from the cash seized when there is no dispute as regards the title of the seized cash. YES is the verdict.

Facts of the case

The assessee is an Individual. He derives income from salary and interest. In relevant year, certain cash was seized by the Revenue from one person who admitted that the cash did not belong to him but belonged to the assessee.The assessee filed return for relevant AY declaring income including said unexplained cash. The assessee filed an application to the Jurisdictional AO to adjust the tax liability from the seized amount. Assessment order was passed u/s 143(3) of Act. A penalty order was also passed. On request made by the assessee for rectification, an order was passed u/s 154 of the Act revising the total demand in quantum proceedings.Thereafter, the assessee made an application to the AO for release of the seized amount along with interest after adjusting the demand. The AO refused to issue the refund until completion of the assessment of the other person from whom cash was seized. Aggrieved assessee filed appeal before the High Court seeking release of the amount with interest.

After hearing parties, HC held that,

++ in the facts of the present case also, it is not in dispute that the seized articles (cash) belong to the petitioner, who has also disclosed the unexplained cash of Rs.21,73,000/- for taxation in the year under consideration, and in fact, the respondent, in the assessment proceedings, has also accepted such fact and has given credit of Rs.8,84,040/- to the petitioner against the seized amount. The person from whom the cash had been seized namely, Shri Vinod Sen has also admitted that such cash belongs to the petitioner. Evidently therefore, there is no dispute as regards the title of the seized assets (cash). The respondent is, therefore, not justified in not releasing the balance amount to the petitioner on the ground that the cash had been seized from Shri Vinod Sen. Nonetheless, since the respondent has voiced an apprehension that the cash having been seized from Shri Vinod Sen, in case Shri Vinod Sen stakes a claim to the seized amount, the Department would be put in a precarious situation, the court is of the view that the said apprehension can be allayed by calling upon the petitioner to file an undertaking to the effect that in case Shri Vinod Sen stakes such claim, the petitioner would indemnify the Department;

++ for the foregoing reasons, the petition succeeds and is accordingly allowed. The respondent is directed to forthwith refund the balance amount after adjusting the tax dues of the petitioner with interest (if any) in accordance with law subject to the petitioner filing an undertaking before this court that in the event Shri Vinod Sen stakes a claim to the seized amount, the petitioner should indemnify the Department in respect thereof. Rule is made absolute accordingly, with no order as to costs.

(See 2016-TIOL-1421-HC-AHM-IT)