GYAN SUDHA MISRA,J. - (1.) IN view of S. 132B(3) of the IT Act, 1961 (hereinafter to be referred as "the IT Act, 1961"), whether the IT authorities/respondents herein could retain the excess assets belonging to the petitioner which had been seized in course of an income-tax raid can be retained during pendency of an appeal even after the discharge of the tax liabilities of the petitioner, is a question which falls for consideration in this writ petition.
(2.) THE facts insofar as it is relevant for the purpose of determination of the question are rather simple and lie in straight jacket, as they are not disputed. A search was conducted on 18th Feb., 1996, under S. 132 of the IT Act, 1961, in the residential house of the petitioner which lay in the joint occupation of his sons and himself. In course of the search, large quantity of assets were seized from the petitioner's bedroom and the seizure list was prepared which disclosed that a cash amount of Rs. 18,50,000 (rupees eighteen lacs fifty thousand) were seized and jewellery including gold and silver worth Rs. 5,00,000 approximately as also documents regarding petitioner's investment worth Rs. 71,000 were also seized. Accordingly, a notice under S. 132(2) under the IT Act, 1961, was issued on 31st Jan., 1997, which was served on the petitioner on 6th Feb., 1997. Thereafter, returns were filed by the petitioner on 27th Aug., 1997, and an assessment of the tax liability of the petitioner towards undisclosed income for the period 1st April, 1986 to 18th Sept., 1996, was assessed at Rs. 29,89,151 due to which 60 per cent tax was assessed under S. 113 of the IT Act, 1961 and hence a sum of Rs. 17,93,490 was held payable by the petitioner as per the order of the Dy. CIT (Asst) at Jaipur on 30th Sept., 1997. The order in categorical terms states order was passed with the prior approval of the CIT, Bikaner, headquarter at Jaipur. A notice of demand was therefore, issued to the petitioner for Rs. 17,93,490 by respondent No. 4, Dy. CIT, Special Range-2, Assessment at Jaipur, in response to which notice, an application was submitted on behalf of the petitioner on 6th Oct., 1997 before respondent No. 4 who had issued the demand notice informing him that the cash seized in the search may be appropriated and adjusted towards the tax liability of Rs. 17,93,490 out of the seized cash amount of Rs. 18,50,000 which amount was lying in the custody of the respondent in P.D. Account. The petitioner therein also requested respondent No. 3, the CIT, to transfer the balance amount of seized cash of Rs. 56,510 after adjusting his tax liability and thereafter release the seized ornaments of gold and silver and Indira Vikas Patra of the value of Rs. 71,000 which has not been done till date as a result of which the petitioner had to move this Court for release of his cash, ornament and document on the plea is that once the petitioner discharged his tax liability which included penalty adjusted, there is no reason to allow his property under confiscation, as the authorities are statutorily bound to release the seized goods once the order of assessment is passed on 30th Sept., 1997, and the petitioner discharged his liability. Learned counsel for the petitioner has submitted that the IT authorities/respondents were legally bound to make the adjustment, as prayed by the petitioner, out of the cash amount seized from the petitioner and according to the petitioner's case, they have also already made such adjustment and appropriation and once they have done it, they have no justification whatsoever to retain the balance assets referred to hereinabove, as undue retention of the petitioner's property which the respondents had seized as a public authority, tantamounts to a breach of trust. The respondents, according to him, however are unauthorisedly retaining the excess assets of the petitioner without any legal justification, subjecting the petitioner to further harassment by compelling him to move this Court by filing this writ petition. In support of his submission, learned counsel has relied on several authorities reported in Income Tax Report.
(3.) PRIMA facie a sustainable case having been made out in favour of the petitioner, a show-cause notice was issued to the respondents/IT authorities and although at the outset the respondent's advocate Shri Anant Kasliwal did not object to the release of the excess assets, after deducting the petitioner's tax liability, yet he submitted that it should be recorded as to whether the cash which was seized belonged to the petitioner or his firm and only after recording such statement on his behalf, the goods be ordered to be released since the petitioner has filed the appeal before the Tribunal disputing the correctness of assessment order dt. 30th Sept., 1997, passed by the Dy. CIT, respondent No. 4. According to the learned counsel for the respondents, this is a cause weighty enough, not to release the excess assets of the petitioner since the petitioner has not come out with a clear and specific case as to whether the seized cash belonged to him or the firm. In this regard the respondents have urged that the petitioner, has not come out with clear stand that the entire assets seized from his bedroom belonged to him exclusively and none else although in course of the assessment proceedings the petitioner did not raise the plea of cash belonging to the firm, but the aforesaid plea has been taken by him in the appeal. It has been further averred by respondents No. 3 and 4 that although they were in the process of releasing the petitioner's excess assets seized, they suddenly came accross a ground taken in the appeal preferred by the petitioner before the Tribunal that the assets did not belong to him, but to the firm and hence was justified in retaining his cash and other assets even though he has discharged his liabilities towards arrears of tax.;