- (1.) HEARD learned counsel for the parties.
(2.) FOLLOWING question has been referred to this Court by the Income Tax Appellate Tribunal, Patna Bench, Patna vide order dated 29th February, 2000: "Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the assessee was liable for interest u/s 139(8)/217 for the assessment year 1988 -89 and interest u/s 234A and 234B for the assessment year 1989 -90 upto 26.3.91 the due date when the return was filed without giving credit of the amount retained by the department u/s 132(5) for meeting future tax liability which was seized on 7.7.1989?  The brief facts of the case are that in the course of search under Section 132 B of the Income Tax Act, 1961 on 6th July, 1989 a sum of Rs. 11,95,660 was seized from the petitioner. Out of this amount as per Sub -clause (i) (ii) (iia) and (iii) of sub -section (5) of Section 132 (as was in enforce) the Assessing Officer provisionally determined the liability of tax and retained Rs. 6.44,881 and released rest of the amount. Final assessment was made by the Assessing Officer creating liability against the assessee and imposed interest under Section 139(8) and 217 for the assessment year 1988 -89 and under Section 234A and 234B for the assessment year 1989 -90. In the appeal preferred by the assessee, the C.I.T.(Appeals) held in order dated 27.7.1992 that the department since had money with it from 6.7.1989, therefore, that money is required to be adjusted against the assessed liability from the date the money was seized and, therefore, from that date (7.7.1989) the assessee was not required to pay the interest. The finding of this appellate order dated 27.7.1992 was reversed by the Income Tax Appellate Tribunal in its order dated 18.6.1997 on appeal preferred by the Revenue. Therefore, an application was submitted by the assessee for referring the question of interest liability to the High Court, upon which, the Tribunal has referred the above question for consideration of this Court.
(3.) LEARNED senior counsel, Sri Binod Poddar, for the assessee submitted that the money was seized in search operation under Section 132 of the Act of 1961 and was retained by the Revenue obviously for tax liability of the assessee and not for any other purpose, therefore, on the day on which the amount was seized by the revenue it was against the tax liability of the assessee though such liability may have been created subsequent to the seizure because of the reason that assessment could have been made after reasonable time only and not forthwith. It is submitted that by no stretch of imagination, it can be said that said amount was kept by the Revenue for other reason than the assessment against the liability of the petitioner for the tax claimed by the revenue. It is also submitted that if the department keeps the money of anybody, which is not in accordance with law, in that situation also the department is liable to pay the interest. Learned counsel for the petitioner relied upon judgment of the Hon'ble Supreme Court delivered in the case of Sandvik Asia Ltd. Vs. Commissioner of Income -Tax reported in {2006} 280 ITR (SC); Commissioner of Income Tax Vs. Pandurang Dayaram Talmale reported in (2004) 135 Taxman 193(Bom.) and Commissioner of Income Tax Vs. K.K. Marketing (2005) 278 ITR 596 (Delhi); Satpal D. Agarwal HUF Vs. ACIT reported in (1998) 62 TTJ (Mumbai) 98 and Vipul D. Doshi Vs. ACIT reported in (2001) 118 Taxman 30 (Mum).;