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July 2011

Search and seizure: Interest u/s.132B(4) of Income-tax Act, 1961: Period for which interest is payable on seized amount: Search assessment resulting in no additional tax liability: Interest payable up to the date of refund and not up to the date of the assessment order.

By K. B. Bhujle, Advocate
Reading Time 1 mins
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[Mohit Singh v. ACIT, 241 CTR 244 (Delhi)]

In the course of search u/s.132 of the Income-tax Act, 1961 on 11-9-2003, an amount of Rs.17 lakhs was seized. Block assessment order for the block period 1998-99 to 2003-04 was passed on 23-3-2006 which resulted in no additional tax liability. The seized amount of Rs.17 lakhs was paid on 15-4-2008. Thereafter on 16-5-2008, interest amount of Rs.1,91,704 was paid covering the period from 7-5-2004 to 23- 3-2006. No interest was paid for the period from 23-3-2006 to 15-4-2008 i.e. date of refund.

On a writ petition filed by the assessee the Delhi High Court directed the Revenue to pay the interest at the rate of 7.5% for the period from 23-4-2006 to 15-4-2008 i.e., the date of the refund.

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