August 2008
S. 132B : Cash found during search satisfactorily explained : Application for release made within 30 days : Cash should be released.
By K. B. Bhujle, Advocate
Reading Time 3 mins
New Page 2
43 Search and seizure : Release of cash : S.
132B of Income-tax Act, 1961 : Cash found in the course of search satisfactorily
explained : Application for release made within 30 days : Cash should be
released.
[Bipin Vimalchand Jain v. ADIT, 169 Taxman 396 (Bom.)]
In the course of the search action, cash amounting to
Rs.1,28,34,090 was found at the business premises of the petitioner. The
petitioner explained that out of the said amount, a sum of Rs.1.14 crores
belonged to one VJ and the explanation was verified and found to be correct by
the authorities. The petitioner filed application u/s.132B(1)(i) seeking release
of the said cash on the ground that it belonged to VJ. The Assessing Officer
rejected the application on the ground that assessment u/s.153A was pending and
seized cash was required to be applied for satisfying liabilities on completion
of that assessment.
The Bombay High Court allowed the writ petition filed by the
petitioner, directed release of cash and held as under :
“(i) Under the first proviso to S. 132B(1)(i), on an
application made for release of the seized asset within 30 days from the end
of the month in which the asset was seized, the Assessing Officer on being
satisfied regarding the nature and source of acquisition of such asset is
empowered to recover the existing liability out of such asset and release the
remaining portion of the asset.
(ii) In the instant case, it was not in dispute that the
application seeking release of the seized cash to the extent of Rs.1.14 crores
was made within 30 days of the seizure. Once the explanation given by the
petitioner regarding the nature and source of acquisition of the seized cash
was, on verification, found to be correct, then the amount of Rs.1.14 crores,
which belonged to VJ, could not be retained by the Assessing Officer by
rejecting the application filed by the petitioner.
(iii) The only reason given in the impugned order for
rejecting the application was that the assessment made u/s.153A was yet to be
finalised. In the absence of any material on record to suggest that the seized
cash represented the undisclosed income of the petitioner, respondent No. 2
could not have rejected the application made u/s.132B(1)(i) merely on the
ground that assessment u/s.153A was pending. In other words, application
u/s.132B(1)(i) could be rejected only if the Assessing Officer had reason to
believe that the seized cash represented the undisclosed income of the
petitioner liable to be assessed in the year in which search took place. In
the impugned order, it was not even remotely suggested that the seized cash
represented the undisclosed income of the petitioner.
(iv) In the circumstances, the impugned order was to be
quashed and set aside, with the direction to the Assessing Officer to release
the seized cash to the petitioner along with interest.”
