VIDIT KUMAR AGARWAL vs. ASSISTANT COMMISSIONER OF INCOME TAX AYEEKAR BHAWAN CIVIL LINES JHANSI AND 2 OTHERS

WTAX/988/2018HC AllahabadUPHC01130230201805 October 20213 pages
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What were the facts?

The petitioner, Vidit Kumar Agarwal, seeks the refund of Rs. 16,00,000 seized from him on June 3, 1998, along with interest. The amount was seized when he was traveling in a car with Ram Krishna Agarwal and Deepak Kumar Agarwal. The Income Tax Authorities requisitioned the money under Section 132A of the Income Tax Act, 1961. A previous writ petition filed by the petitioner in 1999 directed the authorities to first decide if the seized amount was disclosed or undisclosed income. Subsequently, a block assessment order was passed against the petitioner and others as an Association of Persons (AOP), including the seized cash. This order was partly set aside by the CIT(Appeal) and then quashed by the Income Tax Appellate Tribunal (ITAT). The Revenue's appeal against the ITAT's order was dismissed by the High Court. A reassessment order was also set aside, and that order was upheld by the ITAT. The petitioner was then asked to furnish bank account details of the AOP for refund of the principal amount seized along with statutory interest.

What did the High Court hold?

The Tribunal held that the petitioner is entitled to a refund of Rs. 16,00,000 seized from him, along with interest. The reasoning is based on the fact that the existence of the AOP, in whose status the block assessment was made, was disbelieved by the Tribunal in its order dated January 20, 2005, which has attained finality. The subsequent reassessment order was also set aside and attained finality. The Tribunal found that there exists no demand against the petitioner arising from the seizure of cash, nor any other demand that would allow the revenue authorities to detain any part of that amount. Applying Section 132B(4)(b) read with Section 244A(1)(b) of the Act, the petitioner is entitled to interest at the rate of 1.5% per month from the expiry of 20 days from the last authorization issued against him, arising from the seizure/detention of Rs. 32,34,600, up to the date of actual payment on the amount of Rs. 16,00,000. The Tribunal did not find it a fit case to award any further amount by way of cost or compensation, as the block assessment order was made in the status of AOP, and the Tribunal quashed the entire assessment proceedings without allowing regular reassessment. The operative direction is that the writ petition is allowed, and the petitioner is entitled to the refund of Rs. 16,00,000 along with interest as calculated.

What were the issues?

1. Whether the petitioner is entitled to a refund of Rs. 16,00,000 seized from him, along with interest, given that the block assessment order and subsequent reassessment proceedings have been quashed and no demand exists against him. Assessee's Contention: The petitioner argues that since the block assessment order and subsequent proceedings have been quashed by the Tribunal and upheld by the High Court, and no demand exists against him, he is entitled to the refund of the seized amount along with interest. The petitioner relies on the decision in Writ Tax No. 1202 of 2007 (Umang Agarwal vs. Commissioner of Income Tax) for claiming further compensation. Revenue's Contention: The judgment does not explicitly record any specific contentions from the revenue regarding the refund of the seized amount and interest, other than their initial actions leading to the seizure and subsequent assessment proceedings. The revenue's previous appeals against the ITAT's orders were dismissed.

Which sections of the Income-tax Act were involved?

Section 132A,Section 132B,Section 244A,Section 260A

AI-generated summary — verify with the full judgment below

Court No. - 3 Case :- WRIT TAX No. - 988 of 2018 Petitioner :- Vidit Kumar Agarwal Respondent :- Assistant Commissioner Of Income Tax Ayeekar Bhawan Civil Lines Jhansi And 2 Others Counsel for Petitioner :- Suyash Agarwal,Rakesh Ranjan Agrawal Counsel for Respondent :- S.S.C.,Gaurav Mahajan Hon'ble Naheed Ara Moonis,J.

Hon'ble Saumitra Dayal Singh,J.

Heard Sri Rakesh Ranjan Agarwal, Advocate assisted by Sri Suyash Agarwal, learned counsel for the petitioner and Sri Gaurav Mahajan, learned counsel for respondent.

By means of present writ petition, the petitioner is seeking refund of Rs. 16,00,000/- seized from him on 03.06.1998 under the provisions of Income Tax Act, 1961 (hereinafter referred to as "the Act") together with interest.

Undisputedly the petitioner-Vidit Kumar Agarwal along with one Ram Krishna Agarwal and Deepak Kumar Agarwal was travelling in a car on 03.06.1998, when the police intercepted those persons and amounts Rs.16,00,000/- (from the petitioner- Vidit Kumar Agarwal), Rs. 8,00,000/- (from Ram Krishna Agarwal ) and Rs. 8,34,600/- (from Deepak Kumar Agarwal), were detained. That information was passed on to the Income Tax Authorities, who recquisitioned the en

The order continues below.

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