JIWAN KUMAR vs. PRINCIPAL COMMISSIONER OF INCOME TAX AND OTHERS

Facts

The petitioner, Jiwan Kumar, an employee of M/s Khoobsurat Ornaments, was carrying ` 15,02,530/- in cash on January 6, 2012, for a property purchase. The cash was seized by the Income Tax Department under Section 132/132A of the Income Tax Act, 1961, due to being in excess of the permissible limit during election period checking. The petitioner filed his return, and assessment proceedings followed, including an addition of ` 50,000/- which was later reduced to ` 35,000/- by the CIT(Appeals). The Commissioner of Income Tax (Central), Ludhiana, set aside the assessment order under Section 263 and remanded it. The Income Tax Appellate Tribunal (ITAT) allowed the petitioner's appeal against the Section 263 order. The seized cash of ` 15,02,530/- was refunded to the petitioner on July 4, 2017. The petitioner then sought interest on the seized amount for the period of its retention, but received no response, leading to the present writ petition.

Held

The High Court disposed of the writ petition by directing respondent No.3 (presumably the Assessing Officer or a relevant authority) to decide the petitioner's letter (Annexure P-7) in accordance with law by passing a speaking order. This decision must be made after affording the petitioner an opportunity of hearing within two months from the date of receiving the certified copy of the order. Furthermore, if the petitioner is found entitled to interest, it should be released to him within the subsequent one month. The Court explicitly stated that it was not expressing any opinion on the merits of the case. The specific question of entitlement to interest was not decided by the High Court but was remanded for a decision by the concerned respondent.

Key Issues

1. Whether the petitioner is entitled to interest on the cash amount of ` 15,02,530/- seized from him for the period from January 6, 2012, to July 4, 2017, when it was refunded? The petitioner argued that he had sent a letter (Annexure P-7) to the respondent seeking interest on the seized cash, but no action had been taken thereon. The revenue's contentions are not recorded in the judgment.