KAWALJEET KAUR WIFE OF LATE SHRI SURJEET SINGH SETHI vs. DEPUTY DIRECTOR OF INCOME TAX (INVESTIGATION-3),

Petitioners have preferred this writ petition inter alia praying that the illegally seized cash in hand of Rs.34,02,005/- be released.

Succinctly stated, the facts of the case are that an amount of Rs.34,02,005/- was seized by the respondent from the bank locker belonging to the petitioners. After the seizure, petitioners applied within 30 days explaining their source of acquisition of such assets and prayed for release of money.

It is contended by Mr. Siddharth Ranka, Advocate appearing for the petitioners that under Section 132B of the Income Tax Act (for short ‘the Act’), in the first proviso, it is mentioned that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the [Principal Chief Commissioner or] Chief Commissioner or [Principal Chief Commissioner or] Commissioner, to the person from whose custody the assets were seized. It is contended that the second proviso is mandatory in nature as the same provides that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days form the date on which the last of the authorizations for search under Section 132 or for requisition under Section 132A, as the

Counsel for the petitioners has placed reliance on M/s Enforcement D.B. Civil Writ Petition No.14857/2022 decided M/S Vir Impex) Vs. ITO 2022 (4) TMI 1285 (Gujarat High Counsel appearing for the respondent- Mr. Siddharth Bapna has opposed the writ petition. It is contended that second proviso to Section 132B of the Act was considered by the Division Bench of Allahabad High Court in Dipak Kumar Agarwal Vs. Assessing Officer: [2024] 298 taxman 578 (Allahabad), wherein it has been held that the provisions does not stipulate any

We have considered the contentions.

Relevant provision of the Act pertaining to the present matter reads as under:- Section 132B: Application of seized or requisitioned assets. “[Provided that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained] to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the [Principal Chief Commissioner or] Chief Commissioner or [Principal Chief Commissioner or] Commissioner, to the person from whose custody the assets were seized: Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or for

A bare perusal of Section 132B of the Act, the first proviso and second proviso would reveal that the second proviso would come into play only when an application is made to the Assessing Officer and the Assessing Officer is satisfied that such asset or part of the asset after recovering the liability may be released with prior approval of appropriate authorities to the person from whose custody the assets were seized. Thus, for applying the second proviso, there has to be some satisfaction of the Assessing Officer. This clearly goes to show that once the Assessing Officer has arrived at a satisfaction with regard to the existing liability and with regard to the return of the assets, then the second proviso would apply and the assets or part of the assets as the case may be shall be released within a period of 120 days. Thus, the second proviso is mandatory and the same would

In the present case in hand, the application was filed within thirty days before the Assessing Officer, but the Assessing Officer has not passed any order with regard to the liability or with regard to the return of the assets. Thus, the second proviso would not come into play. Further, the first proviso does not give any time line and the second proviso is applicable only when there is an assessment by the Assessing Officer.

As far as factual aspects of the case are concerned, it is not disputed that the seizure was made on 21.09.2023 and an application for release of the cash seized from the lockers of the petitioners was made on 09.10.2023 and 06.11.2023, which have not been decided by the respondent. Thereafter, prior to the seizure by the respondent, the petitioners vide letters dated 17.01.2023 & 23.08.2023 had disclosed that their bank lockers were having cash to the tune of around Rs.37 lac.

As to whether the second proviso to Section 132B of the Act should be considered to be mandatory and whether the assets seized have to be released after the expiry of 120 days, came up for consideration before the Division Bench of this Court in Harish Forex Services Pvt. Ltd. (supra) and the Division Bench held that the provision is mandatory and the assets have to be released after the expiry of 120 days. Similar controversy arose before the Division Bench of Allahabad High Court in Dipak Kumar Agrawal (supra) and the Allahabad High Court held that the

In none of the judgments cited by counsel for the petitioners- Mr. Siddharth Ranka, Section 132B (4)(a) & (b) of the Act have been dealt with.

We are of the considered view that second proviso to Section 132B of the Act would apply only after the Assessing

Division Bench of this Court in the judgment of Harish Forex Services Pvt. Ltd. (supra), has not discussed Section 132B (4)(a) & (b) of the Act and on bare reading of the proviso to Section 132B, the same was held to be mandatory. The said judgment is per incuriam as provisions of Section 132B (4)(a) & (b) of the Act has not been dealt with by the Division Bench. Division Bench in Harish Forex Services Pvt. Ltd. (supra) has also not considered the fact that second proviso has been made subject to the first proviso.

We are of the considered view that the judgment of the Allahabad High Court has dealt with Section 132B (4)(a) & (b) of the Act and has rightly come to the conclusion that the second proviso to Section 132B of the Act does not contemplate automatic release on expiry of 120 days.

Consequently, the prayer of the petitioners for refund of the amount cannot be granted. However, since cash has been recovered from Bank locker and even prior to recovery, petitioners

In view of the above, the writ petition is accordingly, disposed. All pending applications stand disposed. (PRAVEER BHATNAGAR),J (PANKAJ BHANDARI),J CHANDAN /53