MOHAMMED NIAZ vs. THE INCOME TAX OFFICER (INV)

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WP(C)/24783/2016HC KeralaKLHC01072207201626 August 2016Bench: HONOURABLE MR.JUSTICE A.M.SHAFFIQUE4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court of Kerala observed that given the submissions of the respondent Department, it was not possible to issue a time-bound direction for the release of funds, nor could the Court decide on the petitioner's entitlement to the claimed amount at that stage. The Court found that the assessment proceedings were not finalized and required further action by the Department. Therefore, the only direction that could be issued was for the respondent to complete the proceedings as expeditiously as possible. The Court did not decide on the merits of the petitioner's claim for the refund or the validity of the Department's retention of the funds, leaving these matters to be resolved through the ongoing assessment process.

What were the facts?

The petitioner, Mohammed Niaz, approached the High Court of Kerala seeking a direction to release an excess amount of Rs. 1,51,29,850/- retained by the Income Tax Officer (Investigation), Kochi. A search conducted by the Income Tax Department in a hotel room booked in the petitioner's name resulted in the seizure of Rs. 1.89 crores. The petitioner claimed that his tax liability, including interest and penalty, would not exceed Rs. 37,70,150/-, and thus the remaining amount should be refunded. He also cited severe medical conditions requiring funds for treatment. The respondent Department stated that the assessee accepted ownership of the seized money, purportedly for a land sale, but their explanation for the source was unsatisfactory. The Department also noted that assessment proceedings were not finalized, requiring centralization to the Central Circle, Kochi, and initiation of assessment under Section 147 against the petitioner and another individual who had not filed returns.

What were the issues?

1. Whether the petitioner is entitled to the refund of Rs. 1,51,29,850/-, being the excess amount retained by the respondent after accounting for potential interest and penalty, given the seizure of Rs. 1.89 crores during a search. Assessee's Contention: The petitioner argued that his total liability, including interest and penalty, would be Rs. 37,70,150/-, and therefore, the excess amount of Rs. 1,51,29,850/- should be released. He also highlighted his urgent need for funds due to medical treatment. Revenue's Contention: The respondent Department contended that the assessee's explanation for the source of the seized Rs. 1.89 crores was unsatisfactory. They further stated that assessment proceedings were ongoing, requiring centralization and initiation of assessment under Section 147, and thus the petitioner was not entitled to the refund at this stage.

Which sections of the Income-tax Act were involved?

Section 131A,Section 132(4),Section 147

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE FRIDAY, THE 26TH DAY OF AUGUST 2016/4TH BHADRA, 1938 WP(C).No. 24783 of 2016 (W) ---------------------------- PETITIONER: -------------------- MOHAMMED NIAZ, ZEREENE, EDAPPALLY P.O., RAILWAY STATION ROAD, NEAR AL AMEEN SCHOOL, ERNAKULAM, KOCHI 24.

BY ADV. SRI.K.ANAND RESPONDENT : ------------------------- THE INCOME TAX OFFICER (INV), 3RD FLOOR, ARYA BHANGI PINNACLE BUILDING, SA ROAD, ELAMKULAM, KOCHI. PIN-682 020

BY SRI.P.K.R.MENON,SR. COUNSEL, GOI(TAXES) ADV. SRI.JOSE JOSEPH, SC, THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 26-08-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts

WP(C).No. 24783 of 2016 (W) ------------------------------------------ APPENDIX PETITIONER(S)' EXHIBITS ---------------------------------------- EXHIBIT P1 TRUE COPY OF THE SEARCH WARRANT (COPY OF WHICH WAS GIVEN TO THE PETITIONER AND LIST OF SEIZED ITEMS) DATED 28/01/2016

EXHIBIT P2 TRUE COPY OF THE SUMMONS ISSUED TO THE PETITIONER UNDER SECTION 131 A DATED 08/02/2016

EXHIBIT P3 TRUE COPY OF THE SWORN STATEMENT GIVEN UNDER SECTION 131 OF THE IT ACT DATED 9/2/2016

EXHIBIT P4 TRUE COPY OF THE STATEMENT GIVEN UNDER OATH UNDER SECTION 132(4) DATED 15/02/2016

EXHIBIT P5 TRUE COPY OF THE MEDICAL RECORDS EVIDENCING THE FACT THAT HE IS UNDERGOING MEDICAL TREATMENT DATED 17/12/2015, 04/02/2016, 25/05/2016, 02/06/2016 & 25/06/2016

RESPONDENT(S)' EXHIBITS: NIL ------------------------------------------- /TRUE COPY/ P.A.TO JUDGE sts

A.M.SHAFFIQUE, J.

--------------------------------- W.P (C) No. 24783 of 2016 --------------------------------- Dated this the 26th day of August, 2016 J U D G M E N T Petitioner has approached this Court seeking for a direction to release an excess amount of Rs.1,51,29,850/- retained by the respondent for consequential reliefs. The petitioner submits that a search was conducted by the Income Tax Department in the room booked in the name of the petitioner at Mariott Hotel, Edappally and Rs.1.89 crores were seized. The Income Tax Department had taken steps for finalizing the assessment. According to the petitioner, if at all there is a liability to pay interest and penalty, it would only come to Rs.37,70,150/- and therefore excess amount has to be refunded. According to the petitioner, he is suffering from severe disease and is hospitalized. He is badly in requirement of funds for his treatment and therefore he has approached this Court. 2. A statement is filed by the Standing Counsel inter alia stating that the assessee had accepted the ownership of Rs.1.89 crores which was seized by the Department. According to him, the money was for the purpose of a proposed land sale agreement. According to the Department,

W.P (C) No. 24783 of 2016 2 the assessee's explanation was not found to be satisfactory and the Department is not convinced about the source of money. It is further submitted that the proceedings against the assessee cannot be finalized at this stage. The case has to be centralized to the Central Circle, Kochi for assessment. Further, the Assessing Officer has to initiate assessment under Section 147 against Shri. Mohammed Niaz and Shri. Mahmood K.U. and they had not filed any return of income until 30.03.2016. It is stated that the assessee will have to wait until the completion of the assessment proceedings and to finalize the same. Hence, according to the Department, petitioner is not entitled for the reliefs sought for. 3. Having regard to the aforesaid submission of the respondent, I do not think that a time bound direction can be issued in this matter, nor can this Court decide on the entitlement of the petitioner for the amount as claimed. Suffice it to say that the only direction that can be issued is to the respondent to complete the proceedings as expeditiously as possible. With the above observation, this writ petition is closed. A.M.SHAFFIQUE JUDGE DMR/-

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