Interest on seized cash which was released by department.
Querist :
Anonymous
(Querist) 02 May 2018
This query is : Resolved
Facts of the case An amount of Rs 120000/- was seized by income tax department from an assessee way back in 1987. After seizure of the said amount an assessment was made u/s 132(5) of the I.T. Act 1961 for a/y1988-89. In such assessment a demand was raised of tax and penalties of Rs 43450/- and Rs 86900/- respectively. As the liability determined on account of tax and Penalty imposable exceeds the amount seized, entire seized Cash of Rs.120000/- was retained by the assessing officer. Being aggrieved with the assessing officer's order the assessee had filed an application u/s 132(11) of the I.T. Act 1961 before the jurisdictional Commissioner of income tax. Ld.. jurisdictional commissioner in his verdict had quashed the assessing officer's order and directed to release the said amount on 19.08.1993. Since then assesse had sent several reminders to income tax department, but did not succeed in realizing the same. In February's2017 assessee had filed a grievance petition before the central Board of Direct taxes (income tax) for release of said amount together with update interest till date. Against said grievance petition an amount of Rs 120000/-was finally released on 18.05.2017, but interest due on the said amount was not paid. subsequently assessee had again filed a petition before the principal commissioner of income tax on 17.08.2017, claiming interest on the said amount u/s 244A of the I.T. Act 1961. On receipt of the said petition, Principal Commissioner's office had referred the matter to the concerned assessing officer. A.O. had opined that assessee should get interest for 30 years ( i.e. 1987 to 2017) u/s 132B (4) and not u/s 244A. But the concerned Principal Commissioner has not approved that on the ground that the section under which interest is proposed to be paid is not appropriate. Now the question is under which section assesse should get interest on the said amount of Rs 120000/- . In this instant case an assessment was made first u/s 132(5) of the I.T.Act 1961 for the a/y 1988-89 raising a demand of Rs 130350/-, and entire seized cash of Rs 120000/- was adjusted against the liability so determined on account of tax and penalty.for a/y 1988-89. Since the said assessment order was subsequently quashed by the then Ld Jurisdictional Commissioner of Income tax, therefore the amount appropriated by A.O in his said order towards income tax and penalty of Rs.120000/- out of seized cash should be treated as tax and penalty paid in excess for a/y 1988-89 in absence of any liability. Therefore is the assesse not entitled to get interest on said excess payment of tax and penalty of Rs 120000/- for the A/Y 1988-89 u/s 244a of I.T. Act 1961?
R.Ramachandran
(Expert) 10 May 2018
How does it matter to you, so long as the rate of interest payable is one-half percent for each month - either under Section 132 or under Sec. 244A?
