CHIRONJILAL SHARMA HUFversusUNION OF INDIA AND ORS.

                       [2013] 12 S.C.R. 666


A                  CHIRONJILAL SHARMA HUF
                                  v.
                    UNION OF !NOIA AND ORS.
                  (Civil Appeal No. 10601 of 2013)
                       NOVEMBER 26, 2013
B
             [R.M. LODHA, MADAN B. LOKUR AND
                     KURIAN JOSEPH, JJ.]

         Income Tax Act, 1961 - s.1328(4)(b) - Payment of
C   interest on delayed assessment- Search conducted in house
    of appellant - Cash amount of Rs. 2,35,0001- recovered -
    Order passed u/s.132(5) on 31.5.1990 - Assessing Officer
    (A.O.) calculated tax liability and cash seized in search from
    appellant's house appropriated - Order of A. 0. set-aside by
D   Tribunal - Revenue accepted the order of Tribunal -
    Appellant got refund of Rs.2,35,0001- alongwith interest from
    4.3.1994 (date of last of the regular assessments by A.O.)
    until the date of refund - Claim of appellant-assessee for
    interest u/s.1328(4)(b) for the period from expiry of period of
E   six months from the date of order under s. 132(5) to the date
    of regular assessment order - Held: Order u/s. 132(5) having
    been passed on 31.5.1990, six months expired on 30.11.1990
    and the last of the regular assessments was done on
    4.3.1994, hence, appellant entitled to claim simple interest u/
F   s.1328(4)(b) from 1.12.1990 to 4.3.1994 at the rate of 15%
    per annum.
      In the search conducted in the house of the appellant
  on 31.1.1990, a cash amount of Rs. 2,35,0001- was
  recovered. On 31.5.1990, an order under Section 132(5)
G of the Income Tax Act, 1961 came to be passed. The
  Assessing Officer calculated the tax liability and the cash
  seized in the search from the appellant's house was
  appropriated. However, the order of the Assessing Officer
  was finally set-aside by the Income Tax Appellate Tribunal.
H                              666
  CHIRONJILAL SHARMA HUF v. UNION OF INDIA             667


The revenue accepted the order of the Tribunal.               A
Consequently, the appellant was refunded the amount of
Rs. 2,35,000/- along with interest from 4.3.1994 (date of
last of the regular assessments by the Assessing Officer)
until the date of refund.
                                                              B
     In the instant appeal, the appellant (assessee)
claimed entitlement to interest under Section 1328(4)(b)
of the Act which was holding the field at the relevant time
for the period from expiry of period of six months from
the date of order under Section 132(5) to the date of         C
regular assessment order. The order under Section
132(5) of the Act having been passed on 31.5.1990, six
months expired on 30.11.1990 and the last of the regular
assessments was done on 4.3.1994, the assessee
claimed interest under Section 1328(4)(b) of the Act from
1.12.1990 to 4.3.1994.                                        D

    Allowing the appeal, the Court

     HELD: 1. A close look at the provisions of Section
1328(4)(a) and (b) of the Income Tax Act, 1961 clearly E
shows that where the aggregate of the amounts retained
under Section 132 of the Act exceeds the amounts
requited to meet the liability under Section 1328(1 )(i), the
department is liable to pay simple interest at the rate of
fifteen percent on expiry of six months from the date of F
the order under Section 132(5) of the Act to the date of
the regular assessment or re-assessment or the last of
such assessments or reassessments, as the case may
be. In the instant case, it is true that in the regular
assessment done by the Assessing Officer, the tax
liability for the relevant period was found to be higher G
and, accordingly, the seized cash under Section 132 of
the Act was appropriated against the assessee's tax
liability but the fact of the matter is that the order of the
Assessing Officer was over-turned by the Tribunal. finally,
 on 20.2.2004. As a matter of fact, the inte~~$t for the post· H
    668       SUPREME COURT REPORTS               [2013] 12 S.C.R.

A assessment period i.e. from 4.3.1994 until refund on the
  excess amount has already been paid by the department
  to the assessee. The department denied the payment of
  interest to the assessee under Section 132B(4)(b) on the
  ground that the refund of excess amount is governed by
B Section 240 of the Act and Section 132B(4)(b) of the Act
  has no application. But, Section 132B(4)(b) deals with pre-
  assessment period and there is no conflict between this
  provision and Section 240 or for that matter 244(A). The
  former deals with pre-assessment period in the matters
C of search and seizure and the later deals with post
  assessment period as per the order in appeal. The view
  of the department is not right on the plain reading of
  Section 132B(4)(b) of the Act. The appellant is entitled to
  the simple interest at the rate of fifteen percent per annum
  under Section 132B(4)(b) of the Act from 1.12.1990 to
D 4.3.1994. The revenue shall calculate the interest payable
  to the assessee as above and pay the same to the
  appellant (assessee) within two months. [Paras 5, 7, 8 &
  9] [672-B-H; 673-A-B]

E       CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    10601 of2013.

        From the Judgment and Order dated 16.08.2011 of the
    High Court of Madhya Pradesh at Jabalpur, Bench at Gwalior
F   in W.P. No. 5531 of 2005.

          Gaurav Agrawal for the Appellant.

        RP. Bhatt, Arijit Prsad, Shalini Kumar, Anil Katiyar for the
    Respondents.
G
          The Judgment of the Court was delivered by

          R.M. LODHA,J. 1. Leave granted.

          2. The brief facts necessary for consideration of the issue
H
   CHIRONJILAL SHARMA HUF v. UNION OF INDIA                   669


raised in the appeal are these: In the search conducted in the        A
house of the appellant on 31.1.1990, a cash amount of Rs.
2,35,000/- was recovered. On 31.5.1990, an order under
Section 132(5) of the Income Tax Act, 1961 (for short "the Act")
came to be passed. The Assessing Officer calculated the tax
liability and the cash seized in the search from the appellant's      B
house was appropriated. However, the order of the Assessing
Officer was finally set-aside by the Income Tax Appellate
Tribunal (for short "the Tribunal") on 20.2.2004. The revenue
accepted the order of the Tribunal. Consequently, the appellant
has been refunded the amount of Rs. 2,35,000/- along with             c
interest from 4.3.1994 (date of last of the regular assessments
by the Assessing Officer) until the date of refund.

      3. The appellant (assessee) claims that he is entitled to
interest under Section 1328(4)(b) of the Act which was holding
                                                                      0
the field at the relevant time for the period from expiry of period
of six month's from the date of order under Section 132(5) to
the date of regular assessment order. In other words, the order
under Section 132(5) of the Act having been passed on
31.5.1990, six months expired on 30.11.1990 and the last of           E
the regular assessments was done on 4.3.1994, the assessee
claims interest under Section 132B(4)(b) of the Act from
1.12.1990 to 4.3.1994.

     4. Section 132 of the Act deals with search and seizure.
Sub-section (5) thereof, which is relevant for the purposes of        F
the present appeal, reads as under:

     (5): Where any money, bullion, jewellery or other valuable
     article or thing (hereafter in this section and in sections
     132A and 1328 referred to as the assets) is seized under         G
     sub-section (1) or sub-section (1A), as a result of a search
     initiated or requisition made before the 1st day of July,
     1995, the Income-tax Officer, after affording a reasonable
     opportunity to the person concerned of being heard and
                                                                      H
    670       SUPREME COURT REPORTS                 [2013] 12 S.C.R.


A         making such enquiry as may be prescribed, shall, within
          one hundred and twenty days of the seizure, make an
          order, with the previous approval of the Joint
          Commissioner)-

                 (i) estimating the undisclosed income (including the
B
                 income from the undisclosed property) in a
                 summary manner to the best of his judgment on the
                 basis of such materials as are available with him;

                 (ii) calculating the amount of tax on the income so
c                estimated in accordance with the provisions of the
                 Income Income-Tax Act, 1922 (11 of 1922), or this
                 Act;

                 (iia) determining the amount of interest payable and
D                the amount of penalty imposable in accordance with
                 the provisions of the Indian Income-Tax Act, 1922
                 (11 of 1922), or this Act, as if the order had been
                 the order of regular assessment;

E                (iii) specifying the amount that will be required to
                 satisfy any existing liability under this Act and any
                 one or more of the Acts specified in clause (a) of
                 sub-section (1) of section 230A in respect of which
                 such person is in default or is deemed to be in
F                default,

          and retain in his custody such assets/or part thereof as are
          in his opinion sufficient to satisfy the aggregate of the
          amounts referred to in clauses (ii), (iia) and (iii) and
          forthwith release the remaining portion, if any, of the assets
G
          to the person from whose custody they were seized:

          Provided that if, after taking into account the materials
          available with him, the Income Tax Officer is of the view
          that it is not possible to ascertain to which particular
H
  CHIRONJILAL SHARMA HUF v. UNION OF INDIA                    671
               [R.M. LODHA, J.]
    previous year or years such income or any part thereof A
    relates, he may calculate the tax on such income or part,
    as the case may be, as if such income or part were the
    total amount chargeable to tax at the rates in force in the
    financial year in which the assets were seized and may
    also determine the interest or penalty, if any, payable or B
    imposable accordingly:

    Provided further that where a person has paid or made
    satisfactory arrangements for payment of all the amounts
    referred to in clauses (ii), (iia) and (iii) or any part thereof, C
    the Income-Tax Officer may, with the previous approval of
    the Chief Commissioner or Commissioner, release the
    assets or such part thereof as he may deem fit in the
    circumstances of the case."

     5. Section 1328 deals with the payment of interest on D
delayed assessment. Omitting the unnecessary part, the
relevant provisions of Section 1328(4)(a) and(b) of the Act read
as under:

    1328: Application of retained assets ....... .                   E
    (4)(a) The Central Government shall pay simple interest at
    the rate of fifteen per cent per annum on the amount by
    which the aggregate of money retained under Section 132
    and of the proceeds, if any, of the assets sold towards the
    discharge of the existing liability referred to in clause 3 of F
    sub-section (5) of that section exceeds the aggregate of
    the amounts required to meet the liability referred to in
    clause (i) of sub-section (1) of this section.

    (b) Such interest shall run from the date immediately G
    following the expiry of the period of six months from the
    date of the order under sub-section 5 of section 132 to the
    date of the regular assessment or reassessment referred
    to in clause (i) of sub-section (1) or, as the case may be,
                                                                H
    672       SUPREME COURT REPORTS                  [2013] 12 S.C.R.


A         to the date of last of such assessments or re-
          assessments. 3

           5. A close look at the above provisions and, particularly,
    clause (b) of Section 1328(4) of the Act clearly shows that
B   where the aggregate of the amounts retained under Section
    132 of the Act exceeds the amounts required to meet the
    liability under Section 132B(1)(i), the department is liable to pay
    simple interest at the rate of fifteen percent on expiry of six
    months from the date of the order under Section 132(5) of the
c   Act to the date of the regular assessment or re-assessment or
    the last of such assessments or reassessments, as the case
    may be. It is true that in the regular assessment done by the
    Assessing Officer, the tax liability for the relevant period was
    found to be higher and, accordingly, the seized cash under
o   Section 132 of the Act was appropriated against the
    assessee's tax liability but the fact of the matter is that the order
    of the Assessing Officer was over-turned by the Tribunal finally
    on 20.2.2004. As a matter of fact, the interest for the post
    assessment period i.e. from 4.3.1994 until refund on the
E   excess amount has already been paid by the department to the
    assessee. The department denied the payment of interest to
    the assessee under Section 132B(4)(b), according to Mr. Arijit
    Prasad, learned counsel for the revenue on the ground that the
    refund of excess amount is governed by Section 240 of the Act
F   and Section 132B(4)(b) of the Act has no application. But, in
    our view, Section 132B(4)(b) deals with pre-assessment period
    and there is no conflict between this provision and Section 240
    or for that matter 244(A). The former deals with pre-assessment
    period in the matters of search and seizure and the later deals
G   with post assessment period as per the order in appeal.

        7. The view of the department is not right on the plain
    reading of Section 132B(4)(b) of the Act as indicated above.

        8. We, accordingly, allow the appeal and set-aside the
H   impugned order and hold that the appellant is entitled to the
  CHIRONJILAL SHARMA HUF v. UNION OF INDIA               673
               [R.M. LODHA, J.]

simple interest at the rate of fifteen percent per annum under   A
Section 132B(4)(b) of the Act from 1.12.1990 to 4.3.1994.

    9. The revenue shall calculate the interest payable to the
assessee as above and pay the same to the appellant
(assessee) within two months from today. No costs.               B

B.B.B.                                       Appeal allowed.