Rameshkumar Shankarlal And Co v. Deputy Commissioner Of Income Tax

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 13896 of 2019 FOR APPROVAL AND SIGNATURE: HONOURABLE MR. JUSTICE J.B.PARDIWALASd/-andHONOURABLE MS. JUSTICE NISHA M. THAKORESd/-================================================================ ================================================================RAMESHKUMAR SHANKARLAL AND CO Versus DEPUTY COMMISSIONER OF INCOME TAX ================================================================ Appearance: MR JAIMIN R DAVE, ADVOCATE for the Petitioner(s) No. 1MR PRANAY V SHAH, ADVOCATE for the Petitioner(s) No. 1MR M.R.BHATT, SR.ADVOCATE for M.R. BHATT & CO. for the Respondent(s) No. 1,2 ========================================================== CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA andHONOURABLE MS. JUSTICE NISHA M. THAKORE Date : 22/02/2022 ORAL JUDGMENT (PER : HONOURABLE MS. JUSTICE NISHA M. THAKORE) 1.By this writ-application under Article 226 of theConstitution of India, the writ-applicant has prayed for thefollowing reliefs : “9(a) To quash and set aside impugned order/letter dated16.11.2018 at Annexure-A to this petition; 9(b) Direct Respondents herein to refund an amount ofRs.24,50,000/- along with statutory interest from the dateof filing of his Petition; 9(c) Pending hearing and final disposal of this Petition thisHon’ble Court may be pleased to direct respondent anamount of Rs.24,50,000/- against Bank Guarantee and/orBond of equivalent amount; 9(d) Any other and further relief, which is just and proper,may kindly be granted as may be deemed expedient by thisHon’ble Court in the facts and circumstances of the case; 9(e) Award cost of the present petition.” 2.The facts giving rise to this writ-application may besummarized as under : 2.1.The writ-applicant is a partnership firm registeredunder the Partnership Act, 1932 (for short, the ‘Act 1932’).There are in all nine partners in a partnership firm. 2.2.The partnership firm is engaged in the business ofAngadia (courier service). 2.3.It appears from the materials on record that twoemployees of the partnership firm, namely Bhuraram andGanpat Singh, were travelling to Ajmer on 24/06/2009. Itis the case of the writ-applicant that they were asked to goto Ajmer for the purpose of purchasing a property in theform of office/shop on behalf of the firm. It is also the caseof the firm that it had handed over an amount ofRs.24,50,000/- (Twenty-Four Lakh Fifty Thousand) in cashto the two employees referred to above for the purpose ofpayment towards the purchase of shop-cum-office. 2.4.There is a strong assertion on the part of the firmthat the cash referred to above belongs to the firm. Thetwo employees named above were detained by the policenear the Clock Tower, Ajmer, and the cash referred toabove was seized. 2.5.It appears that upon seizure the firm filed anapplication under Section 457 of the Code of CriminalProcedure for the release of the cash. The said applicationwas rejected by the court at Ajmer vide the order dated16/09/2009. 2.6.Being aggrieved by the order passed by theMagistrate at Ajmer rejecting the application for release ofthe cash, the firm preferred a revision application beforethe Additional Sessions Judge (Fast Track) at Ajmer. Therevision application also came to be rejected vide orderdated 03/01/2011. The firm thereafter preferred the Criminal Misc. Petition No.747 of 2012 before the HighCourt of Rajasthan at Jaipur and assailed the two ordersdated 16/09/2009 and 03/11/2011 respectively referredto above. The High Court of Rajasthan disposed of thematter vide order dated 28/09/2016, asking the firm toapproach the trial court for release of the said amount. 2.6.Being aggrieved by the order passed by theMagistrate at Ajmer rejecting the application for release ofthe cash, the firm preferred a revision application beforethe Additional Sessions Judge (Fast Track) at Ajmer. Therevision application also came to be rejected vide orderdated 03/01/2011. The firm thereafter preferred the Criminal Misc. Petition No.747 of 2012 before the HighCourt of Rajasthan at Jaipur and assailed the two ordersdated 16/09/2009 and 03/11/2011 respectively referredto above. The High Court of Rajasthan disposed of thematter vide order dated 28/09/2016, asking the firm toapproach the trial court for release of the said amount. 2.7.Pursuant to the order passed by the High Court ofRajasthan, the firm once again approached the Court ofthe Chief Judicial Magistrate, Ajmer. The Chief JudicialMagistrate, Ajmer, passed an order dated 20/12/2016,directing the police to hand over the cash to the firm, if notrequired in any other proceedings. 2.8.However, it appears that way back on 09/02/2011,the Chief Judicial Magistrate, Ajmer, while rejecting theapplication of the firm for release of the cash, had passedan order directing that the amount of Rs.24,50,000/- incash which was seized from the two employees of the firmshall be deposited with the Income Tax Department,Jodhpur. Accordingly, on 24/02/2011, the seized cashcame to be deposited with the Assistant Director of IncomeTax (Inv.)-I, Jodhpur. 2.9It appears that the case of Bhuraram was centralizedwith the ACIT-CC-1(2), Ahmedabad, and the requisiteamount came to be transferred to the CIT (Central),Ahmedabad. On 15/10/2012, the statement of oneBhuraram was recorded under Section 131 of the Act,wherein he stated that the source of the cash seized from his possession was from sale of silver. Bhuraram also filedaffidavits of two individuals to whom he is said to have soldthe silver. However, Bhuraram was not able to producethose two purchasers before the Income Tax authorities forinterrogation. Bhuraram further accepted the said cash ashis undisclosed income and requested the department todeduct the corresponding tax from the seized amount. On31/10/2012, the assessment of Bhuraram was completedunder Section 143(3) read with Section 153(A) of the Act bythe ACIT, CC-1(2), Ahmedabad, and an addition ofRs.24,50,000/- was made in the hands of Bhuraram M.Patel. 2.10. The DCIT-CC-1(2), Ahmedabad, thereafter vide orderdated 07/03/2013, levied penalty of Rs.7,35,000/- underSection 271(1)(c) of the Act for concealment of the incomein case of Bhuraram. A notice under Section 148 of theAct dated 21/03/2013 came to be issued to the firm. On01/07/2013, the CIT-Ahmedabad dismissed the appeal ofBhuraram. On 01/01/2014, the assessment order waspassed under Section 143(3) read with Section 147 of theAct. The Assessing Officer concluded that out ofRs.24,50,000/- shown by way of an entry, Rs.13,00,000/-stood explained and an amount of Rs.11,50,000/- wastreated as the unexplained cash seized on 24/06/2009. 3.At this stage, we must look into the assessment orderdated 01/01/2014 referred to above in the case of the firm forthe Assessment Year 2010-2011, more particularly, para-4 of thesaid order. 3.At this stage, we must look into the assessment orderdated 01/01/2014 referred to above in the case of the firm forthe Assessment Year 2010-2011, more particularly, para-4 of thesaid order. “4.During the course of assessment proceedings, it isseen from the books of account produced that the assesseehas shown withdrawal of Rs.24.50 Lac on 23.06.2009 andthe description is narrated as “Chief Judicial MagistrateCourt” Ajmer Ganpat Singh B. Rajput Bhuraram M. GandhiMakan Milkat Mate”. The Authorized Representative wasrequested to explain the source of such a huge cash. TheAuthorized Representative explained that it can be verifiedfrom the cash book that the assessee firm is havingsufficient cash balance to withdraw and send Rs.24.50 Lacfor purchase of Shop at Ajmer. The AuthorizedRepresentative was requested to produce/furnish evidenceof such accumulation in the cash book. The AuthorizedRepresentative explain that it can be seen from the bankaccount that the assessee firm has withdrawn Rs.3 Lac on02.04.2009 and 10 lac on 28.05.2009 from the bank andthe same are reflected in the cash book, rest of the cash isout of day-to-day Khep Income/Receipt. On perusal of thecash book, it is seen that the assessee is having a verylimited amount of receipt in the cash book and there is alsoequivalent withdrawal/expenses appearing in the cashbook on account of Khep Expenses, Stationery, news Paper,Officer Expenses, Delivery Expenses etc. which implies thatthe accumulation of huge cash of Rs.11.50 lac (Rs.24.50 lac– Rs.13 lac) is not found justifiable and the cash bookappears to be a drafted one to justify the source of cashseized. The Authorized Representative argued that openingbalance of the cash book may be accepted as the source ofcash withdrawal. The Authorized Representative wasrequested to produce evidence and explain when there is meager difference between Khep Income and Expenses,resulting net income of current financial year as show by theassessee at Rs.82,000/-, how Rs.15.00 Lac can be acceptedas opening balance shown in cash book on 01.04.2009.The Authorized Representative did not put forth any furtherargument but submitted that the cash withdrawal is out ofcash available with the assessee firm and requested not todraw any adverse inference on this account. After takinginto account all the facts, evidences available on recordsand circumstances of the case it is concluded that out ofRs.24.50 Lac which were seized by the SHO, Clock Tower,Police Station, Ajmer only Rs.13.00 Lac are found to beexplained on being withdrawn from the bank account andthe rest of the amount of Rs.11.50 Lac is required to beadded to the total income of assessee. Hence, Rs.11.50 Lacis treated as unexplained cash seized on 24.06.2009 andsame is added to the total income of the assessee. Penaltyproceeding u/s.271(1)(c) is initiated separately forconcealment the particulars of its income or furnishinginaccurate particulars of such income (Addition Rs.11,50,000/-) Subject to the above remarks and date made available, thetotal income of the assessee is computed as under: Assessed u/s 143(3) r.w.s. 147 of the I. T. Act. Give creditfor pre-paid taxes, if any, after due verification. Chargeinterest u/s. 234A, 234B, 234C, 234DF as the case may be.Issue demand notice and challan. Penalty proceedingu/s.271(1)(c) is initiated separately for concealment theparticulars of its income or furnishing inaccurate particularsof such income.” 4.Thus, it appears from the aforesaid that the assessment inthe case of the firm proceeded on the footing of the entry ofRs.24.50 lakh in the books of account on 23/06/2009, whereinthe description is narrated as the “Chief Judicial MagistrateCourt, Ajmer, Ganpat Singh B. Rajput Bhuraram M. GandhiMakan Milkat Mate”. Assessed u/s 143(3) r.w.s. 147 of the I. T. Act. Give creditfor pre-paid taxes, if any, after due verification. Chargeinterest u/s. 234A, 234B, 234C, 234DF as the case may be.Issue demand notice and challan. Penalty proceedingu/s.271(1)(c) is initiated separately for concealment theparticulars of its income or furnishing inaccurate particularsof such income.” 4.Thus, it appears from the aforesaid that the assessment inthe case of the firm proceeded on the footing of the entry ofRs.24.50 lakh in the books of account on 23/06/2009, whereinthe description is narrated as the “Chief Judicial MagistrateCourt, Ajmer, Ganpat Singh B. Rajput Bhuraram M. GandhiMakan Milkat Mate”. 5.It is the case of the Revenue that the said entry was madeby the firm after the seizure of the cash and the same is clearlyborne out from the said book entry itself which narrates thefactum of litigation of the seized cash in the Court of CJM. On02/01/2014, the CIT (Ahmedabad) dismissed the appeal ofBhuraram filed against the order imposing penalty. On02/11/2015, the department adjusted Rs.24,50,000/- towardsthe outstanding tax demand and penalty in the case ofBhuraram and the balance amount of Rs.7,49,956/- along withinterest up to 01/01/2015 was refunded to Bhuraram. Suchadjustment was in terms of Section 132B(3) of the Act. On04/03/2016, the CIT(A) allowed the appeal filed by the firm anddeleted the addition. The Rajasthan High Court, vide the orderdated 28/09/2016 passed in the Criminal Misc. Petition No.747of 2012, directed the firm to approach the trial court for release of the amount. Pursuant to the direction issued by theRajasthan High Court, the firm went before the trial court. Thetrial court, vide order dated 20/12/2016, directed thedepartment to release the seized amount in favour of the firm, ifnot required in any other proceedings. 6.It is the case of the department that the trial court in itsorder dated 20/12/2016 failed to take into account the factumof such seized amount having been adjusted against theliabilities of Bhuraram as well as the consequential refundamount along with the interest having been paid to Bhuraram.Thereafter on 24/09/2017, 07/08/2018 and 11/10/2018respectively, the firm requested the department to refund theamount. On 16/11/2018, the impugned order came to bepassed, whereby the application for refund came to be rejectedon the ground that the cash of Rs.24,50,000/- was seized fromBhuraram and not from the firm. The said amount was partlyadjusted against the Income Tax demand raised in the case ofBhuraram and the balance was refunded to him along withinterest in accordance with the provisions of Section 132B(3) ofthe Act. On 15/03/2019, Bhuraram preferred an application forgrant of interest under Section 244(A) of the Act on the refundedamount of Rs.7,49,956/-. On 25/04/2019, the Income TaxOfficer, Ahmedabad, passed an order under Section 154 of theAct granting interest of Rs.93,744/- to Bhuraram. The orderreads thus: “4.The assessee has applied for rectification vide dated24.10.2017 for the A.Y. 2010-2011 and requested for issueof interest u/s. 132B(4)(b) of the Act. The balance amount of Rs.7,49,956/- was issued from PD A/c. Of PrincipalCommissioner of Income Tax (Central-1), Ahmedabad to theassessee vide Cheque No.717887 dated 02,.01.2015 andsame was received by assessee on 02.01.2015.Accordingly, after due verification, order u/s.154 of the Actdated 267/02/2018 was passed resulting into a refund of63,746/- (interest u/s. 132B(4)(b) of the Act) and rejectingclaim of refund u/s.244A of the Act stating that granting ofrefund out of seized cash is governed by section 132B(4)(b)of the Act and the manual refund of Rs.63,746/- was issuedto the assessee on 09.03.2018 with the prior approval of theJt. CIT, Range-1(2), Ahmedabad vide approval letterNo.Jt.Cit/Range-1(2)/Manualrefund/2017-18dated08.03.2018. The working of interest u/s. 132B(4)(b) is as under: Rs.7,49,956/- was issued from PD A/c. Of PrincipalCommissioner of Income Tax (Central-1), Ahmedabad to theassessee vide Cheque No.717887 dated 02,.01.2015 andsame was received by assessee on 02.01.2015.Accordingly, after due verification, order u/s.154 of the Actdated 267/02/2018 was passed resulting into a refund of63,746/- (interest u/s. 132B(4)(b) of the Act) and rejectingclaim of refund u/s.244A of the Act stating that granting ofrefund out of seized cash is governed by section 132B(4)(b)of the Act and the manual refund of Rs.63,746/- was issuedto the assessee on 09.03.2018 with the prior approval of theJt. CIT, Range-1(2), Ahmedabad vide approval letterNo.Jt.Cit/Range-1(2)/Manualrefund/2017-18dated08.03.2018. The working of interest u/s. 132B(4)(b) is as under: 132B(4)(b)Interest DateofNumbers ofDateofAmountofInterestu/s.requisitiondays fromconclusion ofRefund received132B(4)(b) of theu/s.132A of25.02.2011Assessmentsby the assesseeAct. i.e. fromseized cashtoproceedingsafter adjustment26.06.2017 tobythe25.06.2011 u/s. 143(3)againstthe31.10.2012 [17Departmentr.w.s.153A(1)remainingMonthx(b) for A. Y.demandvideRs.7,49,956/- x2010-11 cheque0.5%] No.717887dated02.01.2015 24.02.2011120 days31.10.2012Rs.7,49,956/- Rs.63,746/- 25.06.2011 The assessee, not being satisfied with the above refundissued, filed a fresh CPGRAM petition vide G.No.:CBODT/E/2019/05873 dated 15/03/2019, seeking interest u/s.244Aof the Act for 26 months of Rs.97,494/-. 6.On perusal of the assessee’s CPGRAM grievancepetition, it appears that the assessee was seeking interestu/s.244A of the Act for 26 month of Rs.97,494/-. The claimof the assessee is cross-verified with the case record and itis found that the assessee was eligible for refund of interestu/s.244 of the Act on refund of Rs.7,49,956/- for 25 monthsfrom 01.01.2013 to 21.01.2015 since the department washolding the assessee’s refund for 25 months after theassessment was completed and the case is rectified u/s.154of the Act. The working of interest u/s.244A of the Act is as under: Total Income Remained unchanged Recalculate taxes and interest as per law and give credit toprepaid tax, if any. Issue demand notice/challan or R. O.accordingly after due verification of taxes paid. Date:25/04/2019 (D.L.Waghela)Place:Ahmedabad Income-Tax Officer, Ward-1(2)(1), Ahmedabad” 7.We have heard Mr.Jaimin Dave, learned counsel appearingfor the writ-applicant firm and Mr.M.R.Bhatt, learned seniorcounsel appearing for the respondents. 8.Mr.Jaimin Dave, the learned counsel would submit thatthe department could not have appropriated the seized cashtowards the income tax liabilities of Bhuraram and further couldnot have paid the balance cash to Bhuraram, more particularly,when the department was very well aware that the writ-applicantwas claiming ownership of the seized cash since the year 2009.He would submit that the Revenue could not have appropriatedthe seized cash towards the income tax liabilities of Bhuraram,more particularly, when the Revenue has assessed the seizedcash in the hands of the writ-applicant firm. Mr. Dave, thelearned counsel would submit that the Assessing Officer madeaddition of Rs.11,50,000/- based on the seized cash vide orderdated 01/01/2014 which, ultimately, the CIT(A) deleted videorder dated 04/03/2016. Mr.Dave, the learned counsel wouldsubmit that in none of the proceedings as above, the departmenttook the stance that the seized cash was appropriated towardsthe liabilities of Bhuraram. On the contrary, according toMr.Dave, the department always believed it to be the income ofthe firm. 9.In the aforesaid context, Mr.Dave, the learned counsel seekto rely upon the decision of this Court in case of Hemal DilipbhaiShah vs. Assistant Commissioner of Income-tax reported in [2017]80 taxmann.com 151 (Gujarat). Mr.Dave would submit that theentire action on the part of the department is in breach of the 9.In the aforesaid context, Mr.Dave, the learned counsel seekto rely upon the decision of this Court in case of Hemal DilipbhaiShah vs. Assistant Commissioner of Income-tax reported in [2017]80 taxmann.com 151 (Gujarat). Mr.Dave would submit that theentire action on the part of the department is in breach of the principles of natural justice. He would submit that thedepartment could not have paid the balance cash to Bhuraramwithout issuing notice to the writ-applicant firm. Mr.Dave wouldsubmit that in a case where the ownership of the seized cash isin dispute the department is duty bound to determine the actualowner before handing over the cash/assets seized in accordancewith Section 132(B) of the Act. 10.In the last, Mr.Dave submitted that the action on the partof the department is contrary to the order passed by theRajasthan High Court and also the order passed by the JudicialMagistrate, First Class. He submitted that vide order dated20/12/2016, the Judicial Magistrate, First Class, had directedthe department to hand over the seized cash to the writapplicant firm, and in such circumstances, the department wasbound by the same. 11.On the other hand, this writ-application has beenvehemently opposed by Mr.M.R.Bhatt, the learned seniorcounsel appearing for the Revenue. Mr.Bhatt would submit thatthe writ-applicant has no case worth the name and the writ-application deserves to be rejected. Mr.Bhatt would submit thatthe case put up by the writ-applicant was rightly not accepted asno amount was seized by the department in case of the writ-applicant firm. The cash was seized by the Ajmer police from thepossession of Bhuraram and the same was deposited in thename of Bhuraram by the CIT (Central), Jaipur, in the PDaccount of the CIT (Central), Ahmedabad. Mr.Bhatt wouldsubmit that the assessment under Section 143(3) read withSection 147 of the Act in the case of the writ-applicant firm was made by the Income Tax Officer, Ward-2(2), Ahmedabad, videorder dated 01/01/2014 on the basis of the details forwarded bythe ACIT-CC-1(2) Ahmedabad, whereas the refund application ofthe writ-applicant was rejected as no amount was seized in thehands of the firm. The cash was in the hands of Bhuraram. Hewould submit that the notice under Section 153(A) of the Actwas issued to Bhuraram and not to the firm. During the courseof the post-search proceedings as well as the assessmentproceedings, Bhuraram admitted that the cash seized belongs tohim and not to the firm. The addition in respect of the seizedcash was made in the hands of Bhuraram for the A.Y. 2010-2011 while finalizing the order under Section 143(3) read withSection 153(A) of the Act. He would submit that the penaltyunder Section 271(1)(c) of the Act was also levied in the case ofBhuraram on concealment of the income of Rs.24,50,000/-. Therefund of the balance amount after set-off of the other taxliabilities was also issued to Bhuraram in view of theproceedings under sub-section 3 of Section 132(B) of the Act. 12.In the last, Mr.Bhatt submitted that the notice underSection 153(A) was issued to Bhuraram and not to the firm. Theaddition in respect of the seized cash was made in case ofBhuraram. The penalty under Section 271(1)(c) of the Act wasalso levied in case of Bhuraram. The refund of the balanceamount after the set-off of the other liabilities was also issued toBhuraram in view of the provisions of sub-section 3 of Section132(B) of the Act. 13.In such circumstance referred to above, Mr.Bhatt wouldsubmit that the department cannot be said to have wrongly withhold any amount pertaining to the writ-applicant. He wouldsubmit that the writ-application may be rejected. 12.In the last, Mr.Bhatt submitted that the notice underSection 153(A) was issued to Bhuraram and not to the firm. Theaddition in respect of the seized cash was made in case ofBhuraram. The penalty under Section 271(1)(c) of the Act wasalso levied in case of Bhuraram. The refund of the balanceamount after the set-off of the other liabilities was also issued toBhuraram in view of the provisions of sub-section 3 of Section132(B) of the Act. 13.In such circumstance referred to above, Mr.Bhatt wouldsubmit that the department cannot be said to have wrongly withhold any amount pertaining to the writ-applicant. He wouldsubmit that the writ-application may be rejected. 14.Having heard the learned counsel appearing for the partiesand having gone through the materials on record, the onlyquestion that falls for our consideration is, whether in the factsand circumstances of the case, the writ-applicant firm is entitledfor refund of the seized cash which is otherwise declared‘unaccounted money’ and taxed in the hands of the searchedperson. 15.At this stage, it would be appropriate to first examine theorder passed by the Assessing officer in the case of writ-applicant firm in the proceedings under Section 143(3) read withSection 147 of the Act. It transpires from the record that thereopening of the assessment proceedings for the A.Y. 2010-11came to be initiated in the case of the writ-applicant pursuant tothe notice dated 21/03/2013 issued under Section 148 of theAct. As recorded in the assessment order, which is produced atpage 33, the writ-applicant firm had moved before the RajasthanHigh Court for release of the seized cash of Rs.24.50 lakh wayback in the year 2012. At that stage, a copy of such applicationalong with a copy of the FIR dated 25.06.2009 and otherevidence were forwarded to the ACIT, Central Circle-1(2),Ahmedabad, for necessary action, which ultimately culminatedinto the reopening in the case of the writ-applicant firm. Duringsuch proceedings, the notice under Section 142(1) read withSection 143(2) of the Act was issued upon the writ-applicant on05/11/2013. The said notice was responded to by the writ-applicant firm by filing a reply on 31/12/2013, which is produced at page 27. By way of such reply, the writ-applicantfirm has tried to explain the source of income of Rs.24.50 lakh. 16. On reading the assessment order in the case of the writ-applicant, it transpires that though the writ-applicant hadoffered the explanation for the whole seized amount of Rs.24.50lakh under the description of “Chief Judicial Magistrate Court”,Ajmer, Ganpat Singh B.Rajput, Bhuraram Ganchi Makan MilkatMate”, the Assessing Officer had assigned cogent reasons byrecording specific findings that the “accumulation of huge cashof Rs.11.50 lakh (Rs.24.50 lakh (-) Rs.13 lakh) is not foundjustifiable and the cash book appears to be drafted one to justifythe source of cash seized”. It further transpires that theauthorized representative of the writ- applicant firm was givenan opportunity to produce the evidence in support of theirassertion. However, the only explanation tendered by the writ-applicant was that the cash withdrawal was out of cashavailable with the assessee firm. It is in this peculiar facts thatthe Assessing Officer concluded that so far as the remainingamount of Rs.11.50 lakh is concerned, in absence of anymaterial, the same to be treated as unexplained income and isrequired to be added to the total income of the assessee. Furtherdirections were issued for separate proceeding under Section271(1)(c). 17.Thereafter, in the appeal before the Commissioner ofIncome Tax (Appeals) – 4, Ahmedabad, the writ-applicant firm,for the first time, placed on record the extract of the balance-sheet as on 31/03/2009 along with the ITR for the F.Y. 2008-09corresponding the A.Y. 2009-10 with the photograph of 17.Thereafter, in the appeal before the Commissioner ofIncome Tax (Appeals) – 4, Ahmedabad, the writ-applicant firm,for the first time, placed on record the extract of the balance-sheet as on 31/03/2009 along with the ITR for the F.Y. 2008-09corresponding the A.Y. 2009-10 with the photograph of acknowledgment slip. The writ-applicant firm, relying upon thefurther documents, contended that the additional amount ofRs.11.50 lakh was, in fact, shown as the closing balance as on31/03/2009, which had been carried forward by the writ-applicant as reflected in the balance-sheet as on 01/04/2009.The writ-applicant firm by submitting the details of variousentries as reflected in the cash book for the period between01/04/2009 and 30/03/2009 contended that there was anavailable balance of amount Rs.15 lakh as on 01/04/2009,which had continued all throughout for the aforesaid period. TheCommissioner of Income Tax (Appeals) - 4, Ahmedabad, had noalternative but to accept the case of the writ-applicant firm and,therefore, directed to delete the additions made by the AssessingOfficer while allowing the appeal in favour of the writ-applicantfirm. 18.Having regard to the facts narrated in details as above, wehave gathered an impression that the writ-applicant, in collusionwith Bhuraram, took the Revenue for a ride. We do not proposeto cast any aspersions on either of them, but at the same time, itneeds to be noted that when Bhuraram was intercepted by thepolice at Ajmer and cash was recovered from his possession, hisfirst version was that he was in possession of cash as he hadsold silver. Bhuraram was not able to furnish any information asregards the two individuals to whom he had sold the silver andcollected the cash in lieu of such sale transaction. Bhuraramaccepted that the said cash was his undisclosed income andasked the department to do the needful in accordance with law. 19.On the other hand, the writ-applicant says that Bhuraram was its employee and he was sent to Ajmer with cash for thepurpose of purchasing a property in the form of office/shop onbehalf of the firm. This case put up by the writ-applicant isunpalatable. If an employee of a firm is sent with such a hugeamount in cash, then why all of a sudden the said employee hadto say before the Revenue that it was his cash and he was theowner of the cash. 20.When Bhuraram persuaded the matter with the Revenue,what was the writ-applicant doing ? When the learned counselappearing for the writ-applicant was confronted with thisquestion, the only reply was that it was not within the knowledgeof the writ-applicant that Bhuraram was pursuing the matterwith the Revenue, as if Bhuraram was the lawful owner of thecash. The legitimate question arises to be answered by the writ-applicant is, as to at what point of time Bhuraram severed offthe master-servant relationship ? Nothing is forthcoming onrecord. On one hand the writ-applicant went on asserting thatthe cash belongs to it, and on the other hand, Bhuraram tookthe stance that he was the lawful owner of the cash. 21.Under the Income Tax Act, Section 132B provides for theprocedure for application of the assets seized under Section 132or requisitioned under Section 132A and release of the assetsthereunder. As per Section 132B(1), an assessee has to make anapplication for release of the seized assets within a period ofthirty days. The reference to the word ‘existing liability’authorises the officer to realise the amount of the existingliability by way of recovery from such seized assets. The closedexamination of Sections 132 to 132B of the Act embodies an 21.Under the Income Tax Act, Section 132B provides for theprocedure for application of the assets seized under Section 132or requisitioned under Section 132A and release of the assetsthereunder. As per Section 132B(1), an assessee has to make anapplication for release of the seized assets within a period ofthirty days. The reference to the word ‘existing liability’authorises the officer to realise the amount of the existingliability by way of recovery from such seized assets. The closedexamination of Sections 132 to 132B of the Act embodies an integrated scheme laying down the procedure comprehensivelyfor the search and seizure and the power of the authoritiesmaking the search and seizure to order confiscation of the assetsseized. Section 132A of the Act confers power to the authoritiesto requisition the books of the account in consequence of theinformation in their possession. Section 132B provides themanner in which the assets retained under sub-section (5) ofSection 132 can be dealt with. Sub-section (7) provides that if anassessing officer is satisfied that the seized assets or any partthereof were held by such person for and on behalf of such otherperson, the assessing officer may proceed under sub-section (5)against such other person and the provisions of Section 132shall apply to such other persons as well. Sub-section (11)provides that if any person objects for any reasons to such ordermade under sub-section (5), he can, within a period of 30 days ofthe date of such order, make an application before the ChiefCommissioner stating the reasons therein of such objections andrequesting for appropriate relief in the matter. 22.In light of the aforesaid scheme envisaged for release of theseized assets, if we examine the case on hand we find that theRevenue has also committed some mistake, but the question is,whether the writ-applicant, in the facts and circumstances of thepresent case, is entitled to now assert, as a matter of right, thatthe department should return the cash to him with interest. Theanalysis of the facts which has emerged on record makes theoverall conduct of the writ-applicant highly suspicious. (1)On 24/06/2009, the cash amount was seized fromBhuraram Patel by the SHO, Clock Tower Police Station,Ajmer, pursuant to the order dated 09/02/2011 passed by the Chief Judicial Magistrate. The seized amount of cashwas handed over to the ADIT (Inv.), Jodhpur. The firststatement of the searched person Bhuraram Patel came tobe recorded under Section 132(4) of the Act by the Revenueon 24/03/2011, wherein he admitted that the cashamount belongs to him. It further transpires from therecord that in the said statement under Section 131(A) ofthe Act recorded by the Investigation Wing, Jodhpur, aspecific query was raised to the assesee Bhuraram Patel(searched person), which is produced at page 68. Inquestion no.5, a specific query was raised as regards theclaim of the writ- applicant firm which was categoricallydenied by the said Bhuraram Patel (searched person). (2)It is pertinent to note that though the writ-applicantbeing aware about the objection raised by the Revenuewhile opposing release of the cash in an application underSection 457 of Cr.P.C., chose not to approach the Revenueseeking release of the seized cash under Section 132B ofthe Act. The Revenue had categorically taken the stancethat the department has proceeded under Section 132 ofthe Act. Admittedly, the writ-applicant chose to submitapplication seeking refund of the cash seized before therespondent department for the first time on 17/03/2016followed by an applications-cum-reminders dated24/09/2017, 07/08/2018 and 11/10/2018 respectively. (3)Further, the writ-applicant had approached theconcerned JMFC Court at Ajmer under Section 457 of theCode of Criminal Procedure for release of the seized cash in (3)Further, the writ-applicant had approached theconcerned JMFC Court at Ajmer under Section 457 of theCode of Criminal Procedure for release of the seized cash in July, 2009. The said application under Section 457 ofCr.P.C. came to be rejected by the concerned trial courtvide order dated 16/09/2009, against which even arevision was preferred by the writ-applicant, which alsocame to be rejected on 3/1/2011. Therefore, the seizedcash came to be transferred by the ADIT (Inv.) - 1,Jodhpur, to the CIT (Central) Jaipur on 24/02/2011,which ultimately came to be transferred to the CIT(Central), Ahmedabad, in the year 2012 for initiation ofappropriate block assessment proceedings against the saidBhura Ram Patel (searched person). It is upon suchtransfer that the Assessing Officer, i.e. the AssistantCommissioner of Income Tax, assumed the jurisdiction forinitiation of the proceedings against Bhuraram Patel(searched person) under Section 153(A) of the Act byissuing the notice dated 07/09/2011. (4)The Assessing Officer was made to believe that theseized cash belongs to the searched person in view of theuncontroverted statement made by Bhuraram Patelrecorded on 24/03/2011. Based on such satisfaction, theassessment proceedings in the case of Bhuraram Patel(searched person) was initiated by issuing the notice dated07/09/2011 under Section 153-A of the Act, which wasresponded to by the assessee (searched person) by filingthe return on 15/10/2012, declaring his total income ofRs.54,000/-. In response to the specific query raised by theAssessing Officer to explain the source of cash seized andrequisitioned under Section 132A of the Act on24/02/2011 of Rs.24.50 lakh along with the supporting documents/evidence, the said assessee Bhuraram Patel(searched person) had submitted his reply dated15/10/2012 (which is reproduced in the order at page 72),wherein the searched person had accepted that the seizedcash belongs to him being derived from the sale of silver. Itfurther transpires that the statement of Bhuraram Patel(searched person) was first recorded on 24/03/2011 underSection 132 (4) of the Act. The second statement wasrecorded on 15/10/2012 (which is placed on record atpage 75). However, at the end of the assessmentproceedings, the Assessing Officer, upon appreciation ofthe materials on record, by an order dated 31/10/2012,arrived at a conclusion that said assesee was holdingunaccounted income of Rs.24.50 lakh for the A.Y. 2010-11. (5)The said order of the Assessing Officer was furtherchallenged by the said assessee – Bhuraram Patel(searched person) by preferring an appeal on 22/11/2012before the CIT(A), Ahmedabad. However, the CIT (A),Ahmedabad, vide order dated 02/01/2014 had dismissedthe appeal, thereby confirming the order passed by theAssessing Officer of the unexplained income of Rs.24.50lakh. Even the penalty order under Section 27(1)(C) of theAct, 1961, came to be passed against the said searchedperson on 07/03/2013 by the Deputy Commissioner ofIncome Tax, Central Circle-I (2), Ahmedabad, levying thepenalty of an amount of Rs.7.35 lakh. The appealpreferred by the said assessee - Bhuraram Patel againstthe aforesaid order of penalty came to be rejected by theCIT(A), Ahmedabad, vide order dated 01/01/2014. The CIT(A) found the story of the said assessee not believableas except for the affidavit no other cogent material orevidence were brought on record and, therefore, confirmedthe order passed by the Deputy Commissioner levying thepenalty under Section 270(1)(C) of the Act. CIT(A) found the story of the said assessee not believableas except for the affidavit no other cogent material orevidence were brought on record and, therefore, confirmedthe order passed by the Deputy Commissioner levying thepenalty under Section 270(1)(C) of the Act. Thus, as on date of the passing of the order dated01/01/2014 in the case of the writ-applicant firm, theproceedings under Section 153A against the searchedperson Bhuraram Patel had already concluded in view ofthe order dated 31/10/2012 passed by the AssessingOfficer, treating the cash in the hand of said assessee as‘unaccounted income’. In fact, the matter travelled inappeal and even penalty proceedings had already beenstarted. On the other hand, when the assessmentproceedings were initiated against the writ-applicant firmand were heard, the writ-applicant had failed to furnish theaforesaid details before the Assessing Officer. 23.It is pertinent to note that nothing has been placed onrecord by the writ-applicant to suggest that the proceedingsundertaken by the department under Section 132 of the Act,were objected to by the writ-applicant at the relevant point oftime. In fact, the inaction on the part of the writ-applicant firmas against the statement of the searched person Bhuraram Patel,the Assessing Officer has been made to form a reasonable beliefof treating the seized cash in the hands of the searched personBhuraram, for initiation of the proceedings under Section 153Aof the Act as against Bhuraram only. Had the writ-applicant firmapproached before the Revenue Department, then the recourse as available under Section 132 or Section 153C of the Act hadalso been followed against the writ-applicant firm. In fact, it wasonly when the said fact was noticed in the proceedings before theRajasthan High Court challenging the criminal proceedingsarising out of Section 457 Cr.P.C. that the papers related to thewrit-applicant were placed before the Revenue Department,which culminated into the reopening proceedings under Section148 of the Act. The Court further finds that the reopeningproceedings in the case of the writ-applicant has been carriedout in terms of Section 143(3) read with Section 147 of the Actrather than Section 153C of the Act. Again, there is no challengeto the order declaring the seized cash in the hands of BhuraramPatel as ‘unaccounted income’ of the searched person. Even,there is no challenge to the order of penalty and the seized cashbeing adjusted towards the same. We find that there is noirregularity or illegality in the order passed by the AssessingOfficer, treating the seized cash as ‘unaccounted income’ in thehands of the searched person Bhuraram Patel.. 24.In light of the aforesaid facts and legal position, this Courtdoes not find any fault with the department of having refused torelease the seized amount at the relevant point of time or eventhe refund thereafter. At the same time, declaring the income inthe case of the writ- applicant being not taxable, will not ipsofacto result into refund of the seized cash, which has otherwisebeen realized from the searched person. 25.It is well-settled legal position that prerogative writs underArticle 226 of the Constitution can be issued only in grave caseswhere the subordinate tribunals or bodies or officers act wholly without jurisdiction, or in excess of jurisdiction, or in violation ofprinciples of natural Justice, or refused to exercise jurisdictionvested in them, or there is error apparent on the face of recordwhich has resulted in manifest injustice. In the case of SangramSingh vs. Election Tribunal, Kotah, AIR 1955 SC 425, in para 14of the judgment the Supreme Court has observed as under : 25.It is well-settled legal position that prerogative writs underArticle 226 of the Constitution can be issued only in grave caseswhere the subordinate tribunals or bodies or officers act wholly without jurisdiction, or in excess of jurisdiction, or in violation ofprinciples of natural Justice, or refused to exercise jurisdictionvested in them, or there is error apparent on the face of recordwhich has resulted in manifest injustice. In the case of SangramSingh vs. Election Tribunal, Kotah, AIR 1955 SC 425, in para 14of the judgment the Supreme Court has observed as under : “That, however, is not to say that the jurisdiction will beexercised whenever there is an error of law. The HighCourts do not, and should not, act as courts of appeal underArticle 226. Their powers are purely discretionary andthough no limits can be placed upon that discretion it mustbe exercised along recognized lines and not arbitrarily ; andone of the limitations imposed by the Courts on themselvesis that they will not exercise jurisdiction in this class of caseunless substantial injustice has ensued, or is likely toensue. They will not allow themselves to be turned intocourts of appeal or revision to set right mere errors of law,which do not occasion injustice in a broad and generalsense, for, though no Legislature can impose limitations onthese constitutional powers it is a sound exercise ofdiscretion to bear in mind the policy of the Legislature tohave disputes about these special rights decided asspeedily as may be. Therefore, writ petitions should not belightly entertained in this class of case.” 26.In M.Padmanabha Iyengar vs. Government of A.P., reportedin AIR 1990 AP 357, Jeevan Reddi, J. (as His Lordship then was)observed as follows : “It must also be remembered that, the remedy under Article226 is a discretionary one. The Court is not bound tointerfere merely on the establishment of an irregularity orillegality. The Court must further be satisfied that suchinterference is called for to meet, or to further, the ends ofjustice. If by interfering in the matter the interests of justiceare going to suffer, this Court will withhold its arm;” (seeSangram Singh vs. Election Tribunal, Kotah, AIR 1955 SC425 and Venkateswara Rao vs. Government of AndhraPradesh, AIR 1966 SC 828). 27. A Division Bench of this High Court in the case ofSaurashtra Paper and Board Mills Pvt Ltd vs. State of Gujaratand others, reported in (1992) 2 GLR 871, observed as under: “It is a settled principle of law that the remedy under Article226 of the Constitution of India is discretionary in natureand in a given case, even if some action or order challengedin the petition is found to be illegal and invalid, the HighCourt while exercising its extraordinary jurisdictionthereunder can refuse to upset it with a view to doingsubstantial justice between the parties.” 28.It has been rightly observed that the legal formulationscannot be enforced divorced from the realities of the factsituation of the case. While administering law, it is to betempered with equity, and if the equitable situation demandsafter setting right the legal formulations, not to take it to thelogical end, the High Court would be failing in its duty if it does not notice the equitable consideration and mould the final orderin exercise of its extraordinary jurisdiction. Any other approachwould render the High Court a normal Court of Appeal, which itis not. 29.In view of the aforesaid, we decline to grant any relief to thewrit-applicant. The writ-application accordingly stands rejected. (J. B. PARDIWALA, J.) /MOINUDDIN (NISHA M. THAKORE, J.)