Wp/513/2005 Of S.satyavathi v. Chief Commissioner Of Income Tax-Ii

HON’BLE SRI JUSTICE BILAL NAZKIAND HON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAO WRIT PETITION Nos.20436 of 2003 & 513 of 2005 Date: 16-04-2007. Between : S.Satyavathi. …..Petitioner And Chief Commissioner of Income Tax-II, Hyderabad &others. …..Respondents. HON’BLE SRI JUSTICE BILAL NAZKIANDHON’BLE SRI JUSTICE NOOTY RAMAMOHANA RAOWRIT PETITION Nos.20436 of 2003 & 513 of 2005 COMMON ORDER: (Per Hon’ble Sri Justice Bilal Nazki) These two writ petitions raise same questions of lawand fact and therefore, they are being disposed of by thiscommon judgment. Heard learned counsel for the parties and perusedthe record. The grievance of the petitioner is that during searchand seizure operations, the Revenue had seized articles of gold on 30[th] of June 1990. Thereafter, theassessments were made and only Rs.26,000/- at thatpoint of time, was outstanding and that too by way of aninterest. The petitioner moved applications for waiver,which were rejected. Thereafter, she moved applicationbefore the Central Board of Direct Taxes, which ispending. The main contention of learned counsel forpetitioner is that the original liability was only Rs.26,000/-, the gold that was seized weighed more than 400 gramsand at any point of time, the value of gold was much morethan the liability of the petitioner and in terms of Section132B of the Income Tax Act, 1961 (for short ‘the Act’), therespondents should have sold the gold and adjusted theliability and refunded the balance amount. He submitsthat although that was the responsibility of the Revenue,the petitioner and her husband made frequent appealsand representations to the respondents to return the goldafter adjusting the liability, but this was not done. We have seen from the record theapplications made by the petitioner and her husband. One of the applications is dated 12.07.2003, in which, aspecific request had been made to sell the gold andadjust the liability. The learned counsel for petitionersubmits that on one hand the Department retained thegold for more than seventeen years and on the otherhand the meter with regard to interest remained on and assuch, in the counter affidavit now it has been stated thatthe liability as on today is Rs.1,58,000/-. Out of this, theinterest component is Rs.1,13,286/-. We feel the courseadopted by the Revenue is against common sense andby adopting such a course, they neither gainedthemselves nor the petitioner had any gains, on the otherhand, the petitioner was put to harassment for a period of seventeen years as the gold belonging to her wasretained by the Department unnecessarily. Section 132B of the Act as it read at the relevant period of time is; “132B. Application of retained assets:-- (1)The assets retained under sub-section (5) ofsection 132 may be dealt with in the followingmanner, namely :-- (i) The amount of the existingliability referred to in clause (iii) ofthe said sub-section and theamount of the liability determinedon completion of the regularassessment or reassessment for allthe assessment years relevant tothe previous years to which theincome referred to in clause (i) ofthat sub-section relates (includingany penalty levied or interestpayable in connection with suchassessment or reassessment) andin respect of which he is in defaultor is deemed to be in default maybe recovered out of such assets. (ii) If the assets consist solely ofmoney, or partly of money andpartly of other assets, theAssessing Officer may apply suchmoney in the discharge of theliabilities referred to in clause (i) andthe assessee shall be dischargedof such liability to the extent of themoney so applied. (i) The amount of the existingliability referred to in clause (iii) ofthe said sub-section and theamount of the liability determinedon completion of the regularassessment or reassessment for allthe assessment years relevant tothe previous years to which theincome referred to in clause (i) ofthat sub-section relates (includingany penalty levied or interestpayable in connection with suchassessment or reassessment) andin respect of which he is in defaultor is deemed to be in default maybe recovered out of such assets. (ii) If the assets consist solely ofmoney, or partly of money andpartly of other assets, theAssessing Officer may apply suchmoney in the discharge of theliabilities referred to in clause (i) andthe assessee shall be dischargedof such liability to the extent of themoney so applied. The assets other than moneymay also be applied for thedischarge of any such liabilityreferred to in clause (i) as remainsundischarged and for this purposesuch assets shall be deemed to beunder distraint as if such distraintwas effected by the AssessingOfficer or, as the case may be, TaxRecovery Officer underauthorization from the ChiefCommissioner or Commissionerunder sub-section (5) of section226 and the Assessing Officer or,as the case may be, Tax RecoveryOfficer may recover the amount ofsuch liabilities by the sale of suchassets and such sale shall beeffected in the manner laid down inthe Third Schedule.” (iii) In view of the mandate of this provision of law and inview of what has been stated by us hereinabove, we feelthat the course adopted by the Department should havebeen to sell the gold items and adjust the liability as soonas it was possible, but the department cannot go onwaiting indefinitely that too for a period of seventeenyears, retaining the assets of assessees, not selling them,not adjusting the liability, but adding to the interest everyyear. The other contention raised by the petitioner wasthat the gold does not belong to the assessee, who was her husband, but it was her Stridhana property. This pleacannot be accepted because we have seen from therecord that many applications were made by the husbandof the petitioner when he was alive and also by thepetitioner herself, claiming the property to be the propertyof her husband and even asking the Department to sellthe property and adjust against the liability. For these reasons, we allow the writ petitions anddirect that the gold seized from the petitioner be releasedon payment of an amount of Rs.35,378/-. Although therespondents have claimed an amount of Rs.9,335/- overand above the amount we have mentioned, but thisamount pertains to the liability of 1989-1990, which wasnever subject matter of any notice given to the petitioner. In the circumstances of the case, we direct that no interestshall be charged, and on payment of the amount directedby us, the gold shall be released in favour of thepetitioner. However, if the petitioner fails to pay theamount within two weeks from today, the Department shallsell the gold, adjust the liability and refund the balanceamount to the petitioner. 16[th] April 2007 _______________ BILAL NAZKI, J _____________________________ NOOTY RAMAMOHANA ajr RAO, J