Search and Seizure Release of Seized Cash Alongwith Interest Where Source of Seized Asset Explained

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The Tax Publishers Income Tax--Search and Seizure Release of Seized Cash Alongwith Interest Where Source of Seized Asset Explained CA. Nisha Bhandari During the course of search if any asset is seized but nature and source of such seized asset is duly explained by the assessee to the satisfaction of the assessing officer such seized asset should be released within specified time. In case of any failure in releasing such seized asset as per law, interest under section 132B(4) would be payable to the assessee. The learned author analyses the statutory provision in this regard alongwith some judicial decisions rendered clarifying such statutory provision. 1. Dealing with application for release of seized assets According to the first proviso to section 132B(1)(i) where the person concerned makes an application to the assessing officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained to the satisfaction of the assessing officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, to the person from whose custody the assets were seized. The second proviso provides that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed. The first proviso to clause (i) uses the word 'may' with reference to the release of the assets by the assessing officer whereas the second proviso uses the word 'shall' with reference to the period within which assets are required to be released. Thus the combined effect of both the proviso is that where the assessee is able to explain the nature and source of acquisition of the assets, then assessing officer would be duty bound to release such assets. 2. CBDT's clarification regarding release of cash deposited in personal deposit (PD) account As per Board Instruction No. 11/2006, dt. 1-12-2006, the cash deposited in PD Accounts be strictly dealt with as under : (a) Where an application is made in accordance with first proviso to section 132B(1)(i) for release of seized cash and the nature and acquisition of such cash is explained to the satisfaction of the assessing officer, the seized cash should be released within the time limit provided under that section after adjustment of any existing liability. (b) Where seized cash or part thereof was not released under first proviso section 132B(1)(i), the amount lying in PD Account should be released within one month of passing the (search and seizure) assessment order after - SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Search and Seizure

Release of Seized Cash Alongwith Interest Where Source of Seized Asset Explained

CA. Nisha Bhandari

During the course of search if any asset is seized but nature and source of such seized asset is duly explained by the assessee to the satisfaction of the assessing officer such seized asset should be released within specified time. In case of any failure in releasing such seized asset as per law, interest under section 132B(4) would be payable to the assessee. The learned author analyses the statutory provision in this regard alongwith some judicial decisions rendered clarifying such statutory provision.

1. Dealing with application for release of seized assets

According to the first proviso to section 132B(1)(i) where the person concerned makes an application to the assessing officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained to the satisfaction of the assessing officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, to the person from whose custody the assets were seized.

The second proviso provides that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed.

The first proviso to clause (i) uses the word 'may' with reference to the release of the assets by the assessing officer whereas the second proviso uses the word 'shall' with reference to the period within which assets are required to be released. Thus the combined effect of both the proviso is that where the assessee is able to explain the nature and source of acquisition of the assets, then assessing officer would be duty bound to release such assets.

2. CBDT's clarification regarding release of cash deposited in personal deposit (PD) account

As per Board Instruction No. 11/2006, dt. 1-12-2006, the cash deposited in PD Accounts be strictly dealt with as under :

(a) Where an application is made in accordance with first proviso to section 132B(1)(i) for release of seized cash and the nature and acquisition of such cash is explained to the satisfaction of the assessing officer, the seized cash should be released within the time limit provided under that section after adjustment of any existing liability.

(b) Where seized cash or part thereof was not released under first proviso section 132B(1)(i), the amount lying in PD Account should be released within one month of passing the (search and seizure) assessment order after -