Facts of the Case

The petitioner, Suresh Gulati, filed a writ petition seeking directions to the Income Tax Department to pay interest on the amount seized during search proceedings, as mandated under Section 132B(4)(a) read with Section 244A of the Income Tax Act, 1961.

The petitioner had submitted multiple representations dated:

  • 03 October 2017
  • 16 July 2019
  • 03 February 2020
  • 12 October 2020
  • 20 July 2021

However, these representations remained undecided by the authorities.

Issues Involved

  1. Whether the petitioner is entitled to interest on seized amounts under Section 132B(4)(a) read with Section 244A of the Income Tax Act, 1961.
  2. Whether failure of the authorities to decide representations seeking such interest is legally sustainable.

Petitioner’s Arguments

  • The non-payment of interest on seized amounts is contrary to Section 132B(4)(a).
  • The Income Tax Department is under a statutory obligation to pay interest after expiry of 120 days from the date of last authorization of search.
  • Reliance was placed on the Supreme Court judgment in Chironjilal Sharma HUF vs Union of India & Ors. (2013).

Respondent’s Arguments

  • The order does not record detailed submissions of the respondents.
  • However, the respondents had not decided the pending representations of the petitioner regarding payment of interest.

Court’s Findings / Order

  • The Court observed that the petitioner’s representations had remained undecided for a considerable period.
  • Without adjudicating on the merits of entitlement to interest, the Court directed Respondent No. 2 to:
    • Decide the petitioner’s pending representations
    • Within six weeks
    • In accordance with law
  • The writ petition was disposed of with this direction.

Important Clarification by Court

  • The Court explicitly clarified that:
    • It has not expressed any opinion on the merits of the case.
    • All rights and contentions of parties remain open.

 Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:3938-DB/MMH03122021CW136412021_163218.pdf

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