Facts of the Case

The petitioner filed a writ petition seeking grant of interest on the amount seized by the Income Tax Department during search and seizure proceedings. It was contended that despite completion of assessment, the respondent retained the seized amount for more than four years without paying statutory interest as mandated under Section 132B(4) of the Income Tax Act.

The petitioner had been continuously making representations since May 2017 requesting refund of interest, but no action was taken by the department.

Issues Involved

  1. Whether the petitioner is entitled to interest on seized amount under Section 132B(4) of the Income Tax Act, 1961.
  2. Whether failure of the Income Tax Department to act on representations amounts to arbitrariness.
  3. Whether the Court should issue directions for grant of such interest.

Petitioner’s Arguments

  • The respondent acted arbitrarily by retaining the seized amount for over four years post-assessment.
  • Section 132B(4) clearly provides for payment of interest after expiry of 120 days from the last authorization of search till realization.
  • Despite statutory entitlement, no interest was paid.
  • Multiple representations submitted since 2017 were ignored without justification.

Respondent’s Arguments

  • Notice was accepted by the counsel for the Income Tax Department.
  • No substantive counter-arguments were recorded in the order at this stage.

Court’s Findings / Order

  • The Court observed that the petitioner had been making representations since 2017, which remained undecided.
  • Without entering into the merits, the Court disposed of the writ petition with directions:
    • The Deputy Commissioner of Income Tax, Central Circle-15, New Delhi shall treat the writ petition as a representation.
    • The authority must pass a reasoned order within four weeks.
  • All rights and contentions of both parties were kept open.

Important Clarification

  • The Court did not adjudicate on entitlement of interest directly.
  • It emphasized administrative accountability by directing disposal of pending representations.
  • Reinforces that authorities must act within reasonable time when statutory claims are raised.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2021:DHC:2015-DB/MMH09072021CW62642021_093755.pdf


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