CHIRONJILAL SHARMA HUF versus UNION OF INDIA AND ORS.

Citation: [2013] 11 S.C.R. 666 · Decided: 26-11-2013 · Supreme Court of India · Bench: RAJENDRA MAL LODHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
[2013] 12 S.C.R. 666 
CHIRONJILAL SHARMA HUF 
v. 
UNION OF !NOIA AND ORS. 
(Civil Appeal No. 10601 of 2013) 
NOVEMBER 26, 2013 
[R.M. LODHA, MADAN B. LOKUR AND 
KURIAN JOSEPH, JJ.] 
Income Tax Act, 1961 - s.1328(4)(b) - Payment of 
C interest on delayed assessment- Search conducted in house 
of appellant - Cash amount of Rs. 2,35,0001- recovered -
Order passed u/s.132(5) on 31.5.1990 - Assessing Officer 
(A.O.) calculated tax liability and cash seized in search from 
appellant's house appropriated - Order of A. 0. set-aside by 
D Tribunal - Revenue accepted the order of Tribunal -
Appellant got refund of Rs.2,35,0001- alongwith interest from 
4.3.1994 (date of last of the regular assessments by A.O.) 
until the date of refund - Claim of appellant-assessee for 
interest u/s.1328(4)(b) for the period from expiry of period of 
E six months from the date of order under s. 132(5) to the date 
of regular assessment order - Held: Order u/s. 132(5) having 
been passed on 31.5.1990, six months expired on 30.11.1990 
and the last of the regular assessments was done on 
4.3.1994, hence, appellant entitled to claim simple interest u/ 
F s.1328(4)(b) from 1.12.1990 to 4.3.1994 at the rate of 15% 
per annum. 
In the search conducted in the house of the appellant 
on 31.1.1990, a cash amount of Rs. 2,35,0001- was 
recovered. On 31.5.1990, an order under Section 132(5) 
G of the Income Tax Act, 1961 came to be passed. The 
Assessing Officer calculated the tax liability and the cash 
seized in the search from the appellant's house was 
appropriated. However, the order of the Assessing Officer 
was finally set-aside by the Income Tax Appellate Tribunal. 
H 
666 
CHIRONJILAL SHARMA HUF v. UNION OF INDIA 
667 
The revenue accepted the order of the Tribunal. 
A 
Consequently, the appellant was refunded the amount of 
Rs. 2,35,000/- along with interest from 4.3.1994 (date of 
last of the regular assessments by the Assessing Officer) 
until the date of refund. 
In the instant appeal, the appellant (assessee) 
claimed entitlement to interest under Section 1328(4)(b) 
of the Act which was holding the field at the relevant time 
for the period from expiry of period of six months from 
B 
the date of order under Section 132(5) to the date of C 
regular assessment order. The order under Section 
132(5) of the Act having been passed on 31.5.1990, six 
months expired on 30.11.1990 and the last of the regular 
assessments was done on 4.3.1994, the assessee 
claimed interest under Section 1328(4)(b) of the Act from 
1.12.1990 to 4.3.1994. 
D 
Allowing the appeal, the Court 
HELD: 1. A close look at the provisions of Section 
1328(4)(a) and (b) of the Income Tax Act, 1961 clearly 
E 
shows that where the aggregate of the amounts retained 
under Section 132 of the Act exceeds the amounts 
requited to meet the liability under Section 1328(1 )(i), the 
department is liable to pay simple interest at the rate of 
fifteen percent on expiry of six months from the date of 
F 
the order under Section 132(5) of the Act to the date of 
the regular assessment or re-assessment or the last of 
such assessments or reassessments, as the case may 
be. In the instant case, it is true that in the regular 
assessment done by the Assessing Officer, the tax 
liability for the relevant period was found to be higher G 
and, accordingly, the seized cash under Section 132 of 
the Act was appropriated against the assessee's tax 
liability but the fact of the matter is that the order of the 
Assessing Officer was over-turned by the Tribunal. finally, 
on 20.2.2004. As a matter of fact, the inte~~$t for the post· H 
668 
SUPREME COURT REPORTS 
[2013] 12 S.C.R. 
A assessment period i.e. from 4.3.1994 until refund on the 
excess amount has already been paid by the department 
to the assessee. The department denied the payment of 
interest to the assessee under Section 132B(4)(b) on the 
ground that the refund of excess amount is governed by 
B Section 240 of the Act and Section 132B(4)(b) of the Act 
has no application. But, Section 132B(4)(b) deals with pre-
assessment period and there is no conflict between this 
provision and Section 240 or for that matter 244(A). The 
former deals with pre-assessment period in the matters 
C of search and seizure and the later deals with post 
assessment period as per the order in appeal. The view 
of the department is not right on the plain reading of 
Section 132B(4)(b) of the Act. The appellant is entitled to 
the simple interest at 

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