M/S. K.C.C. SOFTWARE LTD. AND ORS. versus DIRECTOR OF INCOME TAX (INV.) AND ORS.

Citation: [2008] 2 S.C.R. 168 · Decided: 29-01-2008 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Dismissed

Judgment (excerpt)

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[2008] 2 S.C.R. 168 
A 
M/S. K.C.C. SOFTWARE LTD. AND ORS. 
v. 
DIRECTOR OF INCOME TAX (INV.) AND ORS. 
(Civil Appeal No. 769 of 2008) 
B 
JANUARY 29, 2008. 
(DR. ARIJIT PASAYAT AND S.H. KAPADIA, JJ.) 
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Income Tax Act, 1961; Ss. 132(1 )(iii), 132(3), 132(8A), · 
132(b), 153(A) and 158(A): 
c 
Search of premises of assessee by income tax authorities 
- -Seizure ·of jewellery, cash and fixed deposit receipts -
Operation of bank accounts restrained in terms of order 
passed by authorities uls. 132(8) of the Act- Representations 
of_ assessees for release of seized articles, cash and to lift 
D restraint order not considered by authorities - Writ petition -
dismissed by High Court - On appeal, Held: Since order 
passed by the authorities u/s. 132(8) of the Act not challenged 
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by assessee, no relief could be granted to him - Authorities 
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are directed to complete the assessment within the time period 
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E statutorily provided for - Cash seized and transferred to the 
account of Commissioner be kept in interest bearing fixed 
deposit - Directions issued - Income Tax Search and Seizure 
Manual- Paras 5.01 and 5.02 - Check List of articles seized 
- Cash seized - Deposit of. 
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Words and Phrases: 
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'Cash in hand' and 'cash in bank' - Distinction between -
Discussed in the context of search and seizure of cash. 
Pursuant to warrant of authorization, search and 
G seizure was conducted by the authorities of Income-tax 
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Department in the premises of the assessee. Certain 
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assets including jewellery, cash and fixed deposit receipts 
were seized. Operation of five bank accounts of appellant 
Nos.1 and 3 had also been restrained in terms of order 
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168 
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Mts: K.C.C. SOFTWARE LTD. & ORS. v. DIRECTOR 
169 
OF INCOME TAX (INV.) & ORS. 
issued by the authorities under S.132(3) of the Income Tax A · 
Act, 1961. Appellant represented for lifting the restraint 
order as the information about all bank accounts under 
restraint have been disclosed in the regular books of 
account and the restraint order was hampering the day 
to day operations of the business of the company. B 
Appellant No.3 moved an application under Section 132(8) 
of the Act to the authorities for release of jewellery and 
FDR. Appellant No.2 addressed a letter to the Manager of 
the Bank informing him that as per provisions of Section 
132 (SA) of the Act, the restraint order was no longer c 
operative. However, the authorities issued two fresh 
warrants of authorization to the Bank in respect of the 
bank accounts in question and the bank accounts of the 
appellants were seized. Since then, appellants Nos. 1 & 3 
represented for release of the amount seized by the 0 
authorities after adjusting self-assessment tax for the 
assessment years 2005-2006 and advance tax for the year 
2006-2007, but the authorities had failed to release the 
balance amount. The appellants filed writ petitions for 
appropriate directions to the authorities for release of 
seized articles and balance amount and to quash the E 
warrants of authorization. The writ petitions were 
dismissed by the High Court. Hence the present appeal. 
Appellants contended that the order passed under 
Section 132B of the Act shows that the amount was F 
ordered to be retained for estimated liability. However, 
such a course is not available after deletion of the 
provision relating to estimated liability in the year 2002; 
that since the authorities themselves permitted 
adjustment of self assessment and advance tax, the 
balance amount has perforce to be refundabte; that there G 
is no dispute that Section 132 (3) read with Section 132 
(SA) of the Act restricts the period of operation of the order 
of restraint to 60 days; that s.132B relates to adjusting 
liability on completion of assessment under Section 153A 
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170 
SUPREME COURT REPORTS 
(2008] 2 S.C.R. 
A and it is relatable to the year in which search and seizure 
was initiated and block period in terms of Chapter XIV-8 
of the Act; and that s.158 relates to retention and not 
appropriation of the cash seized. 
Respondents submitted that reference to Section 
B 153A in Section 1328 shows that it relates to estimated 
liability; that though it is accepted that the provision 
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relating to estimated liability in terms of Section 132 (5) 
was deleted w.e.f. 1.6.2002, yet in view of Section 1538 
the period of assessment is continuing; and that the 
C amount even though wit

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