Citing laxity, HC asks I-T to return jewellery seized in 2002, refund tax plus interest | Mumbai News

MUMBAI: The Bombay high court directed the income-tax department to return jewellery seized 21 years ago from a businessman in Pune and refund with additional interest Rs 7 lakh paid as tax over its inaction in the case despite an ITAT order as well as follow up by the family.
I-T had searched Lakhpatrai Agarwal’s house in August 2002 and seized the jewellery after he admitted undisclosed income of Rs 28 lakh. In 2010, the Pune Income Tax Appellate Tribunal (ITAT) directed fresh assessment. After Agarwal died of old age, his legal heir wrote to I-T in March 2018, seeking refund and the return of jewellery as the department had failed to complete the fresh assessment. In July 2022, I-T sent Sunil Agarwal, the heir, a notice about starting the fresh assessment in August. At this, Agarwal moved the high court with his lawyer Sham Walve saying such belated action was time-barred. He pointed at section 153(3) of the I-T Act and said a fresh assessment has to be completed within nine months from the end of the financial year in which the order is received by the commissioner.
I-T, represented by advocate Ajeet Manwani, said it did not receive the 2010 ITAT order and the compliance period does not begin till the order “is received” as mentioned in the I-T Act.
The high court held that a period for receiving the order has to be “reasonable’’. “We are unable to accede to the contention of the (I-T office) to construe the words ‘is received’ in section 153(3) to mean ‘till it is received’ and thereby extend the limitation in perpetuity. It has to be a reasonable period of time, especially when the respondents (Union ministry of finance and income-tax commissioners) are a party to the proceeding,” said a bench of Justices D S Thakur and Kamal Khata in a February 10 judgment.
Agarwal’s petition had said the assessee received the order in March 2010. “Section 254(3) provides for ITAT to send a copy of the order to both the assessee and to the commissioner; therefore, the onus would lie on the respondent to prove they had not received the said order,” said the HC.
It added that accepting the department’s stand “would have led to extending the time for compliance…for almost 12 years at least, in this case”. Besides, such a stand would mean shifting the onus on the assessee to oversee that the I-T commissioner has received the tribunal’s order, which is not what the legislature intended.
The high court further noted that Manwani had fairly admitted that I-T had received the 2018 letter.
The court pointed out I-T could have requested for a copy of the ITAT order after the letter, but it eventually sought a copy of the order in February 2022. Having failed to take steps to “comply with the order” even in 2018, the high cout directed refund of the tax paid with interest and release of the jewellery within two weeks.

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