IMPORTANT POINT
The main legal point established in the judgment is the interpretation of the word 'shall' in the second proviso to Section 132B(1)(i) of the Income Tax Act, 1961, and the determination of its mandatory or directory nature.

JUDGMENT :

1. Heard Sri Rakesh Ranjan Agarwal, learned Senior Advocate assisted by Sri Ram Narain Yadav, learned counsel for the petitioner and Sri Gaurav Mahajan, learned counsel for the revenue.

2. Present writ petition has been filed to quash the seizure of Rs. 36,12,000/- dated 13.09.2022, effected under Section 132B(1)(i) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). Further relief has been sought to release the said amount detained since 01.09.2022, together with due interest payable under Section 132(B)(4) read with Rule 119 (A) of the Income Tax Rule, 1961 (hereinafter referred to as 'the Rules').

3. Learned Senior Counsel for the petitioner submits, petitioner is a jeweller. He regularly filed his income tax returns since 2012-2013. In the year 2022, he set out to acquire stock of gold jewellery for the oncoming Dushehra and Diwali festivities. He thus handed over Rs.36,12,000/- to his worker Om Prakash Bind on 31.08.2022 alongwith railway ticket requiring him to undertake the rail journey to Kolkata to buy jewellery. On 31.08.2022, said Om Prakash Bind was apprehended by the Government Reserved Police (GRP) at Railway Station, Mirzapur. In the course of that search by the police authorities, Rs.36,12,000/- was recovered from his bag. Later, that information was passed on to the Income Tax Authority who arrived on the scene on 01.09.2022 and subjected the cash recovered from Om Prakash Bind to proceeding under Section 132 (1-A) of the Act.

4. In the course of proceedings statements of the petitioner as also Om Prakash Bind were recorded. In that, according to the petitioner, a consistent story emerged that the cash Rs.36,12,000/- recovered from Om Prakash Bind, belonged to the present petitioner.

5. The petitioner further claims, during the course of that investigation, petitioner had produced regular books of accounts and details of his income tax returns filed for the past Assessment Years to establish that the seized cash was duly accounted for/tax paid money. On 15.09.2022, the petitioner made an application to the assessing authority/respondent No.3 in terms of Section 132 B (1) (i) read with the proviso to Section 132 B (1) (i) of the Act to release the amount Rs.36,12,000/-. As a fact, it is undisputed, rather it is admitted to the revenue-that application has remained pending till now.

6. In such facts, learned Senior Counsel for the petitioner has vehemently urged, in view of the clear language of Section 132B(1)(i) of the Act read with the second proviso thereto, once the application had been made by the petitioner to release the seized amount, the assessing authority was obligated to examine, if the nature and source of acquisition of any part of the seized money was explained. Further, it was obligated to examine, if there was any existing liability of tax or penalty etc. against the petitioner that may be satisfied from the seized amount. In absence of such pre-existing demand etc., the amount or the balance amount, as the case may be, ought to have been released in favour of the petitioner.

7. Relying heavily of the second proviso, it has been urged, in absence of any decision made under the first proviso, the entire seized amount had to be released at the end of 120 days time period specified therein. Since, the petitioner had made the application within the stipulated time of 30 days (from the end of month in which assets/money was seized), that period of 120 days would expire not beyond mid January, 2023. Since no decision was made within that time, the petitioner has become absolutely entitled to release of that money.

8. Reliance has been placed on the decisions of the Gujarat High Court in Mitaben R. Shah vs. Deputy Commissioner of Income-Tax And Another; (2011) 311 ITR 424 (GUJ) as followed in Mul Chand Malu (HUF) vs. Assistant/Deputy Commissioner of Income Tax; (2016) 69 Taxmann.com 437 (Gauhati) and as also followed by the Gujarat High Court in Nadim Dilip Bhai Panjvani vs. Incom