K.C.C. Software Ltd. And Ors vs Director Of Income Tax (Inv.) And Ors

3. Background facts in a nutshell are as follows:

4. According to the appellants no reply was received to the letters dated 8.8.2005 and 16.9.2005 and the respondents did not make any effort to verify the correctness of the appellants contentions. On 21.9.2005 appellant No.3 moved an application under Section 132(B) of the Act to the Deputy Commissioner of Income Tax for release of jewellery worth Rs.4,76,588/- and FDR of Rs.1,79,710/-. Since the nature and source was duly explained, the limitation of 60 days in terms of Section 132(8A) expired w.e.f. 31.8.2005 i.e. the date of issuance of the order of restraint. On 3.10.2005 appellant No.2 addressed a letter to the Manager, HDFC Bank informing him that as per provisions of Section 132 (8A) of the Act, the restraint order was no longer operative. On 4.10.2005 Bank through its Bank Manager sought clarification from the Deputy Director of Income Tax. The Income Tax Department on 4.10.2005 issued two fresh warrants of authorization under Section 132 of the Act in respect of the bank accounts. It is alleged that the appellants were not informed about the warrants of search. On 5.10.2005 the bank accounts of the appellants were searched and seized through withdrawal of cash by demand drafts. Appellants stand in essence is that the fresh warrants of authorization were without jurisdiction and in any event since the accounts had been duly disclosed in the regular books of account, there was no scope for operating Section 132 (3) of the Act. The earlier order passed under Section 132 (3) of the Act ceased to be operative w.e.f. 2/3.10.2005. On 8.10.2005 the bank by a letter informed the appellants about search and seizure of the bank accounts under Section 132 (3) of the Act and also gave details of demand drafts issued in favour of respondent No.2 withdrawing the money from the accounts of the appellants.

5. On 28.10.2005 the appellants were supplied with copies of the Panchnama. On 29.10.2005 appellant No.1 requested the respondents to adjust towards self assessment tax of Rs.77,68,177/- for the assessment year 2005-06 from the seized amount of Rs.1,81,91,982/- and to release the balance. On 29.11.2005 appellants Nos.1 and 3 moved an application under Section 132 (B) of the Act for release of the amount seized on 5.10.2005 i.e. within 30 days of the end of the month in which seizure took place. Several documents were filed to substantiate the claim. Again on 16.2.2006 Income tax authorities were requested for adjustment of Rs.40,00,000/- as advance tax for the assessment year 2006-07 from the seized amount and to release the balance. Since the respondents failed to respond to the requests of the appellants, writ petitions Nos.6313-6315 of 2006 were filed inter alia for the following directions:

7. A rejoinder affidavit was filed on 2.11.2006 taking the stand that the order dated 1.2.2006 was not served and there were apparent contradictions as regards the search and seizure in the pleadings. By the impugned order the writ petitions were dismissed observing that the respondents had taken a stand that there was estimated tax liability of approximately Rs.10,00,000/-. The satisfaction note dated 13.9.2005 of ADIT, Unit I and the notings of the Director (investigation) clearly indicated that the stand of the appellants was without substance.

20. The appeal is dismissed subject to the aforesaid directions. There will be no order as to costs.