# Dipak Kumar Agarwal v. Assessing Officer, Ward III, Mirzapur & Ors

- **Citation:** (2024) 4 ILRA 1033
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-03-19
- **Case number:** Writ Tax No. 1597 of 2022
- **Bench:** Saumitra Dayal Singh, Surendra Singh-I
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/dipak-kumar-agarwal-v-assessing-officer-ward-iii-mirzapur-ors-51766
- **Pages:** 12

## Headnote

Civil Law - Income Tax Act, 1961 -
Sections 132(1-A), 132B(1)(i) & 132B(4) -
Income Tax Rules, 1962 - Rule 119A -
Constitution of India,1950 - Article 226 -
Petitioner challenged seizure of Rs. 36,12,000/-
on 01.09.2022 under Section 132B(1)(i) and
sought its release with interest under Section
132B(4), alleging non-compliance with the 120day timeline for deciding release application.
Court held: (1) Section 132B(1)(i) allows release
of seized assets if their nature and source are
explained and no pre-existing or likely tax
1034 INDIAN LAW REPORTS ALLAHABAD SERIES
demand exists; the second proviso's use of
"shall release" within 120 days is directory, not
mandatory, as the only consequence of noncompliance is interest at 18% per annum under
Section 132B(4) (St. of U.P. Vs Manbodhan Lal
Srivastava, AIR 1957 SC 912). (2) Petitioner's
application
dated
15.09.2022,
claiming
ownership of seized cash with supporting books
of accounts, was maintainable despite seizure
from another person, as ownership was not
disputed
by
the
revenue.
(3)
Assessing
Authority's failure to decide the application
within 120 days did not result in automatic
release, as the directory nature of the provision
preserves jurisdiction to decide post-timeline (C.
Bright Vs District Collector, (2021) 2 SCC 392).
(4) Decisions of Guj. and Gauhati High Courts
treating the timeline as mandatory were not
followed,
as
they
relied
on
inapplicable
precedent under Section 132(8) (Mitaben R.
Shah Vs Deputy Commissioner of Income-Tax,
(2011) 311 ITR 424 (Guj)). Writ petition
disposed of with direction to Assessing Authority
to decide application within two weeks by a
reasoned order. (Paras 13-36)

Writ Petition Disposed.

List of Cases cited:

## Text

_Characters 0–39,753 of 40,550. This is a partial read: ask again with offset=39753 for what follows._

4 All. Dipak Kumar Agarwal Vs. Assessing Officer, Ward III, Mirzapur & Ors.
1033
notice goes to the root of the matter and is a
factor to be considered. In my view, the
delay leads to an inference that the
authorities have acted in a callous manner.

11. This Court is of the view that the
entire procedure followed by the authorities
indicates not only a lackadaisical approach
but also showcases the incompetence and
inefficiency of the authorities that had
carried out the survey in a shoddy manner
and thereafter issued the show cause notice
and passed order of confiscation and
penalty belatedly.

12. It is trite law that the burden of
proof for imposition of penalty and
confiscation of goods is on the Department
and the same cannot be done on estimates
when it is clear that the Department could
have carried out a physical verification
based on counting and weighing of the
goods. In light of the same, the entire
finding with regard to excess stock, that is
based on estimate, is liable to be rejected
outrightly.

13. In light of the above, the
impugned orders in Writ Tax No.916 of
2022
with
regard
to
penalty
and
confiscation are quashed and set aside.

14. Similarly, the entire proceedings
that have been initiated under Section 74 of
the Act that have culminated in the writ
petition bearing Writ Tax No.1600 of 2022,
wherein challenge has been raised against
the order passed by the Assessing Officer
and the order passed in appeal with regard
to liability of tax under Section 74 of the
Act are to be quashed and set-aside as the
same are based on finding that there was
excess stock. As the said finding of excess
stock is clearly without any basis in law
and illegal, the initiation of proceedings
under Section 74 of the Act cannot stand on
any footing.

15. Accordingly, the impugned orders
in Writ Tax No.1600 of 2022 are quashed
and set-aside. Consequently reliefs to
follow. The amount, if any, deposited by
the petitioner with the authorities, the same
should be returned to the petitioner within a
period of eight weeks from date.

16. Accordingly, both the writ
petitions are allowed.
----------
(2024) 4 ILRA 1033
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.03.2024

BEFORE

THE HON'BLE SAUMITRA DAYAL SINGH, J.
THE HON'BLE SURENDRA SINGH-I, J.

Writ Tax No. 1597 of 2022

Dipak Kumar Agarwal ...Petitioner
Versus
Assessing Officer, Ward III, Mirzapur &
Ors. ...Respondents

Counsel for the Petitioner:
Sri Ram Narain Yadav, Sri Suyash Agarwal, Sri
Rakesh Ranjan Agarwal (Sr. Adv.)

Counsel for the Respondent:
A.S.G.I., Sri Gaurav Mahajan, Sri Gopal Verma

Civil Law - Income Tax Act, 1961 -
Sections 132(1-A), 132B(1)(i) & 132B(4) -
Income Tax Rules, 1962 - Rule 119A -
Constitution of India,1950 - Article 226 -
Petitioner challenged seizure of Rs. 36,12,000/-
on 01.09.2022 under Section 132B(1)(i) and
sought its release with interest under Section
132B(4), alleging non-compliance with the 120day timeline for deciding release application.
Court held: (1) Section 132B(1)(i) allows release
of seized assets if their nature and source are
explained and no pre-existing or likely tax
1034 INDIAN LAW REPORTS ALLAHABAD SERIES
demand exists; the second proviso's use of
"shall release" within 120 days is directory, not
mandatory, as the only consequence of noncompliance is interest at 18% per annum under
Section 132B(4) (St. of U.P. Vs Manbodhan Lal
Srivastava, AIR 1957 SC 912). (2) Petitioner's
application
dated
15.09.2022,
claiming
ownership of seized cash with supporting books
of accounts, was maintainable despite seizure
from another person, as ownership was not
disputed
by
the
revenue.
(3)
Assessing
Authority's failure to decide the application
within 120 days did not result in automatic
release, as the directory nature of the provision
preserves jurisdiction to decide post-timeline (C.
Bright Vs District Collector, (2021) 2 SCC 392).
(4) Decisions of Guj. and Gauhati High Courts
treating the timeline as mandatory were not
followed,
as
they
relied
on
inapplicable
precedent under Section 132(8) (Mitaben R.
Shah Vs Deputy Commissioner of Income-Tax,
(2011) 311 ITR 424 (Guj)). Writ petition
disposed of with direction to Assessing Authority
to decide application within two weeks by a
reasoned order. (Paras 13-36)

Writ Petition Disposed.

List of Cases cited:

1. St. of U.P. Vs Manbodhan Lal Srivastava, AIR
1957 SC 912 (Para 23)

2. Banwarilal Agarwalla Vs The St. of Bihar, AIR
1961 SC 849 (Para 24)

3. C. Bright Vs District Collector, (2021) 2 SCC
392 (Para 25)

4. New India Assurance Company Vs Hilli
Multipurpose Cold Storage (P) Ltd, (2020) 5 SCC
757 (Para 26)

5. Mitaben R. Shah Vs Deputy Commissioner of
Income-Tax, (2011) 311 ITR 424 (Guj) (Para 8)

6. Mul Chand Malu (HUF) Vs Assistant/Deputy
Commissioner of Income Tax, (2016) 69
Taxmann.com 437 (Gauhati) (Para 8)

7. Nadim Dilip Bhai Panjvani Vs Income-tax
Officer, (2016) 66 Taxmann.com 124 (Guj.)
(Para 8)
8. Ashish Jayantilal Sanghavi Vs Income-tax
Officer, (2022) 139 Taxmann.com 126 (Guj.)
(Para 8)

(Delivered by Hon'ble Saumitra Dayal
Singh, J.
&
Hon'ble Surendra Singh-I, J. )

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
4 All. Dipak Kumar Agarwal Vs. Assessing Officer, Ward III, Mirzapur & Ors.
1035
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 132 B (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. Income-tax Officer, Ward
No.3; (2016) 66 Taxmann.com 124
(Gujarat)
and
Ashish
Jayantilal
Sanghavi vs. Income-tax Officer; (2022)
139 Taxmann.com 126 (Gujarat).

9. Second, referring to the provisions
of Section 132 B (4) read with Rule 119 A
of the Rules, it has been submitted, the
petitioner is entitled to monthly interest at
the rate one-half percent, to be computed
strictly in accordance with Rule 119 A of
the Rules.

10. Thus, it has been submitted, the
word 'shall' used in the second proviso to
Section 132 B (1) (i) of the Act is a
legislative mandate. It comes into force on
1036 INDIAN LAW REPORTS ALLAHABAD SERIES
its own, upon expiry of time. Thus, at most,
the revenue may hold the seized money for
120 days. During that period upon
application filed, the assessing authority
would become obligated to apply his mindif money is duly accounted for and also if
such money may be applied to satisfy any
existing demand or demand likely to arise
from the seizure itself. In the present facts,
there was no pre-existing demand against
the petitioner. Therefore, the revenue
authority could only have examined if the
seized
amount
Rs.36,12,000/-
was
accounted for and it it was required to
satisfy the likely demand of tax. The
petitioner produced his books of accounts
and clearly established that the entire
money was duly accounted for. In absence
of any adverse inference drawn within the
permissible time limitation of 120 days, the
petitioner is entitled to refund of that
money, by operation of law.

11. On the other hand, Sri Gaurav
Mahajan, learned counsel for the revenue
would submit, there is no absolute right to
refund earned by the petitioner during
pendency of the assessment proceedings
arising from the requisition made under
Section 132 A (c) of the Act. He would also
submit that the word 'shall' used in the
second proviso of Section 132 B (1) (i) of
the Act provides for directory scheme and
not a mandatory legislative dictate.

12. Further objection that was also
raised by Sri Mahajan, learned counsel for
the revenue that the cash seized was not from
the present petitioner but from Om Prakash
Bind and therefore, application, if any, may
have been made by said Om Prakash Bind,
does not impresses the Court.

13. Having heard the learned counsel
for the parties and perused the record, in
the first place, it would be useful to take
note of the provisions of Section 132 B (1)
(i) of the Act. It reads:

"132 B. Application of seized or
requisitioned assets.- (1) The assets seized
under section 132 or requisitioned under
section 132 A may be dealt with in the
following manner, namely:-

(i) the amount of any existing
liability under this Act, the Wealth-tax Act,
1957 (27 of 1957), the Expenditure-tax Act,
1987 (35 of 1987), the Gift-tax Act, 1958
(18 of 1958) and the Interest-tax Act, 1974
(45 of 1974), and the amount of the liability
determined
on
[completion
of
the
assessment
or
reassessment
or
recomputation] and the assessment of the
year relevant to the previous year in which
search is initiated or requisition is made, or
the amount of liability determined on
completion
of
the
assessment
under
Chapter XIV-B for the block period, as the
case may be (including any penalty levied
or interest payable in connection with such
assessment) and in respect of which such
person is in default or is [deemed to be in
default, or the amount of liability arising
on an application made before the
Settlement Commission under sub-section
(1) of section 245C, may be recovered out
of such assets]"

14. Undoubtedly, the first proviso to
the said sub-section allows the person
searched, an opportunity to make an
application for release of a seized assets, if
nature and source of its acquisition, is
explained. The money Rs. 36,12,000/-
seized from Om Prakash Bind is clearly an
asset that has been seized. Therefore,
subject matter of seizure fell within the
scope of provisions of Section 132 B (1) (i)
of the Act.
4 All. Dipak Kumar Agarwal Vs. Assessing Officer, Ward III, Mirzapur & Ors.
1037

15. Second it is also not in doubt that
the petitioner applied for release of that
asset/cash Rs.36,12,000/- within a time
stipulated for that purpose i.e. 30 days from
the last authorization. That, the revenue
does not dispute.

16. Then, a presumption exists that
under the Act, an asset seized from a person
belongs to that person at the same time that
presumption remains rebuttable in law.
Therefore, it was open to the petitioner to
make such an application even though the
cash had not been seized from his person or
from him. At the same time, it may have
remained open to the respondent/authority
to issue notice to Om Prakash Bind on that
application made by the petitioner and pass
appropriate order, thereafter.

17. Here, it is not disputed to the
revenue that in the course of investigation
arising from seizure made, the said Om
Prakash Bind did participate in the
investigation and at present, the record
appears to suggest that he made a statement
indicating petitioner's ownership in the
money Rs.30,12,000/-. In any case, we are
not required to draw any final conclusion in
that regard, at present, since that exercise
had to be made by the assessing authority.
Yet, there was no inherent defect in the
application made by the petitioner.

18. In the present facts, no finding
has been recorded by the Assessing
Authority. In fact he has neither disputed
the ownership of money claimed by the
petitioner nor he has considered the issue
to any
extent. Therefore,
the only
conclusion to be drawn at this stage is-the
application made by the petitioner for
release
of
the
seized
money
of
Rs.36,12,000/-
dated
15.09.2022
was
wholly maintainable.

19. Under the scheme of the Act, in
the first place, upon an application for
release of seized assets filed, the Assessing
Authority is first required to examine if the
nature and source of acquisition of the
seized asset is explained. In fact, law
obligates
the Assessing Authority
to
consider release such part of the seized
asset of which nature and source of
acquisition is explained by the person
searched. The first caveat to that statutory
principle is that there may not pre-exist any
demand of tax to which such explained
asset may not be applied, in the interest of
revenue. The second caveat is, such asset
may not be released if it would be required
to recover the tax demand likely to arise
upon assessment being made consequent to
the search. Thus, though tax paid/duly
explained assets of an assessee may come
to be seized in the course of search
proceedings on the strength 'reason to
believe'
recorded
at
that
stage
of
proceedings, the Act does not permit
retention of such assets. On the contrary,
the Act stipulates, such assets may be
released in favour of the person searched at
the initial stage itself subject however to
the exception that there may not be any
outstanding recovery of tax against such a
person and such asset may not be required
to recover the demand of tax likely to arise
upon assessment to be made as consequent
to the search.

20. Seen in that light, we come to the
core issue involved in the present case. It is
whether in such facts where the petitioner
had made an application to release seized
asset/cash of Rs.36,12,000/- in terms of the
first proviso to Section 132 B (1) (i) of the
Act and the Assessing Authority failed to
record any satisfaction within '120 days'
stipulated under the second proviso to the
above noted provision, the petitioner
1038 INDIAN LAW REPORTS ALLAHABAD SERIES
became absolutely entitled in law to obtain
release of those assets.

21. To decide that issue, we have to
interpret the word 'shall release' appearing
in the second proviso to Section 132 B (1)
(i) of the Act. If those words express
mandatory intent, it cannot be denied that
the petitioner would remain entitled to
refund
of
Rs.36,12,000/-,
upon
the
Assessing Authority's failure to decide the
petitioner's application dated 15.09.2022
within the stipulated time of 120 days. On
the other hand, if those words express
directory intent, the application would
survive for consideration by the Assessing
Authority, in terms of first proviso to
Section 132 B (1) (i) of the Act.

22. In grammar, the words 'shall' and
'may' indicate different intent. The word
'shall' is normally used to indicate to cause
a mandatory effect whereas 'may' indicates
action to be taken as per the doers volition.
In usage, the difference may also indicate
the degree of politeness invoked by the
user. However in law though application of
the rules of grammar is not excluded, at the
same time interpretation in law as to
mandatory or directory nature of the word
'shall' is not to be decided solely on the
strength of rules of grammar. Well
recognized principle in that regard involve
looking at the object and purpose and
whether consequences of non-compliance
have been prescribed in law.

23. In State of U.P. vs. Manbodhan
Lal Srivastava: AIR 1957 SC 912, a fiveJudge bench of the Supreme Court
observed as below:

11. An examination of the terms
of Article 320 shows that the word "shall"
appears in almost every paragraph and
every clause or sub-clause of that article. If
it were held that the provisions of Article
320(3)(c) are mandatory in terms, the other
clauses or sub-clauses of that article, will
have to be equally held to be mandatory. If
they are so held, any appointments made to
the public services of the Union or a State,
without observing strictly, the terms of
these sub-clauses in clause (3) of Article
320, would adversely affect the person so
appointed to a public service, without any
fault on his part and without his having any
say in the matter. This result could not have
been contemplated by the makers of the
Constitution. Hence, the use of the word
"shall" in a statute, though generally taken
in a mandatory sense, does not necessarily
mean that in every case it shall have that
effect, that is to say, that unless the words
of the statute are punctiliously followed, the
proceeding
or
the
outcome
of
the
proceeding, would be invalid. On the other
hand, it is not always correct to say that
where the word "may" has been used, the
statute is only permissive or directory in the
sense that non-compliance with those
provisions will not render the proceeding
invalid. In that connection, the following
quotation from Crawford on Statutory
Construction- Article 261 at p. 516, is
pertinent:

"The question as to whether a
statute is mandatory or directory depends
upon the intent of the legislature and not
upon the language in which the intent is
clothed. The meaning and intention of the
legislature must govern, and these are to be
ascertained, not only from the phraseology
of the provision, but also by considering its
nature, its design, and the consequences
which would follow from construing it the
one way or the other..."

(emphasis supplied)
4 All. Dipak Kumar Agarwal Vs. Assessing Officer, Ward III, Mirzapur & Ors.
1039

24. Then, in the case Banwarilal
Agarwalla vs. The State of Bihar And
Others; AIR 1961 SC 849, another five
Judge bench of the Supreme Court as
under:

6. It was not disputed before us
that when the Regulations were framed, no
Board as required under Section 12 had
been constituted, and so, necessarily there
had been no reference to any Board as
required under Section 59. The question
raised is whether the omission to make
such a reference makes the rules invalid. As
has been recognised again and again by the
courts, no general rule can be laid down
for
deciding
whether
any
particular
provision in a statute is mandatory,
meaning
thereby
that
non-observance
thereof
involves
the
consequence
of
invalidity or only directory, i.e., a direction
the non-observance of which does not
entail
the
consequence
of
invalidity,
whatever other consequences may occur.
But in each case the court has to decide the
legislative intent. Did the legislature intend
in making the statutory provisions that nonobservance of this would entail invalidity
or did it not? To decide this we have to
consider not only the actual words used but
the scheme of the statute, the intended
benefit to public of what is enjoined by the
provisions and the material danger to the
public by the contravention of the same. In
the present case we have to determine
therefore on a consideration of all these
matters whether the legislature intended
that the provisions as regards the reference
to the Mines Board could be contravened
only
on
pain
of
invalidity
of
the
regulation."
(emphasis supplied)

25. Then, in C. Bright vs. District
Collector And Others; (2021) 2 SCC 392
a three Judge bench of the Supreme Court
had the occasion to consider whether the
word 'shall' used (in Section 14 of the
Securitization
and
Reconstruction
of
Financial Assets and Enforcement of
Security Interest Act, 2002) to prescribe 3060 days time limit to deliver possession,
was mandatory or directory. The Supreme
Court considered the pre-existing law on
the subject and observed as below:-

8.
A
well-settled
rule
of
interpretation of the statutes is that the use
of the word "shall" in a statute, does not
necessarily mean that in every case it is
mandatory that unless the words of the
statute
are
literally
followed,
the
proceeding
or
the
outcome
of
the
proceeding, would be invalid. It is not
always correct to say that if the word "may"
has been used, the statute is only
permissive or directory in the sense that
non-compliance with those provisions will
not render the proceeding invalid and that
when a statute uses the word "shall", prima
facie, it is mandatory, but the Court may
ascertain
the
real
intention
of
the
legislature by carefully attending to the
whole scope of the statute. The principle of
literal construction of the statute alone in
all circumstances without examining the
context and scheme of the statute may not
serve the purpose of the statute.

9. The question as to whether, a
time-limit fixed for a public officer to
perform a public duty is directory or
mandatory has been examined earlier by
the courts as well. A question arose before
the
Privy
Council
in
respect
of
irregularities
in
the
preliminary
proceedings for constituting a jury panel.
The Municipality was expected to revise the
list of qualified persons but the jury was
drawn from the old list as the Sheriff
1040 INDIAN LAW REPORTS ALLAHABAD SERIES
neglected to revise the same. It was in these
circumstances, the decision of the jury
drawn from the old list became the subjectmatter of consideration by the Privy
Council. It was thus held that it would
cause greater public inconvenience if it
were held that neglecting to observe the
provisions of the statute made the verdicts
of all juries taken from the list ipso facto
null and void so that no jury trials could be
held until a duly revised list had been
prepared.

10. The Constitution Bench of this
Court held that when the provisions of a
statute relate to the performance of a public
duty and the case is such that to hold acts
done in neglect of this duty as null and
void,
would
cause
serious
general
inconvenience or injustice to persons who
have no control over those entrusted with
the duty, the practice of the courts should
be to hold such provisions as directory. In a
seven-Bench judgment, this Court was
considering as to whether the power of the
Returning Officer to reject ballot papers is
mandatory
or
directory.
The
Court
examined
well-recognised
rules
of
construction to observe that a statute
should be construed as directory if it
relates to the performance of public duties,
or if the conditions prescribed therein have
to be performed by persons other than
those on whom the right is conferred.

11. In
a
judgment
reported
as Remington
Rand
of
India
Ltd. v. Workmen ,
Section
17
of
the
Industrial Disputes Act, 1947 came up for
consideration. The argument raised was
that the time-limit of 30 days of publication
of award by the Labour Court is
mandatory. This Court held that though
Section 17 is mandatory, the time-limit to
publish the award within 30 days is
directory inter alia for the reason that the
non-publication of the award within the
period of thirty days does not entail any
penalty.

12. In T.V.
Usman v. Food
Inspector, Tellicherry Municipality, the time
period during which report of the analysis
of a sample under Rule 7(3) of the
Prevention of Food Adulteration Rules,
1955 was to be given, was held to be
directory as there was no time-limit
prescribed within which the prosecution
had to be instituted. When there was no
such limit prescribed then there was no
valid reason for holding the period of 45
days as mandatory. Of course, that does not
mean that the Public Analyst can ignore the
time-limit prescribed under the Rules. He
must in all cases try to comply with the
time-limit. But if there is some delay, in a
given case, there is no reason to hold that
the very report is void and, on that basis, to
hold that even prosecution cannot be
launched.

13. This
Court
distinguished
between failure of an individual to act in a
given time-frame and the time-frame
provided to a public authority, for the
purposes
of
determining
whether
a
provision was mandatory or directory,
when this Court held that it is a well-settled
principle that if an act is required to be
performed by a private person within a
specified time, the same would ordinarily
be
mandatory
but
when
a
public
functionary is required to perform a public
function within a time-frame, the same will
be held to be directory unless the
consequences therefor are specified.

14. In P.T. Rajan v. T.P.M. Sahir,
this Court examined the effect of nonpublication of final electoral rolls before
the time of acceptance of nomination
4 All. Dipak Kumar Agarwal Vs. Assessing Officer, Ward III, Mirzapur & Ors.
1041
papers. The Court held as under : (SCC p.
516, para 48)

"48. Furthermore, even if the
statute specifies a time for publication of
the electoral roll, the same by itself could
not have been held to be mandatory. Such a
provision would be directory in nature. It is
a well-settled principle of law that where a
statutory functionary is asked to perform a
statutory duty within the time prescribed
therefor, the same would be directory and
not mandatory."
(emphasis supplied)

26. Then, the Supreme Court further
considered the law laid down by a five
Judge Constitution Bench of the Supreme
Court in New India Assurance Company
vs. Hilli Multipurpose Cold Storage (P)
Ltd; (2020) 5 SCC 757. It observed:

"15. A recent Constitution Bench
held that the provisions of the Consumer
Protection Act granting 30 days' time to file
response by the opposite party or such
extended period not exceeding 15 days is
mandatory as the object of the statute is for
the benefit and protection of the consumer.
It observed that such Act had been enacted
to provide expeditious disposal of consumer
disputes. In this case, an individual was
called upon to file his written statement in
contradiction for a pubic authority to
decide the issue before it"

(emphasis supplied)

27. Upon, that discussion of the law,
the Supreme Court then concluded (in C
Bright vs. District Collector And Others:
(2021) 2 SCC 392) as below:

"21. The Act was enacted to
provide a machinery for empowering banks
and financial institutions, so that they may
have the power to take possession of
secured assets and to sell them. The DRT
Act was first enacted to streamline the
recovery of public dues but the proceedings
under the said Act have not given desirous
results. Therefore, the Act in question was
enacted. This Court in Mardia Chemicals,
Transcore and Hindon Forge (P) Ltd. has
held that the purpose of the Act pertains to
the speedy recovery of dues, by banks and
financial institutions. The true intention of
the legislature is a determining factor
herein. Keeping the objective of the Act in
mind, the time-limit to take action by the
District Magistrate has been fixed to
impress upon the authority to take
possession of the secured assets. However,
inability to take possession within timelimit
does
not
render
the
District
Magistrate functus officio. The secured
creditor has no control over the District
Magistrate who is exercising jurisdiction
under Section 14 of the Act for public good
to facilitate recovery of public dues.
Therefore, Section 14 of the Act is not to be
interpreted literally without considering the
object and purpose of the Act. If any other
interpretation is placed upon the language
of Section 14, it would be contrary to the
purpose of the Act. The time-limit is to
instil a confidence in creditors that the
District Magistrate will make an attempt to
deliver possession as well as to impose a
duty on the District Magistrate to make an
earnest effort to comply with the mandate
of the statute to deliver the possession
within 30 days and for reasons to be
recorded within 60 days. In this light, the
remedy under Section 14 of the Act is not
rendered
redundant
if
the
District
Magistrate is unable to handover the
possession. The District Magistrate will
still be enjoined upon, the duty to facilitate
delivery of possession at the earliest."
(emphasis supplied)
1042 INDIAN LAW REPORTS ALLAHABAD SERIES

28. Here, the only consequence of
non-compliance of Section 132 B (1) (i) of
the Act, as has been rightly pointed out by
the learned Senior Counsel for the
petitioner is contained in Section 132 B (4)
of the Act. That provision of law reads as
below:

" 4 (a) The Central Government
shall pay simple interest at the rate of [onehalf per cent. for every month or part of a
month] on the amount by which the
aggregate amount of money seized under
section 132 or requisitioned under section
132A, as reduced by the amount of money,
if any, released under the first proviso to
clause (I) of sub-section (1), and of the
proceeds, if any, of the assets sold towards
the discharge of the existing liability
referred to in clause (I) of sub-section (1),
exceeds the aggregate of the amount
required to meet the liabilities referred to in
clause (I) of sub-section (1) of this section.

(b) Such interest shall run from
the date immediately following the expiry
of the period of one hundred and twenty
days from the date on which the last of the
authorisations for search under section 132
or requisition under section 132A was
executed to the date of completion of the
assessment
[or
reassessment
or
recomputation]"

29. Thus, the only consequence of
non-compliance of Section 132 B (1) (i) of
the Act is by way of payment of interest at
the highest rate provided by the legislature
i.e. @ of 18 % per annum. The period for
which such interest may become payable
has
also
been
specified
under
that
provision. By imposing the levy of interest
on the revenue, a plain reading of sub
section (4) of Section 132 B (1) (i) of the
Act, the legislature itself contemplated
cases where orders may remain to be
passed by the Assessing Authority within
the timeline provided under Section 132 B
(1) (i) of the Act. Payability of interest may
arise only in a case where the order may
have remained to be passed within a time
stipulation provided under the second
proviso to Section 132 B (1) (i) of the Act.

30. That being the only consequence
provided, we find it difficult to persuade
ourselves to the reasoning of the Gujarat
High Court in Mitaben R. Shah vs.
Deputy Commissioner of Income-Tax
And Another (supra)-the sheet anchor of
the submissions advanced by Senior
Advocate for the petitioner, perusal of that
decision reveals, mandatory intent was read
into the language of Section 132 B (1) (i) of
the Act by relying on the reasoning/ratio in
Cowasjee
Nusserwanji
Dinshaw
vs.
Income Tax Officer : (1987) 165 ITR 702.
That was a case of proceeding under
Section 132 (8) of the Act and not Section
132 B of the Act, as it then existed. For
ready reference, that provision of law is
quoted below:

"132. (8) The books of account or
other documents seized under sub-section
(1) or sub-section (1-A) shall not be
retained by the authorised officer for a
period exceeding one hundred and eighty
days from the date of seizure unless the
reasons for retaining the same are recorded
by him in writing and the approval of the
Commissioner
for
such
retention
is
obtained."

31. On the test of consequences
provided,
Cowasjee
Nusserwanji
Dinshaw (supra) case was a different case
altogether.
It
provided
a
statutory
injunction against retention of books of
accounts and other documents beyond a
4 All. Dipak Kumar Agarwal Vs. Assessing Officer, Ward III, Mirzapur & Ors.
1043
period of 180 days, unless reasons for their
continued retention were recorded in
writing
with
the
approval
of
the
Commissioner. In absence of reasons
recorded and approval granted prior to the
expiry of 180 days time limit, the seized
books of accounts and documents had to be
released.

32. Plainly that mandate of law does
not exist under the provision of Section 132
B (1) (i) of the Act. This provision only
contemplates-a person subjected to search
may not be made to wait endlessly for
release of valuable assets that may have
been seized during the course of search. If,
the nature and source of acquisition of a
seized asset is wholly explained and it may
not be required for recovery of any
outstanding demand or demand of tax that
may arise under the assessment proposed to
be made consequent to the search giving
rise to the seizure itself, the same may be
released. The provisions does not stipulate
any consequence of automatic release. It
would first have to be invoked by the
assessee by filing a proper application.
Then if conditions are fulfilled, an order
recording that satisfaction may be passed. It
is for that purpose a timeline of 120 days is
contemplated on a non-imperative basis. In
the event of delay in making the decision
the revenue has been saddled with interest
liability @ 18 % per annum. On the
contrary under Section 132 (8) of the Act
[as considered in Cowasjee Nusserwanji
Dinshaw (supra)], a statutory duty was cast
on the seizing authority to itself record
reasons to detain seized documents beyond
180 days and the consequence of its nonadherence was also provided by way of
release of the same. Therefore, in absence
of statutory intent shown to exist, it may
not be inferred through the process of legal
reasoning-that if no order is passed within a
time of 120 days, seized assets must be
released notwithstanding its impact on the
recovery of existing and likely demands.

33.

As
noted
above,
similar
stipulations
of
time
provided
under
different enactments have been interpreted
to be directory and not mandatory.
Therefore, we are unable to pursue
ourselves to subscribe to the reasoning that
has found its acceptance by the Gujarat
High Court in the case of Mitaben R. Shah
vs. Deputy Commissioner of Income-Tax
And Another (supra), Ashish Jayantilal
Sanghavi
vs.
Income-tax
Officer
(supra),Nadim Dilip Bhai Panjvani vs.
Income-tax Officer, Ward No.3 (supra)
and Gauhati High Court in the case of Mul
Chand Malu (HUF) vs. Assistant/Deputy
Commissioner of Income Tax (supra).

34. Insofar as, learned Senior Counsel
for the petitioner has invoked the principleif an Act is required to be done in a
particular way, it may be done in that way
or not at all, we find the same to be
inapplicable to the present law. In our
opinion, the provision in question [Section
132 B (1) (i)] being directory, the
jurisdiction of the Assessing Authority to
deal with the petitioner's application dated
15.09.2022 did not lapse or abate upon
expiry of the period of 120 days. Since that
stipulation of law is only directory, it
survives to the Assessing Authority to deal
with the application, even today.

35. We may also observe at this stage,
if on due application of mind, the Assessing
Authority reaches a conclusion that the
nature and source of Rs.36,12,000/- seized
from Om Prakash Bind was duly explained
and if assessing officer is adequately
satisfied that that amount was neither
required for satisfaction of any outstanding
1044 INDIAN LAW REPORTS ALLAHABAD SERIES
demand or satisfaction of demand that may
arise pursuant to the assessment proposed
to be made, such refundable amount would
attract liability of interest under Section
132 B (4) of the Act read with Rule 119 A
of the Rules.

36. In view of the above, we decline to
issue the writ of Mandamus as prayed.
Instead, we dispose of the writ petition
with
a
direction
on
the
Assessing
Authority/respondent No.2 to proceed to
deal with and decide the application of the
petitioner dated 15.09.2022 within two
weeks from today, by a reasoned and
speaking order, after hearing the petitioner.
No order as to costs.

----------
(2024) 4 ILRA 1044
APPELLATE JURISDICTION
CRIMINAL SIDE
DATED: LUCKNOW 23.04.2024

BEFORE

THE HON'BLE SUBHASH VIDYARTHI, J.

Criminal Misc Anticipatory Bail Application U/S
438 Cr.P.C. No. 846 of 2024

Sushil Kumar Shukla ...Applicant
Versus
State of U.P. & Anr. ...Respondents

Counsel for the Applicant:
Piyush Tripathi, Manoj Kumar Mishra

Counsel for the Respondents:
G.A.

आपराधिक विधि - भारतीय दंड संहिता, 1860 -
िारा 420, 467, 468, 471, 34, 120-ख - अधिम
जमानत - कधर्थत प्रार्थधमकी िेखपाि द्वारा हदनांक
26.05.2023 को प्रार्थी एिं उसके पुर्त्र के विरुद्ध
म्जिाधिकारी के आदेिानुसार तिसीिदार के धनदेि पर
दजज कराई गई िै - तर्थावप, प्रार्थधमकी में उम्लिम्खत
कर्थनों से हकसी भी अधभयुि द्वारा कोई संज्ञेय अपराि
काररत िोना प्रतीत निीं िोता, अतः ऐसी पररम्स्र्थधत में
प्रार्थधमकी का अंकन उधचत निीं किा जा सकता -
म्जिाधिकारी द्वारा हदनांक 25.05.2023 को जारी
नोहर्स में प्रार्थी पर आरोप िै हक िेखपाि के पद पर
रिते िुए उसने सरकारी भूधम का एक भाग सि-
अधभयुि के नाम अनुधचत रूप से अंहकत हकया -
जबहक प्रार्थी का कर्थन िै हक उि सि-अधभयुि का
नामांतरण सिायक चकबंदी अधिकारी द्वारा मुकदमा के
आिार पर हकया गया र्था और प्रार्थी को िेखपाि के
पद पर 26.07.2012 को तैनात हकया गया र्था, जो
उि नामांतरण से काफी पूिज की घर्ना िै - प्रार्थजना-पर्त्र
के सार्थ संिग्न िपर्थ-पर्त्र में उलिेख िै हक प्रार्थी के
विरुद्ध एक अन्य प्रार्थधमकी दजज िै, म्जसमें उसे िारा
41क भा.दं.सं. का िाभ प्रदान हकया जा चुका िै -
अधभधनिाजररत, वििेष न्यायािीि (भ्रष्टाचार धनिारण
अधिधनयम), सी.बी.आई.