AO can not ask indemnity bond for future tax liability for release of seized assets u/s 132B(1)- High Court

AO can not ask indemnity bond for future tax liability for release of seized assets u/s 132B(1)- High Court deleted the relevant paragraph of the release order.

In the instant case, the petitioner assessee had challenged the part of the release order passed by the Income Tax Officer (ITO) under Section 132-B (1) of Income Tax Act, 1961 (the Act).

ABCAUS Case Law Citation:
ABCAUS 2310 (2018) (04) HC

The paragraph of the said order mentioned the amount which was to be considered as income  and tax to be paid by the assessee in the assessment year, relevant to the current year in which the seized assets were to be released

It was argued that the provisions for release has to be considered under the circumstances of existing liability under the Act. It was contended that the said paragraph was neither  necessary nor within the jurisdiction  of the officer releasing the goods.

The Revenue Contended that it was neither an assessment order nor it was binding upon the assessing authority and therefore, it could not give rise to any cause of action to the petitioner.

The Hon’ble High Court observed that the AO had required the petitioner to produce indemnity Bond regarding payment of tax on income of the assessment year, relevant to the current year in which the seized assets were to be released as calculated vide order referred above.

The Hon’ble High Court directed that the said paragraph, as mentioned in the release order, shall not be read with the release order. The consequential order passed by Income Tax Officer was set aside. 

The Hon’ble High Court clarified that it shall be open for the assessing authority to take cognizance of these facts when the assessment for the said assessment year is made independently.

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