N.K Sud, J.:— This writ petition has been filed for issuance of a writ in the nature of mandamus directing the respondents to release the jewellery which had been seized during the search of the two lockers of the petitioner on September 17, 1996 and September 24, 1996.

2. The residential and business premises of the petitioner were raided on September 11, 1996. His locker No. 39 with the Canara Bank, Dalhousie Road, Pathankot, was searched on September 17, 1996, and a panchnama was prepared, a copy of which has been annexed as annexure P 1. The entire jewellery of the value of Rs. 8,29,936 contained in the said locker was seized. Another locker of the petitioner, i.e, locker No. 72 with the State Bank of Patiala, Chakki Bank, Pathankot, was also searched on September 24, 1996, and a panchnama was prepared, a copy of which has been annexed as annexure P 4. The entire jewellery of the value of Rs. 9,76,010 found in the said locker was also seized.

3. The assessment for the block period under section 158BC of the Income-tax Act, 1961 (for short “the Act”), was completed on September 29, 1997, and the total undisclosed income was assessed at Rs. 3,01,01,078 which included the value of the entire jewellery found in the aforesaid two lockers, and the asses-see was required to pay a further tax of Rs. 1,78,98,002. The petitioner filed an appeal before the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for short “the Tribunal”), which was disposed of vide order dated November 18, 1999, giving substantial relief to the petitioner. Additions made by the Assessing Officer to the extent of Rs. 2,88,34,909 were deleted. The Assessing Officer passed the consequential order on December 17, 1999, giving effect to the relief granted by the Tribunal. The undisclosed income assessed stood revised to Rs. 12,66,170, tax on which worked out to Rs. 7,59,702. After allowing adjustment of Rs. 36.039 on account of tax already deposited, the petitioner was required to pay the balance demand of Rs. 7,23,663. This amount was paid by the petitioner as under: Rs. 3,85,000 on January 31, 2000. Rs. 3,38,663 on February 29, 2000.

4. Since, there was delay in deposit of tax on the part of the petitioner, he was also required to deposit interest under section 220(2) of the Act which was determined at Rs. 45,582. The said amount was also deposited on February 29, 2000.

5. Since the entire demand created in respect of the block assessment stood fully paid on February 29, 2000, and there was no other demand pending against him, the petitioner filed an application before respondent No. 1 on January 2, 2002, for release of the jewellery, which had been seized from his lockers. Receiving no response, another application dated September 4, 2002, with the same prayer was moved. When no action was taken on the second application also, the petitioner filed another letter dated March 24, 2003, before respondent No. 2 which also evoked no response. The petitioner also claims to have met the respondents personally for release of the jewellery but without any success. Having no other alternative, the petitioner has approached this court by way of the present writ petition.

6. On notice, a written statement on behalf of the respondents has been filed in which it has been stated that the Department has not accepted the order of the Tribunal and had filed an appeal before the High Court on July 21, 2000. Thus, it has been claimed that the liability of the petitioner has not been finally determined. It is claimed that since the proceedings are pending before this court, the seized jewellery cannot be released. In support of this averment, reliance has been placed on the decision of the Supreme Court in CIT v. Hindustan Housing and Land Development Trust Ltd. [1986] 161 ITR 524 and that of the Bombay High Court in Commissioner Of Income-Tax v. Sharda Sugar Industries Ltd. [1999] 239 ITR 393. It has also been pointed out that a demand of Rs. 6,21,279 is outstanding in the case of the late Shri Suresh Kumar Kohli, the father of the petitioner, for the block period 1987-88 to 1997-98. It is submitted that the petitioner being the legal representative of Shri Suresh Kumar Kohli, is liable to pay the aforesaid demand but has not taken the responsibility for making the payment. Thus, it is contended that on this ground also, the jewellery recovered from the lockers of the petitioner could not be released. It is, however, admitted that the entire demand in the case of the petitioner stands paid and there is no amount outstanding against him.

7. The petitioner filed a rejoinder in which the provisions of section 132B of the Act have been relied upon to show that the Department could not retain the assets after the liability referred to in clause (i) of sub-section (1) of section 132B of the Act has been discharged. Reliance was also placed on the judgment of the apex court in J. R. Malhotra v. Addl. Sessions Judge, (1976) 1 SCC 430 : AIR 1976 SC 219, to contend that the Revenue could not retain the assets on the plea that some demand was likely to be created in future.

8. When this matter had come up for hearing before us on December 15, 2003, counsel for the Revenue had resisted the prayer of release of jewellery mainly on the ground that a demand of Rs. 6,21,279 was pending against the late Shri Suresh Kumar Kohli, the father of the petitioner. Counsel for the petitioner had pointed out that the release of assets seized from the petitioner could not be denied on this ground. However, to put an end to this litigation, he had offered to furnish security to the extent of Rs. 6,21,279. Thereupon, counsel for the Revenue had sought an adjournment to seek necessary instructions. The matter was, accordingly, adjourned to January 12, 2004. On January 12, 2004, we were informed that counsel had received no instructions as the letter written to the concerned Assessing Officer (respondent No. 2) had evoked no response. The case was adjourned to January 20, 2004, and respondent No. 1 was directed to be present in court.

9. In compliance with our order, Mr. A.V Singh, respondent No. 1, appeared and reiterated the stand taken in the written statement. On a specific query from the Bench, he failed to refer to any provision of law under which the jewellery recovered and seized from the petitioner could be retained in the absence of any demand against him. He merely stated that as per the practice of the Department, goods were released only after the matter was finally decided. He also could not explain as to why there was no response to the various applications made by the petitioner for release of jewellery.

10. We have heard the counsel for the parties and perused the relevant material on record. Section 132B of the Act deals with the application of seized or requisitioned assets. It reads as under:

“132B. (1) The assets seized under section 132 or requisitioned under section 132A 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 under section 153A 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, may be recovered out of such assets:

Provided that where the person concerned makes an application to ‘the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the Chief Commissioner of Income-tax or Commissioner of Income-tax, to the person from whose custody the assets were seized:

Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed.

(ii) if the assets consist solely of money, or partly of money and partly of other assets, the Assessing Officer may apply such money in the discharge of the liabilities referred to in clause (i) and the assessee shall be discharged of such liability to the extent of the money so applied;

(iii) the assets other than money may also be applied for the discharge of any such liability referred to in clause (i) as remains undischarged and for this purpose such assets shall be deemed to be under distraint as if such distraint was effected by the Assessing Officer or, as the case may be, the Tax Recovery Officer under authorisation from the Chief Commissioner of Income-tax or Commissioner of Income-tax under sub-section (5) of section 226 and the Assessing Officer or, as the case may be, the Tax Recovery Officer may recover the amount of such liabilities by the sale of such assets and such sale shall be effected in the manner laid down in the Third Schedule.

(2) Nothing contained, in sub-section (1) shall preclude the recovery of the amount of liabilities aforesaid by any other mode laid down in this Act.

(3) Any assets or proceeds thereof which remain after the liabilities referred to in clause (i) of sub-section (1) are discharged shall be forthwith made over or paid to the persons from whose custody the assets were seized,

(4)(a) The Central Government shall pay simple interest at the rate of eight per cent, per annum 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 subsection (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 under section 153A or under Chapter XIV-B. Explanation: In this section,—

(i) ‘block period’ shall have the meaning assigned to it in clause (a) of section 158B;

(ii) ‘execution of an authorisation for search or requisition’ shall have the same meaning as assigned to it in Explanation 2 to section 158BE.”

11. Sub-section (3) of section 132B of the Act clearly indicates that the seized assets or proceeds thereof which remain after the liabilities referred to in clause (i) of sub-section (1) have been discharged, have to be forthwith made over or paid to the persons from whose custody the assets were seized. It is the admitted case of the parties that there are no existing liabilities in respect of any kind of demand referred to in clause (i) of sub-section (1) of section 132B of the Act. It is also not in dispute that the jewellery was recovered and seized from the custody of the petitioner. There is, thus, no manner of doubt that the respondents are liable to make over the jewellery to the petitioner in terms of the provisions of sub-section (3) of section 132B of the Act. No provision of law has been brought to our notice under which the respondents can retain possession of the seized jewellery during the pendency of appeal filed by the Revenue before the High Court.

12. The judgment of the Supreme Court in the case of Hindustan Housing and Land Development Trust Ltd. [1986] 161 ITR 524 has no application in the present case. The point at issue in the said judgment was in respect of accrual of income. In that case, it was held that since the additional compensation granted by the arbitrator was being disputed by the Government, it could not be said to have accrued to the assessee and brought to tax until the dispute was finally settled. As already observed, counsel for the respondents has not been able to show any provision under which the respondents could keep the release of assets seized under sub-section (3) of section 132B of the Act, in abeyance during the pendency of an appeal, revision or reference filed by the Revenue.

13. We are, therefore, satisfied that the petition deserves to succeed and that the petitioner is entitled to receive back the jewellery seized from his two lockers. However, since the petitioner had very fairly offered to furnish security against the demand pending in the case of his late father, we direct that the jewellery seized from the petitioner's lockers be released to him within seven days of his furnishing security to the extent of Rs. 6,21,279 to the satisfaction of respondent No. 1. Since the respondents have not been able to justify their action under any provision of law and the assessee has been made to suffer the present litigation unnecessarily, he is entitled to costs which are assessed at Rs. 10,000.

14. The writ petition is allowed in the above terms.