Income Tax department asked to pay cost for retaining the books of Assessee for more then 15 days

The Income-Tax department routinely imposes cost on assesses for late filing of returns or delayed tax payment. For a change, it was at the receiving end when the high court imposed a cost of Rs 25,000 for retaining books of accounts impounded from a city builder for almost five years. Justice D V Shylendra Kumar, while disposing of the petition filed by Shubha & Prabha Builders Private Ltd, observed that the I-T department couldn‟t flout its own rules and regulations. “The department cannot hold back the books of accounts for such a long period without any tenable explanation or authority of law. They should immediately return those books and pay the cost to the petitioner,” the court observed. Kiran Kumar, counsel for the petitioner, told the court: “The department impounded those books for verification on October 7, 2005. They extended the retention period from time to time, saying the company could file an appeal. On March 16, 2009, the department issued a fresh order seeking to retain those books till 2010.
“Under Section 131(3) of the IT Act, the department at best can retain impounded books only for 15 days. Thereafter, with due permission from the commissioner, that period can be extended by a few days. Only one extension is available under the law.” Even a recent study by ratings agency Crisil noted that while bank NPAs would rise in light of the slowdown, yet, given their healthy capitalisation and cleaner balance sheets, the impact of rising delinquencies was likely to be within the stress tolerance levels. In India, according to Mr Mohan, the main fallout of the crisis was a sell-off by foreign institutional investors in domestic equity markets, leading to a sharp reduction in net capital inflows, which were also affected by slowing external demand. As a result of this, there were pressures in the foreign exchange market because of which the central bank had to sell dollars. Mr Mohan in his analysis of the impact of the crisis pointed that, “While foreign exchange sales attenuated the mismatch in the foreign exchange market, these operations drained liquidity from the rupee market and accentuated pressures on the rupee liquidity.