Section 250: application of seized or requisitioned assets

Liabilities that can be recovered from seized/requisitioned assets

The following amounts may be recovered out of assets seized under Section 247 or requisitioned under Section 248:

• Any existing tax liability (other than advance tax under Part C of Chapter XIX) under this Act, the Income-tax Act, 1961, or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, where the person is in default or deemed in default
• The liability determined on completion of assessment/reassessment/recomputation for the year in which the search was initiated or requisition made (including penalty or interest), or the liability determined for a block-period assessment under Part B of Chapter XVI, where the person is in default or deemed in default
• Liability arising on an application made before the Interim Boards for Settlement under Section 245C(1) of the Income-tax Act, 1961

Release of assets to the taxpayer

The Assessing Officer may release a seized asset (or part of it) to the person from whose custody it was seized, on an application made within thirty days from the end of the month in which the asset was seized, provided:

• The Assessing Officer is satisfied, based on the explanation furnished, that the nature and source of the asset's acquisition is explained
• Any existing liability has first been recovered out of the asset
• Prior approval has been obtained from the Principal Chief Commissioner/Chief Commissioner/Principal Commissioner/Commissioner

Timeline for release

Where release is approved, the assets must be released within one hundred and twenty days from the date on which the last of the authorisations for the search or requisition was executed.

Applying money and other assets toward liabilities

If the seized assets consist wholly or partly of money, the Assessing Officer may apply that money toward discharging the liabilities described above, and the assessee is discharged of liability to that extent.

Non-money assets can also be applied toward any liabilities that remain undischarged - they are deemed to be under distraint as if effected by the Assessing Officer or Tax Recovery Officer under Section 416(7), with recovery carried out as prescribed.

This mode of recovery does not prevent the department from using any other recovery mode available under the Act.

Leftover assets and interest on money held

Any assets or sale proceeds remaining after the liabilities are discharged must be handed over or paid back to the person from whose custody they were seized.

The Central Government must pay simple interest at the rate of 0.5% per month (or part of a month) on money seized/requisitioned but not released or applied, calculated using the formula (A - B) + (C - D), where A is the money seized/requisitioned, B is the amount released under sub-section (2), C is sale proceeds of assets applied toward liabilities, and D is the aggregate amount needed to meet the liabilities.

This interest runs from the day immediately after the expiry of one hundred and twenty days from the date the last search/requisition authorisation was executed, up to the date the assessment, reassessment or recomputation is completed.

Frequently asked questions