Section 250 — Application of seized or requisitioned assets. Successor to s.132B of the 1961 Act.
Section 250 is in Chapter XIV — Tax Administration, which runs from section 236 to section 261.
Sub-section (1) lists the liabilities that may be recovered out of assets seized under section 247 or requisitioned under section 248 — existing liabilities under this Act, the Income-tax Act, 1961 and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 in respect of which the person is in default or deemed in default, but excluding advance tax payable under Part C of Chapter XIX; the liability determined on completion of the assessment, reassessment or recomputation for the year in which the search or requisition falls, or on completion of a block period assessment under Part B of Chapter XVI, including penalty and interest; and liability arising on an application before the Interim Boards for Settlement under section 245C(1) of the 1961 Act. Sub-section (2) allows the Assessing Officer to release seized assets, or part of them, on an application made within thirty days from the end of the month of seizure, provided the nature and source of acquisition is explained to his satisfaction, existing liabilities have been recovered out of the assets, and prior approval of the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner is obtained; sub-section (3) requires the release within one hundred and twenty days from the date the last authorisation was executed. Sub-sections (4) to (7) govern application: money may be applied directly and discharges the liability pro tanto, other assets may be applied for the undischarged balance and are deemed under distraint as if effected under section 416(7) with recovery in the prescribed manner, this mode does not preclude any other mode of recovery, and any surplus assets or proceeds must forthwith be made over to the person from whose custody they were seized. Sub-sections (8) and (9) provide for simple interest from the Central Government at 0.5% for every month or part of a month on the amount given by the formula (A – B) + (C – D), for the period beginning after the expiry of one hundred and twenty days from execution of the last authorisation and ending on completion of the assessment, reassessment or recomputation.
Assets taken in a search or requisition are held against a liability that has not yet been quantified; this section says which liabilities they can be set against, when the taxpayer can ask for them back, and what must be returned. The interest in sub-section (8) is the price the Government pays for holding money beyond one hundred and twenty days that turns out not to be needed to meet the liabilities.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time to apply for release of seized assets | Thirty days | From the end of the month in which the asset was seized — not from the date of seizure | 250(2) |
| Outer limit for releasing the assets | One hundred and twenty days | From the date on which the last of the authorisations for the search or requisition was executed | 250(3) |
| Interest payable by the Central Government | 0.5% for every month or part of a month | Simple interest, on the amount given by the formula (A – B) + (C – D), not on the value of all seized assets | 250(8) |
| Period for which that interest runs | From the day after the expiry of one hundred and twenty days from execution of the last authorisation to the date of completion of the assessment, reassessment or recomputation | Nothing is payable for the first one hundred and twenty days | 250(9) |
| Liability excluded from recovery out of the assets | Advance tax payable under Part C of Chapter XIX | Expressly carved out of "existing liability" in clause (a) | 250(1)(a) |
If assets have been seized, the application for release has to go in within thirty days from the end of the month of seizure, and it has to carry an explanation of the nature and source of acquisition — the Assessing Officer cannot release without being satisfied on that, without first recovering existing liabilities out of the assets, and without prior approval at Principal Commissioner level or above. Money seized is simply applied against the listed liabilities and discharges them to that extent; other assets are treated as under distraint and realised in the prescribed manner, and anything left over after the liabilities are met must be returned forthwith. Interest at 0.5% a month runs in your favour only on the formula amount — money seized less money released, plus sale proceeds less the liabilities to be met — and only for the period after the first one hundred and twenty days. Recovery out of seized assets does not stop the department using any other mode of recovery for the same liabilities.
Money and jewellery are seized from a firm in a search, and the firm applies for release within thirty days from the end of the month of seizure — sub-section (2) runs that clock from the end of the month, not from the day of seizure. Release, if allowed, must happen within one hundred and twenty days from the date the last of the authorisations was executed, and needs the prior approval of the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner. Interest from the Central Government at 0.5% for every month or part of a month starts only the day after those one hundred and twenty days expire and runs to completion of the assessment, so nothing whatever is payable for the first four months. Nor is it interest on all that was seized: sub-section (8) fixes the base by (A – B) + (C – D), so money already released and the amount needed to meet the liabilities fall out of the computation.
You meet it inside a search or requisition proceeding — in the application for release of the seized assets under sub-section (2), in the Assessing Officer's order releasing them with the prior approval of the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner, and in the adjustment of seized money against the demand when the assessment is completed. The interest under sub-sections (8) and (9) is computed at that same point.
The Central Government shall pay simple interest at the rate of 0.5% for every month or part of a month for the period on the amount determined in accordance with the following formula:–– (A – B) + (C – D)
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
See the circulars index.