1999 (4) TMI 45 - HC - Income Tax

Summary

Issues Involved:
1. Adjustment of seized amount towards advance tax.
2. Liability to pay interest u/s 234B and 234C of the Income-tax Act.

Summary:

Adjustment of Seized Amount Towards Advance Tax:
The petitioners sought adjustment of the seized amounts towards their advance tax liabilities for the financial year 1991-92. The court examined the provisions of sections 132, 132A, and 132B of the Income-tax Act. It was noted that the seized assets could only be dealt with after an order u/s 132(5) was made. The court emphasized that the process of search and seizure is not voluntary and cannot be equated with the voluntary payment of advance tax. The court held that the seized amount could not be adjusted towards the advance tax liability until a final order was made by the Income-tax Officer u/s 132(5) and the retained amount was applied or appropriated in accordance with section 132B.

Liability to Pay Interest u/s 234B and 234C:
The petitioners argued that they should not be liable to pay interest u/s 234B and 234C due to the seizure of their assets. The court rejected this argument, stating that irrespective of the seizure, the assessee was obliged to pay the advance tax in accordance with law. The court held that failure to pay advance tax would attract interest u/s 234B and 234C, and the seized amount could not be considered as payment towards advance tax. The court also disagreed with the Income-tax Appellate Tribunal's decision in Satpal D. Agarwal (HUF) v. Asst. CIT, which suggested that the assessee had not defaulted in payment of taxes due to the seizure of cash.

Conclusion:
The court dismissed the petitions, ruling that the petitioners were not entitled to any relief and were liable to pay interest u/s 234B and 234C. The seized amounts could not be adjusted towards advance tax until an order was made u/s 132(5) and the retained assets were dealt with as per section 132B.