2012 (10) TMI 1107 - AT - Income Tax

Summary

Issues involved: Appeal against rejection of application u/s 154/155 by the assessee for adjusting seized amount against advance tax liability, interpretation of section 132B(1) of the Income-tax Act, liability for interest u/s 234B and 234C, and amendment of grounds of appeal.

Appeal against rejection of application u/s 154/155:
The Revenue appealed against the rejection of the application filed by the assessee u/s 154 for adjusting the seized amount against advance tax liability. The assessee had surrendered an amount during a search under section 132, and subsequently, a notice was received for a demand. The assessee's application u/s 154 was rejected by the Assessing Officer, leading to the appeal. The CIT(A) accepted the explanation of the assessee and directed the deletion of interest charged under section 234A & 234B, finding the AO's rejection erroneous.

Interpretation of section 132B(1) of the Income-tax Act:
The AO contended that section 132B(1) refers to existing liability under the Income-tax Act, excluding advance tax liability. However, the counsel for the assessee argued that advance tax demand should be considered an existing liability, citing relevant court decisions. The CIT(A) upheld the assessee's explanation, emphasizing that advance tax demand created by the department constituted an existing liability, leading to the deletion of interest charges.

Liability for interest u/s 234B and 234C:
The issue of interest liability u/s 234B and 234C arose due to the adjustment of seized amount against advance tax demand. The CIT(A) directed the deletion of interest charges based on the interpretation of existing liability and the application of relevant court decisions favoring the assessee's position.

Amendment of grounds of appeal:
The Revenue sought leave to amend or add grounds of appeal during the proceedings. However, the appeal was dismissed by the Appellate Tribunal, upholding the CIT(A)'s decision to delete the interest charges under section 234A and 234B. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the appeal filed by the Revenue.