2015 (3) TMI 1280 - AT - Income Tax

Seized cash adjustment against the liability of advance tax - Interest leviable under section 234B/C - Held that - CIT(A) has correctly decided the issue because explanation to section 132B can not be held to be of retrospective nature because notes on the clauses very clearly provide that amendment shall take effect from 01/06/2013. Further we are bound to follow the decision in case of CIT v/s Ashok Kumar 2010 (9) TMI 771 - Punjab and Haryana High Court . The Ld. CIT has also correctly noticed that application was received on 22/03/2010 i.e. one week after the due date for deposit of advance tax and that is why he has ultimately directed the AO to rework the interest leviable under section 234B/C. Therefore, we find nothing wrong with this order and follow the same. Appeal of the Revenue dismissed.

Summary

Issues:
1. Interpretation of section 132B(1) regarding adjustment of seized cash against advance tax liability.
2. Retrospective application of the amendment to section 132B by Finance Act 2013.

Issue 1: Interpretation of section 132B(1)
The appeal concerned the interpretation of section 132B(1) regarding the adjustment of seized cash against advance tax liability. The Revenue contended that the seized amount should not be considered as advance tax payment as per the specific provisions of section 132B(1). The CIT(A) partially favored the assessee, noting that the seized cash could not be considered as advance tax payment since the application for adjustment was made after the due date for advance tax deposit. The CIT(A) referred to the amendment to section 132B and a High Court decision supporting the assessee's position.

Issue 2: Retrospective application of the amendment
The debate centered around the retrospective application of the amendment to section 132B introduced by the Finance Act 2013. The Revenue argued that the amendment, though effective from 01/06/2013, should be applied retrospectively as it was clarificatory in nature. However, the assessee's counsel contended that the language of the amendment and the legislative intent indicated prospective application. The CIT(A) analyzed the language of the amendment and compared it to a similar provision with retrospective effect, ultimately concluding that the amendment did not have retrospective effect. The CIT(A) relied on a High Court decision and directed the Assessing Officer to rework the interest leviable under section 234B/C.

In conclusion, the ITAT Chandigarh dismissed the Revenue's appeal, upholding the CIT(A)'s decision. The ITAT agreed with the CIT(A) that the explanation to section 132B should not be considered retrospective based on legislative intent and the effective date mentioned in the amendment. The ITAT also emphasized the importance of following the High Court decision and directed the Assessing Officer to reevaluate the interest leviable under section 234B/C.