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2013 (12) TMI 1264 - AT - Income TaxInterest u/s 234B and 234C A search and seizure operations u/s 132 were carried out at the premises on 13.03.2008 - Cash amounting to Rs. 3,86,11,000/- was seized - The appellant company requested the assessing officer to adjust the aforesaid amount of Rs. 3,86,11,000/- as advance tax paid by the appellant - Held that - Following Commissioner of Income Tax vs K.K. Marketing 2005 (5) TMI 58 - DELHI High Court - Seizure of cash belonging to the assessee firm could be adjusted against its advance tax liability since there is a request by the assessee to adjust the seized cash against the advance payment of tax Following Commissioner of Income Tax vs Arun Kapoor 2010 (7) TMI 610 - Punjab and Haryana High Court - On request for adjustment of advance tax liability against seized cash, the assessee is liable to pay interest u/s 234B and 234C - The assessee is also entitled to get benefit of payment of advance tax out of seized cash from the date of making application for adjustment of seized cash as advance tax towards tax liability Decided against Revenue.
Issues:
1. Whether the seized cash amounting to Rs. 3,86,11,000 can be treated as advance tax for the purpose of re-computing interest under sections 234B and 234C of the Income Tax Act, 1961. Analysis: The appeal was filed by the Revenue against the order of the Commissioner of Income Tax(A)-I, New Delhi for AY 2008-09. The sole ground raised in the appeal was regarding the treatment of the seized cash amount as advance tax for re-computing interest under sections 234B and 234C of the Act. The appellant company had requested the Assessing Officer to adjust the seized amount as advance tax, but the Assessing Officer did not give credit for the same, leading to a demand raised against the appellant. The appellant filed an application for rectification under section 154 of the Act, which was rejected by the Assessing Officer, stating that the seized cash cannot be treated as advance tax as per the Act. Upon appeal, the Commissioner of Income Tax(A)-I, New Delhi allowed the appeal, directing the re-computation of interest under sections 234B and 234C by treating the seized amount as advance tax from the date of the appellant's request. The Commissioner held that the Assessing Officer was not justified in charging interest without giving credit for the seized cash as advance tax. The decision was based on various judicial pronouncements, including the case of Commissioner of Income Tax vs K.K. Marketing, where it was held that seized cash can be adjusted against advance tax liability upon the assessee's request. Further, the Tribunal considered judgments like Commissioner of Income Tax vs Arun Kapoor, where it was established that upon a request for adjustment of advance tax liability against seized cash, the assessee is liable to pay interest under sections 234B and 234C but is entitled to the benefit of payment of advance tax from the date of the application for adjustment. Based on these precedents, the Tribunal upheld the decision of the Commissioner, dismissing the appeal of the Revenue as devoid of merits. In conclusion, the Tribunal found no reason to interfere with the Commissioner's order, as the seized cash was rightly treated as advance tax for re-computing interest under sections 234B and 234C. The appeal of the Revenue was dismissed, affirming the decision of the Commissioner of Income Tax(A)-I, New Delhi.
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