2017 (6) TMI 7 - AT - Income Tax

Adjustment of advance tax and interest - assessee strongly seeks credit of the seized cash of ₹ 40lacs advance tax in the impugned assessment year 2009-10 as well as in respect of interest liability u/s.234B & C - Held that - Assessee had submitted its application well in time seeking credit of the cash sum seized against the above liabilities. We do not see any such evidence at the appellant s behest intimating the revenue authorities to grant credit of the seized cash as advance tax. Shri Divatia is fair enough in referring to assessee s return dated 29-30/09/2009 seeking to claim the above seized cash as advance tax. We therefore quote this tribunal s decision in Kanishka Prints Pvt. Ltd. vs. ACIT (2013 (7) TMI 14 - ITAT AHMEDABAD) and direct the Assessing Officer to grant the assessee the credit prayed for from the date of filing of its return only with all consequential benefits. The assessee s grievance stands partly accepted in view of our above discussions. - Decided partly in favour of assessee.

Summary

Issues:
1. Appeal against CIT(A)'s order upholding AO's decision under section 154 of the Income Tax Act, 1961.
2. Treatment of advance tax payable as "existing liability" under section 132B(1)(i) and computation of interest under sections 234B and 234C.
3. Excessive computation of interest under sections 234B and 234C.

Analysis:

Issue 1:
The appeal was against the CIT(A)'s order upholding the AO's decision under section 154 of the Income Tax Act, 1961. The assessee contended that the order was illegal and against the principles of natural justice. The CIT(A) had partly agreed with the assessee's grievance, leading to further assessment by the AO.

Issue 2:
The main contention revolved around the treatment of advance tax payable as an "existing liability" under section 132B(1)(i) and the computation of interest under sections 234B and 234C. The CIT(A) directed the AO to determine if the request for adjustment of seized cash against advance tax was made and to adjust accordingly, charging interest under sections 234B and 234C after the adjustments. The tribunal partly allowed the appeal, granting the assessee credit for the seized cash as advance tax from the date of filing the return.

Issue 3:
Regarding the excessive computation of interest under sections 234B and 234C, the tribunal considered various judgments presented by both parties. The tribunal referred to previous decisions and directed the AO to grant the assessee the credit for the seized cash as advance tax from the date of filing the return, in line with the principles of natural justice.

In conclusion, the tribunal partly allowed the assessee's appeal, providing relief in terms of granting credit for the seized cash as advance tax and adjusting the interest liability under sections 234B and 234C accordingly. The decision was pronounced on April 25, 2017, by the Appellate Tribunal ITAT Ahmedabad.