2021 (9) TMI 180 - AT - Income Tax

Determination of interest u/s 234A, 234B and 234C - Adjustment of advance tax liability with the seized cash - HELD THAT - Our adjudication to the same goes in assessee's favour and against the department. This is for the reason that Section 132(B)(1)(i) itself includes the amount of liability determined on completion of the assessment u/s. 153A and the assessment of the year relevant to the previous year in which search is initiated or requested is made or interest payable in connection with such assessment . That being the statutory position, we hold that the clinching statutory expression advance tax (supra) in Explanation-II thereof does not deemed to have included any interest which is already treated as allowable in sub-section (1)(i) herein above. We therefore find no merit in the Revenue's sole substantive grievance going by the principles of stricter interpretation as per hon'ble apex court's recent landmark judgment in Commissioner of Customs Vs. Dilip Kumar 2018 (7) TMI 1826 - SUPREME COURT . Penalty u/s 271AAB - non specification of charge - HELD THAT - Assessing Officer's penalty order nowhere specified as to whether the alleged undisclosed income satisfied that the corresponding statutory parameters prescribed in Section 271AAB, Explanation (C)(i)(A) (B) and (ii) not been recorded or before the date of search in the books of accounts or other documents maintained in the normal course relating to such previous year or otherwise not disclosed before the specified authority (ies) or it had surfaced, either wholly or partly in respect of expense recorded We therefore find no reason to sustain the impugned Section 271AAB penalty. - Decided in favour of assessee.

Summary

Issues:
1. Revenue's appeal against CIT(A)'s order denying application of seized cash during survey.
2. Whether Section 132B allows adjustment of Section 234A, 234B, and 234C interest against seized cash.
3. Revenue's and assessee's cross-appeals regarding Section 271AAB penalty.

Analysis:

1. The Revenue's appeal, ITA No. 1250/Hyd/2018, contested the denial of applying seized cash during a survey. The CIT-DR argued that the CIT(A) erred in allowing the adjustment of the seized cash against advance tax along with interest under Sections 234A, 234B, and 234C. Referring to Section 132B and a circular by CBDT, it was contended that advance tax payable does not fall under "existing liability." However, the authorized representative supported the CIT(A)'s decision, emphasizing that the seized cash was requested to be adjusted against advance tax liability. The Tribunal ruled in favor of the assessee, stating that the statutory expression "advance tax" in Section 132(B)(1)(i) does not include interest already treated as allowable. Citing a landmark judgment, the Tribunal rejected the Revenue's grievance.

2. The issue of adjusting Section 234A, 234B, and 234C interest against seized cash was resolved in favor of the assessee. The Tribunal held that the statutory provision did not include interest already considered as allowable. The Tribunal applied principles of stricter interpretation, rejecting the Revenue's sole substantive grievance based on recent legal precedents.

3. The Revenue's and assessee's cross-appeals, ITA Nos. 1251/Hyd/2018 and 1278/Hyd/2018, pertained to the Section 271AAB penalty. The Tribunal noted that the penalty order did not specify whether the undisclosed income met the statutory parameters outlined in Section 271AAB. Due to this lack of clarity, the Tribunal found no basis to uphold the penalty. Consequently, the Revenue's appeal failed, while the assessee's cross-appeal succeeded.

In conclusion, the Tribunal dismissed the Revenue's appeals and allowed the assessee's appeal, issuing a common order on August 25, 2021.