2016 (10) TMI 1399 - AT - Income Tax

Adjustment of amount lying in the PD account against the existing liability of the assessee - Whether the appeal is maintainable u/s 249(4)? - HELD THAT - CIT(A) had correctly allowed the appeal of the assessee in view of the decision in the case of ACIT vs. Sunil C Gupta 2015 (7) TMI 352 - ITAT AGRA wherein the Hon'ble Bench held that cash seized to be adjusted against advance tax liability as Explanation 2 to Section 132B. Appeal of assessee allowed.

Summary

Issues:
- Whether the amount in the PD Account can be considered as advance tax liability.
- Whether the appeal is maintainable under Section 249(4) of the Income Tax Act.
- Whether seized cash can be adjusted against advance tax liability.

Analysis:

Issue 1: Amount in PD Account as Advance Tax Liability
The case involved a search and seizure operation where cash and jewelry were found belonging to the assessee. The assessee admitted to ownership of the seized items and declared them as undisclosed income for the assessment year. The Assessing Officer (AO) calculated the total tax liability, and the assessee requested to adjust the seized cash in the PD Account against the tax liability. The ld. CIT(A) allowed the appeal based on a decision of ITAT Agra Bench, stating that the cash seized could be adjusted against advance tax liability. The ITAT upheld this decision, citing relevant case laws that support the adjustment of seized cash for advance tax purposes. The appeal of the Revenue was dismissed on this ground.

Issue 2: Appeal Maintainability under Section 249(4)
The Revenue raised concerns about the maintainability of the appeal under Section 249(4) of the Income Tax Act. The ld. CIT(A) had decided in favor of the assessee based on the ITAT Agra Bench decision. The Department contended that the ld. CIT(A) erred in allowing the appeal. The ITAT considered the arguments of both parties and upheld the decision of the ld. CIT(A) based on the precedents cited. The appeal of the Revenue was dismissed on this ground as well.

Issue 3: Adjustment of Seized Cash against Advance Tax Liability
The primary contention was whether the seized cash could be adjusted against the advance tax liability of the assessee. The ITAT referred to the ITAT Agra Bench decision and other relevant judgments to support the position that seized cash could indeed be utilized to meet advance tax obligations. The ITAT found no infirmity in the ld. CIT(A)'s order and dismissed the Revenue's appeal. The ITAT emphasized the importance of allowing adjustments of seized cash against advance tax liabilities to prevent undue interest charges on the assessee.

In conclusion, the ITAT upheld the decision of the ld. CIT(A) based on the legal precedents and judgments cited, dismissing the Revenue's appeal on all grounds.