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2018 (4) TMI 338 - AT - Income TaxSeized cash eligible to be given credit before charging interest u/s 234A and 234B - Held that - The income tax department was in possession of the seized cash of ₹ 66,80,000/- from 23.04.2011 onwards for adjustment towards existing liability of the assessee. Hence, the tax payable by the assessee on the returned income is eligible for appropriation from the seized cash. Once the same is appropriated, there will be no resultant tax liability. Hence, there could be no charging of interest u/s 234A of the Act. Accordingly, we direct the ld. AO to delete the charging of interest u/s 234A of the Act. The interest u/s 234B is chargeable from the first day of the assessment year i.e. from 01.04.2011 onwards. Hence, we hold that the interest u/s 234B of the Act would be eligible to be charged on the assessee for the month of April, 2011 only i.e. for one month on the tax finally assessed by the ld. AO. When the seized cash of ₹ 66,80,000/- is in the possession of the income tax department from 23.04.2011 onwards, it would be unfair and unjust to charge interest on the assessee u/s 234B of the Act, merely because, the seized cash was given credit on a later date by the ld. AO. It would be just and fair to conclude that the assessee could not be fastened with interest liability for the delayed adjustment of seized cash by the ld. AO. Hence, we direct the ld. AO to charge interest u/s 234B of the Act on the tax payable on the assessed income for one month only i.e. for April, 2011. With regard to interest u/s 234C of the Act it is levied for deferment of payment of advance tax for the period of 01.04.2010 to 31.03.2011. In the instant case, since, the cash was seized after the expiry of the previous year i.e. after 31.03.2011, the assessee cannot claim non-chargeability of interest u/s 234C on that account. Hence, interest u/s 234C of the Act is leviable in this case.
Issues:
- Whether the seized cash of ?66,80,000/- is eligible for credit before charging interest u/s 234A and 234B of the Income Tax Act, 1961. Analysis: 1. The appeal arises from the order of the Commissioner of Income Tax(Appeals) against the order passed by the ACIT under section 143(3) read with Section 153A of the Income Tax Act, 1961 for the Assessment Year 2011-12. 2. The main issue is whether the seized cash of ?66,80,000/- on 23.04.2011 is eligible for credit before charging interest u/s 234A and 234B of the Act. The cash was seized during a search & seizure operation and handed over to the Income Tax Department. The assessee agreed to offer the seized cash as undisclosed income towards unexplained liabilities for the assessment year 2011-12. 3. The Assessing Officer (AO) completed the assessment, determining the total income and charging interest u/s 234A, B & C without giving credit for the seized cash. The CIT(A) allowed adjustment of the seized cash towards tax liability, following a decision of the ITAT, Kolkata, “B” Bench. 4. The assessee appealed on the grounds that the CIT(A) erred in not giving credit for the seized money as prepaid taxes and in not allowing adjustment of self-assessment tax liability from the date of seizure. The ITAT found that the seized cash was available with the Income Tax Department from 23.04.2011 onwards, and directed the AO to delete the charging of interest u/s 234A. 5. Regarding interest u/s 234B, the ITAT held that interest would be chargeable for one month only, i.e., for April 2011. Interest u/s 234C was found to be leviable due to deferment of advance tax payment for the period of 01.04.2010 to 31.03.2011. 6. The ITAT partly allowed the grounds raised by the assessee, directing the AO to charge interest u/s 234B for one month only and confirming the leviability of interest u/s 234C. 7. Consequently, the appeal of the assessee was partly allowed by the ITAT.
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