9911796707
TMI Blog2001 (7) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... aid amount was much more than the amount of cash seized, the cash seized was retained by the Assessing Officer to be dealt with in accordance with the provisions of section 132B. The return of income was filed by the assessee on26-4-1993declaring total income of Rs.56,56,380. The said return was processed under section 143(1)(a) on27-9-1993, on the basis of which the demand of Rs.58,49,796 was raised against the assessee which included the interest under sections 234A, 234B and234C. The amount retained by the Assessing Officer was adjusted against the aforesaid demand. 3. Aggrieved by the same, the assessee moved an application under section 154 on19-1-1994contending that the cash seized on14-1-1991should have been treated as advance tax paid, failure of which had resulted in mistake apparent from the record. Accordingly, it was prayed that the said mistake be rectified and consequently, the interest chargeable under sections 234A, 234B and234Cshould be modified. The said application was rejected by the Assessing Officer vide order dated 25-1-1994 by holding that cash seized in the course of search and retained under section 132(5) was to be dealt with under section 132B which di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple it was submitted by him that where the seized amount is adjusted against the tax due from the assessee then no interest should be charged with reference to that amount. Accordingly, it was prayed that the amount of cash seized in the course of search proceeding should be considered as advance tax payment as on14-1-1991against the liability of advance tax incurred under section 208. 5.1 He then drew our attention to the provisions of sections 132 and 132B. According to him, the Assessing Officer is bound to pass an order under section 132(5) estimating the undisclosed income, calculating the amount of tax on the income was estimated, determining the amount of interest payable and the amount of penalty imposable in accordance with the provisions of the Act as if the order had been order of the regular assessment and specifying the amount that will be required to satisfy any existing liability under the Act. In pursuance of such order, the Assessing Officer may retain in his custody such assets or part thereof as in his opinion, is sufficient to satisfy the aggregate of the amounts mentioned above and thereafter release the remaining portion to the person from whose custody the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in CIT v. Kohinoor Flou r Mills [1975] 99 ITR 5 4 for the preposition that any amount paid after the due dates of advance tax should also be considered as advance tax payment. Proceeding further it was contended by him that even assuming that seized amount cannot be considered as advance tax payment, the relief should be allowed on the basis of equity and justice and the assessee should not be allowed to suffer on the basis of technicalities. According to him, the object of the entire machinery provisions is to recover the amount and such provisions should be construed considering the objectivity. Therefore, if the amount seized from the possession of the assessee is utilzed by the Department then credit should be given for the same on the basis of principle of justice and equity. 5.3 Lastly, it was contended by him that the issue whether the interest was chargeable or not was also a debatable issue and, therefore, the interest could not be charged while processing the return under section 143(1)(a). The charging of interest by the Assessing Officer in such proceedings amounted to a mistake apparent from the record which was liable to be rectified under section 154. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our consideration is whether the seizure of cash in the course of action under section 132 can be treated as payment of advance tax either on the date of the seizure as contended by the learned counsel for the assessee or on the date of order under section 132(5) read with section 132B as held by the CIT(A). Section 234A provides for levy of interest for delay in filing the returns @ 18% p.a. on the amount of tax on the total income determined under section 143(1) or on regular assessment as reduced by advance tax paid and tax deducted or collected at source. Section 234B provides for levy of interest in case of non-payment or short-payment of advance tax at the similar rate for the period commencing from 1st day of April next following the financial year to the date of determination of the total income under section 143(1) or on regular assessment on the amount of assessed tax. Assessed tax has been defined in Explanation 1 to section 234B which means tax on total income determined as mentioned above reduced by the payment of advance tax and tax deducted or collected at source. Section234Cprovides for levy of interest where payment of advance tax is below the prescribed percentag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be required to satisfy the existing liability under the Act or any other Act specified under section 132(1) in respect of which assessee is in default or is declared to be in default and retained in his custody such assets as in his opinion are sufficient to satisfy the aggregate of the amounts mentioned above. Excess amount, if any, is required to be realised by the ITO. The second proviso to Section 132(5) provides that if the assessee makes satisfactory arrangement for payment of the aforesaid amount than the ITO may release the assets. Section 132(6) provides that assets so retained shall be dealt with in accordance with the provisions of section 132B. Section 132B prescribes the manner in which the assets retained under section 132(5) may be applied. It is not necessary for us to mention all these situations and it would be sufficient to state that assets retained under section 132(5) can be applied to satisfy the existing liability as mentioned in clause (iii) of section 132(5) and the amount of liability determined on completion of regular assessment or re-assessment relevant to the previous year to which the income referred to in clause (1) of section 132(5) relates (inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedure for dealing with the seized assets, it has to be held that the seized cash did not amount to payment of advance tax automatically either on the date of seizure or any other date prior to the date of order under section 132(5). 12. Now the next question is whether it can be said that liability to pay advance tax in the present case stood discharged on the date of order under section 132(5) as held by the CIT(A). In our opinion, the answer is in affirmative. Section 132B provides that retained assets under section 132(5) can be applied in discharge of the following liabilities: (i) The amount of existing liability referred to in clause (iii) of section 132(5); (ii) The amount of liability determined on completion of assessment or re-assessment of past years to which income referred to in clause (i) of the above section including interest payable or penalty imposable; (iii) The amount in respect of which the assessee is in default or deemed to be in default. The contention of the assessee's counsel that assessee is deemed to be in default by virtue of section 218 cannot be accepted. Section 218 speaks of failure to pay the advance tax as required under sub-sections(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad informed the department that he will pay the tax either by raising loan against the seized jewellery or by selling the same. In another letter dated17-12-1990, he gave unqualified proposal to the department to sell the jewellery and appropriate the proceeds towards the advance tax. On the basis of those facts the Tribunal came to the conclusion that advance tax could be said to have been paid only on17-12-1990when unqualified offer was made and not when the vague letter was issued on14-9-1988. This decision rather goes against the assessee since the date of payment related to the date when a specific request was made by the assessee. 14. The view which we have taken is rather fortified by the decision of Hon'ble MP High Court in the case of Ramjilal Jagannath wherein it has been held that the seized amount cannot be adjusted towards advance tax payment even at the request of the assessee. We are only referring this decision for the preposition that there is no automatic or deemed payment of advance tax on account of the seizure of cash itself. The issue whether seized cash can be adjusted against advance tax payment at the request of assessee has been kept open by us for some ..... X X X X Extracts X X X X X X X X Extracts X X X X
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