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TMI Blog2010 (6) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 132B(1)( i ) in the facts and circumstances of the case. Therefore, we set aside the order of the CIT (A), and direct the AO to allow adjustment of seized cash against advance tax liability of the assessee as contended in the written communications dated 1-12-2006 and 15-3-2007 and thereafter recompute, if any, interest chargeable u/s 234B and 234C. In the result, appeal of the assessee is allowed. - MS. SUSHMA CHOWLA AND G.S. PANNU, JJ. O.P. Sharma for the Appellant. R.K. Meena for the Respondent. ORDER G.S. Pannu, Accountant Member. - This appeal by the assessee is directed against the order of the CIT (Appeals) dated 30-9-2009 pertaining to the assessment year 2007-08. 2. The only dispute raised by the assessee in this appeal relates to denying its liability to pay interest under sections 234A, 234B and 234C of the Income-tax Act, 1961 (in short the Act ). The assessment was finalized under section 143(3) read with section 153A of the Act. The primary cause of the dispute arises from the action of the Assessing Officer in denying adjustment of cash seized during search towards the advance tax liability of the assessee. The CIT (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to the charging of interest under section 234A of the Act, the learned counsel pointed out that the return of income was filed on 2-11-2007 whereas the last date for filing of return had been extended up to 15-11-2007 for the assessment year 2007-08. In this connection, a copy of the Notification No. F.225/147/2007-ITA-II(Pt.), dated 31-10-2007 was relied upon. It was submitted that no interest under section 234A is leviable under these circumstances. 5. On the other hand, learned DR has relied upon the orders of the lower authorities in support of the case of the Revenue. The learned DR has referred to the discussion made by the CIT (Appeals) in para 3.1 of his order wherein it is noted that there are divergent decisions of the Courts as regards the application of seized cash towards the advance tax liability. According to the learned DR, the CIT (Appeals) was justified in holding that the advance tax liability cannot be covered by the phrase existing liability as used in section 132B(1)( i ) of the Act and therefore, in the present case, the application of seized cash towards advance tax liability for the assessment year 2007-08 has been rightly declined by the lower aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e adjusted against advance tax liability for the assessment year 2007-08. Be that as it may, none of the aforesaid requests have been shown to have been rejected by the Department by way of any speaking order. 7. The moot question is as to whether the amount of cash seized under section 132 of the Act can be adjusted against advance tax liability of the assessee for the assessment year in question. In this regard, section 132B(1)( i ) of the Act prescribes the manner of application of seized or requisitioned assets. The relevant portion of section 132B reads as under : "132B. (1) The assets seized under section 132 or requisitioned under section 32A may be dealt with in the following manner, namely: ( i )the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the Gift-tax Act, 1958 (18 of 1958) and the Interest-tax Act, 1974 (45 of 1974), and the amount of the liability determined on completion of the assessment under section 153A and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 208 to 210 of the Act. Similarly, section 140A provides for payment of self-assessment tax on the basis of any return of income required to be filed by the assessee. The relevant provisions also prescribe the dates and the amount of tax required to be paid by an assessee. Therefore, the expression existing liability in section 132B(1)( i ) cannot be read to exclude a particular tax liability, if it can be shown to have existed on a particular date. If the liability to pay advance tax had arisen, it would certainly constitute a part of the existing liability used in section 132B(1)( i ) of the Act. 10. In our considered opinion, the doctrine of purposive construction has to prevail in this situation. In the present situation, it is evident that cash was seized from the assessee during search operation and, assessee requested the Department to adjust a part of such cash receipts against the liability of advance tax which arose on account of the income surrendered during the search operation. The Department does not deny possession of the cash since the time of search. Thus, we find no justification for the Revenue to interpret the expression existing liability in section 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no justification for the CIT (Appeals) to rely upon the order of the Madhya Pradesh High Court in the case of Ramjilal Jagannath ( supra ) and deny the claim of the assessee. 11. On the other hand, a Co-ordinate Bench of the Tribunal in the case of Sudhakar M. Shetty ( supra ) has clearly laid down that the Revenue is liable to adjust the seized amounts towards the liability of advance tax having regard to the provisions of section 132B of the Act. Before parting, we may refer to an observation made in the assessment order that the CBDT has purportedly clarified in its letter F. No. 286/15/2005-IT (Investigation-II), dated 13-7-2006 that the provisions of Income-tax Law do not permit application of the seized cash against advance tax liability of the assessee for the year in which search took place. In this regard it is to be noted that no such letter has been placed on record by the Revenue. In any case it is also not clear under which statutory powers, such a letter has been issued by the CBDT. Thus, in the absence of any details in this regard the observation of the Assessing Officer does not justify his stand. The action of the Assessing Officer is contrary to the law. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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