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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 ..... n section 132B of the Act. Against the aforesaid decision, the appellant is in further appeal before us. 3. Before us, learned counsel for the appellant submitted that the cash seized during the course of search & seizure operation at the business premises of the assessee was liable to be adjusted against the advance tax liability payable by the assessee. The learned counsel submitted that during the course of search & seizure operation on 27-10-2006 at the business premises of the assessee firm and the residence of its partners, apart from other assets, cash amounting to Rs. 30 lakhs was seized. A statement under section 132(4) of the Act was also recorded of the partner in which an income of Rs. 70 lakhs was surrendered subject to no penalty and prosecution. A reference has been made to assessee's communication dated 1-12-2006 addressed to the Additional Director (Investigation), Panchkula stating that part of the seized cash be adjusted against the tax liability on the income surrendered and the balance of the seized cash be returned. Further, on 15-3-2007, assessee again requested the Assistant Commissioner of Income-tax, Central Circle, Chandigarh to treat a sum of Rs. 23,20, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch & seizure action under section 132 of the Act took place at the business premises of the assessee firm and the residences of the partner on 27-10-2006. In the course of such operation, certain seizures were made which included Rs. 30 lakhs in cash. The assessee also surrendered an income of Rs. 70 lakhs on account of diamond stock, cash in hand and renovation of a house etc. Consequently, a return of income declaring income of Rs. 84,21,120 was filed on 2-11-2007 for assessment year 2007-08, which inter alia included the surrendered income. In the assessment finalized under section 143(3) read with section 153A of the Act on 30-10-2008, the returned income has been accepted by the Assessing Officer. The only point agitated in appeal by the assessee is that in this assessment, it has been wrongly charged interests under sections 234A, 234B and 234C of the Act. Sections 234B and 234C of the Act prescribe for levy of interest for defaults and deferment in payment of advance tax respectively. As per the assessee, the seized cash of Rs. 30 lakhs was liable to be adjusted against advance tax liability for the assessment year 2007-08. The liability for payment of advance tax is governe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is in default or is deemed to be in default, may be recovered out of such assets:" 8. Quite clearly, it prescribes that the assets seized under section 132 can be adjusted (a) against the amount of any existing liability under this Act; (b) against the amount of liability determined on completion of assessment under section 153A; (c) against the amount of liability determined on completion of assessment under Chapter XIV-B for the block period; and (d) against any penalty levied or interest payable in connection with such assessment. In other words, section 132B(1)(i) of the Act empowers the Assessing Officer to recover the prescribed liabilities out of the assets seized under section 132 of the Act. As per the CIT (Appeals) and which has been supported by learned DR, the liability towards advance tax does not form a part of the expression 'existing liability' appearing in section 132B(1)(i) of the Act. In our considered opinion, even liability to pay advance tax is per the statutory provisions and we find no plausible reason to ascribe a restricted meaning to the expression 'existing liability' appearing in section 132B(1)(i) of the Act, as being contended by the Revenue. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty' used in section 132B(1)(i) in the facts and circumstances of the case. The reliance pleaded by the CIT (Appeals) on the judgment of the Hon'ble Madhya Pradesh High Court in the case of Ramjilal Jagannath v. Asstt. CIT [2000] 241 ITR 758 is quite misplaced. As per the Revenue, in terms of the said judgment, the seized cash cannot be adjusted towards advance tax liability. We have carefully perused the said judgment and find that the same does not prohibit adjustment of seized assets towards liability to pay advance tax. In any case, we find that judgment of the Hon'ble Madhya Pradesh High Court is relevant in a situation when section 132(5) was on the Statute, which has since been deleted by the Finance Act, 2002 with effect from 1-6-2002. Section 132(5) of the Act required the Assessing Officer to make an enquiry and thereafter make an order to deal with the seized assets. Section 132(5) of the Act authorizes the Assessing Officer to retain in his custody such assets as in his opinion were sufficient to satisfy the aggregate amounts referred to in clauses (ii), (iia) and (iii ) of section 132(5) and obligated him to release the remaining seized assets. In this background, the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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