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TMI Blog2010 (7) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... . T. A. No. 333 (ASR)/96 on November 29, 2002, for the assessment year 1994-95, proposing to raise the following substantial question of law : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in upholding the orders of the Commissioner of Income-tax (Appeals) in deleting the interest charged under sections 234B and 234C on the ground that the assessee could not be held liable for such interest on the income surrendered under section 132(4) during the course of search and seizure operation conducted after the close of the financial year ?" The assessee is engaged in the business of trading of cloth and filed return for the assessment year 1994-95 on October 28, 1994, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of payment of advance tax. The finding of the Tribunal is as under : "After considering the rival submissions and going through the material available on the record, it appears that in the instant cases, the assessees had requested soon after the search that whatever tax was due on the income surrendered be adjusted out of the amounts seized from them. Therefore, while filing the returns, the assessees treated the entire cash seized as tax paid by them. It is not disputed at any stage that the assessees requested the Department on May 30, 1994, after the search and seizure operations to adjust a sum of Rs. 42 lakhs seized from this group of cases towards the likely demands arising in view of the surrender made under section 132 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is liable to pay interest under section 234B of the Act on the amount of income assessed under section 143(1) or 143(3) of the Act and not on the basis of income declared in the return by the assessee. The relevant observations reads as under (page 152) : Rs. 9. It is no doubt true that prior to the amendment brought by the Finance Act, 2001, which has been made effective retrospectively from April 1, 1989, the interest under section 234B of the Act was chargeable with reference to the total income as had been declared by the assessee in its return and not on the assessed income. Explanation 1 to section 234B(1) of the Act was amended by the Finance Act, 2001. It reads thus : "Explanation 1.- In this section, `assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is liable to pay interest on the returned income at the rate specified therein for the period for which advance tax has been deferred. In view of the above, though the assessee was entitled to benefit of payment out of the seized cash from the date of his application the assessee was liable to pay interest under section 234B of the Act on the tax liability determined on the income assessed by the Assessing Officer. Similarly the assessee is liable to pay interest under section 234C of the Act in terms thereof and shall be entitled to benefit of payment out of the seized cash from the date of making application for adjustment of the seized cash towards tax liability. The view to the contrary taken by the Tribunal cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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