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TMI Blog2017 (5) TMI 1423X X X X Extracts X X X X X X X X Extracts X X X X ..... not prohibit utilization of amounts seized during the course of search towards the advance tax liability. Provision of Explanation 2 to Section 132 (B) (4) which excludes advance tax from the ambit of existing liability is applicable from 1st June 2013 and not applicable to the assessment years involved in this appeal. Thus we find that assessee was entitled to adjustment of cash seized and offered for taxation towards its liability for taxes including advance tax. Hence in our considered opinion the authorities below have erred in charging interest u/s. 234 B and 234 C on the facts of the circumstances of the case. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2.28 crores is as under: Assessment Year Offer of Income Tax Liability 2010-11 1,70,00,000 56,36,360 2009-10 25,00,000 9,75,000 2008-09 20,00,000 8,57,000 2007-08 13,00,000 6,35,000 2,28,00,000 81,03,360 The appellant based on the offer made of the case seized, had requested for adjustment of seized cash against his tax liability arising on account of the offer of income for the above years vide letter dated 29.07.2010 to ADIT (Inv) Unit IX(2), Mumbai. Subsequently, on 18.11.2011, while filing the Returns in response to notice u/s. 153A, the appellant had also requested for adjustment of seized cash against his tax liability arising on account of the offer of income for the above years vide letter dated 18.11.2011 to ADIT, Central Range 10, Mumbai as under. The said letter dated 18.11.2011 was also filed with Addl. CIT, Central Range 2 & N.Venkatanathan Commission of Income Tax, Central-1. Copies of the above said two letter were enclosed for ready reference. The details being Assessment Year Offer of Income Tax Liability 2010-11 1,70,00,000 56,36,360 2009-10 25,00,000 9,75,000 2008-09 20,00,000 8,57,000 2007-08 13,00,000 6,35,000 2006-07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. First of all the question of any existing tax liability cannot arise till a return is filed. The Self Assessment Tax u/s. 140A cannot arise until return of income is filed. After a return is filed, if the return is processed u/s. 143(1), and demand notice is issued, then only liability will become due and liability arise. The Explanation 1 to section 234B clearly lays down that assessed tax means the tax on total income determined u/s. 143(1). This is in contrast to the provision as existed prior to 1.04.1989. As per explanation 2 to section 132B, the term „existing liability‟ does not include advance tax payable. In the N.Venkatanathan case of Shri Ramji Lal jannnath v ACIT (2000) 241 ITR 758 (MP) it was held that the amount seized under section 132 cannot be dealt with unless an order is made by the ITO either under section 132(5) or the money is applied or appropriated in accordance with section 1328. In the present case there was no existing liability. Secondly, In my view, the assessing officer cannot adjust the cash seized towards tax liability till he comes to the conclusion that the cash seized belongs to the appellant. As per the earlier provisions before 01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as requested to adjust the cash seized against the assessee's liability towards tax the authorities below have erred a not adjusting the cash seized against the tax liability including of tax liability. In this regard we may gainfully refer to provisions of Section 132B as under:- 57. For section 132B of the Income-tax Act, the following section shall be substituted with effect from the 1st day of June, 2002,- N.Venkatanathan '132B. Application of seized or requisitioned assets.- (1) The assets seized under section 132 or requisitioned under section 132A 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 Chapter XIV-B for the block period (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is deemed to be in default, may be recovered out of such assets: Provided that where the nature and sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assets sold towards the discharge of the existing liability referred to in clause (i) of sub-section (1), exceeds the aggregate of the amount required to meet the liabilities referred to in clause (i) of sub-section (1) of this section. (b) Such interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment under Chapter XIV-B. Explanation.-In this section,- (i ) "block period" shall have the meaning assigned to it in clause (a) of section 158B; (ii ) "execution of an authorisation for search or requisition" shall have the same meaning as assigned to it in Explanation 2 to section 158BE.'. In this regard we note that Hon'ble jurisdictional High Court in the case of CIT vs. Shri Jyotindra B. Mody in order 21.09.2011 had held that once assessee offers to tax undisclosed income including the amounts seized during search, the liability to pay advance tax in respect of that amount arises even before completion of the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planation 2 to Section 132B, as Finance Act, 2013 clearly states is effective from 1st June, 2013. When the law so specifically states, there is no scope of holding that it is retrospective in effect. This provision restricts the scope of adjustment of seized cash, and, therefore, is to be treated as advance to the assessee. As held by Hon‟ble Supreme Court in the case of CIT Vs. Vatika Township Private Limited, (2014)367 ITR 466 (SC), the legislation which N.Venkatanathan modifies accrued rights or which imposes obligations or impose new duties or attach a new disability have to be treated as prospective, unless the legislative intent is clearly to give the enactment a retrospective effect. In view of these discussions and consistent with the stand taken by the co-ordinate bench, we approve the reasoning adopted by the CIT(A). Accordingly we approve the order of the CIT(A) and decline to interfere in the matter." In view of the above, we do not find any ground to interfere with the impugned order dated 31.08.2015, Annexure A.3, passed by the Tribunal. The judgment of learned Single Bench of Madhya Pradesh High Court in Ramjilal Jagannath‟s case (supra) does not come ..... X X X X Extracts X X X X X X X X Extracts X X X X
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