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TMI Blog2016 (5) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... 25-5-2016 - Vikas Awasthy ( Judicial Member ) And Pradip Kumar Kedia ( Accountant Member) For the Appellant : Pooja Rastogi For the Respondent : Suhas Bora ORDER Pradip Kumar Kedia ( Accountant Member) The captioned appeal filed by the Revenue is against the order of CIT(A)-II, Pune dated 28.07.2014 relating to assessment year 2004-05 passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. In this appeal, the Revenue has raised the following Grounds of Appeal :- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the interest levied u/s 234B and 234C of the I.T. Act by not appreciating the provisions of sections 132B of I.T. Act which clearly says that seized asset shall be adjusted against any existing liability . 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the interest levied u/s 234B and 234C of the I.T. Act by not appreciating the explanation 2 of section 132B of I.T. Act which clarifies that existing liability does not include advance tax payable. 3. The order of CIT(A) may be vacated and that of the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record point out to the fact that the search action on 21.01.2004 resulted in seizure of cash amounting to ₹ 76,00,000/- and the appellant vide letter dated 13.03.2004 requested the Assessing Officer to adjust the advance-tax liability for the A.Y. 2004-05 out of the said seized cash, however, the same has not been adjusted till the completion of assessment, which was accepted as per returned income as is evident from the order of assessment and demand raised by the Assessing Officer. The seized cash was available for adjustment against the tax liability and the request from the appellant had already been made to the Assessing Officer for its adjustments, the credit of which has not been given by the Assessing Officer. The aforesaid issue is seen to be covered by the decision of the Pune ITAT in the case of Lalit B. Kataria Vs DCIT (cited supra), wherein the Hon ble Tribunal has held as under: In the light of the above referred brief background and on hearing both the sides we have found that this issue now stood squarely covered by our own decision in the case of Shri Lodha Vijay Shantilal, ITA No. 80 81/PN/2008 for AY 2004-05 2005-06 order dated 16th April 2008. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the assessee exceeds the value of such seized assets. Though the AO has to wait for adjustment of seized assets till the finalization of the assessment, yet in the case of cash it cannot be said that the assessee had defaulted in payment of taxes when the amount had been retained by the Revenue Department. The cash seized by the search party that was required to be adjusted against the taxes due should be treated as advance tax for purposes of computation of interest under section 234A, 234B and 234C. It is the claim of the assessee that if the amount of ₹ 1,50,000/- is treated as advance tax, then no interest under s. 234A, 234B and 234C would be chargeable. This claim may be examined by the AO by treating the amount of ₹ 1,50,000/- as advance tax. For that purpose, the issue is remitted to the file of the AO to be decided afresh in accordance with law.' 4. Following the above decisions the grievance of the assessee is hereby allowed and the A.O. is directed to give the due credit of the cash seized during the course of search operation while calculating the interest u/s 234B 234C of I. T. Act. 3.2.1 In the case of Ram Sarda Vs DCIT (cited supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est is to be recovered from the assessee, may be under ss. 234A, 234B or 234C. Thus, the cash seized during the course of search is required to be adjusted against taxes due including advance tax for the purpose of computation of interest under ss. 234A, 234B and 234C. 3.2.2 In the case of CIT Vs Kesar Kimam Karyalaya (supra) it has been held by the Delhi High Court that the Tribunal having deleted the levy of interest u/s 234B and 234C holding the assessee's request for adjustment of seized cash against the advance-tax liability ought to have been allowed. 3.2.3 The Mumbai ITAT in the case of Sudhakar M. Shetty Vs ACIT (cited supra) has held as under: Whatever the amount has been seized by the Department that has to be treated against any pending demand including penalty and against the demand of the block period of which the assessment has to be completed. As per the amended provisions of law, now the AO is empowered to take into consideration the seized cash against various demands in view of the income detected during the course of search. As per the amended provisions of law, there is no requirement to seek any request from the assessee for adjustment. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... request for its appropriation towards advance tax liability was made by the assessee. We note that the assessee has made a specific request to adjust the cash seized towards advance tax liability prior to the due date of payment of advance tax liability. Therefore, we are of the opinion that the Revenue was under obligation to accede to the request and appropriate the cash seized against the advance tax liability. The cash seized and available at the disposal of the revenue was sufficient to cover the advance tax liability for the assessment year under consideration, therefore, no interest under section 234B 234C of the Act could be charged. We also find that the issue is no longer res-integra. We find that the identical issue has been decided in the fovour of the assessee by the Hon ble Delhi High Court in the case of Kesr Kimam Karyalaya (supra) and the Co-ordinate Bench of the ITAT in the case of Shri Lodha Vijay Shantilal (supra). Respectfully following the judicial precedents on the issue noted above, we find no infirmity in the order of CIT(A). 9. In the result, the appeal of the Revenue is dismissed. Order pronounced on this 25th day of May, 2016. - - TaxTMI - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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