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TMI Blog2017 (6) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... m out of ₹ 70 lacs after making adjustments as permissible under sub section (1) of section 132B which will include the advance tax, interest under section 234C of the Act and the penalty under section 271AAA of the Act. - SPECIAL CIVIL APPLICATION NO. 18790 of 2014 - - - Dated:- 5-6-2017 - MR. AKIL KURESHI, AND MR. BIREN VAISHNAV, JJ For The Petitioner : Mr Manish J Shah, Sr. Advocate For The Respondent : Mr Manish Bhatt With Mrs Mauna M Bhatt, Sr. Advocate ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. This petition is filed by the assessee disputing the action of the Revenue in charging interest under sections 234A, 234B and 234C of the Income Tax Act, 1961 [hereinafter to be referred to as 'the Act'] and levying penalty under section 271AAA of the Act. The petitioner has also prayed for interest on delayed refund of the seized cash. These prayers of the petitioner arise in following background: 2. The petitioner is an individual. A search operation was carried out at the premises of the petitioner on 16.03.2012 during which, unaccounted cash of ₹ 70 lacs was found from the possession of the petitioner and seized b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the cash found may be treated as income u/s. 132(4) of the Act. 9. Please note that I am senor citizen and desired to avoid any undesired litigation in respect of tax matter. With this intention and with a view to purchase mental peace I am making this petition which may kindly be considered by your honour. I also request to appropriate the tax amount from the sum of ₹ 70 lacs cash seized, so that I may not be require to pay any interest under the provision of law for non-payment of advance tax. 3. The Assessing Officer did not accept the said request of the petitioner. In fact, there was no written communication from the Assessing Officer even rejecting the prayer. The petitioner, in the meantime, filed separate returns for the block period covered under the said search operation. For the assessment year 2012-13, during which such cash amount was seized, the petitioner filed the return of income on 20.08.2012 declaring total income of ₹ 70 lacs and tax liability on such income at ₹ 20,03,350/-. In such return itself, the petitioner sought adjustment of ₹ 70 lacs and claimed that the remaining amount of ₹ 49,22,530/- be refunded to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able articles or things found as a result of such search. It was in exercise of such powers that the Revenue authorities had seized unaccounted cash of ₹ 70 lacs from the possession of the petitioner. Section 132B of the Act pertains to application of seized or requisitioned assets. Sub section (1) of section 132B lays down the manner, in which, the assets seized under section 132 would be applied. As per clause (i) of sub section (1) of section 132B, such asset would be adjusted against the amount of existing liability under the Act or other Tax Act such as Wealth Tax etc and also the amount of liability determined on completion of the assessment under section 153A of the Act. Under sub section (4) of sub section 132B, the Central Government is required to pay interest at the prescribed rate on the seized amount or part there of which has been refunded later. 8. To complete recording of the statutory provision, we may note that Explanation 2 is added to section 132B by Finance Act of 2013 w.e.f. 01.06.2013 which reads as under: Explanation 2. For the removal of doubts, it is hereby declared that the existing liability does not include advance tax payable in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity became due. Therefore, it is not as if the assessees had any intention of shirking their advance tax liabilities. In similar circumstances, the Tribunal had taken the view that the adjustment of the cash recovered could be made against advance tax liability and the Revenue in the grounds of appeal has not disputed this. The orders passed by the Tribunal in this regard, which have been referred to in paragraph 9 of the impugned order, appear to have been accepted by the Revenue. 13.We may recall, the Explanation 2 to section 132B was introduced w.e.f. 01.06.2013. This explanation provides that for removal of doubts, it is declared that the existing liability does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII. Counsel for the Revenue, therefore, submitted that this explanation being clarificatory in nature, amendment should apply to pending cases as well. It is well settled principle that an amendment in the nature of a clarification could have retrospective operation. However, whether such amendment is clarificatory or declaratory as opposed to creating new rights and liabilities is always open to judicial interpretation. Mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority was in error in not permitting adjustment of the assessee's advance tax liability against the seized cash. Learned counsel Mr. Bhatt for the Revenue, however, drew our attention to the two decisions one of Delhi High Court in case of Commissioner of Income Tax, Central 1 vs. Shri Chand Gupta reported in [2015] 64 Taxmann.com 108 (Delhi) and another of Madhya Pradesh High Court in case of Ramjilal Jagannath and ors vs. Assistant Commissioner of Income Tax reported in 241 ITR 758 . The decision of Delhi High Court in case of Commissioner of Income Tax, Central 1 vs. Shri Chand Gupta of course is on this very issue and supports the Revenue's stand. In this judgement, the Court did not notice the earlier decision of the same High Court in case of Commissioner of Income Tax vs. K.K.Marketing (supra). The decision of Madhya Pradesh High Court was rendered by the learned Single Judge and has also been noticed our High Court decision in case of Kamlesh Bhogilal Kandoi M/s. Bhogilal Mulchand Kandoi vs. A.C.I.T (s upra). Thus, the issue is debatable and a contrary view is imminently possible. Nevertheless, when we have the judgement of our High Court, we wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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