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TMI Blog2024 (2) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be, was executed. In the present cases last date of search action concluded on 15-05-2010 and the outer time period of 120 days expired on 15-09-2010, but the Ld AO has not acted upon the Application for release of the seized goods and thereby retained the seized Cash and FDRs beyond the period of 120 days prescribed in the 2nd Proviso to section 132B(1)(i) of the Act. Coming to the main section 132B(1) of the Act, which prescribes that the assets seized u/s. 132 can be adjusted against any existing liability as per IT, WT or the amount of liability determined on the completion of regular assessment or reassessment including any penalty levied or interest payable in connection with such assessment or reassessment. As per this sub- section, AO ought to have adjusted against the tax liability of Rs. 6,39,620/- while framing the regular assessment as against the seized Cash of Rs. 5,39,000/- and FDRs of Rs. 99,99,999/-. In that event also, the assessee is entitled for release of surplus FDRs seized by the Department as per section 132B [3] of the Act and therefore there is no question of levy of interest u/s 234B and C of the Act. Thus in our considered view, the Ld AO mise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as the Act ) relating to the Assessment Year 2010-11. The Appellants/Assessees herein are all Partners of a Firm and identical issue is involved in these appeals, therefore the same are disposed off by this consolidated order. 2. ITA No.526/RJT/2012 filed by Sri Nune Trimurtulu Rayudu is taken as the lead case. Brief facts of the case is that a search and seizure action under section 132 of the Act was conducted at the premises of the appellants on 18.03.2010. During the course of search, Cash and Fixed Deposit Receipts [FDRs] were seized, the details are as under: S. No. Name of the Appellants Cash (Rs.) FDRs (Rs.) 1 Shri Nune Trimurtulu Rayudu 5,39,000/- 99,99,999/- 2 Smt. Binaben M. Patel -- 2,00,00,000/- 3 Shri Madhubhai Bhagwanbhai Patel -- 1,20,00,000/- 4 Smt. Dinaz Adil Sethna -- 1,10,12,221/- 5 Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed after obtaining approval of the Addl. CIT, Central Range, Baroda, which was conveyed vide his approval No. 203/121 conveyed vide letter No. BRD/AddI. CIT/CR/ Approval/10-11 dated 11.3.2011. (Demand Notice under section 156 of the Act) Tax 6,20,990 Rebate 0 6,20,990 SC 0 Edu. Cess 18,630 6,39,620 234A 0 234B 35,294 234C 10,882 234D 0 244A with 0 6,85,796 Tax paid 3,45,505 Tax payable 3,40,291 3. Aggrieved against the assessment orders, the assessees filed appeals before Commissioner of Income Tax [Appeals]. The Ld CIT[A] by his common appellate order held that the appellants are entitled to the adjustment of seized Cash/FDRs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the fact that self-assessment tax liability is a continuing liability which can be paid from 1st of April of the relevant AY upto the date of filing of return of income. Had the AO released the said Cash/FDRs seized after adjustment with the tax liability in terms of section 132B of the Act during the prescribed period, the appellants could have utilized the Cash/FDRs for the purpose of payment of self-assessment tax liability. The non-adjustment of seized Cash/ FDRs against the self-assessment tax liability of the appellants and charging of interest u/s 234B of the Act for non-payment of self-assessment tax liability when the corresponding amount of seized Cash/FDRs is retained by the Department beyond the period of 120 days is simply against the principles of natural justice. In the present cases, it is submitted that period of 120 days from the last day of search concluded ends on 15-09-2010 considering the fact that last date of search concluded is on 15-05-2010. 7.5 In view of the above, I am of the considered opinion that the appellants are entitled to the adjustment of seized Cash/FDRs against the self-assessment tax liability from the said date on which the said perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returned which is based as per the books of accounts maintained by the appellant assessee. There is no addition whatsoever on account of the UNDISCLOSED/ UNACCOUNTED INCOME' detected as a result of search or seizure of the books of accounts and documents. c) It is therefore, prayed that the assessment order under appeal passed without sanction of law deserves to be quashed. 2. The Ld. CIT(A) IV had grossly erred in law and facts in upholding the action of the AO in charging interest u/s 234B for the period up to 15/09/2010 in utter disregard to the fact that the appellant was prevented from paying the Advance Tax by the Income Tax Department which had ILLEGALLY seized the DISCLOSED FDR's of Rs. 99,99,999/- during Search which was supposed to be used for payment of taxes, and the assessee immediately requested the department for the release and/or adjustment of the same towards the payment of Income tax. This request for adjusting the FDR towards income tax liability for the year under consideration was never expressly rejected by the department. The AO adjusted the FDR's on completion of the assessment and after issuing of demand notice u/s 156, by charging inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 18.03.2010 cash of Rs. 5,39,000/- and FDRs of Rs. 99,99,999/- were seized by the department. The assessee vide application dated 30.04.2010 requested to release or adjust the Cash and FDRs against the advance tax payable by the assessee. The assessee also sent reminders on 17.08.2010 and 09.10.2010. However the Assessing Officer has not acted upon the request to adjust the Cash and FDRs against the tax liability. 6.1. Ld Senior Counsel submitted that the assessment pertaining to the Assessment Year 2010-11 was completed based on the Returned Income which is accepted as the Assessed Income and no addition or disallowance made in the Assessment orders. In so far as the issue as to adjustment of seized asset against existing liability and levy of interest u/s 234B is concerned, the same is covered in favor of the assessee by followings judgements: (i) Shri Ram S. Sarda vs. DCIT-(2012) 17 taxmann.com 23 (Rajkot); (ii) Kanishka Prints (P.) Ltd. vs. ACIT-(2013) 34 taxmann.com 307 (Ahd); (iii) Marble Centre International P. Ltd. vs. ACIT (2020) 117 taxmann.com 208 (Karnataka); (iv) Happy Home Developers vs. ACIT-(2017) 87 taxmann.com 10 (Pune); (v) Nikka Mal Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assets seized u/s. 132 can be adjusted against any existing liability as per IT, WT or the amount of liability determined on the completion of regular assessment or reassessment including any penalty levied or interest payable in connection with such assessment or reassessment. Let us deal with this main section little later and first consider the provisions attached with the section. 9.1. The first proviso to section 132B(1)(i) enables the assessee to make an application within 30 days from the end of the month in which the asset was seized. In these cases Search and Seizure action made on 18-03-2010 and Application for release/adjustment of Cash and FDRs are made 28-04-2010 which is well within the prescribed period 30 days from the end of the month in which the asset was seized. 9.2. First proviso further provides for release of the assets, the assessee is required to explain the nature and source of acquisition of such assets to the satisfaction of the AO. On such satisfaction and with prior approval of the Competent Authority, the AO is empowered to release the assets to the person from whose custody the assets were seized. It is undisputed fact that the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeals filed by the assessees are allowed for statistical purpose. 11. In ITA Nos. 527 to 531/Rjt/2012 filed by the assessees, wherein identical issue is involved, therefore the decision rendered in ITA No. 526/Rjt/2012 will be squarely applicable to the present appeals. Therefore the appeals filed by the assessees are allowed for statistical purposes. ITA Nos. 135 to 138/RJT/2015 12. After the first round of litigation and order giving effect to CIT[A] Order on 13-08-2012, the assessee filed rectification applications vide letter dated 28-09-2012 and 02-09-2012 that the following mistakes apparent from record: (i) Interest u/s. 244A of the IT Act has not been granted on the excess payment as per the provisions of section 244A of the IT Act. (ii) Interest u/s 132B(4) of the IT Act has not been granted. 13. The Ld AO considered the above rectification applications and rejected the same by his order dated 08-10-2013 observing as follows: 2. So far as granting of interest u/s. 244A of the IT Act is concerned the provisions of section 244A(1)(b) are very clear in this regard. In the explanation to section 244A(1) of the IT Act it is clearly mentioned that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate order held that the by mere seizure of the FDs, the appellant has not suffered any pecuniary loss by way of loss of interest, therefore, no interest u/s. 132B(4) can be granted to the assessee by observing as follows: 4.4 I have carefully considered the contention of the appellant. The only issue required to be decided upon is whether the appellant is entitled to interest u/s. 132B(4) on the unutilised seized FDs after 120 days. It would be very relevant to reproduce s.132B(4) of the I. T. Act, 1961 before proceeding further. Section 132B(4) reads as under.- (4) (a) The Central Government shall pay simple interest at the rate of [one- half per cent for every month or part of a month] on the amount by which the aggregate amount of money seized under section 132 or requisitioned under section 132A, as reduced by the amount of money, if any, released under the first proviso to clause (i) of sub-section (1), and of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in clause (1) 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 sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are capable of being assessed in terms of cash, which can alone be covered for the purpose of payment of interest. The shares held by the petitioner which were seized may form part of capital assets of the business in his day-to-day business, but that will become money only if the amount contemplated under the shares is encashed and that encashment from the shares requires the process of sale to ascertain their value and, in my considered view, it cannot be stated to be either money or assets which can be reduced into money. 4.6 From the above decision, it is clear that money is equated with hard cash which is seized. All the decisions relied upon by the appellant are also in respect of cases where cash was seized and not utilised. In none of the cases referred to by the appellant, the FDs have not been seized. The question which now requires to be answered is that whether an FD is an asset which can be reduced into money as held by the Hon'ble Madras High Court. While this may be generally true, the situation in case of FD which has been seized is quite different. If the FD was prematurely encashed and the proceeds deposited in the PD account of the CIT, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey further erred in grossly ignoring various submission, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. The action of the lower authorities is clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 16. Ld. Senior Counsel Shri Tushar Hemani appearing for the assessee submitted that since FDRs were seized during the course of search and were released after completion of assessment, the assessees are eligible for interest u/s. 132B[4] of the Act. The Ld CIT[A] denied the benefit of interest u/s. 132B[4] broadly on the count that section 132B[4][b] refers to money which does not include FDRs . Our attention was invited to section 132[1][iii] wherein also, FDRs are not specifically included, however Department treats FDRs as money for the purpose of seizure, then same view should be adopted for the purpose of granting interest u/s. 132B[4] of the Act. The Ld Counsel relied upon decision of the Delhi High Court in the case of Ajay Gupta -Vs- CIT reported in 297 ITR 125 [Del]. Thus pleaded that FDRs would fall within the ambit of money and resul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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