Case Law Details
As per provisions of section 132B of the Act the assets seized u/s 132 or requisitioned u/s 132A may be adjusted towards the amount of any “existing liability”. The Explanation 2 attach to section 132B of the Act clarifies that for removal of doubts it is hereby declared that the “existing liability” does not include “advance tax” payable in accordance with the provisions of part C of Chapter XVII of the Act.
The ld. Counsel for the assessee submitted that Explanation 2 to section 132B is of prospective effect because it was inserted by the Finance Act, 2013 w.e.f. 1.6.2013.
The ld. DR contended that the provision of Explanation 2 is a clarificatory which was inserted to clarify the provision of section 132B and its legislative intention and to remove doubts therefore, the same is having retrospective effect even if, the same is stated to be applicable from a particular date. Ld. DR contended that Explanation 2 to section 132B is applicable with retrospective effect from 1.6.2002 which cannot be given prospective effect.
On careful consideration of above contention of both the sides on the applicability of provision Explanation 2 to section 132B of the Act. We take respectful guidance from the decision of Hon’ble Apex Court in the case of CIT vs. Shelly Products and Ors. (Supra) and CIT vs. Kanji Shivji and Co. (Supra) wherein it was held that the clarificatory and declaratory provisions which were inserted to clarify the law so as to remove doubts are of retrospective effect even if, the same provisions are stated to be applicable from a particular assessment year or date.
Turning to the facts and circumstances of the present case, we observe that in a Memorandum of Explanation the provisions of Finance Act, 2013 it has been stated that the amendment for insertion of Explanation-1 and Explantion-2 to the provisions of section 132B of the Act are propose to amend the aforesaid section was as to clarify the existing liability does not include advance tax payable in accordance with the provisions of part ‘C’ of Chapter XVII of the Act. Therefore, the Explanation 2 to section 132B of the Act is a clarificatory provision which was inserted to clarify the intention of the legislature that the “existing liability” does not include advance tax payable in accordance with the provisions of Part ‘C’ of Chapter XVII of the Act.
We are inclined to accept the contention of the ld. DR that the Explanation 2 attached to section 132B of the Act, is a clarificatory provision which is of retrospective effect, even if, the same was stated to be applicable from a particular We also hold that Explanation 2 to section 132B of the Ac t is retrospectively effective from the date of insertion of provision of section 132B of the Act w.e.f. 1.6.2002.
On the basis of foregoing discussion, we reach to a legal conclusion that the assets or cash seized u/s 132 of the Act is adjustable against the amount of any “existing liability” under the Act which does not include “advance tax” payable in accordance with the provisions of Part ‘C’ of Chapter XVII of the Act. At the same time, we take cognisance of the provisions of section 208 which stipulates the conditions of liability to pay “advance tax”. Section 208 of the Act reads thus:
“Conditions of liability to pay advance tax.
Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is [ten thousand] rupees or more.]”
In the present case the search and seizure operation was carried out on the premises of the assessee on 29.04.2008 during the financial year 2008-09 which was related to A.Y. 2009-10 and obviously as per provisions of section 208 of the Act the advance tax shall be payable during the financial year in every case where the amount of such tax payable by the assessee during the year, as computed in accordance with the provisions of Chapter XVII of the Act, is Rs.10,000/- or more.
In view of the above provision of section 208 of the Act, the amount of cash seized could not be adjusted as advance tax for the A.Y. 2008-09.
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