Kapoor Industries Limited Vs CPC (ITAT Delhi)
Self-assessment tax is an “existing liability” under Section 132B; Seized cash can be adjusted toward it- Restriction under Explanation 2 applies only to advance tax, not to self-assessment tax.
Assessee faced a tax demand of ₹3.74 crore raised by CPC, Bengaluru, during processing of return u/s 143(1) for A.Y. 2024–25. CPC had denied credit for ₹17.66 crore claimed as payment of self-assessment tax, representing cash seized u/s 132 during a search from the director’s locker.
CIT(A) upheld CPC’s view, holding that seized cash cannot be adjusted toward self-assessment tax, as Section 132B allows adjustment only against “existing liabilities” & excludes advance tax.
Before ITAT, Assessee argued that the seized cash was duly reflected in its books as business receipts, & the request for adjustment dated 30.09.2024 was valid since self-assessment tax is an existing liability, not advance tax. The Department never disputed ownership of the seized cash.
Tribunal agreed with the Assessee, observing that Explanation 2 to Section 132B restricts adjustment only against advance tax, not self-assessment tax u/s 140A. The seized cash, therefore, could be legally appropriated toward tax dues already crystallized.
ITAT directed the adjustment of seized cash of ₹17.66 crore against self-assessment tax liability u/s 132B & deleted the demand of ₹3.74 crore.
