CA Prarthana Jalan
Hon,ble ITAT Agra has held in the case of ACIT Vs. Sunil C Gupta that Cash seized to be adjusted against advance tax liability. Explanation-2 to Section 132B of the Act enacted with effect from 1st June 2013. Hon’ble ITAT has upheld the observations of ld CIT(A) which are as under –
I have carefully considered the assessment order as well as the written submission of the appellant, Remand report and the rejoinder on this issue remand report and the rejoinder. In this case Search and Seizure Operation was carried out in the premises of Shri Sunil Chand Gupta on 10.03.2010 wherein cash amounting to Rs.4,31,36,000/- was seized from the residence and locker and was deposited by the department in the PD account on 10.03.2010 and 19.03.2010. During the course of search the assessee’s statement was recorded u/s 134 of the I.T. Act wherein the assessee offered to pay tax on an income of Rs.10 crore for the F.Y. 2009-2010. The estimated tax liability on an income of Rs.10 crore worked out to about Rs.3 crore approx. Since the liability to pay tax had arisen and the cash being seized by the department, the appellant requested the department to adjust Rs.3 crore out of the Rs.4,31,36,000/- seized and deposited in the PD account. It is seen that the assessee made a written request on 29.03.2010 to the Chief Commissioner of Income Tax which was duly received and also to the Additional Director of Income Tax Investigation, Agra. It also seen that similar request for adjustment letters were written to the DCIT Circle-1, Agra on 29.03.2010 which was duly received in the office on the same day. Further, another letter was written to the CIT-1 on 21.03.2010. Letter dated 05/07/2010 was also written to the DCIT Central Circle stating that return of income for A.Y. 2010-11 had been filed on 30/6/10 with tax payable of Rs.2,92,25,240/- and therefore requesting the AO once again for adjustment of tax liability with the cash lying in the PD account. In the circumstances, the assessee had done all it could do so as to ensure that cash lying in the PD account would be adjusted towards the advance tax liability. However, it seen that no action was taken on the assessee’s petition by any of the authorities before whom the assessee has filed the petition. To my mind, it is an apparent injustice to the appellant to hold on the cash belonging in the assessee in the Government Account and at the same time charge interest for non-payment of advance tax on the due dates. It is clear that the appellant’s application for adjustment has been submitted before the various authorities, the seized cash should have been either been adjusted as requested by the assessee to meet the advance tax obligations or the Assessee should have been informed the reasons why the request made by the assessee cannot be acceded to. The Hon’ble Bombay High Court in the case of CIT Vs. Shri Jyotindra B. Modi in order dated 21.09.2011 has clearly held that once the assessee officers to tax the undisclosed income including the amount seized during search, than the liability to pay advance tax in respect of that amount arises even before completion of the assessment. The Hon’ble High Court further held that section 132B(1) of the Act, thus not prohibit the utilization of amount seized during the course of search towards the advance tax liability. The Hon’ble High Court of Punjab & Haryana in the case of CIT Vs. Ashok Kumar reported in 334 ITR 355 has also held on similar facts that the assessee was entitled to adjustment of seized cash against advance tax liability and therefore, no interest could be charged u/s 234A & 234B in the event of the department no responding to assessee’s request for adjustment of cash seized against advance tax liability. In view of the following judgments, the action of the AO in charging interest under 234A, 234B & 234C is not justified and hence, directed to be deleted.