Case Law Details

Case Name : Shri M.J. Ramani Vs. The Deputy Commissioner of Income Tax (ITAT Bangalore)
Appeal Number : IT Appeal Nos. 383 & 384 (Bang.) of 2012
Date of Judgement/Order : 31/01/2013
Related Assessment Year : 2008- 09 & 2009- 10
Courts : All ITAT (4266) ITAT Bangalore (197)

ITAT BANGALORE BENCH ‘A’

M.J. Ramani

Versus

Deputy Commissioner of Income-tax

N. BARATHVAJA SANKAR, VICE-PRESIDENT
AND N.V. Vasudevan, JUDICIAL MEMBER

IT Appeal Nos. 383 & 384 (Bang.) of 2012
[ASSESSMENT YEARS 2008-09 & 2009-10]

Date of Pronouncement – 31.01.2013

ORDER

1. These are appeals by the assessee against the common order dated 03.10.2011 of the CIT(Appeals)-VI, Bangalore relating to assessment years 2008-09 & 2009-10.

2. The grounds of appeal raised by the assessee in both the appeals are identical. For the sake of easy reference, the grounds of appeal in ITA No. 383/Bang/2012 is given below:-

“1. On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) ought to have appreciated that the amount and also the Fixed Deposit seized at the time of search was more than adequate for appropriation towards tax on the income declared for the relevant year and the appellant having filed declaration to this effect vide letter date 31.10.2008 much anterior to the date of issuance of notice, the interest u/ss. 234A, 234B and 234C of the Act were not leviable in the section 153A proceedings.

2. On the facts the learned Commissioner (A) ought to have appreciated that the return for the relevant year became due u/s. 153A of the Act only after the service of the notice on 6th October 2009 and by the time the appellant’s application for appropriation of the seized amount being available there was no tax due in pursuance of the notice to visit the appellant with the levy of interest u/ss.234A, 234B and 234C of the Act and consequently he ought to have deleted the interest levied u/ss.234A, 234B and 234C of the Act in the assessment made u/s. 153A of the Act.

3. The learned Commissioner (A) ought to have followed the judgments cited by the appellant which supported the appellant’s case fully and refrained from upholding the part of the levy u/ss. 234A, 234B and 234C of the Act.

4. Without prejudice, the interest levied is excessive, arbitrary and unreasonable and ought to be reduced substantially.

5. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed.”

3. The facts giving rise to the present appeals by the assessee are as follows. The assessee is an individual. He belongs to the Venkatesha Education Society group of Bangalore. There was a search carried out by the revenue u/s. 132 of the Act on 16.09.2008 in the case of Venkatesha Education Society group as well as the assessee. In the course of search at the residence of the Assessee, cash amounting to Rs.33,22,000 and fixed deposits worth Rs.1,29,95,913 were found and seized by the Authorized Officer who conducted the search. On 31.10.2008, the assessee gave a letter to the Dy. Director of Income-tax (Investigation), Unit-II(1), Bangalore [“DDIT”for short], requesting him to foreclose the fixed deposits and adjust the proceeds towards the tax liability.

4. In view of the provisions of section 153A of the Act, notice for assessment years 2008-09 and 2009-10 were issued by the AO requiring the assessee to file a return of income on or before 05.11.2009. The assessee filed return of income for the A.Y. 2008-09 only on 29.04.2010. As far as A.Y. 2009-10 is concerned, it was not part of the block period and therefore return of income ought to have been filed by the assessee for that year on or before 31.07.2009, which is the due date as per the provisions of section 139(1) of the Act. The return of income for AY 09-10 was also filed only on 29.4.2010. The assessment u/s.153A of the Act for both the AYs were completed on 30.11.2010. The AO levied u/ss. 234A, 234B & 234C of the Act as follows:-

(Amount in Rs.)

Assessment Year

Income Tax

234A

234B

234C

2008-09

44,20,459

8,84,080

14,14,528

1,69,605

2009-10

17,21,894

1,07,712

2,39,360

40,456

Total

61,42,353

9,91,792

16,53,888

2,10,061

5. The assessee is aggrieved by the determination of interest liability as aforesaid by the AO.

6. Before the CIT(Appeals), the assessee submitted that the total tax liability of the assessee for both the aforesaid assessment years was Rs.61,42,353 whereas cash and fixed deposits seized was to the tune of Rs.1,63,17,963 (33,22,000 + 1,29,95,913). The assessee further pointed out that the assessee gave a letter for foreclosure of fixed deposits and application of the seized cash to the taxes due for the A.Ys. 2008-09 & 2009-10 by letter dated 31.10.2010. It was submitted that as on 31.10.2010, taxes should be deemed to have been paid by the assessee for the A.Ys 2008-09 & 2009-10. It was also pointed out that for A.Y. 2008-09, there was an existing liability u/s. 140A of the Act as on 31.10.2009 and for A.Y. 2009-10 on 31.10.2010 there was an existing liability towards advance tax. The assessee submitted that since there was an existing tax liability, the adjustment of seized cash and fixed deposits prayed for by the assessee should be considered and due credit given while working out the liability for interest u/s. 234A, 234B & 234C of the Act. In this regard, the assessee placed reliance on the decision of the Honorable Supreme Court in the case of CIT v. Pranoy Roy [2009] 309 ITR 231; Sri Raghavendra Traders v. Asstt. CIT (ITA No. 3917/2005 of the Hon’ble High Court of Karnataka) and the decision of the Bangalore Bench of the Tribunal in the case of Asstt. CIT v. R.V. Raibagi & Co. (ITA No. 229/Bang/1990). The assessee pleaded that interest u/ss. 234A, 234B & 234C is not a penalty and was only compensatory, therefore to the extent the money of the assessee was lying with the department, the same has to be considered as paid while determining the taxes due and thereafter only on the remaining sum after such set off, interest should be levied.

7. The CIT(Appeals) in the course of hearing brought to the notice of the assessee the decision of the ITAT Bangalore Bench in the case of R.P.G. Marbles (P.) Ltd. v. Asstt. CIT in ITA No.1015/Bang/2010 dated30-06-2011,wherein the Tribunal after making a reference to the provisions of section 132B of the Act, observed that adjustment of seized cash is possible only when there is an existing liability under the Act. The CIT(A) also referred to another decision of the Bangalore Bench of the Tribunal in the case of Late Shri Bhanwarilal Tainwala v. Dy CIT (ITA Nos. 418 to 424/Bang/2010 dated 22.12.2010),wherein a view has been expressed that credit for the assets seized has to be given with effect from the date of filing the letter for adjustment of taxes. The CIT(A) thereafter held as follows:-

“5. The case law cited by the appellant being M/s. Raghavendra Traders, Santhepet, Hassan v. ACIT, CC, Mysore in ITA No.3197 of 2005 dated 20.07.2011 is regarding the interest charged u/s 158BFA(1) and is not about interest u/ss 234A, 234B & 234C, though some of the observations of the Honorable jurisdictional High Court in para 10, page 12 of the Order are relevant for interest 234 A, 234B & 234C. In the appellant’s case, aftermath of search in their case, the appellant had given a letter dated 31.10.2008 to the DDIT(Inv.), Unit II(1), stating that the FDs had been made out of their unaccounted income and had given their consent to seize the money foreclosing the FDRs and had also requested to adjust the same against their tax liabilities for the respective assessment years. This letter was more general in nature and through this letter, the appellant had consented for fore-closure of FDs and for seizure of the money and for adjustment against the tax liabilities of respective years. However, actual tax liabilities were not worked out nor the returns were filed determining the liability and for adjustment of specific amount. In this context, it is relevant to quote the Honorable ITAT’s Order in RPG Marble Pvt. Ltd. v. ACIT, Central Circle 1(2), case, wherein the Honorable Jurisdictional Tribunal ‘A’ Bench, in ITA Nos. l015/Bang/2010 dated 30.06.2011, had held as under:-

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“10. As regards the computation of the interest u/s 234B of the Income-tax Act is concerned, the learned counsel for the assessee submitted that the search action had taken place on the assessee’s premises on 8.3.2007, during which unaccounted cash found and seized by the Department and deposited in the personal deposit account of the Department. The assessee on 15.3.2007 had filed a letter before the authorities to treat the sum of Rs.50 lakhs seized during the course of search as advance tax payable by the assessee for the assessment year 2007-08 consequent to the search proceedings. Thus, according to the learned counsel for the assessee, this amount has to be treated as advance tax paid by the assessee and the same has to be reduced from the taxable income before computing interest u/s 234B of the Income-tax Act. In support of his contention the learned counsel for the assessee has placed reliance upon the decision of ‘A’ Bench of the Tribunal in the case of Smt. Sushila Devi Tainwala in ITA Nos.418 to 424/Bang/2010 dated 22.12.2010,wherein it has been held that no interest u/s 234B can be charged after the assessee has filed return of income and has asked for the adjustment of tax liability.

11. The learned DR however, drew our attention to sec. 132 of the Income-tax Act to submit that only against existing liability can the property or cash seized during the course of search be appropriated. As regards assessee’s letter dated 15.3.2007, she submitted that no estimation of income is made therein and, therefore, the same cannot be accepted. In the rejoinder, the counsel for the assessee submitted that the offering the adjustment of the cash seized itself amounts to declaration of liability and payment of the advance tax u/s 209 of the Income-tax Act and is presumed to accept the existing liability to pay the tax and cash seized has to be appropriated against the demand for the purpose of the sec. 234B of the Income-tax Act.

12. Having heard both the parties and having considered the rival contentions, we find that the assessee has offered the cash seized of Rs.50 lakhs as advance tax vide letter dated 15.3.2007. The computation of advance tax and payment thereof is governed by secs. 209 and 210 of the Income-tax Act. Sub-sec. (1) of sec. 209 provides that the amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as below namely :

1(a) where the calculation is made by the assessee for the purpose of payment of advance tax under sub secs. (1), (2) or sub-sec. (5) or sub-sec 6 of sec. 210, he shall first estimate his current income and the Income-tax thereon shall be calculated at the rates in force for the financial year;……

Sub-sec. (1) of sec. 210 provides that every person who is liable to pay advance tax u/s 208 shall, out of his own accord pay, on or before each of the due dates specified in sec. 211, the appropriate percentage, specified in that sec. of the advance tax on the current income, calculated in the manner the laid down in sec. 209 of the Income-tax Act.

13. From the reading of the above provisions, it is clear that before making payment of advance tax u/s 210 of the Income-tax Act, the assessee has to compute his current income in the manner laid down u/s 209 of the Income-tax Act. In the case before us, the assessee has not computed the current income nor has he offered this income i.e. the amount of cash seized, as his income for the relevant assessment year. The assessee has only offered the cash seized as the advance tax paid against the liability in the block assessment consequent to the search. Further, sec. 132B provides for application of assets seized u/s 132A of the Income-tax Act. Clause (i) of sub-sec. (1) of sec. 132B provides that the amount of any existing liability under the Income-tax Act, the Wealth-tax, Expenditure-tax Act and Interest-tax Act and the amount of the liability determined on completion of the assessment [u/s 153A and the assessment of the year relevant to the previous year, in which search is initiated or requisition is made, or the amount of liability determined on the completion of the assessment under Chapter XIVB for the block period as the case may be] and in respect of which, such person is in default or is deemed to be default, may be recovered out of such assets. Thus, it is clear that the amounts seized can be applied or apportioned only against the existing liability or liability determined on completion of assessment.

14. This issue has been considered by ‘A’ Bench of the Tribunal in the case of Smt. Sushila Devi Tainwala and it has been held that money seized during the course of search proceedings can be applied only against the liability determined but another fact that has to be considered is that the liability to pay tax could be fastened on the assessee when the assessee has filed the return of undisclosed income for the block period or for relevant previous year and the assessee is bound to pay the tax as soon as he acknowledges his liability by filing his return of income. In the case before us, the assessee has filed the return of income on 31.10.2007 declaring income of Rs.3,60,15,785/- and the taxable income determined or assessed by the Assessing Officer at Rs. 3,60,15,790/-, therefore, following the decision of the ‘A’ Bench, we are of the opinion that the amount of Rs. 50 lakhs seized by the department during the course of search has to be treated as the tax paid as on the date of the filing of the return and the interest u/ss 234B and 234C has to be calculated after reducing the same from the taxable income. Therefore, we uphold the finding of the CIT(A).

In view of the above judgment, it is held that the A.O. shall find out the date on which the return of income was filed (probably it was on 29.04.2010) and the liability was quantified and that day is to be regarded as the date of payment of self-assessment tax to the extent of seized cash available with the Department. Interest u/ss 234A, 234B & 234C are to be quantified with reference to deemed adjustment of seized cash on the date of filing being 29.04.2010 (for both assessment years) to the extent of available seized cash with the Department.

6. In the result, both the appeals are partly allowed.”

8. Aggrieved by the order of the CIT(Appeals), the assessee has preferred the present appeals before the Tribunal.

9. As far as levy of interest u/ss.234A and 234B of the Act is concerned, there are three aspects which have to be seen. The first aspect is the starting point of time from when interest can be levied. The second aspect is the terminal point of time up to which interest can be levied. The third aspect is the sum on which interest is to be levied.

Starting point of time from which interest u/s. 234A of the Act can be levied:

10. As far as levy of interest u/s. 234A for AY 08-09 is concerned, the due date for filing ROI was 31.7.2008. The search in the case of the Assessee took place on 16.9.2008. As on 31.7.2008 the ROI had not been filed by the Assessee. The Assessee seeks to rely on Sec.234A(3) of the Act to contend that the starting point of time from when interest can be levied is the time allowed by the notice u/s.153A of the Act. In our view this stand taken on behalf of the Assessee is not correct. Sub-section (3) of Sec.234A provides that where the return of income for any assessment year, required by a notice under section 148 or section 153A issued after the determination of income under sub-section (1) of section 143 or after the completion of an assessment under sub-section (3) of section 143 or section 144 or section 147, is furnished after the expiry of the time allowed under such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one and one-fourth per cent, for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time allowed as aforesaid. It can be seen from the aforesaid provisions that it is only in a case where notice u/s.153A of the Act is issued after determination of income u/s. 143(1) or 143(3) of the Act for the relevant A.Y. that the starting point of time for levy of interest commences from the expiry of time specified in the notice u/s.153A of the Act. In the present case admittedly there has been no ROI filed by the Assessee for AY 08-09 and no determination of income u/s. 143(1) or 143(3) of the Act. Therefore the starting point of time will have to be reckoned in terms of Sec.234A(1) of the Act, viz., Where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one and one-fourth per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date. Due date for this purpose is the date specified u/s.139 (1) of the Act. The due date u/s.139 (1) of the Act in the case of the Assessee is 31.7.2008 and therefore the starting point of time will be the period from 31.7.2008 for AY 08-09.

11. As far as AY 09-10 is concerned there is no dispute that the starting point of time for levy of interest u/s.234A of the Act is the due date u/s. 139(1) of the Act which is 31.7.2009.

The terminal point of time upto which interest u/s. 234A of the Act can be levied:

12. There is no dispute that the terminal point of time for both the Assessment Year is 29.4.2010 when the Assessee filed return of income for both the A.Ys.

The amount on which interest u/s. 234A is to be levied:

13. Sec.234A of the Act, insofar as it relates to the present case, lays down that interest at the prescribed percentage has to be levied for the period of delay on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduced by the amount of,-

(i) advance tax, if any, paid;

(ii) any tax deducted or collected at source.

14. The question is whether cash, bullion, jewellery or other valuable article or thing seized in the course of a search carried out u/s.132 of the Act, can also be treated as advance tax paid or tax deducted or collected at source. The language of the section does not permit such reduction. The Honorable Delhi High Court in the case of Dr. Prannoy Roy v. CIT [2012] 121 Taxman 314 held that the object of enactment of sec. 234A is to levy mandatory interest by way of compensation where tax is not paid before due date. There is no question of compensation when tax is paid within time. Hence interest under sec. 234A is payable in a case where tax has not been deposited prior to due date of filing of return, and not where tax has been paid but return has been filed belatedly. The decision in Dr. Prannoy Roy (supra) has been affirmed by the Supreme Court in CIT v. Pranoy Roy [2009] 309 ITR 231 holding that assessee having paid the tax before the due date of filing of return which was not less than the tax payable on the returned income which has been accepted, interest under s. 234A is not chargeable for delayed filing of return. This decision will apply in cases where the Assessee had paid the taxes prior to the due date of filing of return and will not apply to cases where adjustment of cash or other valuable article or thing is requested to be adjusted against taxes due.

15. Sec. 132(5) of the Act which was omitted by Finance Act, 2002, sec. 56 (w.e.f. 1-6-2002) provided for the manner in which money, bullion, jewellery or other valuable article or thing seized in the course of search u/s.132 of the Act has to be applied. Prior to its omission, sec. 132(5) of the Act stood as under:

“(5) Where any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as the assets) is seized under sub-section (1) or sub-section (1A), as a result of a search initiated or requisition made before the 1st day of July, 1995, the Income-tax Officer, after affording a reasonable opportunity to the person concerned of being heard and making such inquiry as may be prescribed, shall, within one hundred and twenty days of the seizure, make an order with the previous approval of the Joint Commissioner,—

(i) estimating the undisclosed income (including the income from the undisclosed property) in a summary manner to the best of his judgment on the basis of such materials as are available with him;

(ii) calculating the amount of tax on the income so estimated in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act;

(iia) determining the amount of interest payable and the amount of penalty imposable in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of 1922), or this Act, as if the order had been the order of regular assessment;

(iii) specifying the amount that will be required to satisfy any existing liability under this Act and any one or more of the Acts specified in clause (a) of sub-section (1) of section 230A in respect of which such person is in default or is deemed to be in default,

and retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in clauses (ii), (iia) and (iii) and forthwith release the remaining portion, if any, of the assets to the person from whose custody they were seized:

Provided that if, after taking into account the materials available with him, the Income-tax Officer is of the view that it is not possible to ascertain to which particular previous year or years such income or any part thereof relates, he may calculate the tax on such income or part, as the case may be, as if such income or part were the total income chargeable to tax at the rates in force in the financial year in which the assets were seized and may also determine the interest or penalty, if any, payable or imposable accordingly:

Provided further that where a person has paid or made satisfactory arrangements for payment of all the amounts referred to in clauses (ii), (iia) and (iii) or any part thereof, the Income-tax Officer may, with the previous approval of the Chief Commissioner or Commissioner, release the assets or such part thereof as he may deem fit in the circumstances of the case.”

16. In deciding as to what can be retained by the Revenue out of the seizure made in the course of search u/s.132 of the Act under the erstwhile provisions of Sec. 132(5) of the Act, it has been held by Courts that retention can be only for satisfaction of existing tax liabilities. There cannot be any retention of the seized assets by the Revenue unless and until there is an existing demand outstanding and due from the assessee at the time when the assets were seized. The Revenue cannot indirectly keep the money on the plea that there will be a demand, and, therefore, the money should be allowed to be kept with the Revenue. Such retention was held to be without the authority of law.

17. Sec. 132B of the Act now provides for the manner in which seized assets have to be dealt with. It is akin to the erstwhile provisions of Sec. 132(5) of the Act.

Section 132B Application of seized or requisitioned assets.

(1) The assets seized under section 132 or requisitioned under section 132A may be dealt with in the following manner, namely:—

(i) the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the Gift-tax Act, 1958 (18 of 1958) and the Interest-tax Act, 1974 (45 of 1974), and the amount of the liability determined on completion of the assessment under section 153A and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is deemed to be in default, may be recovered out of such assets:

Provided that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained to the satisfaction of the Assessing Officer, the amount of any existing liability referred to in this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the Chief Commissioner or Commissioner, to the person from whose custody the assets were seized:

Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the authorizations for search under section 132 or for requisition under section 132A, as the case may be, was executed;

(ii) if the assets consist solely of money, or partly of money and partly of other assets, the Assessing Officer may apply such money in the discharge of the liabilities referred to in clause (i) and the assessee shall be discharged of such liability to the extent of the money so applied;

(iii) the assets other than money may also be applied for the discharge of any such liability referred to in clause (i) as remains undischarged and for this purpose such assets shall be deemed to be under distraint as if such distraint was effected by the Assessing Officer or, as the case may be, the Tax Recovery Officer under authorization from the Chief Commissioner or Commissioner under sub-section (5) of section 226 and the Assessing Officer or, as the case may be, the Tax Recovery Officer may recover the amount of such liabilities by the sale of such assets and such sale shall be effected in the manner laid down in the Third Schedule.

(2) Nothing contained in sub-section (1) shall preclude the recovery of the amount of liabilities aforesaid by any other mode laid down in this Act.

(3) Any assets or proceeds thereof which remain after the liabilities referred to in clause (i) of sub-section (1) are discharged shall be forthwith made over or paid to the persons from whose custody the assets were seized.

(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 (i) 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 section.

(b) Such interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorizations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment under section 153A or under Chapter XIV-B.

Explanation. : In this section,—

(i) “block period” shall have the meaning assigned to it in clause (a) of section 158B;

(ii) “execution of an authorization for search or requisition” shall have the same meaning as assigned to it in Explanation 2 to section 158BE.

18. It can be seen from the aforesaid provisions that seized cash and FDs in the present case can be adjusted only against existing tax liability referred to in Sec.132B(1)(i) of the Act. In the present case, admittedly there is no past demand which has remained unpaid. Therefore only when the Assessee files a return of income quantifying his total income for the assessment years in question can it be said that there has arisen tax liability for the relevant AYs. The due date for filing return of income or the fact that advance tax was due on a particular date will not make the liability of the Assessee an “existing tax liability” on those dates. The Honorable Karnataka High Court in the case of CIT v. R.V. Raibagy & Co. & others ITR Case Nos. 4 to 10 of 2003 dated 29.3.2005 has also taken the view that adjustment of seized cash against tax due u/s.140A of the Act, on income declared in a return of income filed should be allowed. This decision supports the view taken by the CIT(A) in the present case. The decision of the Hon’ble Karnataka High Court in the case of Sri Raghavendra Traders v. Asstt. CIT ITA No.3197 of 2005 dated 20.7.2011 is a case arising u/s.158BFA(1) of the Act. There is no indication in this decision that adjustment of seized cash can be claimed even where there is no existing tax liability. The decisions of the Tribunal on which the CIT(A) has placed reliance clearly lay down that adjustment can be allowed when there is an existing tax liability. The CIT(A) has accordingly allowed adjustment of seized cash against tax liability as disclosed in the return of income filed on 29.4.2010 for both the Assessment years. The CIT(A) has not given any adjustment towards foreclosure of FD proceeds. The FD was not foreclosed and adjusted by the Department towards tax dues but was probably returned to the Assessee. We are of the view that the directions of the CIT(A) are just and proper and calls for no interference.

19. As far as interest u/s.234B of the Act is concerned, the starting point of time and the terminal point of time for levy of interest, as per the provisions of Sec.234B is the period from the 1st day of April next following such financial year to the date of determination of total income under sub-section (1) of section 143 and where a regular assessment is made, to the date of such regular assessment. The starting point of time in this case would be 1-4-2009 for AY 08-09 and 1-4-2010 for AY 09-10. The terminal point of time would be 30.11.2010 which is the date of regular assessment for both the A.Y.s.

20. Interest has to be levied for both the A.Y.s u/s.234B on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. Explanation 1 to Sec.234B (1) lays down that “assessed tax” means,-

(a) for the purposes of computing the interest payable under section 140A, the tax on the total income as declared in the return referred to in that section;

(b) in any other case, the tax on the total income determined under sub-section (1) of section 143 or on regular assessment,

as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income.

21. The discussion with regard quantum of sum on which interest is to be levied u/s.234A of the Act will equally apply to levy of interest u/s. 234B of the Act also. For the reasons given earlier, we uphold the order of CIT(A) on this issue.

22. As far as levy of interest u/s.234C of the Act is concerned, the period for which such interest is levied is clear from the section itself. Sec.234-B(1)(b) provides that an assessee, other than a company, who is liable to pay advance tax under section 208 has failed to pay such tax or,-

(i) the advance tax paid by the assessee on his current income on or before the 15th day of September is less than thirty percent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than sixty per cent of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent per month for a period of three months on the amount of the shortfall from thirty per cent or, as the case may be, sixty per cent of the tax due on the returned income;

(ii) the advance tax paid by the assessee on his current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent on the amount of the shortfall from the tax due on the returned income.

23. It is clear from the above provisions that interest u/s.234C is to be levied on shortfall of tax paid on 15th September, 15th December and 15th March of the financial year, to tax payable on the income as declared in the return of income filed and after deducting tax deductible or collectable at source. Adjustment of seized cash in the present case to determine the tax payable on returned income will be governed by the same decision given while deciding interest liability u/s.234B of the Act. We hold accordingly.

24. For the reasons given above, we do not find any reason to interfere with the order of the CIT(A). Consequently, appeals by the Assessee are dismissed.

25. In the result, appeals are dismissed.

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