In the case of CIT v Sri Chand Gupta, Delhi High Court held that during search and seizure under section 132, any declarations made by the assessee could not discharge his liability to the extent of cash seized as Section 132(5) of the Act does not deal with appropriation of the assets seized. Also, it was held that in the absence of any return filed, assessment or determinative process, ITO cannot determine the liability.
Facts of the Case
In the present facts of the case there was a search and seizure under section 132 in which the currency was seized. The Assessee claim that the amounts seized during the search ought to be accounted for as payment of advance tax on the date of seizure. But, according to the Revenue, the particular currency could not be treated as payment of tax till the filing of the return. On 10th May, 1991 the AO passed an order retaining the cash seized to be dealt with in accordance with provisions of Section 132B of the Act. The Assessee filed his return of income on 26th April, 1993 declaring a total income of Rs.56,56,380/- for the relevant period (i.e. Previous Year 1990-1991 relevant to the Assessment Year 1991-92). The said return was processed under Section 143(1)(a) and a demand of Rs.58,49,796/- was raised. This demand included interest payable under Section 234A, 234B & 234C of the Act. The cash seized during search operations was appropriated against the aforesaid demand.
