Payment of self-assessment tax is an existing liability u/s 132B for adjustment of seized cash

Arun Bansal Vs ACIT (ITAT Delhi)

ITAT Delhi held that payment of self-assessment tax is an existing liability u/s 132B for adjustment of seized cash. Accordingly, interest u/s 234B of the Income Tax Act not leviable.

Facts- On 01.12.2018, a search and seizure operation u/s. 132 of the Act was conducted in case of Faquir Chand Lockers and Vaults Pvt. Ltd. In course of search and seizure operation, Investigation Wing found locker No. 168 in the name of the assessee. On opening of the said locker, cash amounting to Rs.1,07,00,000/- was found. The cash found in the locker was seized by the Department.

Subsequently, the assessee filed his return of income on 07.07.2019 declaring income of Rs.4,71,290/-. In course of assessment proceedings, when AO called upon the assessee to explain the nature and source of cash found in the locker, the assessee again offered it as income. The assessee again issued a letter to the Assessing Officer offering the cash seized from the locker as income and requested the Assessing Officer to adjust the tax liability from the cash seized by the Department.

AO ultimately completed the assessment adding back the cash seized of Rs.1,07,00,000/-. However, while computing the tax liability of the assessee, AO levied interest u/s. 234B of the Act alleging non-payment of advance tax. Though, the assessee challenged the levy of interest before the first appellate authority, however, he refused to interfere, firstly, on the ground that the assessee did not voluntarily declare the unexplained cash seized as income and secondly, payment of advance tax cannot be treated to be an existing liability u/s. 132B of the Act for adjustment of seized cash. Accordingly, he upheld the levy of interest.

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