Hon,ble Itat has in the case of Sunil C Gupta held 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 obsrevations of ld CIT(A) which are as under
"3.4 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.
Hon'ble ITAT has upheld the obsrevations of ld CIT(A) which are as under
"3.4 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.
copy of the order enclosed
Regards
Prarthana Jalan
__._,_.___
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