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2015 Supreme(All) 1795
ALLAHABAD HIGH COURT
Tarun Agarwala, Dr. Satish Chandra, JJ.
Commissioner of Income Tax - Appellant
Versus
Sunil Chandra Gupta - Respondent
Income Tax Appeal No. 182 of 2014
Decided On : 11-03-2015
For the Petitioner: Shambhu Chopra, S.C.
For the Respondents: Rahul Agarwal.
Seized cash can be appropriated against existing liabilities, excluding advance tax, as per Section-132B(1) of the Income Tax Act.
Headnote:
Seized Cash - Income Tax - Section-132B(1) - The court discussed the provisions of Section-132B(1) of the Income Tax Act, which deals with the appropriation of seized assets and clarified that the seized cash can only be appropriated against existing liabilities, excluding advance tax.
Fact of the Case:
A search and seizure operation was conducted at the residence and business premises of the assessee, resulting in the discovery of a significant amount of cash. The assessee requested the adjustment of the seized cash against the advance tax liability, but the department did not respond. The department charged interest for non-payment of advance tax.
Finding of the Court:
The court found that the seized cash could have been adjusted against the advance tax liability, and the department's failure to respond to the assessee's request for adjustment was unjust. The court cited precedents where seized cash was allowed to be adjusted against advance tax liability.
Issues: The main issue was whether the seized cash could be appropriated against the advance tax liability and whether the department's actions in charging interest were justified.
Ratio Decidendi: The court held that the seized cash could have been adjusted against the advance tax liability, and the department's failure to respond to the assessee's request for adjustment was unjust. Precedents were cited to support this finding.
Final Decision: The court dismissed the appeal filed by the department, stating that no substantial question of law emerged from the impugned order.
Dr. Satish Chandra, J.
1. The present appeal is filed by the department against the impugned order dated 28.02.2004, passed by the Income Tax Appellate Tribunal, Agra in I.T.A. No. 290/Agra/2013 for the assessment year 2010-2011.
2. The brief facts of the case are that on 10.03.2010, a search and seizure operation was conducted at the residence and business premises of the assessee. The bank lockers were also searched. During the search, a sum of Rs. 4,31,36,000/- was found in cash and seized. The same was deposited by the department in its P.D. Account. The assessee has written a number of letters on 21.03.2010, 29.03.2010 and 05.07.2010 to all the authorities of department to adjust the cash seized against the advance tax for the assessment year 2010-11. When the return for the assessment year under consideration was filed on 30.06.2010 then once again, the assessee made a request the A.O. to adjust the cash lying in the P.D. account against the advance tax, but the A.O. charged the interest under Section-234A, 234B & 234C of the Act. The said interest was deleted by the first appellate authority by observing that the cash was available with the department before filing the return and the same could have been adjusted against the demand of the advance tax. The Tribunal has confirmed the same by observing that the cash belongs to the assessee was already in the government account so there is no question to charge the interest and to this effect the Tribunal has discussed number of case laws to this effect. Still being not satisfied, the department has filed the present appeal.
3. With this background, heard Sri Shambhoo Chopra, learned counsel for the appellant-department, who has justified the order passed by the A.O. and submits that the Tribunal has not considered the provision of Section-132B of the Act which deals with the matter relating to the appropriation of seized assets. He read out Section-132B(1) which is reproduced as under
"132B(1) The assets seized under section 132 or requisitioned under section 132Amay 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.
[Explanation 2.- For the removal of doubts, it is hereby declared that the "existing liability" does not included advance tax payable in accordance with the provisions of Part C of Chapter XVII.]
In view of the above legal provisions, it is apparent that the cash seized in the course of search, can only be appropriated against the amount of any existing liability, which in term of explanation 2 do not include advance tax".
4. The learned counsel for the department also submitted that the cash seized can only be appropriated against the
