Seized cash adjustment against tax liability allowed where advance tax exclusion under section 132B was not yet operative.

Seized cash offered and accepted as undisclosed income was held adjustable against the assessee's tax liability, including advance tax, because the governing version of section 132B did not yet exclude advance tax from recoverable liability. The Tribunal noted that the restrictive Explanation 2 to section 132B operated only prospectively from 1 June 2013, so it did not apply to the years in issue. On that basis, the seized cash had to be adjusted from the date of the assessee's request, and the consequent levy of interest under sections 234B and 234C was unsustainable.

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Issues: Whether cash seized during search and offered as undisclosed income could be adjusted against the assessee's tax liability, including advance tax, so as to restrict the levy of interest under sections 234B and 234C.

Analysis: The assessee had requested adjustment of the seized cash against the tax liability arising from the income offered in search proceedings. The revenue authorities declined adjustment on the premise that seized assets could be appropriated only after completion of assessment and that advance tax was not an existing liability. The Tribunal noted that the assessee had voluntarily offered the seized amount as income and that the department had accepted that income. Relying on section 132B as it stood prior to the insertion of Explanation 2 and on binding precedent, the Tribunal held that the bar against treating advance tax as existing liability was not applicable to the years involved, since the restrictive explanation operated only prospectively from 1 June 2013. On that basis, the seized cash ought to have been adjusted against the tax liability from the date of the assessee's request.

Conclusion: The assessee was entitled to adjustment of the seized cash towards tax liability, including advance tax, and the levy of interest under sections 234B and 234C was unsustainable.

Ratio Decidendi: Where seized cash is admittedly offered and accepted as income for the relevant assessment years, and the governing version of section 132B does not yet exclude advance tax from the scope of recoverable liability, the assessee is entitled to adjustment of the seized amount against the tax liability from the date of request, with consequential restriction of interest under sections 234B and 234C.

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