ITAT rules no interest on seized cash adjusted as tax

The ITAT upheld the decision of the Ld. CIT(A) in a tax case involving seized cash. It ruled that interest u/s 234A should not be charged on the seized cash, which was adjusted as self-assessment tax. The ITAT found the A.O.'s attempt to withdraw the adjustment and charge interest u/s 234B as debatable and not rectifiable under section 154. The ITAT dismissed the Revenue's appeal, affirmed the adjustment of seized cash as self-assessment tax, and canceled the rectification order. The cross objection by the assessee was also dismissed.

---

---

Issues involved:
1. Whether interest u/s 234A should be charged on seized cash from the date of seizure to the completion of assessment.
2. Whether the seized cash should be adjusted as self-assessment tax and if interest u/s 234B is applicable.
3. Whether rectification under section 154 for withdrawing the adjustment of seized cash towards self-assessment tax is valid.

Analysis:

Issue 1:
The appeal and cross-objection were against the order of the Ld. CIT(A) regarding the charging of interest u/s 234A on seized cash of Rs. 2,60,00,000 from the date of seizure to the completion of assessment. The Ld. CIT(A) directed not to charge interest u/s 234A, which was contested by the Revenue. The ITAT considered the facts and held that the assessee requested for adjustment of the seized cash as self-assessment tax, which was accepted by the A.O. The A.O. later proposed rectification under section 154 to withdraw the benefit, which was deemed debatable and not rectifiable under section 154. The ITAT upheld the decision of the Ld. CIT(A) and dismissed the appeal of the Revenue.

Issue 2:
Regarding the adjustment of seized cash as self-assessment tax and the applicability of interest u/s 234B, the ITAT found that the A.O. had initially accepted the amount offered as self-assessment tax on the seized cash. However, without justification, the A.O. later proposed to withdraw this adjustment, which was considered debatable and not rectifiable under section 154. The ITAT referred to relevant case laws and upheld the decision of the Ld. CIT(A) to allow the adjustment of seized cash as self-assessment tax and to cancel the order passed under section 154.

Issue 3:
The issue of rectification under section 154 for withdrawing the adjustment of seized cash towards self-assessment tax was a key point of contention. The ITAT noted that the A.O. should not have rectified the order without justification, especially when the claim of the assessee for adjustment was accepted initially. Citing relevant case laws, the ITAT affirmed the decision of the Ld. CIT(A) to cancel the rectification order and allow the adjustment of seized cash as self-assessment tax.

Overall, the ITAT dismissed the appeal of the Revenue and confirmed the decision of the Ld. CIT(A) in allowing the adjustment of seized cash as self-assessment tax and not charging interest u/s 234A. The cross objection filed by the assessee was also dismissed, and the orders were pronounced in open court.

---