TaxTMI 
TaxTMI 
2003 (8) TMI 191
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....s seized in cash. A sum of Rs. 1,22,500 was surrendered by the assessee under s. 132(4). The learned AO observed that the total surrendered amount was included by the assessee in his return filed on 16th Aug., 1993, but no tax was paid on the returned income of Rs. 1,74,101. A note was found to have been given in the tax computation sheet for adjustment of Rs. 60,000 out of seized cash against the tax liability. The return was processed under s. 143(1)(a) on 7th Jan., 1994, wherein tax and interest payable was worked out at Rs. 66,457. The learned AO observed in the present penalty order that Shri Surajmal also filed return including surrendered income of Rs. 4,75,000 in which also no tax was paid and a note was given in the tax computation....
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....ince the part amount was recovered later out of money deposited in PD account, therefore, the benefit of Expln. 5 was lost. Taking these facts into consideration, penalty of Rs. 49,570 was imposed by the AO, which was duly confirmed in the first appeal. 3. Before us, the learned counsel for the assessee urged that the assessee had requested, at the time of filing the return, for adjustment of Rs. 60,000 against the total tax demand of Rs. 54,451 as worked out in the computation of total income appended along with the return of income. Our attention was drawn towards copy of return and computation placed at pp. 3 and 4 of the paper book to this effect. It was stated that since the amount of demand was only Rs. 55,451, which was requested ....
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....assessee. It was submitted that since the tax and interest liability of the assessee was computed at Rs. 66,457, therefore, the benefit of Expln. 5 to s. 271(1)(c) of the IT Act, 1961, was not available. It was stated that the subsequent adjustment of tax, after the framing of the assessment out of the PD account from the amount deposited by Shri Surajmal was of no consequence and could not be stated to have satisfied the necessary ingredient of Expln. 5, namely, the payment of tax and interest on the surrendered income. 5. We have considered the rival submissions at length and perused the relevant material to which our attention was drawn during the course of proceedings. It is an admitted fact that a total sum of Rs. 1,80,000 was seize....
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.... tax liability to Rs. 66,000 and odd and thereafter the learned Chief CIT directed the AO to reduce the proportionate interest under s. 234B while admitting that the assessee had made a request to the CIT for adjustment of seized cash against the tax demand. The narration of these facts brings us to the situation that as against the total liability of the assessee, after allowing necessary reduction in interest under s. 234B in terms of the order of the learned Chief CIT, came to an amount lower than Rs. 60,000, being the amount for which adjustment against the tax due was sought by the assessee. It is entirely a different matter that the Department adjusted a sum of Rs. 39,977 against the tax liability of the assessee, whereas the claim of....