TaxTMI 
TaxTMI 
2013 (12) TMI 1110
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....cash has been lying with the Income Tax Department. (3) The learned CIT(A) failed to appreciate the fact that, the interest was being charged @ 12% p.a. whereas the interest on the seized cash that would be available to the appellant was only @ 6% p.a." 2. In brief, facts of the case are that there was a search and seizure operation on the appellant on 25.3.2008 and during the search a sum of Rs. 42 lakhs was seized. During the course of assessment proceedings, the appellant/assessee requested the concerned Assessing Officer to adjust the same against tax liability, but the Assessing Officer failed to do so. After the assessment was over, the appellant filed an application sections 154 of the I.T. Act for giving credit for the cash seized and also for reworking of the interest charged u/s.234B & 234C. The Assessing Officer on the application of the assessee sections 154, gave credit for the cash seized towards tax liability of the assessee but rejected the claim of the assessee for reworking/deletion of the interest u/s. 234B & 234C on the ground that the cash seized during the course of search and seizure operation can be adjusted against any existin....
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....application u/s. 154 would not have been maintainable, because in that event there would not have been any mistake apparent on record. 5. Now coming to the issue on merits, the contention of learned AR is that adjustment of the seized cash towards advance tax liability should be from the date of seizure and not from the date of completion of assessment, hence, the assessee is not liable to pay any interest for delayed payment of advance tax. On the other hand, the contention of learned Departmental Representative is that the adjustment can be made towards the existing liability and not towards future liability. For the proper adjudication of the issue we would like to discuss the provisions of section 132B of the I.T. Act. For the sake of convenience, relevant portion of section 132B of the Act is reproduced as under :- "132B. (1) The assets seized under section 132 or requisitioned under section 132A may 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....
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.... (i) of sub-section (1), and of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in clause (i) of sub-section (1), exceeds the aggregate of the amount required to meet the liabilities referred to in clause (i) of sub-section (1) of this section. (b) Such interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment [under section 153A or] under Chapter XIV-B. Explanation.- In this section,- (i) "block period" shall have the meaning assigned to it in clause (a) of section 158B; (ii) "execution of an authorisation for search or requisition" shall have the same meaning as assigned to it in Explanation 2 to section 158BE.] A carefull reading of section 132B reveals that the cash seized during the search and seizure operation can be applied towards the existing tax liability of the assessee as per clause....
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....the last date of execution of search and seizure operation has been granted to the Assessing Officer/tax authority to dealt with the seized cash and to adjust it towards existing liability of the assessee and the remaining amount is required to be returned to the assessee/concerned person. If the amount remains with the Assessing Officer/tax authority after 120 days then the Central Government is liable to pay interest @ one half percent per month on the remaining amount. A perusal of section 132B further reveals that no automatic duty or liability has been prescribed under this section to adjust cash seized towards future liability of the assessee. If no request is made by the assessee for adjustment of the remaining amount towards future liabilities there is no obligation upon the Assessing Officer to do so rather the Central Government will be liable to pay interest @ one half percent per month on the remaining amount after the expiry of 120 days. 6. It can neither be the intention of the legislature nor it seems to be just and proper to approve the contention of the revenue to the effect that the revenue is liable to collect interest @ one percent per month from the assessee....