TaxTMI 
TaxTMI 
TaxTMI 
2008 (3) TMI 692
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....arch and seizure action under s. 132 was carried out on 23rd Jan., 2004, on M/s Deepa Restaurant & Bar Group of cases. The residential premises of the directors of M/s Deepa Restaurant & Bar (P) Ltd. were also covered by the said search action. The assessee is one of the directors of the company. 4.1 The assessments in these cases were completed under s. 143(3) r/w s. 153A of the Act for the two years i.e., asst. yr. 1998-99 and 1999-2000 as these two years fall in the block period. For asst. yr. 1998-99, the assessment was completed on a figure of Rs. 2,84,500 and for asst. yr. 1999-2000 the assessment was completed on a figure of Rs. 2,85,650. Interest under ss. 234A, 234B and 234C was also charged on the assessee. The assessee preferred appeal before the CIT(A) against the order of the AO and an additional. ground was raised vide letter dt. 25th Aug., 2006 that : "the learned Dy. CIT has erred in law as well as the circumstances of the case in not considering the payment of Rs. 62 lacs seized on 23rd Jan., 2004 towards self-assessment dues and by levying interest under ss. 234A, 234B and 234C of the IT Act, 1961". 4.2 The said letter along with the additional ground raised b....
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.... not adjusting the cash seized during the course of search and also objecting the rate of interest charged higher than 1 per cent because the rate of interest @ 1 per cent is leviable w.e.f. 8th Sept., 2003. Therefore, the rate of interest has to be applied @ 1 per cent. It was further explained that prior to the date 8th Sept., 2003 the prescribed rates are different; therefore, the different rates cannot be charged by the AO. 6.1 It was further explained that the return for asst. yr. 1998-99 was filed on 28th Jan., 2005 in response to notice received for completion of assessment under s. 153A and the return for asst. yr. 1999-2000 was filed on 30th May, 2000 and self-assessment tax have already been paid at the time of filing the return. It was further submitted that the assessed income at that point of time is the same as declared by the assessee while filing its return originally on 30th May, 2000 for asst. yr. 1999-2000. Therefore, there is no question of charging interest under ss. 234A, 234B and 234C. 7. The learned Departmental Representative on the other hand, stated that whatever rate of interest has been charged by the AO that has been charged as per the provisions of ....
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....default may be recovered out of such assets." 9.2 Clause (d) of s. 158BC reads as under : "(d) the assets seized under s. 132 or requisitioned under s. 132A shall be retained to the extent necessary and the provisions of s. 132B shall apply subject to such modification as may be necessary and the reference to 'regular assessment' or 'reassessment' in s. 132B shall be construed as references to 'block assessment'." 9.3 The amended provisions of s. 132B as well as cl. (d) of s. 158BC read as under: "(1) The assets seized under s. 132 or requisitioned under s. 132A may be dealt with in the following manner, namely : (i) The amount of any existing liability under this Act, the WT Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the GT Act, 1958 (18 of 1958), and the Interest-tax Act, 1974 (45 of 1974), and the amount of liability determined on completion of the assessment under s. 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....
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.... This is amply demonstrated by several provisions of the IT Act. 14. The question here is how adjustment of recovery amount on the regular assessment is to be made ? Whether date of seizure or recovery is material ? What is the meaning of expression 'dealt with' on 'completion of the regular assessment' used in s. 132B. As per the Revenue, it implies that date of assessment would be the date of recovery of assets, whatever may be the date of seizure or of order under s. 132(5). There is absolutely no justification for upholding above view. The authorities deprived the citizen of valuable assets on a specific date. Order under s. 132(5) is passed to determine liabilities in order to retain assets keeping in mind the date of seizure. Then, how, under the law, the date of recovery of amount can be different from the actual date of recovery. There is no statutory provisions under which this date can be changed 'to be dealt with on the completion of regular assessment' only means that in the regular assessment adjustment should be made against finally determined liabilities and not on estimated liabilities. It does not mean that 'recovered' amount be no....