2017 (9) TMI 1884

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....of Rs. 2,17,085/- and interest u/s. 234C of Rs. 1,55,280/- without appreciating that the computation of interest made by the A.O. is not correct. [2] The learned CIT (A) erred in holding that -  a. The cash seized during the course of search action u/s. 132 could not be adjusted against the advance tax liability u/s. 208 for the year in which search action was conducted and hence, the computation of interest u/s. 234B and 234C made by the A.O. was correct.  b. Explanation 2 to section 132B inserted w.e.f. 01.06.2013 which states that the term 'existing liability' used in sub-section (1) to section 132B does not include advance tax payable, is retrospective in nature and hence, seized cash cannot be adjusted against t....

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....income of Rs. 1.58 crores. The assessment was completed u/s. 153A of the Act determining the assessed Income of Rs. 2,07,00,430/-. While computing the tax liability on the said income, AO charged the statutory interest u/s. 234B & 234C of the Act amounting to Rs. 3,72,365/- i.e. 2,17,085/- u/s. 234B and Rs. 1,55,280/- u/s. 234C. In the process, the AO ignored the assessee's letter dated 11.03.2010 addressed to the DDIT(Investigation-II), Nashik and the another letter dated 14.10.2010 addressed to the DCIT, Central Circle - I, Nashik containing the request for adjustment of the seized cash towards the advance tax liabilities of the assessee. 4. Aggrieved with the said levy of statutory interest, the assessee filed a rectification applic....

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....al. 5. Aggrieved with the same, the assessee is in appeal before us with the grounds extracted above. Bringing our attention to the assessee's letter dated 11.03.2010 (filed on 12.03.2010) written to the Department with a request to adjust the seized cash against the advance tax liability for the A.Y. 2010-11, Ld. Counsel (Page 7 of the Paper Book) submitted the final installment of advance tax is due on 15.03.2010. Assessee filed a letter on 12.03.2010 with Department containing a request to adjust the said seized cash of Rs. 32,24,629/- against the advance tax liability. Assessee focuses on the final installment of advance tax for the A.Y. 2010-11 in the case of the assessee firm i.e. M/s. Happy Home Developers. He also brought our a....

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.....2010. Finally, our attention was drawn to Circular No.20/2017 (Page 7 of the Paper Book) of the CBDT and submitted that the same was issued in connection with applicability of Explanation-2 to section 132B of the Act. He read out the contents of para 2 to 4 of the said circular for the proposition that the said amendment is prospective in nature and the "advance tax liability" of assessee in the year 2010 constitutes the "existing liabilities". To that extent CBDT accepted the judgment of Honourable Punjab and Haryana High Court in the case of Spaze Towers (P.) Ltd. (supra). The para 4 of the said circular contains a conditional direction to the Department either to withdraw or to not press appeal filed by the Department on this issue. Con....

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....s, it is hereby declared that the "existing liability" does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII." 10. The above Explanation-2 was brought into the statute by the Finance Act, 2013 w.e.f 01.06.2013. Considering the language of the said Explanation-2, the Revenue proceeded to adjust the seized cash against the regular tax demand only and justified their action by describing the amendment as clarificatory one. However, the assessee has taken this issue to the judicial forum which eventually decided issue in favour of the assessee, and the judgment of Punjab & Haryana High Court in the case of Spaze Towers (P.) Ltd. (supra) has brought requisite clarity on the issue. Therefore, for the pe....