AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 220
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.....2007 conducted search at different premises of both the appellants as well as one person namely Sarup Chand. During the course of search, it was found that Sarup Chand is maintaining two saving accounts with Standard Chartered Bank wherein a sum of Rs. 43,78,272/-is lying deposited. The Revenue recorded statement of Sunil Mehta under Section 132 (4) of the Income Tax Act, 1961 (for short 1961 Act) wherein he admitted that amount lying in the account of Sarup Chand belonged to his family members. The said amount was sale proceeds of a house in Amritsar. The said house was owned by Smt. Kamla Mehta and Smt. Shelly Mehta (both the appellants herein). Sarup Chand at the time of search was away to his native village. The Revenue seized aforesaid amount lying in the bank account of Sarup Chand. The said amount was transferred in the account of Revenue. Saurp Chand furnished an affidavit dated 03.08.2007 disclosing that amount lying in his account belonged to family members of Sunil Mehta. The said affidavit was followed by letter dated 15.02.2008, requesting the Revenue to adjust seized amount against tax liability of Smt. Shelly Mehta and Smt. Kamla Mehta. 4. The appellant filed her r....
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....ses of both the assessees, namely, Smt. Kamla Mehta and Smt. Shelly Mehta u/s 132B even without ascertaining the tax liability of Sarup Chand upon assessment. It is not in dispute that all the three persons are income-tax assessees and that they have been assessed individually to tax in the assessment year under appeal. It is also not in dispute that the cash was seized from the bank account of Shri Sarup Chand and not from the possession or the premises of either of the assessees before us. The claim of both the assessees is that they have filed affidavit in which it has been claimed that the cash seized from the bank account of Shri Sarup Chand belongs to both the assessees and therefore they should be adjusted against the self assessment due from both the assessees. In our view, the mere filing of affidavit is not sufficient to establish the ownership of cash. Apparent is considered to be real unless proved otherwise. In the present case, the cash was seized from the bank account of Shri Sarup Chand. Filing of mere affidavit of Shri Sarup Chand does not by itself establish that the cash seized from his bank account belonged to both the assessees and not to the person from whose ....
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....nt in the case of Shri Sarup Chand. It was only after the assessment of Shri Sarup Chand was completed by the AO that the AO could know that the cash seized from him would not be required in his case and therefore adjusted the cash so seized from him against the demand due from both the assessees. In this view of the matter, the AO, in our considered view, has rightly adjusted the amount of cash seized against the demands due from both the assessees after completing the assessment in the case of Sarup Chand." 8. Ms. Radhika Suri, Sr. Advocate submits that during the course of search as well as at the first available opportunity, the appellants and Sarup Chand categorically disclosed that money lying in the account of Sarup Chand belonged to appellants, thus, said amount was required to be treated as cash belonging to appellants and seized from their custody. The Revenue was bound to adjust the said amount against tax liability in terms of Section 132B and 140A read with Section 153A and interest under Section 234B of 1961 Act could not be charged. The cash was seized on 17.07.2007 and assessment order was passed on 28.04.2009. The interest of the intervening period could not be c....
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....under Section 132A shall be dealt with in the manner prescribed therein. Relevant extracts of Section 132B are reproduced as below: "132B. Application of seized or requisitioned assets.- (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) and the Interest-tax Act, 1974 (45 of 1974), and the amount of the liability determined on completion of the assessment under section 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 any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is deemed to be in default, or the amount of liability arising on an application made before the Settlement Commission under sub-section (1) of section 245C, may be recovered out of....
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....p Chand. As soon as, it was found that there is no tax liability of Sarup Chand and Revenue was having cash seized from the possession of Sarup Chand, the question of adjustment of said cash arose. The department, at this stage, adjusted seized cash against tax liability of appellants, however, charged interest for the delayed payment of tax. Till the date of framing of assessment of parties, the Revenue had no authority to treat cash seized from the possession of one person as cash belonging to another person. Sarup Chand was not holding cash on behalf of the appellants. It is not a case of constructive possession of cash by appellants. The cash was actually in the possession of Sarup Chand, thus, till the date of framing assessment, he was owner of said cash and it could not be adjusted against tax liability of appellants. 14. Section 132B (3) provides that assets or proceeds thereof which remain after the liabilities are discharged shall be paid to the persons from whose custody the assets were seized. Explanation 2 which was inserted w.e.f. 01.06.2013 provides that existing liability does not include advance tax payable. From sub-section (3) of Section 132B, it is evident that....