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2020 (3) TMI 778 - ITAT RAJKOTBogus capital gain - Addition being 33% of the total addition on account of short-term capital gain - whether assessee has used this transaction as a colorable device to reduce its tax liability by diverting the income ? - HELD THAT:- In the present case there was no reference made by the authorities below suggesting that the transaction is carried out illegally, as the transaction in the instant case were within the ambit of the law as nothing being illegal/illegitimate was brought to our notice. The transactions carried out by the parties were very much normal transaction. There was no variance in the impugned transaction with regard to the terms of the agreement - impugned transaction cannot be regarded as colorable device merely on the reasoning that there is no tax liability arising in the hands of the seller being the wife of the assessee. Hence the ground of appeal of the assessee is allowed. Non granting the credit for the cash seized during the search by treating the same as advance tax - HELD THAT:- The provisions for the adjustment of seized cash against the tax liability are contained under the provisions of section 132B of the Act. As per the provision, the cash seized during the search and seizure operation can be adjusted against the existing tax liability, and the liability of tax determined on the completion of the assessment. Now the question arises for the determination of the existing liability. In the instant case, the assessee has declared income of ₹ 1,22,16,750.00 in the return filed dated 30-9-2011 and the assessee has also requested to treat the seized cash as advance tax vide letter dated 29-09-2011. As a result of the disclosure of income in the return of income transpires that there was a liability of tax on the assessee. Thus in our considered view, the seized cash can be treated as an advance tax liability. See SHREEJI PRINTS PVT. LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME TAX [2013 (7) TMI 19 - ITAT AHMEDABAD] - cash seized during the search and seizure operation can be treated as advance tax liability in the given facts and circumstances. Explanation was brought by the Finance Act 2013 with effect from 1st June 2013. Thus the same cannot be applied to the facts of the case on hand. The Hon’ble Supreme Court in the case of CIT Vs. Cosmos Builders & promoters Ltd. [2016 (5) TMI 1407 - SC ORDER] has held that such an amendment is prospective in nature. Accordingly, it cannot be applied to the case pertaining to the year under consideration. We are not inclined to sustain the order of the Ld.CIT (A). Accordingly, we set aside the order of the Ld.CIT (A) and direct the AO to treat the seized cash as an advance tax with effect from the date of seizure of cash. Interest u/s 234B - HELD THAT:- As we have directed the AO to treat the amount seized during the proceedings as advance tax from the date of seizure of the same - we direct the AO to levy the interest under section 234B of the Act after giving the credit of ₹15 lakhs i.e. the cash seized during the search proceedings. Hence the ground of appeal of the assessee is allowed.
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