TMI Blog1999 (4) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 3,50,000 towards the advance tax. In Writ Petition No. 1803 of 1993 the officials of the Income-tax Department, raided the business and residential premises of the petitioner between November 16, 1988 and November 20, 1988 and seized the books of account, ornaments and cash Rs. 2,30,000. The petitioner applied to respondent No. 1, vide his application dated March 10, 1989, to adjust the seized amount towards the tax payable in advance. He also made a submission that the gold ornaments be released in favour of the petitioner to pay the advance tax. The Department did not adjust the said amount, therefore, the petitioner has filed the petition seeking the relief that it be held that the petitioner is not liable to pay any interest under sections 234B and 234C of the Income-tax Act, and has also challenged the orders passed by the respondents annexed with the petition as annexures P-5 and P-7. The submission of Shri Nema, learned senior counsel for the petitioners, was that the petitioners of each of the cases are liable to pay the advance tax under the provisions of the Income-tax Act. Referring to sections 208, 219, he submitted that the advance tax is an existing liability, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. He submits that the Department was not justified in rejecting the claim of the petitioners. For proper appreciation of the submission of the parties, it would be necessary to refer to section 207 of the Income-tax Act and the onward sections. Section 207 provides that in accordance with the provisions of sections 208 to 219 tax shall be payable in advance during any financial year in respect of the total income of the assessee which would be chargeable to tax. According to section 208, advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of Chapter XVII is one thousand five hundred rupees or more. The mode of computation of advance tax is provided under section 209. Section 210 provides for payment of advance tax by the assessee of his own accord or in pursuance of the order of the Assessing Officer. The advance tax is to be paid in instalments in accordance with section 211 of the Act. For a company, the instalments are to be paid on June 15, September 15, December 15 and March 15, but in the case of the assessees other than companies, the ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e paid. Section 152 provides for search and seizure. It provides that if the officer described in sub-section (1) of section 132 in consequence of information in his possession, has reason to believe that search is necessary, then he may authorise a particular category of officer/officers to enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable article or things are kept. The officer may be authorised to break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (i) where the keys thereof are not available. They may also be authorised to search persons, seize any books of account, documents, money, bullion, jewellery or other valuable article or thing found as a result of such search. Sub-section (3) of section 132 provides that the authorised officer may, where it is not practicable to seize any such books of account, other documents, money, bullion, jewellery or other valuable article or thing, serve an order on the owner or the person who is in immediate possession or control there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (1) of section 230A in respect of which such person is in default or is deemed to be in default, and retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the amounts referred to in clauses (ii), (iia) and (iii) and forthwith release the remaining portion, if any, of the assets to the person from whose custody they were seized : Provided that if, after taking into account the materials available with him, the Assessing Officer is of the view that it is not possible to ascertain to which particular previous year or years such income or any part thereof relates, he may calculate the tax on such income or part, as the case may be, as if such income or part were the total income chargeable to tax at the rates in force in the financial year in which the assets were seized and may also determine the interest or penalty, if any, payable or imposable accordingly : Provided further that where a person has paid or made satisfactory arrangements for payment of all the amounts referred to in clauses (ii), (iia) and (iii) or any part thereof, the Assessing Officer may, with the previous approval of the Chief Commissioner or Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed under sub-section (5) of section 132. Not only he has to estimate the undisclosed income in a summary manner, but has to calculate the amount of tax on the income so estimated determining the amount of interest payable and the amount of penalty imposable and specify the amount that would be required to satisfy the existing liability, but has also to retain in his custody such assets or part thereof as are in his opinion sufficient to satisfy the aggregate of the abovereferred amounts. It would clearly appear from these provisions that section 132(5) provides for a complete procedure. Unless the Income-tax Officer makes an enquiry as may be prescribed and makes an order, the assets seized cannot be dealt with in any other manner. The assets shall be retained by the Income-tax Officer until a final order is made by him in accordance with sub-section (5) of section 132. The occasion to refund or return the assets or to retain the assets or to adjust the assets shall come into existence only after a final order is made by the Income-tax Officer under section 132(5). Immediately after an order is passed under sub-section (5) of section 132, the Income-tax Officer is authorised to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed assets are more than the liability and are more than sufficient to satisfy the aggregate of the amounts referred to in clauses (ii), (iia) and (iii) of sub-section (5), then the other assets shall be released forthwith. If the assets are more than the liability, the same shall be released forthwith, but the amount so retained under sub-section (5) is to be dealt with in accordance with the provisions of section 132B. The object of sub-section (5) of section 132 is to estimate the undisclosed income which is described in clause (c) of sub-section (1) of section 132. The enquiry under sub-section (5) of section 132 is of a summary nature, limited for the purpose of a temporary estimation of undisclosed income and retainment of that portion of the money which is, in the opinion of the authority, sufficient to satisfy the amount of tax, etc., on the income so estimated. There is no confiscation of the property involved. Only a temporary deprivation of possession of money with a view to facilitate the recovery of the amount of tax that may be found due from the person, is contemplated under section 132(5). Section 132B reads as under : "Application of retained assets.---(1) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (1) of this section. (b) Such interest shall run from the date immediately following the expiry of the period of six months from the date of the order under sub-section (5) of section 132 to the date of the regular assessment or reassessment referred to in clause (i) of sub-section (1) or, as the case may be, to the date of last of such assessments or reassessments." According to section 132B, the assets retained under sub-section (5) of section 132 may be dealt with in the manner as provided under sub-section (1) of section 132B. The amount of the existing liability referred to in clause (iii) of section 132(5) and the amount of the liability determined on completion of the regular assessment or reassessment for all the assessment years relevant to the previous year to which the income referred to in clause (i) the retained amount is to be appropriated. If the assets consist solely of money, the Income-tax Officer may apply such money in the discharge of the liabilities and the assessee shall be discharged of such liabilities to the extent of the money so appropriated. The assets other than money may also be applied for the discharge of any such liability by the sale of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be liable to pay simple interest at the rate of two per cent. per month. Section 234C provides that if there is any deferment of advance tax, then the assessee shall be liable to pay interest on the said amount. In the present case, I have already found that the amount/assets seized could not be appropriated towards the advance tax ; the assessee cannot escape his liability either under section 234B or 234C. Irrespective of the seizure of the amount, the assessee was obliged to pay the advance tax in accordance with law and if he has not paid the advance tax in accordance with the provisions of the Income-tax Act, he cannot avoid the liability either under section 234B or section 234C. Learned counsel for the petitioners placed his strong reliance on the judgment in the matter of Satpal D. Agarwal (HUF) v. Asst. CIT [1998] 62 TTJ 98. In the said matter, a Division Bench of the Income-tax Appellate Tribunal has observed that in the case of seizure of the cash, it cannot be said that the assessee had defaulted in payment of taxes when the amount had been retained by the Revenue Department. In the said matter also, a request was made by the assessee to the Department that the cash s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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