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2010 (6) TMI 634 - AT - Income TaxLiability to pay interest u/s 234A, 234B and 234C - cash seized ‘existing liability’ u/s 132B - HELD THAT:- In our considered opinion, the doctrine of purposive construction has to prevail in this situation. In the present situation, it is evident that cash was seized from the assessee during search operation and, assessee requested the Department to adjust a part of such cash receipts against the liability of advance tax which arose on account of the income surrendered during the search operation. The Department does not deny possession of the cash since the time of search. Thus, we find no justification for the Revenue to interpret the expression ‘existing liability’ in section 132B(1)(i ) as not referring to liability of advance tax. Under the Income-tax Act, liability towards advance tax is a part of the scheme of recovery of taxes and such liability definitely falls in the expression ‘existing liability’ used in section 132B(1)(i) in the facts and circumstances of the case. Therefore, we set aside the order of the CIT (A), and direct the AO to allow adjustment of seized cash against advance tax liability of the assessee as contended in the written communications dated 1-12-2006 and 15-3-2007 and thereafter recompute, if any, interest chargeable u/s 234B and 234C. In the result, appeal of the assessee is allowed.
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