Adjustment of seized cash against tax liability payable on the income declared in the application submitted u/s.245C(1) before income Tax Settlement Commission (ITSC) - Income Tax - F.No. 286/12/2014-IT(Inv.lI)

F.No. 286/12/2014-IT(Inv.lI) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Room No. 254, North Block. New Delhi, the 7th April 2014 To All Principal Chief Commissioners of Income Tax ( CCAs) All Directors General of Income Tax Sub : Adjustment of seized cash against tax liability payable on the income declared in the application submitted u/s.245C(1) before income Tax Settlement Commission (ITSC)-reg Sir/Madam. CBDT has received references from officers of the field formation seeking clarification as to whether seized cash can be adjusted against the tax payable on the income declared in the application submitted u/s 245C(1) of the Income tax Act, 1961 ( The Act ) before Income Tax Settlement Commission (ITSC). After careful consideration of the matter, the undersigned is directed to state as under; 2. Sec 132B of the Act mandates that seized cash shall be adjusted against any existing liability and the amount of liabilities determined on completion of assessments pursuant to search, including penalty levied or interest payable, in respect of which, such person is in default or deemed to be in default. Further, as per section 245C(1)of the Act, the additional amount of income-tax on the income disclosed in the application and the interest thereon, is to be paid on or before the date of making the application and proof of such payment is to be attached with the application. Therefore, the amount payable in pursuance of an application before the ITSC cannot be termed as existing liability . 3. As per sec. 132B, the raison d etre for seizure of assets and retention thereon is to safeguard and secure the interest of Revenue upon formal assessment determination of undisclosed income rather than to use them for discharging assessee s tax liability, which arise out of his application from ITSC. Hence, any adjustment of seized assets against such liability may not be in accordance with the existing procedure as laid down u/s 132B for application of the seized assets. 4. The above position may be brought to the notice of all officers working in your region. Yours faithfully. (Rajat Kapoor) Under Secretary to the Government of India