TMI Blog2001 (12) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... sees. It was also requested by all the assessee s in the said declaration made on 16th April, 1994, that the tax on the surrendered income be adjusted from the seized cash. Subsequently on 11th April, 1995, the AO passed an order under s. 132(5) estimating the income of the assessees on the basis of declaration made on 16th Dec., 1994, and after retaining the seized cash for adjustment towards the tax payable by them on such estimated income, the balance amount was released by the AO. 4. During the course of assessment proceedings, it was pleaded before the AO by the assessee that in view of the request made specifically by them on 16th Dec., 1994, to adjust the seized cash against the tax liability on the surrendered income, the same be adjusted against the advance tax liability for asst. yr. 1995-96 and accordingly no interest under ss. 234A, 234B and 234C be charged. This plea of the assessees, however, was not accepted by the AO and interest under s. 234A, 234B and 234C was charged by him without adjusting the seized cash against the advance tax payable by the assessees. Aggrieved by the orders of the AO on this issue, the assessees preferred appeals before the learned CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment of the said seized cash against the advance tax liability. Merely because the orders under s. 132(5) were passed in the next financial year i.e., on 11th April, 1994. According to him, the assessees were made to suffer with the levy of interest under s. 234A, 234B and 234C for no fault on their part. He, therefore, contended that the learned CIT(A) was fully justified in directing the AO to treat the seized cash as payment of advance tax in the month of December, 1994 for the purpose of computing interest under ss. 234A, 234B and 234C. The learned counsel for the assessee also submitted that the issue raised by the Revenue in these appeals is covered in favour of the assessees by the various decisions of the Tribunal including that of Nagpur Bench and cited the following cases in this regard: (i) Gopal Chand Khandelwal vs. Asstt. CIT (1995) 52 ITD 661 (Del); (ii) Promila Bajaj vs. ITO (1995) 51 ITD 532 (Asr); (iii) ITA No. 545/Nag/1994 in the case of Anil B. Agrawal; (iv) ITA No. 296/Nag/1995 in the case of Murtuza Bhai Mohammed Bha;i (v) ITA No. 358/Nag/1996 in the case of P.D. Talmale; (vi) ITA No. 431/Nag/1993 in the case of Shiv Kumar Agarwal (HUF); (vii) I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A, 234B and 234C and the learned CIT(A), therefore, was fully justified in directing the AO to recompute such interest by treating the seized cash as advance tax paid by the assessees in the month of December, 1994. He, therefore, urged that the impugned orders of the learned CIT(A) on this issue deserve to be upheld and the appeals filed by the Revenue are liable to be dismissed. 9. We have considered the rival submissions and also perused the relevant material on record to which our attention was drawn during the course of hearing. We have also carefully gone through the precedents relied upon at the Bar. It is observed that the main issue which requires our consideration for disposing of these appeals is whether the cash seized during the search and seizure operations can be adjusted against the advance tax liability of the assessees as per their request made on 16th Dec., 1994, prior to the passing of order under s. 132(5) on 11th April, 1995. In this regard it is observed that a complete procedure has been provided in s. 132(5) in relation to the application of seized cash/assets and as per the same, the seized assets cannot be dealt with in any manner unless the AO makes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal position as regards adjustment of seized cash against the advance tax liability has however, now been clarified by the Hon ble Madhya Pradesh High Court in its well discussed and well reasoned judgment in the case of Ramjilal Jagannath Ors. vs. Asstt. CIT which appear to be directly on the point in issue under consideration. 11. The learned counsel for the assessee has contended before us that this Bench of Tribunal in its consolidated order dt. 10th Aug., 2001, in ITA No. 13/Nag/1998, 120/Nag/1998 and C.O. 58/Nag/1998, has distinguished the decision of Madhya Pradesh High Court in the case of Ramjilal Jagannath. From the perusal of the said order of the Tribunal, it is, however, evident that the facts of the case before the Tribunal were found to be distinguishable from the facts in the case of Ramjilal Jagannath before the Hon ble Madhya Pradesh High Court inasmuch as in the case before the Tribunal, the assessee had made a request for adjustment of seized cash against the self-assessment tax payable by him only after the date of passing of a final order under s. 132(5) and the Tribunal, therefore, allowed such adjustment considering the facts and circumstances of that ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew to ensure uniform treatment of persons similarly placed to reduce litigation. The very fact that the new system introduced by the provisions of ss. 234A, 234B and 234C relating to payment of mandatory interest was also meant to deter the assessees from repeatedly committing default. The provisions of ss. 234A, 234B and 234C are also meant to cater to different situations, each being distinctly different from other and attracts a liability by way of interest. In the case of Dr. S. Reddappa Ors. vs. Union of India Ors. the Hon ble Karnataka High Court has observed that failure of the assessee to abide by certain provisions of the Act has been made a basis for forcing him to compensate society by paying interest in terms of the offending ss. 234A, 234B and 234C. Explaining further, their Lordships of Karnataka High Court has observed that in the case of failure to perform the statutory and social obligation, an assessee can be directed to compensate society for its acts of commission and omission, as appears to have been done by incorporating ss. 234A, 234B and 234C in the Act. The Hon ble Karnataka High Court has also observed that if despite full knowledge of the date and tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he true compensatory nature of the levy of interest under s. 234A, 234B and 234C in the light of the objects and intentions of the legislature as well as the observations of the Hon ble Karnataka High Court in the case of Dr. S. Reddappa Ors. discussed herein above, we are of the view that if the said objects are understood in the right perspective, then the basis for computation of such interest specifically provided in the relevant provisions appears to be in consonance with the legislative intentions in enacting the same. 14. Reliance was placed by the learned counsel for the assessee before us on the decisions of Hon ble Supreme Court reported in 188 ITR 401, 208 ITR 649 167 ITR 458 and 81 ITR 763 to contend that literal construction is to be avoided if it defeats the manifest, purpose and the objects of the statute. In this regard we have already dealt with the purpose and object of levy of interest under ss. 234A, 234B and 234C elaborately in the preceding paras of this order before finally coming to the conclusion that the relevant provisions are in consonance with the legislative intentions. In any case, the question of avoiding the literal construction and following re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idity of ss. 234A and 234B, at the end it was held by the Hon ble High Court that the petitioner shall be at liberty to urge all such grounds as may be otherwise open to him before the authorities concerned, against the levy of recovery of the interest payable under ss. 234A, 234B and 234C of the Act. We find that s. 234A provides for charging of interest for defaults in furnishing belated return of income. Where the return is furnished after due date, interest under s. 234A of the Act will be charged upto the date of filing the return on the amount of tax on the total income as determined under s. 143(1) and 143(3) as reduced by the advance tax, if any, paid and any tax deducted or collected at source. All the judgments of Hon ble Supreme Court and Hon ble High Courts speak about compensatory nature of levy of interest under s. 234A and 234B etc. A few Benches of Tribunal held that payment of taxes paid in whatever manner should be given credit while charging interest under s. 234B and these decisions do not touch upon the issue of levying of interest under s. 234A of the IT Act except in the case of ITA No. 296/Nag/1995 dt. 31st Dec., 1996. Even in this case relief was allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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