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2010 (7) TMI 610

..... come of Rs. 30,38,920 - On April 29, 1994, a search was conducted at the residential as well as business premises and on search, the assessee surrendered certain amounts as additional income - The assessee made a request for adjusting the cash amount seized during search on May 30, 1994 - The said request of the assessee was not accepted by the Assessing Officer - As the search operation had taken place on April 29, 1994, i.e., after the closing of the financial year, interest u/s 234B and 234C was levied - Hence, the assessee is liable to pay interest u/s 234C of the Act in terms thereof and shall be entitled to benefit of payment out of the seized cash from the date of making application for adjustment of the seized cash towards tax liabi .....

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..... surrendered certain amounts as additional income. The assessment was completed on November 23, 1995, at the total income of Rs. 30,63,930. The assessee made a request for adjusting the cash amount seized during search on May 30, 1994. The said request of the assessee was not accepted by the Assessing Officer. As the search operation had taken place on April 29, 1994, i.e., after the closing of the financial year, interest under sections 234B and 234C was levied. In September, 1994 part of the seized cash was adjusted towards tax due in different cases for the assessment year 1994-95. As per section 211 of the Act, the assessee was required to pay advance tax in three instalments for the financial year ending on March 31, 1994. The due dates .....

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..... e on May 30, 1994. In other words, the assessees had requested soon after the search that whatever tax was due on the income surrendered be adjusted out of the amounts seized from them and the balance be returned to them. We have heard learned counsel for the Revenue. None appears for the assessee. Learned counsel for the Revenue submits that the view taken by the Tribunal in deleting the interest cannot be sustained as payment of interest was mandatory. The mere fact that the assessee could not foresee the interest liability was no ground not to demand interest. The interest was payable on the amount of assessed tax which may be held to be due. Reliance has been placed on Explanation 1 to section 234B(1) of the Act added in the year 2001, .....

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..... Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income. (b) in sub-section (3), for the words one and one-half per cent , the words one and one-fourth per cent shall be substituted with effect from June 1, 2001. 10. The said Explanation was the subject-matter of challenge before this court in Raj Kumar Singal s case [2002] 255 ITR 561 (P&H) where the Division Bench while upholding the validity of the said provision, interpreted it as under (page 562) : . . . A comparison of the two provisions shows that under the original provision interest was leviable on the income as declared in the return filed by the assessee. By the amended provision, the interest .....

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