TMI Blog2012 (7) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... e seized cash from the date of request made by the assessee and thereafter consider charging interest u/ss 234A, 234B and 234C in case there is still any default in discharging the tax liability – In favor of assessee - ITA Nos.1722 & 1723/Hyd/2011 - - - Dated:- 25-5-2012 - SHRI D. KARUNAKARA RAO, SHRI SKTIJIT DEY, JJ. Appellant by Sri S. Rama Rao Respondent by Sri K. Viswanatham ORDER PER SAKTIJIT DEY, JM: These appeals by the assessee are directed against separate orders both dated 2-8-2011 passed by the CIT (A)-I, Hyderabad pertaining to the assessment years 2008-09 and 2009-10. Since common issues are involved in these two appeals, these are clubbed together and disposed of by this combined order for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lared for the assessment years 2008-09 and 2009-10. The AO while completing assessment did not adjust the cash seized amounting to Rs.1,10,00,000/- against the Income-tax liability and raised tax demand. The AO also charged interest u/s 234B and 234C of the Act. Being aggrieved by the order of assessment, the assessee preferred an appeal before the CIT (A). 4. Before the CIT (A), the assessee specifically raised a ground relating to charging of interests under sections 234B and 234C by contending that the AO was only unjustified in not adjusting the cash seized during the search and seizure operations against the Income-tax liability in spite of specific request of the assessee to adjust the same. The CIT (A) without deciding the issue pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an existing liability or against liability determined in pursuance to an assessment order passed u/s 153A or 153C of the Act. 7. We have heard rival contentions and perused the material on record. Undisputed facts are, in course of search and seizure operation conducted in the residential premises of the assessee on 7-8-2008, the department seized cash amounting to Rs.1,10,00,000./-. The assessee in his statement recorded u/s 131 of the Act on 19-11-2008 has specifically requested for adjustment of cash seized against Income-tax liability for assessment year 2008-09. In fact, in a letter dated 8-10-2009, the assessee had intimated the AO that the cash seized would be sufficient to cover the Income-tax liability against declared income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore reasonable to allow the assessee to take credit for seized amount as per recovery made by the revenue authorities and make payment accordingly. In the case of CIT vs. Ashok Kumar (2011) 334 ITR 355 ( P H) The Punjab Haryana High Court held as follows:- In CIT vs. Arun Kapoor, IT A No.149 of 2003 decided on 27th July, 2010 this Court had occasion to consider similar issue where it has been held that the assessee is entitled to adjustment of seized amount towards advance tax liability from the date of making the application in that regard. In the present case, the assessee had made request for adjustment of the advance tax liability of Rs.3,14,3212/- against the seized amount of Rs.5,90,000 on 28th Aug. 1989. Since the first instalme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of Ramjilal Jagannath Ors. vs. Asstt. CIT (1999) 156 CTR (MP) 49 : (2000) 241 ITR 758 (MP) is quite misplaced. As per the Revenue, in terms of the said judgment, the seized cash cannot be adjusted towards advance tax liability. We have carefully perused the said judgment and find that the same does not prohibit adjustment of seized assets towards liability to pay advance tax. In any case, we find that judgment of the Hon'ble Madhya Pradesh High Court is relevant in a situation when s. 132(5) was on the statute, which has since been deleted by the Finance Act, 2002 w.e.f. 1st June, 2002. Sec. 132(5) of the Act required the AO to make an enquiry and thereafter make an order to deal with the seized assets. Sec. 132(5) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2008-09 and 2009-10 but while filing return in compliance to the notice issued u/s 153A, the assessee has computed his income tax liability by taking credit of the cash seized in course of search and seizure operation. It is seen from the assessment order that the AO has accepted the income declared in return filed u/s 153A of the Act, but has not adjusted the cash seized towards the tax liability for the asstt. Years 2008-09 and 2009-10. There is nothing on record to show that there is any other existing liability excepting the income tax liability for the asstt. Years 2008-09 and 2009-10. 9. In the aforesaid view of the matter, we hold that the assessee is entitled to adjustment of seized cash against his income-tax liability. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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