TMI Blog2013 (12) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided in favour of assessee. - ITA Nos.2223 to 2229/Mds/2012 - - - Dated:- 20-3-2013 - O K Narayanan And Vikas Awasthy, JJ. For the Appellant : Shri B Ramakrishnan, FCA For the Respondent : Shri Shaji P Jacob, IRS, Addl. (CIT) ORDER:- PER : Bench This is a bunch of seven appeals. These appeals are filed by the assessee, who is an A.O.P. The relevant assessment years are 2002-03 to 2008-09. 2. These appeals are directed against the common order of the Commissioner of Income-tax(Appeals)-II at Chennai dated 28.9.2012 and arise out of the orders of the Assessing Officer rejecting the petitions filed by the assessee under sec.154 of the Income-tax Act, 1961. 3. The assessee in the present case, an A.O.P., was engaged in the business of money lending. There was a search action under sec.132 on 16.5.2007. Cash amounting to ₹ 1.65 crores was seized in the course of search and the same was retained by the Revenue in the P.D. account of the Commissioner of Incometax. Thereafter the assessments were completed under sec.153C. The assessments so completed were taken in first appeals before the Commissioner of Income-tax(Appeals). Certain modifications we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax(Appeals) has also relied on the judgment of the Hon ble Madras High Court in the case of CIT v. K.T.Kunjumon (239 ITR 782) wherein the Hon ble High Court has held that the seized cash could be adjusted only against the tax resulting from block assessment. He held that when the block assessment is pending, no adjustment can be made against any other tax liability, before competing block assessment. 8. Thus, the Commissioner of Income-tax(Appeals) rejected the first appeals filed by the assessee. The assessee is aggrieved and therefore, the second appeals before us. 9. The common grounds raised by the assessee in all these appeals read as below : 2. The Learned Commissioner of Incometax( Appeals) has erred in upholding that the assessee s appeal is not maintainable u/s 154 as the issue of interest involves a debatable issue even though the same is a mistake apparent from the records. 3. The Learned Commissioner of Incometax( Appeals) has erred in rejecting the assessee s appeal on the ground that the assessee sought the amount seized to be treated as advance tax, where as actually the assessee had requested that the sums seized be treated as tax paid by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search. But, if the assessee authorizes the department to appropriate the seized amount towards such tax liability, then it is the duty of the Revenue to act accordingly and appropriate the seized amount towards such tax liability. In the present case, it is the finding of the Commissioner of Incometax(Appeals) that no such letter is available on records. This observation is not correct. The assessee has written to the Assistant Director of Income-tax on 30.8.2007 requesting the Revenue to adjust the amounts seized from the assessee s residence, bank locker, office and Mrs. Jayanthi Krishnamurthy towards tax payable by the assessee. The assessee has also stated that the assessee is an A.O.P. and the request is made to the department on behalf of the A.O.P. As far as the amount of ₹ 31 lakhs paid on 17.8.2007 is concerned, the finding of the Commissioner of Income-tax(Appeals) is that it was paid by Shri S. Duraipandi on 17.8.2007 for the assessment year 2007-08 in his individual capacity and the credit could be given only in his individual account. This finding is also not true. The assessee as an A.O.P. has already requested in writing to the department that the said amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted against the advance tax liability of the assessee. 17. This is because the argument of the Revenue is contradictory and self-defeating. The authorities below have stated that there was no liability existing at the time of search and therefore, the amount seized from the assessee could not be adjusted against the advance tax. If there was no existing liability of advance tax against the assessee, then how the Revenue can levy interest on the assessee under sec.234B? Interest under sec.234B is levied on an assessee for default in payment of advance tax. That contemplates the existence of liability towards advance tax in the previous year relevant to the assessment year. In the case of the assessee, the said liability towards advance tax is latent. Even though not quantified exactly, the liability towards advance tax has already been crystalized, when the search is completed by the department. If there could have been no tax liability against the assessee consequent to the search, there was no provocation for the department to seize the amount of ₹ 1.65 crores at the time of search. The seizure of that amount is made to adjust against the demand arising out of the consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 596, has considered a similar issue of levying interest under sections 234B and 234C. In the said case, on similar set of facts, the Hon ble High Court held that the department should have appropriated the amount against the advance tax liability of the assessee and as such the assessee could not be held responsible for payment of interest under sections 234B and 234C of the Act. The same view has again been taken by the Hon ble Delhi High Court in the case of Vishwanath Khanna vs. Union of India Others (W.P.(C) No.21428 of 2005 - dated 3rd June, 2011), wherein the Hon ble High Court held that the advance tax payable should be adjusted from the amount lying with the department in the assessee s own account when the assessee has given in writing to the department to meet the advance tax liability from such amount withheld by the department. 22. Accordingly, we direct the assessing authority to compute the interest, chargeable under sec.234B after first giving credit to the amount of ₹ 1.65 crores seized on 16.5.2007 and ₹ 31 lakhs paid on 17.8.2007. The seized amount shall be treated as advance tax paid on 16.5.2007 itself. The sum of ₹ 31 lakhs will be treate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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