TMI Blog2008 (3) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... cash seized during the search against the tax liability of the assessee. Therefore, in our considered view the Department has to adjust the amount seized at the time of search towards the advance tax, etc., from the date when the amount was seized. It is incorrect on the part of the AO, who has taken into consideration the adjustment from the date of assessment. It is a matter of commonsense that once the amount is lying with the Department that has to be adjusted; otherwise that amount where will be adjusted and in which account the Department will keep the amount. The seizure of the amount is for the' obvious reason that the same has to be adjusted against any demand raised against the assessee or against any demand which is pending before the date of search. Therefore, we direct the AO to adjust the remaining cash seized by the Department from the date of seizure because if any amount is to be adjusted against any liability the date of payment of that liability shall be the date of seizure and not the date of adjustment and/or the date of order. The AO is therefore, directed to modify his order accordingly. Rate of interest under ss. 234A and 234B has to be applied - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional. ground was raised vide letter dt. 25th Aug., 2006 that : the learned Dy. CIT has erred in law as well as the circumstances of the case in not considering the payment of ₹ 62 lacs seized on 23rd Jan., 2004 towards self-assessment dues and by levying interest under ss. 234A, 234B and 234C of the IT Act, 1961 . 4.2 The said letter along with the additional ground raised by the assessee was forwarded to the AO for his comments. The AO vide his letter dt. 14th Feb., 2007 sent his comments. Through its comments, it was submitted by the AO that the search action was conducted on 23rd Jan., 2004 on the assessee and during the course of search action cash amounting to ₹ 62 lacs was seized and deposited in PD account of the Director of IT (Inv.) on 29th Jan., 2004. Subsequently, vide letter dt. 10th Feb., 2004, the assessee requested for treating ₹ 22 lacs from seized cash out of ₹ 62 lacs as advance tax paid by the assessee for asst. yr. 2004-05. This request was accepted by the Director of IT (Inv.) and the amount of ₹ 22 lacs towards advance tax deemed to have been paid by the assessee for asst. yr. 2004-05 was transferred. The balance of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessed income at that point of time is the same as declared by the assessee while filing its return originally on 30th May, 2000 for asst. yr. 1999-2000. Therefore, there is no question of charging interest under ss. 234A, 234B and 234C. 7. The learned Departmental Representative on the other hand, stated that whatever rate of interest has been charged by the AO that has been charged as per the provisions of law applicable on the date of assessment completed. It was further submitted that the AO was not competent to adjust the amount found during the course of search in view of the provisions of law. Therefore, the order of the AO and the learned CIT(A) are correct in charging of interest and then rejecting the claim of the assessee. 7.1 In reply the learned counsel of the assessee stated the AO has full power towards adjustment of cash found during the course of search and therefore, it is incorrect to say that the AO was not competent to make adjustment of the amount found during the course of search. It was further submitted that there is no other demand pending against the assessee in earlier years or subsequent years on the date of assessment. Therefore, whate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure-tax Act, 1987 (35 of 1987), the GT Act, 1958 (18 of 1958), and the Interest-tax Act, 1974 (45 of 1974), and the amount of liability determined on completion of the assessment under s. 153A and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period as the case may be (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is deemed to be in default, may be recovered out of such assets. Clause (d) of s. 158BC be read as under : the assets seized under s. 132 or requisitioned under s. 132A shall be dealt with in accordance with the provisions of s. 132B. 9.4 After going through the old provisions of law and the new provisions of law of s. 132B and cl. (d) of s. 158BC, it is amply clear that whatever the amount has been seized by the Department that has to be treated against any pending demand including penalty and against the demand of the block period of which the assessment has to be completed. 9.5 As per the old pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of seizure. Then, how, under the law, the date of recovery of amount can be different from the actual date of recovery. There is no statutory provisions under which this date can be changed 'to be dealt with on the completion of regular assessment' only means that in the regular assessment adjustment should be made against finally determined liabilities and not on estimated liabilities. It does not mean that 'recovered' amount be not treated as not recovered till the regular assessment is made. 9.7 The Hon'ble Delhi High Court in the case of CIT vs. Kesr Kimam Karyalaya (2005) 196 CTR (Del) 611: (2005) 278 ITR 596(Del) has held that interest under s. 234B can be charged upto the date of order under s. 132(5) and not upto date of completion of assessment. 9.8 From the judgment of the Hon'ble Delhi High Court, it is clearly inferred that whatever the amount was seized that has to be taken into consideration for the purpose of adjustment against the demand. Once the order under s. 132(5) is passed, the demand determined and the amount seized has to be adjusted. 9.9 In the case of Dr. Prannoy Roy Anr. vs. CIT (2002) 172 CTR 465 (Del): (2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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