TMI Blog2014 (11) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... question in favour of the assessee - Tax Appeal No. 55 of 2002 - - - Dated:- 26-11-2014 - K. S. Jhaveri And K. J. Thaker, JJ. For the Appellant : S. N. Divatia, Advocate For the Opponent : Varun K. Patel, Advocate JUDGMENT K. S. Jhaveri, J. 1. Being aggrieved and dissatisfied with the impugned order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench A (hereinafter referred to as the Tribunal ) dated 09.07.2001 in ITA No. 2603/Ahd/1995 for the Assessment Year 1993-94, the assessee has preferred the present Tax Appeal. 2. The following substantial questions of law were framed while admitting this appeal on 21.01.2002: (1) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in not entertaining the additional ground of appeal regarding the legality of intimation u/s. 143(1)(a) of the Income Tax Act, 1961. (2) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the cash seized cannot be adjusted against the advance liability as requested by the appellant. 3. The assessee filed its return of income for the assessment year 1993-94 declaring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal regarding the legality of intimation u/s 143 (1)(a) of the Act. We therefore answer question no. 1 against the assessee and in favour of the revenue. 6.1 So far as question no. 2 is concerned, it is an undisputed fact that the appellant before filing return of income addressed a letter dated 18.03.1993 before the end of the previous year relevant to the assessment year 1993-94 to adjust seized cash against the liability of advance tax for the A.Y. 1993-94 which was not accepted by the revenue. In this regard it shall be relevant to peruse sections 234 (B) and (C) and the same are reproduced hereunder: 234B. Interest for defaults in payment of advance tax (1) Subject to the other provisions of this section, where, in any financial year, an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than ninety per cent of the assessed tax, the assessee shall be liable to pay simple interest at the rate of two per cent for every month or part of a month comprised in the period from the 1st day of April next following such financial year to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 143 and where a regular assessment is made as is referred to in sub- section (1) following the date of such regular assessment]] and ending on the date of the re- assessment or recomputation under section 147, on the amount by which the tax on the total income determined on the basis of the reassessment or re- computation exceeds the tax on the total income determined under sub- section (1) of section 143 or] on the basis of the regular assessment aforesaid. (4) Where, as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under subsection (4) of section 245D, the amount on which interest was payable under sub- section (1) or sub- section (3) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and- (i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply, acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one and one- half per cent per month of the shortfall from for a period of three months on the amount of the shortfall from[ thirty] per cent or, as the case may be. 6.2 Similarly, the amended portion with regard to application filed for seized assets under Section 132B reads as under :- Application of seized assets under Section 132B The existing provisions contained in section 132B of the Income-tax Act, inter alia provide that seized assets may be adjusted against any existing liability under the Income-tax Act, Wealth-tax Act, the Expenditure-tax Act, the Gift-tax Act and the Interest-tax Act and the amount of liability determined on completion of assessments pursuant to search, including penalty levied or interest payable and in respect of which such person is in default or deemed to be in default. Various courts have taken a view that the term existing liability includes advance tax liability of the assessee, which is not in consonance with the intention of the legislature. The legislative intent behind this provision is to ensure the recovery of outstanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been made by the partners to bind the assessee and there could not have been any ground for rejecting such a request. It must also be noted that the Revenue accepted the return filed by the assessees and in fact it was found that they were entitled to a refund, which was more than the amount of cash that was seized. On the basis of the above facts, we do not find any error of law having been committed by the Tribunal in accepting the contentions urged by the assessees. While it is true that tax laws and equity do not always go hand in hand, but in the present cases, since there is nothing to prohibit the assessees from making a request for adjustment of the cash seized against advance tax liabilities, equity demands that the cash amount ought to have been adjusted as prayed for by the assessees to save it from any liability of interest. 6.4 In the present case, we do not find that assessee had any intention of shirking its advance tax liabilities and considering the provisions of law, the revenue ought to have considered the assessee s application which was made well in point of time subject to provisions of sections 234 (B) and (C) of the Act. We therefore an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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