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TMI Blog2017 (6) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 6,25,58,000/-. Thereafter in response to notice u/s 153A of the Act, assessee filed the return of income wherein the amount of Rs. 6,25,58,000/- disclosed during search was offered as income from undisclosed sources and the total income returned was Rs. 6,55,44,411/-. Thereafter, the assessment was framed u/s 143(3) vide order dated 18/12/2012 and the total income was determined at Rs. 6,55,44,411/- being the same as returned income. On the aforesaid total income, the Assessing Officer raised the tax demand of Rs. 30,28,404/- which included interest u/s 234B and 234C of the Act. Assessee, thereafter, filed an application u/s 154 of the Act before the Assessing Officer wherein prayer was made for granting of credit of seized cash against the advance tax liability for the year and accordingly sought reworking of interest u/s 234B & 234C of the Act. The application made u/s 154 was rejected by the Assessing Officer vide order dated 14/11/2013 interalia for the reason that according to Assessing Officer, the seized cash could be adjusted u/s 132B only on completion of assessment and that it cannot be adjusted against the advance tax liability for the year and for this conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This legal position was clarified in no uncertain terms by insertion of Explanation-2 in sec. 132B by Finance Act 2013. Explanation-2 of sec. 132B reads as under: Explanation 2.- For the removal of doubts it is hereby declared that the "existing liability" does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII (Emphasis given). 4.3.1 The relevant portion of explanatory memorandum to the Finance Bill 2013 reads as under:- "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 tax/interest/penalty and also to provide for recovery of taxes/interest/penalty, which may arise subsequent to the assessment pursuant to search. Accordingly, it is proposed to amend the aforesaid section so as to clarify that the existing liability does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII of the Act. This amendment will take effect from 1st June,2013." 4.3.2 The expression used in the Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inserted by the Finance Act, 2013 in sec. 132B was considered and it was held that Explanation is not retrospective after referring to Page 807 of Taxmann's publication "Interpretation of Statutes" 2nd Edition by Shri D.P.Mittal. However, in view of the observations of Supreme Court in the case of CIT vs. Podar Cement (P) Ltd. 226 ITR 625 on declaratory amendments, the Explanation-2 in sec. 132B, being declaratory in nature, operates retrospectively and therefore the said decision of ITAT, Ahmedabad is also of no avail to the case of the appellant. 4.3.4 Thus, after the insertion of Explanation-2 in sec. 132B, which is declaratory of law, the seized cash cannot be adjusted against the advance tax payable for the year and there is no flaw or mistake apparent from the record in the assessment order in this respect warranting rectification u/s 154 and therefore the AO is justified in rejecting the rectification application filed by the appellant. 4.3.5 Without prejudice to the above and even presuming for a while that Explanation-2 is not retrospective in nature as claimed by the appellant, it is to be noted that prior to the insertion of said Explanation-2, the issue involved is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds but the solitary issue is with respect to non granting of credit of seized cash towards advance tax. 6. Before us, Ld.Authorised Representative reiterated the submissions made before Assessing Officer and Commissioner of Income Tax(Appeals). He, further, submitted that it is an undisputed fact that the cash of Rs. 2,55,00,000/- was seized at the time of search conducted on 06/09/2010. He, further, submitted that assessee vide letter dated 22/09/2010 addressed to Assistant Commissioner of Income Tax(Investigation) and vide letter dated 28/09/2010 addressed to Commissioner of Income Tax - Central had requested them to adjust the seized cash against the advance tax payable for the year under consideration. He placed on record the copy of the aforesaid letters. He submitted that the Assessee's request was turned down. He submitted that the reliance placed by ld.CIT (A) to the amendment made to Section 132B by 132B by Finance Act 2013 is misplaced as it is effective from 1st June 2013 & therefore not applicable to assessment year 2011-12, being the year under consideration. He submitted that the Honourable Bombay High Court in the case of Commissioner of Income Tax Vs. Jotindra B. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, supported the order of Assessing Officer and Commissioner of Income Tax(Appeals) and further submitted that there was no mistake in the order of Assessing Officer which requires rectification u/s 154 of the Act. He, further, submitted that the Explanation 2 added to section 132B was for the purpose of removal of doubt and therefore it is retrospective in operation and therefore, the amendment made is declaratory in nature and for this proposition, he relied on the decision of Commissioner of Income Tax vs. Poder Cements (1997) 226 ITR 625(SC). 8. We have heard the rival submissions and perused the material on record. The issue in the present case is about the adjustment of cash seized at the time of search against the advance tax liability. It is an undisputed fact that cash of Rs. 2.55 crore was seized on 06/08/2010. It is also an undisputed fact that Assessee vide letter dtd 28/09/2010, addressed to CIT(C) had requested for adjusting of seized cash against the advance tax liability for AY 2011-12. It is Revenue's case that the seized cash cannot be adjusted against advance tax liability in view of the amendment made to Section 132B by insertion of Explanation 2 by Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent/assessee was required to pay advance tax on such income as mandated u/s.208 of the I.T.Act. Therefore, in view of the fact that there is no ambiguity in the provision so far application/adjustment of the seized money is concerned. Further, the judgments as relied upon by the Ld. D.R. would not apply on the facts and circumstances of the present case since this is not a case where application u/s.132(5) is made. Moreover, Section 132(5) is no more on statue book, even otherwise there is divergence in opinion between the Hon'ble High Court of Madhya Pradesh and Hon'ble Delhi High Court as fairly pointed by the Ld.D.R. The order of the ITAT Delhi Bench in ITA No.1151/Del/2008 as relied by the Ld. D.R. is on different set of facts therefore, is not applicable on the facts of the present case. The issue whether the seized money should be applied towards advance tax liability of assessee and credit should be given credit therefrom the date of seizure of money has been decided in favour of the assessee by the decision of ITAT Rajkot Bench in ITA No. 172/RJT/2010 in the case of Shri Ram S. Sarada V. DCIT and the decision of ITAT Mumbai Bench in the case of Sudhakar M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 807 it has been stated as under:- "The effect to be given to an explanatory amendment depends upon several factors, including its language. When the legislature has made the explanation operative prospectively by words expressed therein, its operation shall have to be confined to the future date. The same reasoning governs the case when Parliament limits the retrospectivity of the Explanation with effect from a particular date. In such a situation, giving future respectivity to the Explanation would be hijacking the intention of the Legislature into an impermissible area-CIT vs. Rajasthan Mercantile Co. Ltd. (1995) 211ITR 400 (Delhi). Thus, there is no doubt that ordinarily, a statue, and particularly when the same has been made applicable with effect from a particular date, should be construed prospectively and not retrospectively." 15. Thus considering the totality of the aforesaid, interpretation of applicability of explanation, and amendment made by Finance Bill 2013, facts and respectfully following the decision of the co-ordinate Bench, we are of the view that the amended Explanation cannot be applied in present case. We therefore allow the appeal of the Assessee and direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red Mr. Sethi's argument on behalf of the respondent that the judgment does not lay down the correct law. He also relied upon the memorandum explaining the Finance Bill to contend that Explanation 2 to Section 132B is retrospective. 6. In these circumstances, the questions of law are answered in favour of the appellant/assessee. It is admitted that the order of the Tribunal is liable to be set aside and is accordingly set aside." 10. Before us, Revenue has not placed any contrary binding decision in its support nor has placed any material to demonstrate that against the decision of Ahmedabad Tribunal in the case of Kanishka Prints(supra), Revenue has preferred any appeal before High Court or the aforesaid decision of Ahmedabad Tribunal has been reversed, set aside or overruled in any manner by the higher court. In view of the aforesaid facts, we are of the view that, that cash seized at the time of search be adjusted against the advance tax liability and as per ld. Authorised Representative submission the credit for it be given from the date of its request made to CIT(C) for adjustment of cash. We thus direct accordingly. In the result, the grounds of Assessee are allowed. 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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