Whether advance tax liability can be adjusted against cash lying in account of Revenue which was seized from assessee during search and seizure operation - YES, rules High Court

THE issue before the Bench is - Whether advance tax liability can be adjusted against the cash lying in the account of the Revenue which was seized from the assessee during search and seizure operation. YES is the answer.

Facts of the case

A search and seizure operation was conducted at the residence and business premises of the assessee. The bank lockers were also searched. During the search, a sum of Rs. 4,31,36,000/- was found in cash and seized. The assessee wrote number of letters to all the authorities of department to adjust the cash seized against the advance tax for the AY 2010-11. However, the A.O. charged the interest u/s 234A, 234B & 234C of the Act. The said interest was deleted by the first appellate authority by observing that the cash was available with the department before filing the return and the same could have been adjusted against the demand of the advance tax. The Tribunal confirmed the same by observing that the cash belonged to the assessee and was already in the government account so there was no question to charge the interest. Still aggrieved, this petition has been filed by the Revenue.

Having heard the parties, the High Court held that,

++ it appears that, during the search, a huge cash was recovered. The assessee, while making statement under Section-134 of the Income Tax Act, offered to pay the tax on an undisclosed income of Rs. 10 Crore for which the tax would come to approve Rs. 3 Crore but the cash amount of Rs. 4,31,36,00/- was already available with the department which was deposited in the P.D. account. The assessee made a number of request from time to time for the adjustment of the cash seized against the liability of the advance tax, but the department neither replied nor adjusted the said amount. No doubt that before the due date, the cash was available with the department. The same could have been adjusted against the advance tax. The return was filed on or before the due date so the interest for default in furnishing the return of income under Section-234A was not desirable. Similarly, the interest for default in payment of advance tax is also not leviable under Section-234B for the reason that assessee had already made a request for adjustment of the amount against the advance tax which was already in the custody of the department. Similarly, Section- 234C is not attracted as there was no deferment.

++ in view of above discussion and by considering the totality of the facts and circumstances of the case, we do not find any reason to interfere with the impugned order passed by the Tribunal.