Court No.-36 Reserved Case:-INCOME TAX APPEAL No.-182 of 2014 (A.Y. 2010-11) Appellant :- Commissioner Of Income Tax Kanpur Respondent :- Sh. Sunil Chandra Gupta Counsel for Appellant :- Shambhu Chopra,S.C. It Counsel for Respondent :- Rahul Agarwal Hon'ble Tarun Agarwala,J. Hon'ble Dr. Satish Chandra,J. (Delivered by Dr. Satish Chandra,J. ) present appeal is filed by department against impugned order dated 28.02.2004, passed by Income Tax Appellate Tribunal, Agra in I.T.A. No. 290/Agra/2013 for assessment year 2010-2011. brief facts of case are that on 10.03.2010, search and seizure operation was conducted at residence and business premises of assessee. bank lockers were also searched. During search, sum of Rs. 4,31,36,000/- was found in cash and seized. same was deposited by department in its P.D. Account. assessee has written number of letters on 21.03.2010, 29.03.2010 and 05.07.2010 to all authorities of department to adjust cash seized against advance tax for assessment year 2010-11. When return for assessment year under consideration was filed on 30.06.2010 then once again, assessee made request A.O. to adjust cash lying in P.D. account against advance tax, but A.O. charged interest under Section-234A, 234B & 234C of Act. said interest was deleted by first appellate authority by observing that cash was available with department before filing return and same could have been adjusted against demand of advance tax. Tribunal has confirmed same by observing that cash belongs to assessee was already in government account so 2 there is no question to charge interest and to this effect Tribunal has discussed number of case laws to this effect. Still being not satisfied, department has filed present appeal. With this background, heard Sri Shambhoo Chopra, learned counsel for appellant-department, who has justified order passed by A.O. and submits that Tribunal has not considered provision of Section-132B of Act which deals with matter relating to appropriation of seized assets. He read out Section- 132B(1) which is reproduced as under:- 132B(1) assets seized under section 132 or requisitioned under section 132A may be dealt with in following manner, namely- (i) amount of any existing liability under this Act, Wealth Tax Act, 1957,(27 of 1957), Expenditure Tax Act, 1987(35 of 1987), Gift Tax Act, 1958(18 of 1958) and Interest Tax Act, 1974 (45 of 1974), and amount of liability determined on completion of assessment [under section 153A and assessment of year relevant to previous year in which search is initiated or requisition is made, or amount of liability determined on completion of assessment under Chapter XIV-B for block period, as 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. [Provided that where person concerned makes application to Assessing Officer within thirty days from end of month in which asset was seized, for release of asset and nature and source of acquisition of any such asset is explained] to satisfaction of Assessing Officer, amount of any existing liability referred to in this clause may be recovered out of such asset and remaining portion, if any, of asset may be released, with prior approval of Chief Commissioner or Commissioner, to person from whose custody assets were seized. [Explanatio2.- For removal of doubts, it is hereby declared that existing liability does not included advance tax payable in accordance with provisions of Part Cof Chapter XVII.] 3 In view of above legal provisions, it is apparent that cash seized in course of search, can only be appropriated against amount of any existing liability, which in term of explanation 2 do not include advance tax . learned counsel for department also submitted that cash seized can only be appropriated against amount of any existing liability which does not include advance tax. Accordingly, cash seized during course of search cannot be appropriated against advance tax. On other hand, Sri S.D. Singh, learned Senior Counsel assisted by Sri Rahul Agarwal, learned counsel for assessee- respondent had justified impugned order passed by Tribunal. At strength of written submission, learned counsel for assessee submitted that cash was seized during course of search. return was filed on or before due date, so liability to deposit advance tax could have been adjusted against seized amount. advance tax liability in respect of assessment year 2010-11, for which return was filed on 30.06.2010, cash was already available in P.D. account maintained by department. A.O. as well as other authorities have not accepted request made by assessee for adjustment of advance tax. liability of tax was about Rs. 3 Crore, out of which sum of Rs. 4,31,36,000/- was seized and deposited by department in P.D. account controlled by department. At least on 03 occasions, requests were made for adjustment but department neither replied nor adjusted amount. It is injustice to assessee to hold on to cash belonging to assessee in government account and, at same time, charge interest for non payment of advance tax on due date. It is clear that assessee's application was never adjudicated by authorities. No reasons were supplied to assessee to support his arguments. He relied on ratio laid down by Hon'ble Bombay High Court in case of CIT Vs. Shri 4 Jyotindra B. Modi dated 21.09.2011, where it was observed that liability to pay advance tax in respect of amount arises before completion of assessment. Section-132B(1) never prohibits utilization of amount seized during course of search towards advance tax liability. Lastly, he made request to uphold order passed by Tribunal. We heard both parties at length and carefully gone through materials available on records from which it appears that, during search, huge cash was recovered. assessee, while making statement under Section-134 of Income Tax Act, offered to pay tax on undisclosed income of Rs. 10 Crore for which tax would come to approve Rs. 3 Crore but cash amount of Rs. 4,31,36,00/- was already available with department which was deposited in P.D. account. assessee made number of request from time to time for adjustment of cash seized against liability of advance tax, but department neither replied nor adjusted said amount. No doubt that before due date, cash was available with department. same could have been adjusted against advance tax. return was filed on or before due date so interest for default in furnishing return of income under Section-234A was not desirable. Similarly, interest for default in payment of advance tax is also not leviable under Section-234B for reason that assessee had already made request for adjustment of amount against advance tax which was already in custody of department. Similarly, Section- 234C is not attracted as there was no deferment. It may be mentioned that Hon'ble Punjab & Haryana High Court, in case of CIT vs. Ashok Kumar 334 ITR 355 (P.&H.) observed that assessee was entitled to adjustment of seized cash against advance tax liability and therefore, no interest could be charged under Section-234A,B,C especially when department had not responded to assessee's request for 5 adjustment of cash seized against advance tax liability. Similar view was also expressed in case of CIT vs. Kesar Kimam Karyalaya reported in 278 ITR 596 . In view of above discussion and by considering totality of facts and circumstances of case, we do not find any reason to interfere with impugned order passed by Tribunal. same is hereby sustained alongwith reasons mentioned hereinabove. No substantial question of law is emerging from impugned order. In result, appeal filed by department is dismissed at admission stage. Order Date :- 11/03/2015 pp/ (Dr. Satish Chandra,J.) (Tarun Agarwala,J.) Commissioner Of Income-tax, Kanpur v. Sunil Chandra Gupta