The Kolkata bench of Income Tax Appellate Tribunal ( ITAT ) in Nitin Kumar versus ACIT held that assessee cannot claim non-chargeability of Interest since Cash was seized after the expiry of the previous year.
The bench comrpising of Judicial Member S.S.Viswanethra Ravi and Accountant Member M.Balaganesh was held so while partly allowing the appeal of Assessee.
The Police Department during the election period conducted a search and seizure operation where they seized an unrevealed amount to the tune of 66 lakhs. Assessee agreed to offer seized cash as his undisclosed income towards the unexplained creditors and other liabilities appearing in his books.
In instant case Assessee pleaded the same may be treated as disclosure of income and pleaded for immunity from levy of penalty. However AO determined the tax payable of Rs. 22,11,739/- and charged interest u/s 234A, B & C to the tune of Rs. 9,51,628/- without giving credit for the seized cash available with the Department.
On appeal before CIT (A) granted partial relief to the assessee in the light of decision of Kolkata ITAT in the order held that the action of the assessee in seeking to adjust the seized cash with self-assessment tax payable along with the return of income is in order and in accordance with section 132B of the Act as admittedly self-assessment tax payable becomes ‘existing liability’ on the part of the assessee to settle.
Accordingly CIT (A) directed the AO to adjust the tax liability on the additional income of Rs. 66,80,000/- as self-assessment tax from the date of furnishing the return of income from the seized amount and re-compute the interest u/s 234A,B and C accordingly.
Being further aggrieved Assessee carried the matter to this tribunal. The bench heard the submission and perused the records submitted by the Assessee.
The Tribunal thereafter, found that Assessee had not paid any self-assessment tax but had pleaded to appropriate the same out of seized cash available with the Department. The bench also observed the preposition laid by Assessee that since the undisclosed income adjusted towards taxes payable then he is not eligible for further taxation or to be charged with interest u/s 234A and 234B of the Act.
Regarding the chargeability of interest under Section 234A of the Income Tax Act, the bench found that such interest is chargeable only for the period of delay in filing the return of income. The tribunal bench directed the AO to delete the charging of interest since the I-T department was in possession of seized amount for adjustment towards existing liability of the assessee. Once the amount is appropriated there will be no resultant tax liability.
At the same time Tribunal directed to charge interest under section 234B of the Act by reasoning that the assessee could not be fastened with interest liability for the delayed adjustment of seized cash by the AO.
Finally the bench noted that “With regard to interest u/s 234C of the Act, it is levied for deferment of payment of advance tax for the period of 01.04.2010 to 31.03.2011. In the instant case, since, the cash was seized after the expiry of the previous year i.e. after 31.03.2011, the assessee cannot claim non-chargeability of interest u/s 234C on that account. Hence, interest u/s 234C of the Act is leviable in this case”.
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