The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the cash seized could be adjusted against self-assessment tax payable under Section 132B of the Income Tax Act, 1961.
The Assessee, Arun Bansal was a resident individual. On 01.12.2018, a search and seizure operation under Section 132 of the Income Tax Act was conducted in the case of Faquir Chand Lockers and Vaults Pvt. Ltd.
In the course of a search and seizure operation, the Investigation Wing found a locker in the name of the assessee. When the assessee was called upon to explain the nature and source of cash found, the assessee could not explain the same and the assessee offered the amount as income.
The cash found in the locker was seized by the Department. Subsequently, the assessee filed his return of income.
The assessee offered it as income. However, he explained that he could not offer the amount in the return of income since the return of income was not accepted without payment of tax. Be that as it may, the assessee again issued a letter to the Assessing Officer offering the cash seized from the locker as income and requested the Assessing Officer to adjust the tax liability from the cash seized by the Department.
The Assessing Officer ultimately completed the assessment adding back the cash seized. However, while computing the tax liability of the assessee, the Assessing Officer levied interest under Section 234B of the Income Tax Act alleging non-payment of advance tax.
Somil Aggarwal,on behalf of the assessee submitted that the return of income filed for the impugned assessment year, the assessee could not include the amount of cash seized as income, as the departmental system did not accept the return without payment of self-assessment tax.
Sapna Bhatia who appeared on behalf of the revenue strongly relied upon the observations on the ground that the assessee did not voluntarily declare the unexplained cash seized as income and payment of advance tax could not be treated to be an existing liability under Section 132B of the Income Tax Act for adjustment of seized cash.
The two-member Bench of G.S. Pannu, (President) and Saktijit Dey, (Judicial Member) deleted the interest charged under Section 234B of the Income Tax Act observing that the cash seized could be adjusted against self-assessment tax payable with the return of income.
“On a reading of section 132B of the Act, though it transpires that the assets seized can be adjusted against any existing liability under the Act and advance tax may not be an existing liability, however, in our view, self-assessment tax is certainly an existing liability created on 1st April once the financial year end,” the Bench further observed.
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