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Delhi High Court in the case of Latika Datt Abbott and Charu Datt Bhatia v. DIT(Inv.) in Writ Petition Nos. 6491, 6588/2016 dated 22.08.2017

·            During the course of search, cash was found and seized from the premises of both the assessees. Both the assessees offered additional income for the A.Y. in which search was conducted (A.Y. 2012-13), and thereafter, filed letter dated 13.12.2011 praying for adjustment of cash seized towards advance tax liability for A.Y. 2012-13.

·            Thereafter, both assessees filed their returns of income and claimed the credit of cash seized as payment of tax on 15.12.2011.

·            Both assessees received intimation dated 25.11.2013, wherein the declared income was accepted, however, the credit of cash seized was not given, and accordingly, a demand was raised.

·            Thereafter, both assessees again sent letters dated 08.07.2014 and 14.07.2014 to Department requesting that cash seized may be treated as their respective advance tax payment.

·            On 07.04.2015, both assessees again requested that the seized cash may be adjusted against advance tax payment, and without prejudice to this contention, further requested that seized cash may be adjusted against the demand raised.

·            The Department, acting on above without prejudice request, adjusted the cash seized against the tax demand, as a result of which both assessees were made liable to pay interest u/s 234A, 234B and 234C of the Act from the date on which advance tax was due till the date of above adjustment.

·            The Court took note of the fact that the CBDT has come out with Circular No. 20/2017 dated 12.06.2017, which clarifies that Explanation 2 to section 132B which states that “existing liability does not include advance tax payable” shall have retrospective application.

·            The Court observed that the intention of the Department in the above Circular was not to contest those cases where the benefit of adjustment of seized cash against the advance tax liability had been given to the assessee.

·            The Court, therefore, concluded that the benefit of Circular No. 20/2017 was to be extended to assessees whose request for adjustment of seized cash against advance tax dues was refused prior to the date of this Circular. Accordingly, benefit of said adjustment was allowed to both assessees with effect from the date of their first request made in this regard.

 

For further reading, refer the attachment. 

  Further Reading
Posted on: 13-11-2017