Civil Writ Petition No. 4544 of 1993 -1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Civil Writ Petition No. 4544 of 1993 Date of decision: 2.12.2010 Rakesh Talwar ...Petitioner Versus Central Board of Direct Taxes and others ...Respondents CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Rajiv Atma Ram, Senior Advocate with Mr. Arjun Partap Rajiv Atma Ram, Advocate for the petitioners Ms.Urvashi Dhugga, Advocate for the respondents. **** ADARSH KUMAR GOEL, J ( Oral) This petition seeks quashing of order dated 16.2.1993 passed by Central Board of Direct Taxes and notice of demand dated 31.12.1990 issued by the Assistant Commissioner of Income Tax, Central Circle, Chandigarh. Case of the petitioner is that he derives income by way of share of profits in partnership firm engaged in manufacturing and trading of jewellery. He paid advance tax for the assessment year 1989-90 as per estimation. Thereafter, on 15.3.1989, on his search, amount was seized from him which he surrendered as additional income by way of his statement recorded by the concerned officer Civil Writ Petition No. 4544 of 1993 -2- **** on that day. He further stated that the amount seized may be adjusted towards advance tax liability for the current financial year and the balance may be refunded. However, the notice of demand issued after assessment included interest liability on the advance tax even for the period after 15.3.1989 on which date cash amount was seized from the petitioner and he made request for adjustment of advance tax due upto that date. Accordingly, the petitioner filed a petition under Section 119(2)(a) of the Income Tax Act, 1961 seeking waiver of interest on the amount already available with the department and in respect of which adjustment towards advance tax liability had been sought by way of statement made at the time of seizure of the amount. The said prayer has been rejected by the impugned order dated 16.2.1993 by holding that there was no reason to waive interest on the advance tax liability under Section 234-B of the Income Tax Act. In reply filed, the stand taken is that amount of cash seized from the petitioner could not be treated as payment towards liability for advance tax. We have heard learned counsel for the parties. Question for consideration is whether in spite of amount being available with the department which could be adjusted towards the liability for advance tax as requested by the petitioner, interest could be levied for the period after the said request. The question has to be answered in favour of the petitioner. The stand of the department that the said amount could Civil Writ Petition No. 4544 of 1993 -3- **** not be adjusted towards the liability for advance tax of the petitioner is without any legal basis. The amount seized had to be dealt with in accordance with law and unless otherwise required had to be refunded or adjusted towards the advance tax liability as sought by the petitioner. This view has also been taken by this Court in CIT Vs. M/s Garg Rice and General Mills ITA No.81 of 2005 decided on 27.5.2006. Accordingly, we allow this petition and direct that the amount seized from the petitioner be adjusted towards and to the extent of advance tax liability. The Assessing Officer may make a fresh calculation and pass a consequential order in accordance with law within three months from the receipt of a copy of this order. (Adarsh Kumar Goel) Judge December 02,2010 (Ajay Kumar Mittal) Pka Judge