ITA No. 36 of 2004 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 36 of 2004 Date of Decision: 30.9.2010 The Commissioner of Income Tax ....Appellant. Versus Shri Ashok Kumar ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Vivek Sethi, Advocate for the appellant. Mr. G.R. Sethi, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1. The appeal was admitted by this Court vide order dated 9.9.2004 for determination of the following substantial question of law:- “Whether the amount seized at the time of search under section 132 can be adjusted towards the advance tax liability of the year during which search had been conducted?” 2. Briefly the facts necessary for deciding the appeal as culled out from the record are that a search was conducted at the business premises of the assessee on 27.7.1989. During the course of search, a cash amount of Rs.6,20,580/- was found out of which Rs.5,90,000/- was seized. The assessee surrendered a sum of ITA No. 36 of 2004 -2- Rs.5,75,000/- in his statement recorded under Section 132(4) of the Act as income for the assessment year in question. The assessee filed its return on 5.3.1992 declaring an income of Rs.5,72,370/-. The assessee vide letters dated 28.8.1989 and 12.9.1989 requested that the advance tax payable in respect of the assessment year under consideration amounting to Rs.3,14,213/- may be adjusted out of cash seized and he may not be held liable for interest under Sections 234B and 234C. The assessee did not receive any response that the aforesaid applications had been rejected. However, in the assessment order, interest amounting to Rs.1,04,412/- and Rs.1,47,024/- under Sections 234A and 234B was charged. Being aggrieved, the assessee filed appeal against deduction made and also charging of interest under Sections 234A and 234B before the Commissioner of Income Tax (Appeals) [in short “the CIT (A)”] who vide order dated 5.1.1996 deleted the interest charged under Sections 234A and 234B of the Act. Feeling dissatisfied, the department took the matter in appeal and the Tribunal vide order dated 23.7.2003 dismissed the appeal which gave rise to the revenue to approach this Court by way of instant appeal. 3. We have heard learned counsel for the parties. 4. It is not in dispute that the assessee had made a request vide letter dated 28.8.1989 and reminder dated 12.9.1989 for adjustment out of the seized amount towards advance tax liability in respect of the assessment year in question, i.e. 1990-91. 5. In Commissioner of Income Tax (Central), Ludhiana v. Arun Kapoor, ITA No. 149 of 2003 decided on 27.7.2010, this Court had occasion to consider similar issue where it has been held that the ITA No. 36 of 2004 -3- assessee is entitled to adjustment of seized amount towards advance tax liability from the date of making the application in that regard. In the present case, the assessee had made request for adjustment of the advance tax liability of Rs.3,14,312/- against the seized amount of Rs.5,90,000/- on 28.8.1989. Since the first installment of advance tax was payable on 15.9.1989 and the request for adjustment having been made on 28.8.1989 and reminder on 12.9.1989, no interest was exigible under Sections 234A and 234B of the Act. The Tribunal has rightly held that the assessee was entitled to adjustment of the said amount and no interest could be charged on that basis. Therefore, no fault could be found with the approach adopted by the Tribunal. 6. Accordingly, the substantial question of law is answered in favour of the assessee and against the revenue. 7. Consequently, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE September 30, 2010 (ADARSH KUMAR GOEL) gbs JUDGE