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Money Seized in I-T Searches can be Set off Against Advance Tax

08 Jan

Money Seized in I-T Searches can be Set off Against Advance Tax

The Income Tax Appellate Tribunal or ITAT has ruled that cash seized during a raid by the tax authorities can be adjusted against the advance tax liabilities of a tax payer. The ruling relates to a case involving Ram S Sarda, from whose premises cash was seized by the Income-tax officials after a search. Subsequently, the taxpayer requested the income-tax department to treat the seized cash as payment of advance tax. The department ignored this and levied interest under the provisions of the Income-tax Act on the assumption that advance tax had not been paid. The Commissioner (Appeal ) also did not support the assessee. The ITAT, the second appellate forum, after examining the merits of the case, in its order said that section 132 B (1) of the Income-tax Act provides for adjustment of assets seized against any existing liability. The ITAT said that the liability to pay advance tax is an existing liability and cash seized during the raid ought to have been adjusted against the existing liability. The Tribunal said that cash seized from a third party has been considered as cash belonging to the assessee and therefore the cash will be treated as cash belonging to the taxpayer. The ITAT also cited a Mumbai ITAT order relating to Sudhakar Shetty which said that the seized cash had to be adjusted against the advance tax liability.

Economics Times, New Delhi, 03-01-2012

 
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Posted by on January 8, 2012 in Uncategorized

 

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