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Facts
A search under Section 132 was conducted on the assessee, and cash amounting to ₹1,35,29,300/- was seized. The assessee filed returns under Section 153A, declaring income from transportation business, and requested the appropriation of seized cash against self-assessment tax. The AO assessed the total income as unexplained money under Section 69A, applied Section 115BBE for taxation, and did not adjust the seized cash, which the CIT(A) upheld.
Held
The Tribunal set aside the double addition of income for A.Y. 2021-22, holding that the income already disclosed and assessed in A.Y. 2020-21 should be excluded. It also ruled that Section 69A and Section 115BBE were not applicable as the source of seized cash was explained as business income, directing the application of normal tax rates. Furthermore, the Tribunal directed the AO to adjust the seized cash against the self-assessment tax liability as per Section 132B and to charge interest under Section 234B only after such adjustment.
Key Issues
Whether there was a double addition of income across assessment years; whether Sections 69A and 115BBE apply when the source of seized cash is explained as business income; whether seized cash should be adjusted against self-assessment tax liability; and whether interest under Section 234B should be levied without such adjustment.
Sections Cited
132, 153A, 143(3), 142(1), 131, 144, 69A, 115BBE, 68, 69, 69B, 69C, 69D, 139(1), 132B, 140A, 234B, 234C, 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-26 (hereinafter referred to as the “Ld. CIT(A)”] dated 11.03.2025 for the AY 2020-21 & 2021-22.
The facts in brief are that a search u/s 132 of the Act was carried out on the assessee on 05.11.2020. Accordingly, the notices were issued u/s 153A of the Act for the six assessment years prior to the year of search from A.Y. 2015-16 to A.Y. 2020-21. The assessee is engaged in the business of transportation business. The assessee has regularly
With the above factual matrix of the case, the various grounds raised by the assessee in A.Y. 2020-21 and 2021-22 are being adjudicated in the following paras:-
i. Ground nos.1 and 2 are not pressed by the assessee and therefore, no adjudication is required. Hence, the ground nos.1 and 2 are dismissed as not pressed. ii. The issue raised in ground no.3 is against the order of ld. CIT (A) upholding the assessment order wherein the income has been taken at ₹1,40,87,000/- by ignoring the fact that out of the said income ₹50,22,990/- was already disclosed in A.Y. 2020-21 and has been accepted by the ld. AO vide order dated 17.03.2022. iii. After hearing the rival contentions and perusing the materials available on record, we find that the ld. AO has assessed the income u/s 69A of the Act at ₹1,40,87,000/- as unexplained money which is according to the ld. AO was the cash seized during the course of search whereas the ld. AO, in assessment framed the assessment for A.Y. 2020-21, vide order dated 17.03.2022, passed u/s 153A read with section 144 of the Act, has already assessed the income at ₹50,22,9900/-. Therefore, the additions made by the ld. AO again in iv. The issue raised in ground no.4 is against the order of ld. CIT (A) upholding the order of the ld. AO wherein the income disclosed in the return of income had been subjected to tax @ 60% by applying the provisions of Section 115BBE of the Act, which is completely illegal and void ab initio. v. We have heard the rival submissions and perused the materials available on record, we note that the income declared by the assessee in the return of income was treated as unexplained money u/s 69A of the Act. We observe that though, the cash was found during the course of search on the premises of the assessee but the same was claimed by the assessee to be on account of income earned from business of the assessee from transportation and others. Therefore, the source of income stood explained at the very threshold. Therefore, applying the rate of tax at 60% by invoking the provisions of Section 115BBE of the Act is incorrect and against the provisions of the Act. In our opinion, since the source of income stood explained, therefore provisions of 69A of the Act is not applicable and so is provisions of section 115BBE of the Act. We have “Where director of assessee-company surrendered a certain sum during search, and Assessing Officer treated said sum as income from unexplained sources and invoked provisions of section 115BBE and churged tax at a higher rate, since Assessing Officer had not pointed out any unexplained credit in books of account, provisions of sections 68, 69, 69A, 69B, 69C and 69D were not attracted on surrendered amount and aforesaid surrender not being covered under provisions of sections 68, 69, 694. 698. 69C and 69D. provisions of section 115BBE were not attracted" vi. Accordingly, we direct the ld. AO to apply normal rate of tax as applicable to the business/ other source of income. Needless to state that the income assessed in A.Y. 2020-21 shall be excluded from vii. The issue raise in ground no.5 is against the order of ld. CIT (A) upholding the assessment order where the ld. AO has failed to adjust the seized cash against the self-tax liability, which is in violation of provisions of Section 132B of the Act. viii. The facts qua this ground have been narrated at page no.1 as noted above that the assessee wrote to the PCIT, CC-1, Kolkata by way of three communications dated 01.03.2022, 09.03.2022 and 17.03.2022, allowing the appropriation of cash seized against the self-tax liability as per the return of income filed by the assessee. However, the ld. AO has not adjusted the said cash seized though the said facts were mentioned by the ld. AO in the assessment order. ix. The ld. AR vehemently submitted before us that the ld. AO as well as the ld. CIT (A) has gravely erred in not considering the request of the assessee in not adjusting the seized cash against the self-tax liability which is against the Provisions of Section 132B of the Act which deals with the application of seized/ requisition assets. The ld. AR submitted that as per the Provisions of Section 132B of the Act, adjustment of seized assets/ requisition assets, the Explanation 2 inserted with effect from 01.06.2013 by Finance Act, 2013, to Section 132B of the Act specifically provides that the existing tax liability does not include advance tax payable in accordance with the provisions of Section part C of Chapter XVII. The ld. AR submitted that but the self-assessment liability has not been excluded from the term of existing liability. The ld. AR submitted that self-assessment tax was covered under chapter XIV and therefore argued that the adjustment of cash seized during the search is allowed against the x. We have examined the facts of the case in the light of the decision of the co-ordinate bench of this Tribunal in the case of Assistant Commissioner of Income-tax vs. Narendra N. Thacker (supra), wherein the Hon'ble Bench has held as under:-
“Pursuant to the search, a notice under section 153A was issued on the assessee and in response to the same, the assessee filed his return of income for the assessment year 2006-07 declaring certain taxable income. During the course of search, cash to the extent of Rs. 20,00,000 was found from a locker with the Canara Bank belonging to the assessee and the same was seized by the department. The assessment was completed under section 153A determining taxable income raising a demand. Originally the Assessing Officer gave credit for seized cash towards self assessment tax which was later rectified under section 154 by the Assessing Officer by revoking the credit for seized cash as according to the Assessing Officer, there was no existing liability, and consequentially charged interest under sections 234B and 234C. Held that the subsequent action of the Assessing Officer in revoking the credit given for seized cash towards existing tax liability under proceedings under section 154 is illegal. The provisions of section 132B makes it clear that the terms 'existing liability' does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII. But this amendment was brought in the statute by the Finance Act, 2013 with effect from 1-6-2013 only. Hence, it can be safely concluded that what is precluded in the statute is adjustment of seized cash towards advance tax liability only and not self “3. We have heard learned counsel for the parties.
It is not in dispute that the assessee had made a request vide letter dated August 28, 1989 and reminder dated September 12, 1989 for adjustment out of the seized amount towards advance tax liability in respect of the assessment year in question, i.e., 1990-91.
In CIT v. Arun Kapoor-I. T. A. No. 149 of 2003, decided on July 22, 2010, [2011] 334 ITR 351 (P&H), this court had occasion to consider a similar issue where it has been held that the 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 August 28, 1989. Since the first instalment of advance tax was payable on September 15, 1989 and the request for adjustment having been made on August 28, 1989 and reminder on September 12, 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.
Accordingly, the substantial question of law is answered in favour of the assessee and against the Revenue.
Consequently, the appeal is dismissed.” xii. Considering the above facts of the assessee in the light of the aforesaid decisions, we are inclined to hold that the cash seized by the department during search needs to be adjusted against the self- tax liability. Accordingly, we direct the ld. AO to adjust the same. The ground no. 5 is allowed.
A.Y. 2020-21 xiv. The issue raised in the assessee’s appeal are similar to one as decided by us in ITA No. 791/KOL/2025. Therefore, our decision on various grounds would mutatis mutandis, apply to this appeal of assessee in for A.Y. 2020-21. Hence, the appeal of the assessee is allowed. xv. In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 11.11.2025.