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Delhi HC Rules Seized Cash should not be treated as Advance Tax when No Default Found in Payment

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Published on: November 21, 2023 at 17:58 IST

The Delhi High Court recently determined that cash seized during a search operation should be treated as advance tax, asserting there was no default in payment.

Justice Rajiv Shakdher and Justice Girish Kathpalia emphasized that the petitioner had formally offered Rs. 50 lakhs seized during the search to be treated as advance tax, both in the return on investment (ROI) and the accompanying computation sheet.

The petitioner, subjected to a search under Section 132 of the Income Tax Act, 1961, contested that the seized amount had not been treated as advance tax, despite consistent representations.

The computation sheet filed on March 15, 2010, along with the ROI, explicitly stated that the seized cash should be treated as advance tax.

The court rejected the department’s argument that adjustments could only be made against existing tax liabilities, as no such liability had been determined at the time of the cash seizure.

The court maintained that the ROI was filed post-search, and the petitioner, in line with the prevailing regime, offered the seized amount as advance tax. Consequently, the court concluded there was no default or deferment in the payment of advance tax.

Case Title: Ashok Kumar Aggarwal v. ACIT