11 January 2011
Dear Please help me in the Following Case : Thank you in Advance
In Scrutiny a corporate assesse has been imposed an addition tax of Rs. 5.5 Lacs and the notice of same recd. by assessee on 15 Jan. but the assessee fails to pay the amount within 30 days and the the department seized the bank account of the assessee in May , at the time of seizing of account tha account contains only 5000/- rupees but also having an uncleared cheque of Rs. 5 Lacs which was cleared with in 3 days of seizing of the account . Now after one year a demand notice of whole additional tax is send by the AO ie Rs. 5.5 Lacs with imposing Interest u/s 220(2) upto today.
Now when we approch the AO that they have seized our bank account one year back which already having a balance of Rs. 5 Lacs ( Aprox.) only after that they withdrawl the money from there . Also we are unable to use the same money from last 1 year because of Account Seizing by them.
Now my ques. is that since the department seized the co. bank account the account contain about Rs. 5 Lacs.Is it correct to impose interest upto today or they have to impose interest only upto that date when the a/c have Rs. 5 Lacs And on Bal. amt. interest upto today.
Please provide your valuable suggestions and if you have any case law regarding this also provide the same to us.
11 January 2011
as such, the amount on the date of seizure is considered and recorded by the authority. any uncleared amount on that date is not taken into account.
you may refer an appeal to CIT as, the power to reduce or waive interest u/s 220(2) vest with the Commissioner of Income-tax by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, with effect from April 1, 1987.
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