ASTT. COMMISSIONER OF INCOME TAX-1, KANPUR V. GHANSHYAM DAS VERMA, KANPUR

MA 5/LKW/2019

AI Insights

The case revolves around a Miscellaneous Application (MA) filed by the Revenue against an order of the ITAT, Lucknow, which had deleted the interest levied under section 220(2) of the Income Tax Act on the assessee, Ghanshyam Das Verma. The Revenue contended that there was a mistake in the Tribunal's earlier order, claiming that the assessee had not furnished a bank guarantee as requested, which led to the delay in adjusting the tax liability against the sale proceeds of seized jewellery. The Tribunal, however, found that the Revenue's interpretation of the assessee's request was incorrect and that the assessee had indeed sought the sale of the jewellery to set off against the tax liability, not its release.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470387 (ITAT-LUCKNOW)
• Duration Of Justice: 5 year(s) 10 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-12-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-11-2024
• Assessment Year: misc
• Appeal Filed On: 30-01-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR RAJWANSHI
• Assessee Lawyers: RAKESH GARG
• Keywords: Search and seizure
• Section: 154; 254(2); 251; 132

Judgement Text

"M..A. No.05/Lkw/2019 Block Period Ending 10/09/89 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘A’, LUCKNOW BEFORE SHRI KUL BHARAT, VIDE PRESIDENT SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER M.A.No.05/Lkw/2019 (in I.T.A. No.27/Lkw/2017) Block Period Ending:10/09/1989 A.C.I.T.-1, Kanpur. Vs. Ghanshyam Das Verma, Prop. M/s Jewel Palace, 59/40, Birhana Road, Kanpur. PAN:ABHPV8567F (Appellant) (Respondent) O R D E R PER ANADEE NATH MISSHRA:A.M. (A) This Miscellaneous Application (“MA\" for short) has been filed by Revenue in respect of order dated 08/08/2017 of Co-ordinate Bench of the Income Tax Appellate Tribunal in I.T.A. No.27/Lkw/2017 for block period ending 10/09/1989 contending that a mistake had occurred in the aforesaid order, which was apparent from the record, and requesting to rectify the mistake and pass a suitable order. (B) In this case order dated 27/07/2017 was passed by Co-ordinate Bench of the Income Tax Appellate Tribunal, Lucknow in I.T.A. No.27/Lkw/2017, deleting interest levied u/s 220(2) of the I. T. Act. The relevant portion of the aforesaid order dated 27/07/2017 is reproduced below: Appellant by Shri Sunil Kumar Rajwanshi, Addl. CIT (D.R.) Respondent by Shri Rakesh Garg, Advocate M..A. No.05/Lkw/2019 Block Period Ending 10/09/89 2 “3. We have heard the rival submissions and have carefully gone through the orders of the authorities below. The only question before us whether the assessee is liable to pay interest u/s. 220(2) and by charging interest u/s. 220(2), the Assessing Officer has committed mistake. It is not denied that there has been search and seizure operation in the case of the assessee, During the course of said search jewellery valued at Rs.20,26,104/- had been seized. The assessee vide a petition dated 07.04.1999 requested the Revenue to dispose of the gold ornaments lying in the possession of the department and the admitted liability of tax/may be set off against the sale proceeds of the ornaments. The tax liability in the case of the assessee, after giving effect to the order of the CIT(A) came to Rs.14,60,641/- and the interest levied u/s. 158BFA(1) Rs.87,638/- . The Assessing Officer, we noted, vide letter dated 05.07.1999 took a view as if the assessee had asked for the release of jewellery and, accordingly, asked the assessee to submit bank guarantee of Rs.21,98,326/-. Copy of the said letter is available at pages 6 and 7 of the paper-book. We, noted that the Revenue has not taken any action on the petition filed by the assessee dated 07.04.1999. Had the Revenue taken the action, the amount realized out of sate of jewellery would have been adjusted against the income tax liability. The interest u/s. 220(2) although mandatory in nature is leviable if the assessee fails to pay, the amount specified in the notice of demand issued u/s. 251 within 30 days of the service of notice on him. In this case, the demand has been raised only after completion of the assessment not prior to that. The assessment was framed on 29.09.2000. The demand was raised subsequently reduced by the order of the CIT(A) and the ultimate demand came to Rs.14,60,641/- in respect of the tax and interest u/s. 158BFA(1) at Rs.87,638/. It is not a case where the assessee has filed an appeal against levy of interest u/s. 220(2) but the assessee has filed appeal against the order passed u/s. 154 rejecting claim of the assessee that since the assessee has requested vide his application dated 07.04.1999 for the disposal of, the jewellery and the adjustment of the amount so realized against the admitted tax liability. If the Assessing Officer would have disposed of the jewellery, no interest u/s. 220(2) would have been levied on the assessee as the ultimate demand was only Rs.14,60,641/- and interest u/s. 158BFA(1) Rs.87,538/, which was less than the value of the jewellery seized. In this case, the assessee has requested on for disposal of jewellery on 07.04.1999 and the assessment was completed on 29.09.2000. The Revenue had sufficient time to dispose of the said jewellery and adjust the amount so realized against the tax liability of the assessee. The period of 16 M..A. No.05/Lkw/2019 Block Period Ending 10/09/89 3 months, in our opinion, was sufficient to dispose of the jewellery as had been specifically asked for by the assessee. The interest u/s. 220(2) is leviable @1% of every month or part of the month after the expiry of thirty days of the service of notice of demand u/s. 156. The assessee in this case has been deemed to have been in default without any fault on the part of the, assessee but for the inaction of the Revenue. Hence, in our opinion, the assessee cannot be penalized for the inaction on art of the Revenue. In the case of the assessee, no doubt, while framing assessment, demand was originally raised on 29.09.2000 at Rs.30,48,872/- for the tax. Subsequently, it was reduced to Rs.14,60,641/-. Therefore, u/s. 220(2), the assessee could have been made liable for levy of interest on demand of Rs.14,60,641/- and interest u/s. 158BFA(1) amounting to Rs.87,638/-, which is less than the amount of the jewellery seized. Had the Assessing Officer adjusted the amount realized on the sale of jewellery, the assessee, in our opinion, would not have been liable for interest u/s. 220(2). To that extent, we find that a mistake has crept into the order of the CIT(A). We, accordingly, delete the interest levied i/s. 220(2) and to that extent allow the appeal of the assessee.” (B.1) The present M.A. before us was filed by the Revenue in respect of the aforesaid order dated 08/08/2017 contending that a mistake had occurred in the aforesaid order, which was apparent from the record, and requesting to rectify the mistake and pass a suitable order in this case. The relevant portion of the M.A. is reproduced below: “3. While adjudicating the appeal the Hon'ble I.T.A.T. has held that the assessee in this case has been deemed to have been in default without any fault on the part of the assessee but for the inaction of the Revenue. In this regard, it is submitted that these observations of the ITAT are not in consonance with the material available on records in view of the fact that in response to the assessee's request to recover the demand from sale of seized jewellery, made vide his letter dated 23.01.1999, the A.O. vide letter dated 11.02.1999 asked the assessee to submit Bank Guarantee of Rs.21,98,326/- to get the seized jewellery released after adjustment and payment of tax, but no Bank Guarantee was furnished by the assessee. Therefore, the delay was on part of the assessee and interest u/s. 220(2) of the I.T. Act, 1961 was levied as per Law. Thus, a mistake has occurred in the above mentioned order which is apparent from records. M..A. No.05/Lkw/2019 Block Period Ending 10/09/89 4 4. In view of the above factual position, the Hon'ble Tribunal is very kindly requested to rectify the above mistake and pass a suitable order in this case.” (C) At the time of hearing before us, Revenue was represented by Shri Sunil Kumar Rajwanshi, Addl. CIT (D.R.) and the assessee was represented by Shri Shri Rakesh Garg, Advocate. Learned Sr. D.R. for Revenue relied on the contents of the aforesaid Misc. Application, relevant portion of which has been reproduced in foregoing paragraph of this order. Learned Counsel for the assessee supported the aforesaid order dated 08/08/2017 of the ITAT and contended that there was no mistake apparent from record in the order dated 08/08/2017 of the ITAT. (D) We have heard both sides. We have perused the materials on record. We find that the assessee vide a petition dated 17/04/2019 requested Revenue to dispose off gold ornaments lying in the possession of the Department (seized during the course of search u/s 132 of the Act), and to set off the admitted liability of tax against the sale proceeds of the ornaments. The petition application dated 17/04/2019 was misconstrued by Revenue as request for release of the jewellery whereas in reality it was request for disposing of the seized jewellery (and setting it off against admitted tax liability of the assessee) and not for release of the jewellery. The order dated 27/07/2017 (sought to be amended in this MA) was passed after due consideration of these and other relevant facts and circumstances, and applicable law was also well-considered. In the MA before us, once again an attempt is being made to portray the assessee’s request as request for release of jewellery whereas in reality, the request made from assessee was not for release of jewellery but for selling of the jewellery and setting off sale proceeds of the jewellery with the admitted tax liability. The MA is based on the misconstrued understanding of assessee’s petition dated M..A. No.05/Lkw/2019 Block Period Ending 10/09/89 5 17/04/2019. Amendment to the aforesaid order dated 08/08/2017 of ITAT sought by Revenue, if accepted, would amount to review of the aforesaid order dated 08/08/2017. But Income Tax Appellate Tribunal does not have power to revise its own order. Perusal of section 254(2) of the I. T. Act will reveal that ITAT has power to amend the order passed u/s 254(1) of I. T. Act, to rectify any mistake apparent from record. But ITAT does not have power to review its order passed after taking a well-considered view. (E) In view of the foregoing, we are of the view that the present Misc. Application of Revenue is unsustainable. We hold that there was no mistake in the aforesaid order dated 08/08/2017 of the ITAT, Lucknow. Accordingly, the Misc. Application of the Revenue is dismissed. (F) In the result, the Misc. Application is dismissed. (Order pronounced in the open court on 06/12/2024) Sd/. Sd/. (KUL BHARAT) (ANADEE NATH MISSHRA) Vice President Accountant Member Dated:06/12/2024 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. Concerned CIT 4. The CIT(A) 5. D.R. ITAT, Lucknow Asstt. Registrar "