M/s Radha Mohan Purushottam Das Jewels Pvt Ltd., Kanpur V. Astt. Commissioner of Income Tax, Kanpur

ITA 127/LKW/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5280 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 17-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K BAR
• Keywords: Gift; Recovery proceedings; Search and seizure; Reasonable cause; Set aside
• Section: 153A; 234B; 201; 208; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 127/LKW/2017 ASSESSMENT YEAR: 2011 - 12 M/S RADHA MOHAN PURSHOTTAM DAS JEWELS PVT. LTD. 59/39, BIRHANA ROAD KANPUR V. ACIT CC-II KANPUR T AN /PAN : AAECR2919N (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI A. K. BAR, CIT (DR) DATE OF HEARING: 22 10 201 9 DATE OF PRONOUNCEMENT: 05 11 201 9 O R D E R PER A. D. JAIN, V.P.: THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE LD. CIT(A)- IV, KANPUR, DATED 7/12/2016 FOR ASSESSMENT YEAR 2011-12, TAKING THE FOLLOWING GROUNDS: 1. BECAUSE THE CIT(A), HAS ERRED ON FACTS AND IN LAW IN DISMISSING THE APPEAL EX PARTE WITHOUT GIVING ADEQUATE OPPORTUNITY, WHICH ORDER IS BAD IN LAW AND BE QUASHED. 2. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN SUMMARILY DISMISSING THE APPEAL EX-PARTE BEING DISMISSED IN DEFAULT STATING THAT ON THE DATE FIXED, NONE ATTENDED, WHICH DISMISSAL OF APPEAL IS CONTRARY TO FACTS AND SET-A-SIDE. 3. BECAUSE THE ASSESSEE BEING PREVENTED BY SUFFICIENT AND REASONABLE CAUSE IN NOT ATTENDING BEFORE THE CIT(A) IN RESPONSE TO THE NOTICES ISSUED, THE ORDER PASSED BY THE CIT(A) BE SET- ASIDE. WITHOUT PREJUDICE: ITA NO.127/LKW/2017 PAGE 2 OF 15 4. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN DISMISSING THE APPEAL FILED AGAINST THE ORDER PASSED UNDER SECTION 154 OF THE ACT, 1961 IN LIMINE HOLDING THAT THE 'ADMITTED TAX' IN TERMS OF SECTION 249(4) HAS NOT BEEN DEPOSITED, THE APPEAL BEING NOT MAINTAINABLE, THE ORDER PASSED BY CIT (A) IS CONTRARY TO FACTS, BAD IN LAW AND BE QUASHED. 5. BECAUSE THE ENTIRE 'ADMITTED TAX' HAVING BEEN DEPOSITED AS PER THE PROVISIONS OF LAW IN TERMS OF SECTION 249 AND THE DETAILS, HAVING BEEN FURNISHED, THE CIT(A) HAS, MISINTERPRETED THE PROVISIONS AND HAS ARBITRARILY HELD, THAT THE 'ADMITTED TAX' HAS NOT BEEN DEPOSITED THE ORDER PASSED BY THE CIT(A) BE QUASHED. 6. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT THE PRESENT APPEAL IS AGAINST THE ORDERS PASSED U/S 154 OF THE ACT, 1961 AND NOT AGAINST 143(3), THE PROVISIONS OF THE SECTION 249 AS SUCH WOULD PRIMA FADE NOT BE APPLICABLE, THE DISMISSAL OF APPEAL IN LIMINE IS TOTALLY UNWARRANTED. 7. BECAUSE HAD THE 'ADMITTED TAX NOT BEEN DEPOSITED OR DEEMED TO HAVE DEPOSITED, THE AO WOULD NOT HAVE DROPPED THE PENALTY PROCEEDINGS INITIATED U/S 140A/221 OF THE ACT, 1961, THIS ITSELF PROVES THAT THE 'ADMITTED TAX' STOOD DEPOSITED, THE ORDER PASSED IS BAD IN LAW AND BE QUASHED. 8. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT IT IS A CASE OF SEARCH U/S 132 DATED 31.03.2011 WHEREIN THE ASSESSEE HAD SURRENDERED RS.8 CRORES AT THE TIME OF SEARCH AND CASH AMOUNTING TO RS.4,70,80,000/- WAS SEIZED; THREE POSTDATED CHEQUES AGGREGATING TO RS.2.25 CRORES WERE PROCURED FROM THE ASSESSEE TOWARDS PAYMENT/ADJUSTMENT OF TAX ON THE AMOUNT SURRENDERED AT THE TIME OF SEARCH ITSELF, THERE WAS NO REASON FOR THE CIT(A) TO INFER, THAT THE 'ADMITTED TAX' HAD NOT BEEN DEPOSITED, THE ORDER PASSED BY THE CIT(A) IS BAD IN LAW AND BE QUASHED. 9. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD MOVED THREE LETTERS OF THREE DIFFERENT DATES I.E., 07.04.2011, 07.11.2012 AND 17.04.2013 REQUESTING FOR ADJUSTMENT OF THE AMOUNT SEIZED TOWARDS PAYMENT OF TAX LIABILITY IN TERMS OF SECTION 132, THE AMOUNT SEIZED WAS BOUGHT TO BE ADJUSTED AGAINST THE TAX LIABILITY, ARISING AT, THE TIME OF FILING OF RETURN ON THE INCOME ITA NO.127/LKW/2017 PAGE 3 OF 15 SURRENDERED, THE CIT(A) HAS ERRED IN HOLDING OTHERWISE, THE 'APPEAL ORDER PASSED' BY THE CITA) BE QUASHED. 10. BECAUSE THE AUTHORITIES BELOW HAVE ERRED ON FACTS AND IN LAW IN CHARGING INTEREST UNDER SECTION 2348 AND 234C OF THE ACT WITHOUT ADJUSTING THE AMOUNT OF CASH SEIZED AT THE TIME OF SEARCH, FROM THE DATE WHEN THE REQUEST WAS MADE WHICH IF DONE, THERE WOULD BE NO LIABILITY TO PAY INTEREST, THE INTEREST CHARGED BE DELETED. 11. BECAUSE WITHOUT BEING PREJUDICE TO THE ABOVE, THE CIT(A) HAS ERRED IN LAW IN NOT GIVING ANY FINDING, ON THE MERITS OF THE CASE, WHICH IS CONTRARY TO THE PRINCIPLES OF JUDICIAL DISCIPLINE. 2. THIS IS A RECALLED MATTER. THE APPEAL IN ITA NO.127/LKW/2017, FIRST TIME, WAS DISPOSED OF BY THE LUCKNOW BENCH OF THE TRIBUNAL, VIDE ORDER DATED 4/5/2018, SETTING ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORING THE MATTER BACK TO HIS FILE WITH A DIRECTION TO ADJUDICATE THE ISSUE AFRESH AFTER PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE AND ALSO LOOKING INTO THE ORDER OF THE TRIBUNAL AS REFERRED TO BY THE ASSESSEE BEFORE THE TRIBUNAL. AGAINST THIS ORDER, THE ASSESSEE MOVED AN APPLICATION, VIDE M.A. NO.31/LKW/2018, WITH THE SUBMISSION THAT THE ISSUE INVOLVED IN THE APPEAL OF THE ASSESSEE IS IDENTICAL TO THE ISSUE RAISED BY THE RADHA MOHAN PURSHOTTAM DAS AGARWAL GROUP, CONSISTING OF TEN APPEALS, BEING ITA NOS.679 TO 687/LKW/2017, WHOSE APPEALS WERE DISPOSED OF BY THE LUCKNOW BENCH OF THE TRIBUNAL, VIDE ORDER DATED 8/8/2017, DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEES, THEREFORE, THE SAME VIEW BE TAKEN IN THE CASE OF THE ASSESSEE ALSO. RELYING ON THE SUBMISSIONS MADE BY THE ASSESSEE, THE ORDER OF THE TRIBUNAL DATED 4/5/2017 IN ITA NO.127/LKW/2017 WAS RECALLED AND ACCORDINGLY THE APPEAL IS FIXED FOR HEARING ON 22/10/2019. ITA NO.127/LKW/2017 PAGE 4 OF 15 3. THE ASSESSEE HAS MOVED AN APPLICATION DATED 2/5/2018, STATING THEREIN THAT GROUND NOS.1 TO 8 AND 11 ARE NOT PRESSED. ACCORDINGLY GROUND NOS.1 TO 8 AND 11 ARE REJECTED AS NOT PRESSED. 4. THE ASSESSEE FURTHER STATES THAT GROUND NO.12 IS GENERAL IN NATURE, FOR WHICH NO ADJUDICATION IS REQUIRED. 5. NOW WE ARE LEFT WITH GROUND NOS. 9 & 10, RELATING TO CHARGING OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT. 6. THE BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION AT THE BUSINESS-CUM-RESIDENTIAL PREMISES OF THE ASSESSEE AND ITS PARTNERS ON 31/3/2011, RESULTANT TO WHICH, A SUM OF RS.72,80,000/- WAS SEIZED FROM THE BUSINESS PREMISES OF THE ASSESSEE FIRM AND RS.5,50,000/- FROM THE RESIDENTIAL PREMISES OF THE PARTNERS. AT THE SAME, A SEARCH HAD ALSO TAKEN PLACE AT THE BUSINESS-CUM-RESIDENTIAL PREMISES OF M/S RADHA MOHAN PURSHOTTAM DAS JEWELS PVT. LTD., RELATED TO THE ASSESSEE FIRM, AND CASH AMOUNTING TO RS.2,00,00,000/- AND RS.1,92,50,000/- WERE SEIZED FROM THE BUSINESS PREMISES AT BIRHANA ROAD, KANPUR AND KUCHI MAHAJAN, NEW DELHI. AT THE TIME OF SEARCH, THE STATEMENT OF SHRI KAILASH NATH, PARTNER OF THE FIRM, RADHA MOHAN PURSHOTTAM DAS AGARWAL AND SHRI AMAR NATH AGARWAL, DIRECTOR OF THE CONCERN, RADHA MOHAN PURSHOTTAM DAS JEWELS PVT. LTD. WAS RECORDED, AND SHRI KAILASH NATH AGARWAL, PARTNER OF THE ASSESSEE FIRM HAD SURRENDERED RS.7,00,00,000/- AS UNDISCLOSED INCOME TO BE TAXED, IN THE HANDS OF THE FAMILY MEMBERS, AND SHRI AMAR NATH AGARWAL HAD DISCLOSED A SUM OF RS.8,00,00,000/- TO BE TAXED IN THE HANDS OF HIS FAMILY MEMBERS. ON THE DISCLOSED AMOUNT OF RS.7,00,00,000/-, THE D.I. WING HAD TAKEN THREE CHEQUES OF RS.75 LAKHS EACH FROM SHRI KAILASH NATH AGARWAL, TOWARDS THE ESTIMATED TAX LIABILITY. 7. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING AN INCOME OF RS.5,17,63,360/-, INCLUDING THE PROPORTIONATE UNDISCLOSED INCOME OF ITA NO.127/LKW/2017 PAGE 5 OF 15 RS.3,50,00,000/- (50%). THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS.5,18,61,380/-, AFTER ADDING A SUM OF RS.98,000/- AS DISALLOWANCE OUT OF EXPENSES. ACCORDINGLY A TAX LIABILITY OF RS.1,24,91,886/- WAS CREATED, AS PER DETAILS GIVEN BELOW: S. NO. PARTICULARS AS PER NOTICE OF DEMAND AS PER RETURN OF INCOME 1 ASSESSED INCOME 5,18,61,380/- 5,18,61,380/- 2. TAX PAYABLE 1,60,25,166/- 1,60,25,166/- 3. PREPAID TAXES 68,39,956/- 1,66,19,956/- 4. INTEREST U/S 234B 33,06,376/- 3,58,750/- 5. TOTAL TAX PAYABLE 1,24,91,886/- -2,36,040/- 8. WHILE FILING THE RETURN, THE ASSESSEE CLAIMED A SUM OF RS.1,66,19,956/- AS PREPAID TAXES, WHICH INCLUDED ADVANCE TAX. HOWEVER, THE ASSESSING OFFICER DID NOT GIVE CREDIT FOR THE PREPAID TAXES AND ALSO NOT ADJUSTED THE AMOUNT SEIZED AT THE TIME OF SEARCH AGAINST THE SELF-ASSESSMENT TAX, RESULTANT TO WHICH A TAX LIABILITY OF RS.1,24,91,886/- HAS BEEN CREATED, AND ALSO CHARGED INTEREST UNDER SECTION 234B AND 234C OF THE ACT. 9. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A), WHO DISMISSED THE APPEAL OF THE ASSESSEE. 10. THE SUBMISSION OF THE ASSESSEE BEFORE US WAS THAT THE ASSESSEE HAD SURRENDERED RS.8 CRORES AT THE TIME OF SEARCH AND CASH AMOUNTING TO RS.4,70,80,000/- WAS SEIZED; THAT AT THE TIME OF SEARCH, THREE POSTDATED CHEQUES, AGGREGATING TO RS.2.25 CRORES WERE PROCURED FROM THE ASSESSEE TOWARDS PAYMENT/ADJUSTMENT OF TAX ON THE AMOUNT SURRENDERED AT THE TIME OF SEARCH, THEREFORE, THERE WAS NO REASON FOR ITA NO.127/LKW/2017 PAGE 6 OF 15 THE AUTHORITIES BELOW TO HOLD THAT THE 'ADMITTED TAX' HAD NOT BEEN DEPOSITED; THAT THE ASSESSEE HAD FILED LETTERS, DATED 7/4/2011 (APB:14A), DATED 7/11/2012 (APB:13) AND DATED 14/4/2013 (APB:12), TO THE ASSTT. DIRECTOR OF INCOME TAX (INV.), UNIT-I, KANPUR REQUESTING FOR ADJUSTMENT OF THE AMOUNT SEIZED TOWARDS PAYMENT OF TAX LIABILITY IN TERMS OF SECTION 132 OF THE ACT; AND THAT THEREFORE, THE ASSESSING OFFICER WAS NOT JUSTIFIED TO CHARGE INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT. THE LD. A.R. OF THE ASSESSEE FURTHER SUBMITTED THAT THE LUCKNOW BENCH OF THE TRIBUNAL, IN THE GROUP CASES, IN ITA NO.679 TO 687/LKW/2017, VIDE ORDER DATED 8/8/2017, DEALT WITH THIS ISSUE OF CHARGING OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT, AND DIRECTED THE ASSESSING OFFICER TO RECOMPUTED THE INTEREST UNDER SECTION 234B OF THE ACT. THUS, FOLLOWING THE SAME VIEW, THE ISSUE RELATING TO LEVY OF INTEREST IN THE CASE OF THE ASSESSEE MAY BE DECIDED. 11. THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 12. HEARD. WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY THE ORDER OF THE LUCKNOW BENCH OF THE TRIBUNAL, VIDE ORDER DATED 8/8/2017, WHEREIN THE TRIBUNAL, IN THE CASE OF THE RADHA MOHAN PURSHOTTAM DAS AGARWAL GROUP, CONSISTING OF NINE APPEALS, HAS DEALT WITH THE ISSUE RELATING TO CHARGING OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT, HOLDING AS UNDER: 4. NOW THE NEXT ISSUE ARISING IN GROUND NO. 8 RELATES TO THE CHARGING OF INTEREST U/S 234B AND 234C OF THE I.T. ACT. SO FAR THE INTEREST U/S 234C IS CONCERNED, LEARNED A.R. BEFORE US VEHEMENTLY CONTENDED THAT SINCE IN THE IMPUGNED CASE THE ASSESSEE SURRENDERED THE AMOUNT AS ON 31/03/2011 I.E. AT THE LAST DAY OF THE FINANCIAL YEAR RELATING TO ASSESSMENT YEAR THEREFORE, THE LIABILITY TO PAY THE ADVANCE TAX DOES NOT ARISE PRIOR TO THE ACCRUAL OF THE INCOME. THE INCOME HAS ACCRUED AS PER THE PROVISIONS OF SECTION 4 OF THE ACT ON ITA NO.127/LKW/2017 PAGE 7 OF 15 31/03/2011 WHEN THE ASSESSEE SURRENDERED THE SAID INCOME. THEREFORE, NO QUESTION OF LEVY OF THE INTEREST U/S 234C ARISE. 5. LEARNED D. R., ON THE OTHER HAND, RELIED ON THE ORDER OF THE ASSESSING OFFICER 6. AFTER GOING THROUGH THE FACTS OF THE CASE, ESPECIALLY THE FACT THAT IN THIS CASE SEARCH HAD TAKEN PLACE ON 31/03/2011 AND THE SURRENDER OF THE INCOME HAS BEEN MADE ON THAT VERY DAY. WE DO AGREE WITH LEARNED A.R. THAT IT IS NOT A CASE OF DEFERMENT OF THE INCOME AS THE LIABILITY TO PAY THE ADVANCE TAX IN THE CASE OF THE ASSESSEE ARISE ONLY AT THE MOMENT THE INCOME WAS SURRENDERED BY THE ASSESSEE I.E. AS ON 31 ST MARCH AND NOT PRIOR TO THAT. SINCE THE LIABILITY TO PAY THE ADVANCE TAX HAS ARISEN ON 31 ST MARCH THEREFORE, IT CANNOT BE REGARDED TO BE A CASE OF DEFERMENT OF INCOME TAX. THEREFORE, WE DO AGREE THAT THE INTEREST U/S 234C CANNOT BE LEVIED AND THERE HAS BEEN A MISTAKE APPARENT ON RECORD IN THE ORDER OF THE ASSESSING OFFICER WHILE LEVYING THE INTEREST U/S 234C OF THE ACT. 6.1 NOW COMING TO THE COMPUTATION OF INTEREST U/S 234B. THE ASSESSEE HAS MOVED AN APPLICATION FOR RECTIFICATION IN EACH OF THE CASE DATED 12/05/2015 REQUESTING THE ASSESSING OFFICER TO RECTIFY THE MISTAKE APPARENT ON RECORD IN RESPECT OF THE COMPUTATION OF INTEREST U/S 234B. THE MAIN PLEA OF THE ASSESSEE IS THAT SINCE THE ASSESSEE HAS REQUESTED FOR THE ADJUSTMENT OF THE CASH SEIZED VIDE HIS LETTER DATED 07/04/2011 THEREFORE, THE REVENUE IS BOUND TO GIVE THE CREDIT OF THE CASH SEIZED TOWARDS THE ADVANCE TAX LIABILITY AS ON 07/04/2011. FOR THE INACTION OF THE REVENUE, THE ASSESSEE SHOULD NOT BE PENALIZED. WE NOTED FROM THE COPY OF THE LETTER, WHICH IS AVAILABLE AT PAGE NO. 14 OF THE PAPER BOOK, THAT IT IS NOT A FACT THAT THE ASSESSEE HAS REQUESTED THE DEPARTMENT FOR THE ADJUSTMENT OF THE CASH SEIZED TOWARDS THE PAYMENT OF THE TAX BUT WE NOTED THAT THE REVENUE HAS NOT TAKEN ANY ACTION AND THE ASSESSEE HAS NOT BEEN GIVEN CORRECT PARTICULARS OF THE TAX PAID AGAINST THE ADVANCE TAX PAYABLE BY THE ASSESSEE. WE NOTED THAT THE REVENUE HAS ALLOWED THE CREDIT TO THE ASSESSEE AS CLAIMED IN EACH OF THE HAND ONLY AFTER THE COMPLETION OF THE ASSESSMENT I.E. VIDE ORDER DATED 20/06/2014 AND ACCORDINGLY LEVIED THE INTEREST U/S 234B TILL THE DATE OF PAYMENT ITA NO.127/LKW/2017 PAGE 8 OF 15 THAT THE REVENUE HAS TAKEN TO BE THE DATE WHEN THEY MADE THE ADJUSTMENT. WE NOTED THAT THIS ISSUE IS DULY COVERED BY THE DECISION OF DELHI TRIBUNAL IN THE CASE OF MAHABIR PRASAD GUPTA VS. DCIT IN I.T.A. NO.1151/DEL/2008, ORDER DATED 14/10/2011 IN WHICH THIS TRIBUNAL ON THE ISSUE OF LEVY OF INTEREST U/S 234B HELD AS UNDER: 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. IN ORDER TO APPRECIATE THE CONTROVERSY MORE LOGICALLY, IT IS IMPERATIVE UPON US TO HAVE A LOOK ON SECTION 132B(I) WHICH PRESCRIBES THE MODE OF APPLICATION OF SEIZED ASSETS OR REQUISITIONED ASSETS. THE PORTION RELEVANT FOR THE PURPOSES OF PRESENT APPEAL READS AS UNDER: '132B. (1) THE ASSETS SEIZED UNDER SEC. 132 OR REQUISITIONED UNDER SEC. 32A MAY BE DEALT WITH IN THE FOLLOWING MANNER, NAMELY: (I) THE AMOUNT OF ANY EXISTING LIABILITY UNDER THIS ACT, THE WEALTH-TAX ACT, 1957 (27 OF 1957), THE EXPENDITURE-TAX ACT, 1987 (35 OF 1987), THE GIFT- TAX ACT, 1958 (18 OF 1958) AND THE INTEREST-TAX ACT, 1974 (45 OF 1974), AND THE AMOUNT OF THE LIABILITY DETERMINED ON COMPLETION OF THE ASSESSMENT UNDER SEC. 153A AND THE ASSESSMENT OF THE YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH AS INITIATED OR REQUISITION IS MADE, OR THE AMOUNT OF LIABILITY DETERMINED ON COMPLETION OF THE ASSESSMENT UNDER CHAPTER XTV-B FOR THE BLOCK PERIOD, AS THE CASE MAY BE (INCLUDING ANY PENALTY LEVIED OR INTEREST PAYABLE IN CONNECTION WITH SUCH ASSESSMENT) AND IN RESPECT OF WHICH SUCH PERSON IS IN DEFAULT OR IS DEEMED TO BE IN DEFAULT, MAY BE RECOVERED OUT OF SUCH ASSETS'. 7. A BARE PERUSAL OF THIS CLAUSE WOULD REVEAL THAT IT REFERS TO THE MECHANISM FOR ADJUSTING THE ASSETS SEIZED UNDER SEC. 132 OF THE ACT. SUCH ASSETS CAN BE ADJUSTED, ITA NO.127/LKW/2017 PAGE 9 OF 15 (A) AGAINST THE AMOUNT OF ANY EXISTING LIABILITY UNDER THIS ACT; (B) AGAINST THE AMOUNT OF LIABILITY DETERMINED ON COMPLETION OF ASSESSMENT UNDER SEC. 153A; (C) AGAINST THE AMOUNT OF LIABILITY DETERMINED ON COMPLETION OF ASSESSMENT UNDER CHAPTER XTV B FOR THE BLOCK PERIOD; (D) AGAINST ANY PENALTY LEVIED OR INTEREST PAYABLE IN CONNECTION WITH SUCH ASSESSMENT. THUS, SECTION 132(L)(I) OF THE ACT AUTHORIZED THE ASSESSING OFFICER TO RECOVER THE LIABILITY PRESCRIBED UNDER THE ACT OUT OF THE ASSETS SEIZED UNDER SEC. 132 OF THE ACT. LEARNED COMMISSIONER IN THE IMPUGNED ORDER, HAS OBSERVED THAT THOUGH ASSETS POSSESSED BY THE DEPARTMENT BUT ITS OWNERSHIP DOES NOT VEST WITH THE DEPARTMENT AUTOMATICALLY AND IT REMAINS WITH THE ASSESSEE ONLY. ACCORDING TO THE LEARNED CIT(APPEALS), THE DEPARTMENT CANNOT DEAL WITH SUCH MONEY UNTIL A PROPER TAX DEMAND IS CREATED AGAINST THE ASSESSEE. HE ALSO EMPHASIZED THAT UNTIL AND UNLESS SUCH LIABILITY IS CRYSTALLIZED, THE CASH SEIZED BY THE DEPARTMENT CANNOT BE ADJUSTED. IN OUR OPINION, WHEN ADVANCE TAX IS TO BE PAYABLE BY AN ASSESSEE BY VIRTUE OF THE OPERATION OF INCOME-TAX ACT, 1961 AND THE DEPARTMENT IS ALREADY POSSESSING MONEY BELONGING TO THE ASSESSEE AND ASSESSEE MADE A PRAYER FOR ADJUSTING SUCH AMOUNT AGAINST THE ADVANCE TAX PAYMENT OR ANY TAX REQUIRED TO BE PAID BY THE ASSESSEE THEN CREDIT OUGHT TO BE GIVEN BECAUSE THE DEPARTMENT HAS DEPRIVED THE ASSESSEE OF HIS MONEY BY SEIZING THE CASH OTHERWISE ASSESSEE WOULD HAVE PAID THE TAX ON 12.4.2006 AND 12.09.2006. THE ITAT IN THE CASE OF NIKKA MAL BABU RAM (SUPRA), HAS MADE A LUCID ENUNCIATION OF LAW AND FACTS ON THIS ISSUE, AND IT IS WORTH TO TAKE NOTE OF THE DISCUSSION MADE BY THE ITAT WHICH READS AS UNDER: '9. IT IS WELL UNDERSTOOD THAT AS PER SECTION 4 OF THE ACT, AN ASSESSEE IS CHARGEABLE TO INCOME-TAX ITA NO.127/LKW/2017 PAGE 10 OF 15 IN RESPECT OF HIS TOTAL INCOME. SUB-SECTION (2) OF SECTION 4 PRESCRIBES THAT THE INCOME-TAX SO CHARGEABLE SHALL BE DEDUCTED AT SOURCE OR PAID IN ADVANCE, WHERE IT IS SO DEDUCTIBLE OR PAYABLE UNDER ANY PROVISION OF THE ACT. WE HAVE OBSERVED EARLIER THAT ADVANCE TAX LIABILITY IS GOVERNED BY SECTIONS 208 TO 210 OF THE ACT. SIMILARLY, SECTION 140A PROVIDES FOR PAYMENT OF SELF-ASSESSMENT TAX ON THE BASIS OF ANY RETURN OF INCOME REQUIRED TO BE FILED BY THE ASSESSEE. THE RELEVANT PROVISIONS ALSO PRESCRIBE THE DATES AND THE AMOUNT OF TAX REQUIRED TO BE PAID BY AN ASSESSEE. THEREFORE, THE EXPRESSION 'EXISTING LIABILITY IN SECTION 132B(1)(/) CANNOT BE READ TO EXCLUDE A PARTICULAR TAX LIABILITY, IF IT CAN BE SHOWN TO HAVE EXISTED ON A PARTICULAR DATE. IF THE LIABILITY TO PAY ADVANCE TAX HAD ARISEN, IT WOULD CERTAINLY CONSTITUTE A PART OF THE 'EXISTING LIABILITY 1 USED IN SECTION 132B(1)(/) OF THE ACT. 10. IN OUR CONSIDERED OPINION, THE DOCTRINE OF PURPOSIVE CONSTRUCTION HAS TO PREVAIL IN THIS SITUATION. IN THE PRESENT SITUATION, IT IS EVIDENT THAT CASH WAS SEIZED FROM THE ASSESSEE DURING SEARCH OPERATION AND, ASSESSEE REQUESTED THE DEPARTMENT TO ADJUST A PART OF SUCH CASH RECEIPTS AGAINST THE LIABILITY OF ADVANCE TAX WHICH AROSE ON ACCOUNT OF THE INCOME SURRENDERED DURING THE SEARCH OPERATION. THE DEPARTMENT DOES NOT DENY POSSESSION OF THE CASH SINCE THE TIME OF SEARCH. THUS, WE FIND NO JUSTIFICATION FOR THE REVENUE TO INTERPRET THE EXPRESSION 'EXISTING LIABILITY' IN SECTION 132B(1)(I) AS NOT REFERRING TO LIABILITY OF ADVANCE TAX. UNDER THE INCOME-TAX ACT, LIABILITY TOWARDS ADVANCE TAX IS A PART OF THE SCHEME OF RECOVERY OF TAXES AND SUCH LIABILITY DEFINITELY ITA NO.127/LKW/2017 PAGE 11 OF 15 FALLS IN THE EXPRESSION 'EXISTING LIABILITY' USED IN SECTION 132B(1)(I) IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE RELIANCE PLEADED BY THE CIT (APPEALS) ON THE JUDGMENT OF THE HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF RAMJILAL JAGANNATH V. ASSTT. CIT [2000] 241 ITR 758 IS QUITE MISPLACED. AS PER THE REVENUE, IN TERMS OF THE SAID JUDGMENT, THE SEIZED CASH CANNOT BE ADJUSTED TOWARDS ADVANCE TAX LIABILITY. WE HAVE CAREFULLY PERUSED THE SAID JUDGMENT AND FIND THAT THE SAME DOES NOT PROHIBIT ADJUSTMENT OF SEIZED ASSETS TOWARDS LIABILITY TO PAY ADVANCE TAX. IN ANY CASE, WE FIND THAT JUDGMENT OF THE HON'BLE MADHYA PRADESH HIGH COURT IS RELEVANT IN A SITUATION WHEN SECTION 132(5) WAS ON THE STATUTE, WHICH HAS SINCE BEEN DELETED BY THE FINANCE ACT, 2002 WITH EFFECT FROM 1-6-2002. SECTION 132(5) OF THE ACT REQUIRED THE ASSESSING OFFICER TO MAKE AN ENQUIRY AND THEREAFTER MAKE AN ORDER TO DEAL WITH THE SEIZED ASSETS. SECTION 132(5) OF THE ACT AUTHORIZES THE ASSESSING OFFICER TO RETAIN IN HIS CUSTODY SUCH ASSETS AS IN HIS OPINION WERE SUFFICIENT TO SATISFY THE AGGREGATE AMOUNTS REFERRED TO IN CLAUSES (//), (//A) AND (/'//) OF SECTION 132(5) AND OBLIGATED HIM TO RELEASE THE REMAINING SEIZED ASSETS. IN THIS BACKGROUND, THE HON'BLE HIGH COURT, ON THE FACTS OF THE CASE BEFORE IT, HELD THAT UNLESS AN ORDER UNDER SECTION 132(5) OF THE ACT IS PASSED, THE ASSESSING OFFICER COULD NOT DIRECT THAT THE ASSETS SEIZED BE ADJUSTED TOWARDS ADVANCE TAX LIABILITY. THE HON'BLE HIGH COURT SPECIFICALLY NOTED THAT IT IS ONLY AFTER AN ORDER UNDER SECTION 132(5) IS PASSED THAT THE ASSESSEE CAN MAKE A REQUEST THAT THE SEIZED AMOUNT WHICH IS SOUGHT TO BE RELEASED IN HIS FAVOUR BE ADJUSTED OR ITA NO.127/LKW/2017 PAGE 12 OF 15 APPROPRIATED TOWARDS THE LIABILITY TO PAY ADVANCE TAX. THOUGH, IN THE CONTEXT OF THE PRESENT ASSESSMENT YEAR BEFORE US, THE PROVISIONS OF SECTION 132(5) ARE NOT APPLICABLE AND THEREFORE, STRICTLY SPEAKING, THE RATIO OF THE JUDGMENT OF THE HON'BLE MADHYA PRADESH HIGH COURT DOES NOT APPLY, SO HOWEVER IT IS PERTINENT TO OBSERVE THAT THE HON'BLE HIGH COURT HAS NOT READ ANY BLANKET PROHIBITION IN THE ACT AGAINST ADJUSTING THE SEIZED ASSETS AGAINST LIABILITY FOR PAYMENT OF ADVANCE TAX. THEREFORE, THERE IS NO JUSTIFICATION FOR THE CIT (APPEALS) TO RELY UPON THE ORDER OF THE MADHYA PRADESH HIGH COURT IN THE CASE OF RAMJILAL JAGANNATH (SUPRA) AND DENY THE CLAIM OF THE ASSESSEE'. 8. WE DO NOT FIND ANY DISPARITY ON FACTS, THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH AND IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE DEPARTMENT TO GIVE CREDIT OF RS.60,40,000 TO THE ASSESSEE FROM THE DATE, WHEN ASSESSEE MADE APPLICATION FOR TREATING THE CASH AS PAYMENT OF ADVANCE TAX/FARE WHILE COMPUTING THE INTEREST CHARGEABLE UNDER SEC. 234B AND 234C OF THE INCOME-TAX ACT, 1961. SIMILAR VIEW HAS BEEN TAKEN BY VARIOUS BENCHES OF THIS TRIBUNAL IN THE FOLLOWING CASES: (I) RAM S. SARDA VS. DCIT, I.T.A. NO.1172/RJT/2010, ORDER DATED 21/12/2011 (II) DWARKADAS PUNJABHAI PATEL HUF VS. ACIT, I.T.A. NO.2085/AHD/2012 AND 2086/AHD/2012, ORDER DATED 25/10/2013 (III) DCIT VS. BOMBAY BEADS CENTRE, I.T.A. NO.3458/MUM/2011, ORDER DATED 02/03/2012 ITA NO.127/LKW/2017 PAGE 13 OF 15 (IV) CIT VS. SHRI MURLIDHAR AGARWA, I.T.A. NO.777/LKW/2014, ORDER DATED 04/09/2015 (V) SATYA PRAKASH SHARMA VS. ACIT, I.T.A. NO.1735/DEL/2008, ORDER DATED 13/02/2009. 6.2 WE ALSO NOTED THAT THE SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN I.T. APPEAL NO. 182 OF 2014 IN THE CASE OF CIT VS. SUNIL CHANDRA GUPTA IN WHICH HON'BLE HIGH COURT VIDE ORDER DATED 11/03/2015 TOOK THE VIEW, FOLLOWING THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ASHOK KUMAR 334 ITR 355 (P&H), THAT THE ASSESSEE WAS ENTITLED TO ADJUSTMENT OF THE SEIZED CASH AGAINST THE ADVANCE TAX LIABILITY AND THEREFORE, NO INTEREST COULD BE CHARGED U/S 234A, 234B AND 234C ESPECIALLY WHEN THE DEPARTMENT HAD NOT RESPONDED TO THE ASSESSEES REQUEST FOR THE ADJUSTMENT OF THE CASH SEIZED AGAINST THE ADVANCE TAX LIABILITY. WE NOTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF CIT VS. KESAR KIMAM KARYALAYA AS REPORTED IN 278 ITR 596. WE ALSO NOTED THAT HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JYOTINDRA B. MODI VIDE ORDER DATED 21/09/2011 OBSERVED THAT THE LIABILITY TO PAY ADVANCE TAX IN RESPECT OF AN AMOUNT ARISES BEFORE COMPLETION OF THE ASSESSMENT. THEY HAVE SPECIFICALLY TOOK THE VIEW THAT SECTION 132B(1) NEVER PROHIBITS THE UTILIZATION OF AMOUNT SEIZED DURING THE COURSE OR SEARCH TOWARDS THE ADVANCE TAX LIABILITY. IN VIEW OF THIS FACT, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE INTEREST U/S 234B IN ACCORDANCE WITH THE LAW, IF AT ALL, IT IS LEVIABLE ONLY TILL THE DATE WHEN THE ASSESSEE MADE AN APPLICATION TO THE DEPARTMENT FOR THE ADJUSTMENT OF THE CASH SEIZED TOWARDS THE INCOME TAX LIABILITY. TO THAT EXTENT WE FIND THERE IS A MISTAKE APPARENT ON RECORD IN THE ORDER OF THE ASSESSING OFFICER WHILE COMPUTING THE INTEREST U/S 234B OF THE ACT. WE ACCORDINGLY ALLOW GROUND NO. 8 OF THE APPEAL. 13. THUS, WHETHER INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT IS TO BE CHARGED, OR NOT, HAS BEEN CONSIDERED BY THE TRIBUNAL IN THE CASE OF THE RADHA MOHAN PURSHOTTAM DAS AGARWAL GROUP, CONSISTING OF NINE APPEALS, ON FACTS EXACTLY SIMILAR, MUTATIS MUTANDIS, TO THOSE PRESENT IN THE CASE OF THE ASSESSEE PRESENTLY UNDER APPEAL AND THE ITA NO.127/LKW/2017 PAGE 14 OF 15 TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEES, VIDE ORDER DATED 8/8/2017. FOLLOWING THIS VIEW TAKEN BY THE A BENCH OF THE LUCKNOW TRIBUNAL IN ITA NOS.679 TO 687/LKW/2017, WE SET ASIDE THE ORDER OF THE LD. CIT(A), AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE INTEREST U/S 234B IN ACCORDANCE WITH THE LAW, IF AT ALL IT IS LEVIABLE, ONLY TILL THE DATE WHEN THE ASSESSEE MADE AN APPLICATION TO THE DEPARTMENT FOR THE ADJUSTMENT OF THE CASH SEIZED TOWARDS THE INCOME TAX LIABILITY. TO THAT EXTENT, WE FIND THERE IS A MISTAKE APPARENT ON RECORD IN THE ORDER OF THE ASSESSING OFFICER WHILE COMPUTING THE INTEREST U/S 234B OF THE ACT. WITH REGARD TO CHARGING OF INTEREST UNDER SECTION 234C OF THE ACT, WE FIND THAT THE SEARCH HAD TAKEN PLACE ON 31/03/2011 AND THE SURRENDER OF THE INCOME HAS BEEN MADE ON THAT VERY DAY, THEREFORE, IT IS NOT A CASE OF DEFERMENT OF THE INCOME, AS THE LIABILITY TO PAY THE ADVANCE TAX IN THE CASE OF THE ASSESSEE AROSE ONLY AT THE MOMENT THE INCOME WAS SURRENDERED BY THE ASSESSEE, I.E., AS ON 31 ST MARCH, AND NOT PRIOR TO THAT. SINCE THE LIABILITY TO PAY THE ADVANCE TAX HAS ARISEN ON 31 ST MARCH THEREFORE, IT CANNOT BE REGARDED TO BE A CASE OF DEFERMENT OF INCOME TAX. THEREFORE, THE INTEREST U/S 234C CANNOT BE LEVIED AND THERE HAS BEEN A MISTAKE APPARENT ON RECORD IN THE ORDER OF THE ASSESSING OFFICER WHILE LEVYING THE INTEREST U/S 234C OF THE ACT. WE ACCORDINGLY ALLOW GROUND NOS. 9 & 10 OF THE APPEAL. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05/11/2019. SD/ - SD/ - [ T. S. KAPOOR ] [ A. D. JAIN ] ACCOUNTANT MEMBER VICE PRESIDENT DATED:05/11/2019 JJ:2210 ITA NO.127/LKW/2017 PAGE 15 OF 15 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSISTANT REGISTRAR