ACIT, Circle - 5(1), Hyderabad V. Shri Suresh Kumar Agarwal, Hyderabad

ITA 1356/HYD/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7723 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B RAMA KRISHNA
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Search and seizure
• Section: 234B; 132; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1356/HYD/2014 (ASSESSMENT YEAR 2007 - 08) ASST COMMISSIONER OF INCOME - TAX CIRCLE 5(1), HYDERABAD V/S. SHRI SURESH KUMAR AGARWAL, HYDERABAD ( PAN - ABAPA 5718 N ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.RAMAKRISHNA DR RESPONDENT BY : SHRI K.A.SAIPRASAD DATE OF HEARING 02 . 12 .2014 DATE OF PRONOUNCEMENT 10.12.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) V, HYDERABAD, WHEREBY HE DIRECTED THE ASSESSING OFFICER TO ADJUST THE SEIZED CASH TOWARDS AD V ANCE TAX PAYABLE BY THE ASSESSEE. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUAL, BE L ONGS TO CSK G ROUP. DU R ING THE COURSE OF SEARCH AND SEIZURE ACTION UNDER S.132 CON D U C TED IN THE CA S ES BELONGING TO THE SAID G ROUP, CASH OF R S .23, 64,50 0 WAS FOUN D AND SEIZED. TH E SAID CASH WAS OWNED UP BY TH E ASSESSEE AND OFFERED TO TAX IN TH E R ETURN OF IN C OM E FILED FOR THE Y E AR UNDER CONSIDERATION . IN TH E ASSESSMENT COMPLETED UNDER S.143(3) OF TH E A C T, VIDE ORDER DATED 30.12.2008 , TOTAL INCOM E O F TH E ASSESSEE WAS COMPU T ED BY TH E ASSESSING OFFICER AT RS.7, 36,78,180 . IN THE SAID ASSESSMENT ORDER, INTEREST UNDER S.234B AND S. 234C WAS A LSO CHARGED BY TH E ASSESSING OFFICER , AND I TA NO. 1 356 /HYD/201 4 SHRI SURESH KUMAR AGARWAL, HYDERABAD 2 WHILE COMPUTING S UCH INTEREST, CREDIT ON ACCOUNT SEIZED CASH AMOUNTING TO RS .23 ,64, 500 WAS NO T GIVEN. 3. ASSESSEE MOVED AN APPLI C A T ION UNDER S.154 REQUESTING TO GIVE SUCH CREDIT AND RECOMPUT E THE INTERES T CHARGE A BL E UNDER S.234B AND 234C. THE ASSESSING OFFICER, HOW E VER , NOTED THAT CREDIT FOR TH E SEIZED CASH HAD ALREADY BEEN GIVEN AS PAYMENT FOR R EGULAR DEMAND ON 29.3.2009 AND KEEPING IN VIEW THE SAME, H E REJECTED THE APPLICATION FI L ED BY TH E ASSESSEE UND ER S.154, VIDE O R DER DATED 31 .1.2013 . 4. AGA I N S T TH E O R DER PASSED BY TH E ASSESSING OFFICER U N DER S.154, AN APPEAL WAS PREFERRED BY TH E ASSESSEE BEFORE THE LEARNED CIT(A) AND TH E FOLLO W IN G SUBMI S SION S WERE MA D E ON HIS BEHALF BEFORE TH E LEARNED CIT(A) IN SUPPORT OF TH E CLAIM FOR CREDIT ON ACCOUNT OF SEIZED CASH - THE APPEAL IS AGAINST THE REFUSAL OF TEE LEARNED ASSESSING OFFICER TO TREAT THE CASH OF RS.23,64,500/ - , SEIZED DURING THE SEARCH ON 24 - 08 - 2006, AS ADVANCE TAX FOR THE FINANCIAL YEAR 2006 - 07 RE LEVANT TO THE ASSESSMENT YEAR 2007 - 08. 2.1 BRIEFLY THE FACTS ARE THAT THERE AS A SEARCH U/S. 132 ON 24.08.2006, IN C.S.K. GROUP OF CASES. IN WHICH THE APPELLANT IS A DIRECTOR AND UNACCOUNTED CASH OF RS.23,64,500 RELATING TO THE APPELLANT WAS SEIZED. THE APPELLANT OFFERED THIS AMOUNT AS ALSO OTHER INCOME U/S.132(4). THE RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2007 - 08 WAS FILED ON 16 - 11 - 2007 DECLARING A TOTAL INCOME OF RS.1,82,22,810/ - , WHICH INCLUDES THE UNACCOUNTED CASH FOUND AND SEIZED. (A REV ISED RETURN OF INCOME WAS FILED ON 26 - 12 - 2008 DECLARING A TOTAL INCOME OF RS.7,36,78,180 FOR SOME OTHER PURPOSES.) WHILE COMPUTING THE TAX PAYABLE THE APPELLANT CLAIMED THE AMOUNT OF SEIZED CASH OF RS.23,64,500/ - AS ADVANCE TAX. THE LEARNED ASSESSING OFFIC ER DID NOT TREAT THIS AS ADVANCE TAX, (THOUGH GAVE CREDIT FOR THIS AMOUNT TOWARDS THE DEMAND RAISED IN THE SAME COMPUTATION OF TAX FOR THE SAME ASSESSMENT YEAR) AND, THUS, CHARGED INTEREST U/S 234 B AND 234C ON THIS AMOUNT ALSO. 2.2 AN APPLICATION U/S 154 WAS FILED, REQUESTING THE LEARNED ASSESSING OFFICER TO GIVE CREDIT OF THIS AMOUNT OF RS.23,64,500 TOWARDS ADVANCE TAX PAID AND REVISE THE INTEREST U/S 2348 AND 234C ACCORDINGLY . 2.3 THE LEARNED ASSESSING OFFICER, HOWEVER, REFUSED TO DO SO AND I TA NO. 1 356 /HYD/201 4 SHRI SURESH KUMAR AGARWAL, HYDERABAD 3 REJECTED TH E APPELLANT'S CLAIM WITH THE FOLLOWING OBSERVATION: 'ON VERIFICATION OF OLTAS IT IS OBSERVED THAT THE CREDIT OF THE ABOVE CLAIMED AMOUNT HAS BEEN GIVEN AS PAYMENT OF REGULAR DEMAND ON 29 - 03 - 2009 I.E. THE DATE OF CREDITING OF AMOUNT IN CENTRAL GOVT. ACCOUNT. IN VIEW OF THE ABOVE THE ASSESSEE'S CLAIM IS HEREBY REJECTED. ' 3. IT IS SUBMITTED THAT NO TAXES WERE DUE FROM THE APPELLANT, AS ON THE DATE (24 - 08 - 2006) OF THE SEARCH AND SEIZURE OF CASH OF RS.23,64,500/ - . THE APPELLANT'S REQUEST IS TO ADJUST T HE CASH SEIZED ON 24 - 08 - 2006 TOWARDS ADVANCE TAX DUE AFTER THE DATE OF SEARCH (I.E., IN DECEMBER 2006 AND MARCH 2007) ON ACCOUNT OF THE DISCLOSURE MADE U/S 132(4). AN AMOUNT OF RS.23, 64,500 OF THE APPELLANT WAS IN THE POSSESSION OF THE INCOME TAX DEPAR TMENT RIGHT FROM 24 - 8 - 2006, I.E. MUCH BEFORE THE DUE DATE FOR PAYMENT OF ADVANCE - TAX AND, IT IS SUBMITTED, IT IS NOT FAIR OR JUSTIFIED TO CHARGE INTEREST U/S 234B ON THIS AMOUNT ALSO ON THE GROUND THAT THE APPELLANT DID NOT PAY ADVANCE - TAX. 4. IT IS SUBMI TTED THAT IT IS A WELL SETTLED PROPOSITION THAT IF LIABILITY TO PAY ADVANCE TAX HAS ARISEN IT WOULD CERTAINLY CONSTITUTE A PART OF EXISTING LIABILITY AS PER SECTION 132B(1)(I) AND SEIZED CASH MAY BE APPLIED TO DISCHARGE ADVANCE TAX LIABILITY, AS HELD BY TH E ITAT, RAJKOT 8ENCH IN THE CASE OF SHRI RAM S. SARDA (17 TAXMANN.COM 23). RELIANCE IS ALSO PLACED ON THE DECISIONS IN THE FOLLOWING CASES: (I) KANISHKA PRINTS (P) LTD VS. AC I T, CENTRAL CIRCLE - 2, SURAT - ITAT AHMEDABAD (34TAXMANN.COM 307). (II) N IKKA MAI 8ABU RAM VS. AC/T, CENTRAL CIRCLE, CHANDIGARH - ITAT (41 SOT407) (III) VIJAY D.MEHTA V/S. ACIT, CENTRAL CIRCLE - 35 (ITAT MUMBAI) (35 TAXMANN.COM 201) (IV) C I T V / S. PANDURANG DAYARAM TALMALE - HIGH COURT OF BOMBAY, NAGPUR BENCH (135 TAXMAN 193). (COPIES OF THE ABOVE DECISIONS ARE ENCLOSED FOR READY REFERENCE.) 5. IT IS, THEREFORE, PRAYED THAT THE HON'BLE COMMISSIONER OF INCOME TAX(APPEALS) BE PLEASED TO DIRECT THE LEARNED ASSESSING OFFICER TO TREAT THE AMOUNT OF RS. 23,64,500/ - SEIZED ON 24 - 08 - 2006 AS ADVANCE TAX FOR THE ASSESSMENT YEAR 2007 - 08 AND REVISE THE CALCULATION OF INTEREST PAYABLE BY THE APPELLANT. 5. IN ADDITION TO T H E ABOVE SUBMI S SION S , A COPY O F TH E LETTER DATED 3.5.2007 FILED BEFORE THE ASSESSING OFFICER REQUESTING FOR ADJUSTMENT OF SEIZED CASH TOWARDS TAX LIABILITY FOR THE I TA NO. 1 356 /HYD/201 4 SHRI SURESH KUMAR AGARWAL, HYDERABAD 4 ASSESSMENT YEAR 2007 - 08 WAS ALSO SUBMITTED BY TH E ASSESSEE BEFORE THE LEARNED CIT(A) . 6. AFTER TAKING INTO CONSIDE R ATION TH E SAID LETTER AS WELL AS TH E SUBMI S SION S MADE BY TH E ASSE SSEE , TH E LEARNED CIT(A) DIRECTED THE ASSESSING OFFICER TO A D JU S T THE SEIZE D CASH AGAINST THE ADVANCE TAX PAYABLE BY THE ASSESSEE FOR THE YE A R UNDER CONSIDERATION FOR TH E FOLLOWING REASONS GIV E N IN PARAGRAPH NO.6 OF HIS ORDER. 6. I HAVE CAREFULLY CONSID ERED THE SUBMISSIONS OF THE APPELLANT AND THE CASE - LAWS CITED AND I FIND FORCE IN THE CONTENTIONS OF T HE APPELLANT. IT IS ALSO A FACT THAT THIS SEIZED CASH OF RS.23,64,500 WAS IN THE POSSESSION OF THE DEPARTMENT RIGHT FROM DATE OF SEARCH ON 24 - 8 - 2006 AND MUCH BEFORE THE DUE DATE FOR PAYMENT OF ADVANCE - TAX. THE HIGH COURT/TRIBUNALS HAVE CATEGORICALLY HELD THAT IF THERE WAS LIABILITY TO PAY ADVANCE TAX, IT WOULD CONSTITUTE A PART OF EXISTING LIABILITY AS PER SECTION 132B(1)(I) OF THE ACT AND THE SEIZED CAS H HAS TO BE ADJUSTED TOWARDS DISCHARGE OF ADVANCE TAX LIABILITY FOR COMPUTATION OF INTEREST U/S234A, 2348 & 234C.HENCE,RESPECTFULLY FOLLOWING THE DECISIONS CITED BY THE APPELLANT, I DIRECT THE A.O. TO GIVE CREDIT FOR THE CASH SEIZED OF CASH RS.23,64,500 ON 24 - 8 - 2006 TOWARDS ADVANCE TAX DUE AFTER THE DATE OF SEARCH (I.E.IN DECEMBER, 2006 AND MARCH, 2007) FOR THE ASSESSMENT YEAR UNDER CONS IDERATION AND RECOMPUTE THE INT ERES T U/S. 234B AND 234C ACCORDINGLY. 7. AGGRIEVED BY TH E ORDER OF TH E LEARNED CIT( A) , REVENUE HAS PREFERRED THIS APPEAL BEFORE US. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT NO REQU E ST WAS MADE BY TH E ASSESSEE FOR ADJUSTMENT OF SEIZED CASH AGAINST THE AD V ANCE TAX LIABILITY DURIN G TH E RELEVANT PREVIOU S Y E AR AND IN THE ABSENCE OF SUCH A REQUEST, NO FAULT COUL D B E FOUN D WITH TH E ASSESSING OFFICER FOR NOT M A KIN G ADJU S TM E NT OF SEIZED CASH AGAIN S T A D VANCE TAX LIAB I LITY. HE CONTENDED THAT TH E RE WAS NO EXI S TING LIABIL IT Y OUTSTANDING AGAINST TH E ASSESSEE AT THE R ELEVANT TIME AND SIN C E THE ADVANCE TAX LIABIL I TY FOR THE YEAR UN D ER I TA NO. 1 356 /HYD/201 4 SHRI SURESH KUMAR AGARWAL, HYDERABAD 5 CON S IDERATION WAS NO T B R OU G HT TO THE NO T ICE OF TH E ASSESSING OFFICER BY TH E ASSESSEE BY MAKING A SP E CIFIC REQUEST TO ADJU S T TH E SEIZED CASH AGAIN S T SUCH LIABIL IT Y, THE ASSESSING OFFICER WAS FULLY JU S TIFIED IN NOT ALLO W IN G THE CLAIM O F TH E ASSESSEE FOR ADJU S TM E NT O F SEIZED CASH AGAIN S T AD V ANCE TAX LIABILITY, MADE SUBSEQUENTLY AFTER THE END O F TH E RELEVANT PREVIOU S Y E AR. HE CONTENDED TH A T IF AT ALL SUCH A REQUEST WAS MADE BY TH E ASSESSEE BY A L E TTER DATED 3 R D MAY, 2007, AS CLAIMED, TH E SAME HAVING BEEN MADE AFTER THE END O F THE RELEVANT PREVIOU S Y E AR, ADJU S TM E NT OF SEIZED CASH COUL D B E MADE ONLY AGAIN S T THE SELF - ASSESSMENT TAX LIABILITY, BUT NOT AGAIN S T THE ADVANCE TAX LIABILIT Y . 9. TH E LEA RNED COUN S EL FOR THE ASSESSEE , ON THE O T H E R HAND, SUBMI T TED TH A T THE ASSESSING OFFICER AS PER TH E P RO VI SI ON S OF S.132B W A S BOUND TO ADJU S T THE SEIZED CASH AGAIN S T EXIS T ING LIA B ILITY OF TH E ASSESSEE AND SIN C E THE ADVANCE TAX LIABILIT Y PRIOR TO IN S ERTION OF E XPLANATION 2 WITH EFFECT FROM 1.6.2013 CON S TITU T ED E XI S TING LIABILIT Y , IT WAS INCUMBENT UPON TH E ASSESSING OFFICER TO MAKE THE ADJU S TM E N T OF SEIZED CASH AGAIN S T TH E A D VANCE TAX LIABILITY OF TH E ASSESSEE . IN SUPPORT OF SUCH CON T ENTION, THE LEARNED COUNSE L FOR THE ASSESSEE RELIED ON TH E DECISION OF THE CHANDIGARH BENCH OF THIS TRIBUNAL IN TH E C A SE OF NIKKA M AL BABU R AM V/ S . ACIT (41 SOT 407) AND THAT OF H ONBLE PUNJAB AND HARYANA HIGH COURT IN THE CA S E OF CIT V/S. ASHOK KUMAR (334 ITR 355). 10 . WE HAV E HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OB S ERVED THAT AS P E R THE REL E VANT PROVI SI ON S OF S.132B, TH E ASSESSING OFFICER WAS REQUIRED TO A D JU S T TH E SEIZED CASH AGAINST ANY EXITING TAX LIABIL I TY OF TH E A SSESSEE , AND AS H E L D IN VARIOUS JUDICIAL PRONOUNCE M ENTS INCLU D IN G TH E CA S E - LAWS CITED BY THE LEARNED COUNSEL FOR TH E I TA NO. 1 356 /HYD/201 4 SHRI SURESH KUMAR AGARWAL, HYDERABAD 6 ASSESSEE , AD V ANCE TAX LIABILITY CONS T ITUTED EX I STING LIABILITY PRIO R TO IN S ERTION OF EXPLANATION 2 BELOW S.132B OF TH E FIN A N C E ACT, 2013 WITH EFFECT FROM 1.6.2013. HOWEVER, AS RIGHTLY CON T ENDED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, IF AT ALL THERE WAS ANY SUCH ADVANCE TAX LIABIL IT Y FOR TH E RELEVANT YEAR, THE ASSESSEE SHOULD HAVE BROU G HT THE SAME TO THE NO T ICE OF THE ASSES SING OFFICER WITH A REQUEST TO ADJUST THE SAID CASH AGAIN S T THE SAID LIABILITY , AND UNLESS AND UNTIL THIS WAS DON E BY THE ASSESSEE, ASSESSING OFFICER COULD NOT B E EXPECTED TO KNOW ABOUT SUCH ADVANCE TAX LIABIL IT Y AND MAKE THE ADJ U STM E N T OF S EIZED CASH AGAINST THE SAME. EVEN IN THE CA S E OF NIK K A M AL BABU R AM (SUPRA) CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE AMOUNT OF AD V ANCE TAX PAYABLE WAS B R OU G HT TO THE NOTICE OF THE ASSESSING OFFICER BY THE ASSESSEE BEFORE THE DUE DATE, MAKING A SPECIFIC RE QUEST FOR ADJUSTMENT OF CASH SEIZED AGAIN S T SUCH LIABILITY AND KEEPING IN VIEW THE SAME, THE ASSESSING OFFICER WAS DIR E CTED BY THE TRIBUNAL TO ALLOW ADJUSTMENT AGAINST ADV A NCE TAX LIABILITY AND RECOMPUT E THE INTEREST CHARGEABL E UNDER S.24B AND S. 234C. I N TH E C A S E OF ASHOK K UMAR (SUPRA) ALSO , A REQUEST WAS MADE BY THE ASSESSEE FOR ADJU S TMENT O F TH E AD V AN C E TAX LIABILITY OF R S . 3,14,312 AGAINST THE SEIZED CASH ON AUGU S T 28, 1989 AND SIN C E THE FIRST INSTALM E NT OF AD V ANCE TA X WAS PAYABLE ON SEP T EMB E R 15, 1989 , HON'BLE PUNJAB AND HARYANA HIGH COURT HELD THAT THE SEIZED CASH SHOUL D HAVE BEEN A D JU S TED BY THE ASSESSING OFFICER AGAINST THE ADVANCE TAX PAYABLE BY THE ASSESSEE ON 15 TH S E P T EMBER, 1989. IN THE PR E SEN T CA S E, THE R EQUEST FOR ADJU S TMENT O F SEIZED CASH AGAINST THE TAX LI ABI LITY FOR THE YEAR UNDER C ON S I D ERATION WAS MADE BY THE ASSESSEE ON LY ON 3.5.2007 AND KEEPING IN VIEW THE SAME, WE FIND MERIT IN TH E CON T ENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE SEIZED CASH COULD APPROPRIAT ELY BE ADJU S TED ONLY AGAIN S T THE SELF ASSESSMENT TAX LIABILITY O F TH E ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND NO T THE I TA NO. 1 356 /HYD/201 4 SHRI SURESH KUMAR AGARWAL, HYDERABAD 7 ADVANCE TAX LIABILITY AS HELD BY THE LEARNED CIT(A). WE TH E R E FORE, MO D I F Y THE IMPU G N ED ORDER O F THE LEARNED CIT(A) AND DIRECT THE A SSESSING OFFICER TO ADJUST THE SEIZED C ASH AGAINST T H E SELF ASSESSMENT TAX PAYABLE BY TH E ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND REC O MPU T E THE INTEREST PAYA B L E UN D ER S.234B AND 234C ACCORDINGLY. 11. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 10 TH DECEMBER, 2014 SD/ - SD/ - ( ASHA VIJAYARAGHAVAN) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER DT/ - 10 TH DECEMBER, 2014 COPY FORWARDED TO: 1. SHRI SURESH KUMAR AGARWAL, 5 - 9 - 30/1/17, PALACE COLONY, ROAD NO.2, BASHEERBAGH, HYDERABAD 2 . ASST COMMISSIONER OF INCOME - TAX CIRCLE 5(1), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) V, HYDERABAD 4. 5. COMMISSIONER OF INCOME - TAX IV HYDERABAD DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S