ABC Promoters & Builders Pvt. Ltd., Pune V. ITO Wd. 1(1), Pune

ITA 152/PUN/2005

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49840 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 25-01-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Opportunity of being heard
• Section: 143(3); 234B; 148; 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 152 /PN/ 20 0 5 ( ASSTT. YEAR : 19 89 - 90 ) ABC PROMOTERS & BUILDERS PVT LTD. ... APPELLANT C/O KHANDEL WAL JAIN & ASSO, CAS 1 ST FLOOR ALANKAR CINEMA BLDG, PUNE 411 001 PAN : NOT AVAILABLE V. INCOME TAX OFFICER, WARD 1( 1 ) , RESPONDENT PUNE APP ELLANT BY : SHRI NILESH KHANDELWAL RESPONDENT B Y : SHRI L. RAMAJI RAO ORDER PER I.C. SU DHIR, JM TH E FIRST APPELLATE ORDER HAS BEEN QUESTIONED BY THE ASSESSEE ON THE FOLLOWING SOLE GROUND : 1. ON FACTS & CIRCUMSTANCES PREVAILING IN THE CASE & AS PER PROVISIONS OF LAW, IT BE HELD THAT, INTEREST U/S 234B IS NOT LEVIABLE IN CASE OF THE APPELLANT. IT FURTHER BE HELD THAT INTEREST CHARGED U/S 234B IN SUCH ORDER IS CONTRARY TO PROVISIONS OF LAW. THE INTEREST SO CHARGED BE DELETED. IT IT FURTHER BE HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER REJECTING THE APPLICATION MADE U/S 154 IS CONTRARY TO PROVISIONS OF LAW. IT BE HELD THAT INTEREST CHARGED BY THE ASSESSING OFFICER IS WITHOUT SANCTION OF PROVISIONS OF LAW AND IS NOT TENABLE, & THE MISTAKE IS RECTIFIABLE IN TERMS OF PROVISIONS OF SEC. 15 4. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISIONS RELIED UPON. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE COMPANY HAD FILED REGULAR RETURN OF I NCOME DECLARING LOSS OF RS. 29,658/ - WHICH WAS ITA . NO 152/PN/2005 ABC PROMOTERS AND BUILDERS PVT. LTD., A. Y 1989 - 90 PAGE OF 6 2 SUBSEQUENTLY REVISED DECLARING LOSS OF RS. 2,00,727/ - . THE ADVANCE TAX OF RS.1,01,000/ - WAS PAID AND AS SUCH, THE ASSESSEE COMPANY CLAIMED REFUND OF EXCESS TAX PAID, WHICH WAS REFUNDED BY A.O. ON PASSING O F THE ORDER ACCEPTING THE LOSS OF RS. 2,00,730/ - . CONSEQUENT TO THE SEARCH AND SEIZURE OPERATION CARRIED OUT AT THE PREMISES OF ASSESSEE ON 1.9.1994, CERTAIN BOOKS OF ACCOUNTS WERE SEIZED. SUBSEQUENTLY, NOTICES U/S. 148 OF THE ACT WERE ISSUED FOR DIFFERE NT ASSESSMENT YEARS AND THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y. UNDER CONSIDERATION ON 12.12.1995 IN RESPONSE TO THE NOTICE ISSUED U/S. 148 ON 26.7.1995. THEREAFTER, THE ASSESSEE MOVED AN APPLICATION BEFORE THE INCOME TAX SETTLEMENT COMMISSIO N AND THE APPLICATION WAS ADMITTED AND FINALLY THE ORDERS OF SETTLEMENT COMMISSION U/S. 245 D(4) WERE PASSED VIDE ORDER DATED 1.9.2003. THE A.O. GAVE EFFECT TO THE ORDERS OF THE SETTLEMENT COMMISSION AND ALSO CHARGED INTEREST U/S. 234B OF THE ACT AS PER THE DIRECTION GIVEN BY THE SETTLEMENT COMMISSION. THE ASSESSEE OBJECTED TO THE CORRECTNESS OF THE ORDER GIVING EFFECT AND MOVED AN APPLICATION U/S. 154 OF THE ACT CHALLENGING THE CHARGING OF INTEREST U/S. 234B OF THE ACT STATING THAT SINCE THE INCOME ORIGINALLY ASSESSED U/S. 143(3) OF THE ACT DID NOT INVITE LEVY OF INTEREST U/S. 234B OF THE ACT, THE A.O. COULD NOT HAVE LEVIED THE INTEREST U/S. 234B(4) OF THE ACT WHILE GIVING EFFECT TO THE ORDERS OF THE SETTLEMENT COMMISSION. ACCORDING TO THE APPELLANT , AS PER SECTION 234B(4) OF THE I.T. ACT, IT WAS NECESSARY THAT BEFORE INTEREST COULD BE CHARGED U/S. 234B OF THE ACT, IT HAD TO BE ESTABLISHED THAT THE AMOUNT OF INCOME EARLIER ASSESSED SHOULD BE SUCH INCOME ON WHICH INTEREST WAS INITIALLY CHARGEABLE UNDE R THE SECTION. HOWEVER, SINCE THE INTEREST WAS NOT CHARGEABLE WHEN THE INCOME WAS ASSESSED U/S. 143(3) OF THE ACT, THE INTEREST COULD NOT HAVE BEEN ITA . NO 152/PN/2005 ABC PROMOTERS AND BUILDERS PVT. LTD., A. Y 1989 - 90 PAGE OF 6 3 INCREASED CONSEQUENT TO THE ORDERS GIVING EFFECT TO THE ORDERS OF THE SETTLEMENT COMMISSION. 4. THE A.O. D ID NOT AGREE WITH THIS OBJECTION OF THE ASSESSEE AND REJECTED THE APPLICATION FILED U/S. 154 OF THE ACT. AGAINST THAT ORDER, THE ASSESSEE WENT IN FIRST APPEAL, BUT COULD NOT SUCCEED. 5. THE LD CIT(A) REMAINED OF THE VIEW THAT IN THE PRESENT CASE, SETTLEM ENT COMMISSION HAD ADMITTED THE PENDING PROCEEDINGS FOR THE A.Y. UNDER CONSIDERATION AND THE PENDENCY AROSE BECAUSE OF RE - ASSESSMENT PROCEEDINGS INITIATED BY THE A.O. IT IS, THEREFORE, QUITE OBVIOUS THAT THE SETTLEMENT COMMISSION ASSUMED JURISDICTION O VER THE RE - ASSESSMENT PROCEEDINGS FOR THE A.Y. UNDER CONSIDERATION AND THEREAFTER PASSED AN ORDER U/S. 245D(4) OF THE I.T. ACT DETERMINING THE TOTAL INCOME OF THE APPELLANT AND GAVE DIRECTION FOR CHARGING OF INTEREST AS AND WHEN REQUIRED AS PER PROVISIONS OF LAW. THE LD CIT(A) OBSERVED THAT AS PER SECTION 234B(3) OF THE ACT, THERE IS NO DISPUTE THAT HAD THE ASSESSMENT BEEN COMPLETED BY THE A.O U/S. 148 OF THE ACT, INTEREST U/S. 234B OF THE ACT COULD HAVE BEEN ATTRACTED IN VIEW OF CLEAR PROVISION OF SECTIO N 234B(3) OF THE ACT. HOWEVER, SINCE THE JURISDICTION OVER THE RE - ASSESSMENT PROCEEDINGS WAS TAKEN OVER BY THE SETTLEMENT COMMISSION, THE ONLY ORDER THAT COULD HAVE BEEN PASSED WOULD BE THE ORDER U/S. 245(D)(4) OF THE I.T. ACT AND THEREFORE, INTEREST WAS CLEARLY LEVIABLE AS PER SECTION 234B(3) OF THE I.T. ACT. THE LD CIT(A) OBSERVED FURTHER THAT IT WOULD BE ABSURD TO ACCEPT THE PROPOSITION OF THE APPELLANT THAT AS PER SECTION 234B(4) OF THE ACT, EVEN THE ORIGINAL ASSESSED INCOME DID NOT ATTRACT THE LEVY O F INTEREST, THE FINALLY ASSESSED INCOME WOULD ALSO NOT ATTRACT INTEREST U/S. 234B OF THE ACT. ITA . NO 152/PN/2005 ABC PROMOTERS AND BUILDERS PVT. LTD., A. Y 1989 - 90 PAGE OF 6 4 6. WHILE REITERATING CONTENTIONS MADE ON BEHALF OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW, AS DISCUSSED ABOVE, THE LD. A.R. ALSO PLACED RELIANCE ON THE DECIS ION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DATAMATICS LTD. V/S. ACIT (2008), 299 ITR (AT) 286 (MUM. ) . 7. THE LD. A.R. ALSO ADVANCED AN ALTERNATIVE ARGUMENT THAT INTEREST U/S. 234B, IF SO REQUIRED, BE CHARGED UPTO TO THE DATE OF ORDER U/S. 245D(1 ) AND NOT UPTO THE DATE OF ORDER OF SETTLEMENT U/S. 245D(4) , AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF BRIJ LAL & ORS., V/S. CIT, (2010), 328 ITR 477 (SC). 8. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW AS DISCUSSED ABOVE. 9. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE ISSUE RAISED IN THE PRESENT APPEAL HAS BEEN SETTLED BY THE HONBLE SUPREME COURT IN ITS RECENT DECISION IN THE CASE OF BRIJ LAL & ORS., V/S. CIT (SUPRA). THE QUESTIONS FRAMED BE FORE THE HONBLE SUPREME COURT WERE AS UNDER : (I) WHETHER SECTION 234B APPLIES TO PROCEEDINGS OF THE SETTLEMENT COMMISSION UNDER CHAPTER XIX - A OF THE SAID ACT ? (II) IF THE ANSWER TO THE ABOVE QUESTION IS IN THE AFFIRMATIVE, WHAT IS THE TERMINAL POINT F OR LEVY OF SUCH INTEREST WHETHER SUCH INTEREST SHOULD BE COMPUTED UP TO THE DATE OF THE ORDER UNDER SECTION 245D(1) OR UP TO THE DATE OF THE ORDER OF THE COMMISSION UNDER SECTION 245D(4) ? (III) WHETHER THE SETTLEMENT COMMISSION COULD REOPEN ITS CONCLUDE D PROCEEDINGS BY INVOKING SECTION 154 OF THE SAID ACT SO AS TO LEVY INTEREST UNDER SECTION 234B, THOUGH IT WAS NOT SO DONE IN THE ORIGINAL PROCEEDINGS ? ITA . NO 152/PN/2005 ABC PROMOTERS AND BUILDERS PVT. LTD., A. Y 1989 - 90 PAGE OF 6 5 AFTER DISCUSSION OF THE SUBJECT AT LENGTH AND THE RELATED PROVISIONS OF LAW, THE HONBLE SUPREME COUR T HAS COME TO THE FOLLOWING CONCLUSION AT PAGE NO. 508 OF THE JOURNAL I.E. ITR VOLUME 328 : CONCLUSIONS : (1) SECTIONS 234A, 234B AND 234C ARE APPLICABLE TO THE PROCEEDINGS OF SETTLEMENT COMMISSION UNDER CHAPTER XIX - A OF THE ACT TO THE EXTENT INDICATED H EREINABOVE. (2 CONSEQUENT UPON CONCLUSION (1), THE TERMINAL POINT FOR THE LEVY OF INTEREST UNDER SECTION 234B WOULD BE UP TO THE DATE OF THE ORDER UNDER SECTION 245D(1) AND NOT UP TO THE DATE OF THE ORDER OF SETTLEMENT UNDER SECTION 245D(4). (3) THE S ETTLEMENT COMMISSION CANNOT REOPEN ITS CONCLUDED PROCEEDINGS BY INVOKING SECTION 154 OF THE ACT SO AS TO LEVY INTEREST UNDER SECTION 234B, PARTICULARLY, IN VIEW OF SECTION 245 - 1. ACCORDINGLY, THE REFERENCE TO THE CONSTITUTION BENCH, VIDE ORDERS DATED DECE MBER 14, 2004 AND JANUARY 20, 2005, STANDS DULY ANSWERED AND THE MATTERS ARE ACCORDINGLY DISPOSED OF. 10. WE, THUS, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF HONBLE SUPREME COURT ON THE ISSUE IN THE CASE OF BRIJ LAL & ORS. V/S. CIT (SUPRA), SET ASID E THE MATTER TO THE FILE OF THE A.O TO DECIDE THE ISSUE AFRESH IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF BRIJ LAL & ORS. V/S. CIT (SUPRA) AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND IS ACCORDINGLY ALLOW ED FOR STATISTICAL PURPOSES. 11. IN RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 20TH JUNE 2011. ITA . NO 152/PN/2005 ABC PROMOTERS AND BUILDERS PVT. LTD., A. Y 1989 - 90 PAGE OF 6 6 SD/ - SD/ - ( D. KARUNAKARA RAO ) ACCOUNTANT MEMBER ( I.C. SUD HIR ) JUDICIAL MEMBER PUNE , DATED THE 20TH JUNE , 20 1 1 US COPY OF THE ORDER IS FORWARDED TO : 1. THE A PP ELLA NT 2. THE RESPONDENT 3. THE CIT, KOLHAPUR 4. THE CIT(A) - , KOLHAPUR 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE