DCIT, Jaipur V. LATE SMT SUDHA PATNI(L/H SH MAHENDRA KR. PATNI), Jaipur

ITA 161/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5020 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 23-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDER SINGH
• Assessee Lawyers: VIJAY GOYAL C A DHK
• Keywords: Gift; Search and seizure
• Section: 143(3); 234B; 132; 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES , JAIPUR JH HKKXPUN] YS[KK LNL; ,O JH DQY HKKJR] U;KF;D L NL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 161/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 THE DCIT CENTRAL CIRCLE-2 JAIPUR CUKE VS. LATE SMT. SUDHA PATNI (THRU: L/H SHRI MAHENDRA KR.PATNI) 248, MUSAGRON KA CHOWK, HALDIYON KA RASTA, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AWFPP 1174 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY:SHRI RAJENDER SINGH, ADDL. CIT- DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI VIJAY GOYAL , CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/10/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 18 /10/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), JAIPUR-4 DATED 23-12-2015 FOR THE ASSESSMEN T YEAR 2012-13 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1. WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN DECIDING THAT THE AMOUNT LYING IN THE PD ACCOUNT CAN BE JUSTIFIED AS ADVANCE TAX LIABILITY BEING THE EXISTING LIABILITY OF THE A SSESSEE. ITA NO. 161/JP/2016 THE DCIT , CENTRAL CIRCLE- 2, JAIPUR V S. LATE SMT. SUDHA PATNI, JAIPUR . 2 2. WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS RIGHT IN TREATING THE A PPEAL MAINTAINABLE U/S 249(4) OF THE I.T. ACT WITHOUT APP RECIATING THE FACT THAT AMOUNT LYING IN THE PD ACCOUNT CANNOT BE ADJUSTED AGAINST THE EXISTING LIABILITY OF THE ASSE SSEE AND AS PER EXPLANATION-2 OF THE SECTION 132B OF THE I.T. A CT THE EXISTING LIABILITY DOESNT INCLUDE THE ADVANCE TA X PAYABLE IN ACCORDANCE WITH THE PROVISIONS OF PART-C OF CHAPTER -XVII. 3. WHETHER ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS RIGHT IN IGNORING THE I NSTRUCTION F.NO.286/108/2005-IT(INV-II) DATED 13-07-2006 WHERE IN IT HAS BEEN CLARIFIED THAT SEIZED CASH CANT BE ADJUST ED AGAINST THE ADVANCE TAX LIABILITY OF THE ASSESSEE FOR THE Y EAR IN WHICH SEARCH TOOK PLACE. 2.1 AT THE OUTSET OF THE HEARING, THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) HAD DECIDED THE APPEAL OF THE ASSESSEE IN VIEW OF THE DECISION OF HON'BLE ITAT AGRA BENCH IN THE CASE OF ACIT VS. SUNIL C GUPTA( ITA NO . 290/AGRA/2013 DATED 28-02-2014). 2.2 THE LD. DR RELIED ON THE ORDER OF THE AO AND SU BMITTED THAT THE LD. CIT(A) HAD ERRED IN ALLOWING THE APPEAL OF THE ASS ESSEE FOR WHICH THE DEPARTMENT IS IN APPEAL WITH THE ABOVE GROUNDS OF A PPEAL BEFORE THE ITAT. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS REPRODUCED FOR THE CONVENIENCE AND BREVITY OF TH E CASE. ITA NO. 161/JP/2016 THE DCIT , CENTRAL CIRCLE- 2, JAIPUR V S. LATE SMT. SUDHA PATNI, JAIPUR . 3 THE FACTS OF THE CASE ARE THAT SMT. SUDHA PATNI, HEREIN REFERRED AS THE ASSESSEE / APPELLANT ASSESSEE. A SE ARCH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CARRIED OUT ON 29 -06-2011 AT LOCKER NO. 378 (OWNED BY THE ASSESSEE) SITUATED AT GANPATI LOCKERS (P) LTD. AND VALUABLE INVENTORISED AND SEIZED AS UNDER:- JEWELLERY VALUED BY THE DVO AT RS. 2,84,19,380/- CASH AMOUNTING TO RS. 46,22,500/- AFOREMENTIONED CONTENTS INVENTORISED WERE FOUND TO BE BELONGING TO THE ASSESSEE. IN THE SWORN STATEMENT R ECORDED ON OATH U/S 132(4) OF THE ACT ON 03-08-2011, ASSESSEE ADMITTED THAT AL THE JEWELLERY ITEMS SO INVENTORISED FROM THE LOCKER NO. 378 BELONGED TO HER WHICH WAS RECEIVED AS GIFT FROM TIME TO TIME AN D CASH FOUND IN THE LOCKER WAS RECEIVED AS SALE PROCEEDS OF 20 GOLD BIS CUITS (SOLD IN APRIL 2011). THE ASSESSEE ADMITTED IN THE SWORN STATEMENT RECORDED ON OATH U/S 1342(4) OF THE ACT THAT ALL VALUABLES AND CASH WHICH WERE FOUND INVENTORISED AND SEIZED FROM THIS LOCKER BELONGED T O HER. ACCORDINGLY, THE ASSESSEE SURRENDERED A SUM OF RS. 3,30,41,880/- (JEWELLERY VALUED AT RS. 2,84,19,330/-AND CASH AMOUNTING TO RS. 46,22 ,500/- REFER PG 2 OF THE ASSESSMENT ORDER) AS HER UNDISCLOSED INCOME FOR THE A.Y. 2012- 13.HOWEVER, ASSESSEE E-FILED HER RETURN OF INCOME D ECLARING TOTAL INCOME AT RS. 2,71,91,880/- (INCLUSIVE OF VALUABLES AND CASH INVENTORISED FROM THE LOCKER AT RS. 2,71,91,880/- O N 3-08-2012 FOR THE A.Y. 2012-13). LATER ON, AO COMPLETED THE ASSESSMENT PROCEEDINGS U /S 143(3) VIDE ORDER DATED 10-03-2014 AT TOTAL INCOME OF RS. 2,71,91,880/- AND ALSO SIMULTANEOUSLY INITIATED PENALTY PROCEEDINGS U /S 271AAA OF THE ACT. AO FINALLY CREATED TOTAL TAX LIABILITY AGAINST THE ASSESSEE AT RS. 60,90,769/-. IN RESPONSE TO THIS, ASSESSEE HAD IN F ACT REQUESTED THE AO TO GIVE CREDIT OF AMOUNT LYING IN PD ACCOUNT AGAINS T THE SEIZED CASH AMOUNTING TO RS. 46,22,500/-. IN THE SAID LETTER, A SSESSEE HAD ALSO OBJECTED TO THE FACT THAT INTEREST U/S 234B & 234C WERE CALCULATED WITHOUT ALLOWING CREDIT OF SEIZED CASH LYING IN THE PD ACCOUNT. THE TOTAL TAX LIABILITY AS PER ORDER PASSED U/S 143(3) OF THE ACT HAS BEEN COMPUTED AS UNDER:- ASSESSED INCOME RS. 2,71,91,880/- TAX THEREOF INCOME TAX RS. 80,02 564/- SURCHARGE RS. 2,40,077/- TOTAL TAX LIABILITY RS. 82,42,641/- LESS: PREPAID TAXES (-) RS. 40,64,240/- ITA NO. 161/JP/2016 THE DCIT , CENTRAL CIRCLE- 2, JAIPUR V S. LATE SMT. SUDHA PATNI, JAIPUR . 4 BALANCE PAYABLE RS. 41,78,401/- INTEREST U/S 234B(3) RS. 16,07,399/- INTEREST U/S 234C(3) RS. 3,04,969/- TAX PAYABLE RS. 60,90,769/- ON RECEIPT OF ASSESSMENT ORDER ALONGWITH DEMAND NOT ICE DATED 10-03-2014, ASSESSEE REQUESTED FOR ADJUSTMENT OF SE IZED CASH AMOUNTING TO RS. 46,22,500/- LYING PD ACCOUNT FOR A DVANCE TAX SEPT. 2011 LIABILITY. IN THIS REGARD, ASSESSEE HAS ASSESS MENT ORDER SUBMITTED LETTERS REQUESTING FOR TREATING THE SAME AGAINST TH E ADVANCE TAX LIABILITY OF SEPT. 2011. HOWEVER, AO DID NOT AGREE TO ASSESS EE'S CONTENTION. IN THE MEANTIME ASSESSEE ALSO FILED AN APPLICATION U/S 154 OF THE ACT FOR RECTIFICATION OF DEMAND NOTICE WHEREIN CREDIT OF SE IZED CASH LYING IN PD A/C WAS NOT ALLOWED FOR ADVANCE TAX ADJUSTMENT. HOWEVER, AO VIDE THE ORDER PASSED U/S 14 OF THE ACT DATED 30-09 -2014 HAS REJECTED ASSESSEE'S APPLICATION DATED 20-03-2014. IT IS NOTED FROM THE RECORDS THAT THE LD. CIT(A) HA D ALLOWED THE APPEAL OF THE ASSESSEE IN VIEW OF THE DECISION DATED 28-02-20 14 OF ITAT AGRA BENCH IN THE CASE OF ACIT VS. SUNIL C GUPTA IN ITA NO. 290/AGRA/2013 WHEREIN THE HON'BLE BENCH HELD THAT CASH SEIZED TO BE ADJUSTED AGAINST ADVANCE TAX LIABILITY AS EXPLANATION 2 TO SECTION 1 32B OF THE ACT IS ENACTED W.E.F. IST JUNE, 2013 AND IN THIS CASE THE ITAT UPHELD THE OBSERVATION OF THE LD. CIT(A) WHICH IS AS UNDER:- 3.4 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AS WELL AS THE WRITTEN SUBMISSION OF THE APPELLANT, REMAND REP ORT AND THE REJOINDER ON THIS ISSUE REMAND REPORT AND THE REJOI NDER. IN THIS CASE SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THE PREMISES OF SHRI SUNIL CHAND GUPTA ON 10.03.2010 WHEREIN CASH AMOUNT ING TO RS.4,31,36,000/- WAS SEIZED FROM THE RESIDENCE AND LOCKER AND WAS DEPOSITED BY THE DEPARTMENT IN THE PD ACCOUNT ON 10 .03.2010 AND 19.03.2010. DURING THE COURSE OF SEARCH THE ASSESSE ES STATEMENT WAS RECORDED U/S 134 OF THE I.T. ACT WHEREIN THE ASSESS EE OFFERED TO PAY TAX ON AN INCOME OF RS.10 CRORE FOR THE F.Y. 2009-2010. THE ESTIMATED TAX LIABILITY ON AN INCOME OF RS.10 CRORE WORKED OUT TO ABOUT RS.3 CRORE ITA NO. 161/JP/2016 THE DCIT , CENTRAL CIRCLE- 2, JAIPUR V S. LATE SMT. SUDHA PATNI, JAIPUR . 5 APPROX. SINCE THE LIABILITY TO PAY TAX HAD ARISEN A ND THE CASH BEING SEIZED BY THE DEPARTMENT, THE APPELLANT REQUESTED T HE DEPARTMENT TO ADJUST RS.3 CRORE OUT OF THE RS.4,31,36,000/- SEIZE D AND DEPOSITED IN THE PD ACCOUNT. IT IS SEEN THAT THE ASSESSEE MADE A WRITTEN REQUEST ON 29.03.2010 TO THE CHIEF COMMISSIONER OF INCOME TAX WHICH WAS DULY RECEIVED AND ALSO TO THE ADDITIONAL DIRECTOR OF INC OME TAX INVESTIGATION, AGRA. IT ALSO SEEN THAT SIMILAR REQU EST FOR ADJUSTMENT LETTERS WERE WRITTEN TO THE DCIT CIRCLE-1, AGRA ON 29.03.2010 WHICH WAS DULY RECEIVED IN THE OFFICE ON THE SAME DAY. FU RTHER, ANOTHER LETTER WAS WRITTEN TO THE CIT-1 ON 21.03.2010. LETTER DATE D 05/07/2010 WAS ALSO WRITTEN TO THE DCIT CENTRAL CIRCLE STATING THA T RETURN OF INCOME FOR A.Y. 2010-11 HAD BEEN FILED ON 30/6/10 WITH TAX PAYABLE OF RS.2,92,25,240/- AND THEREFORE REQUESTING THE AO ON CE AGAIN FOR ADJUSTMENT OF TAX LIABILITY WITH THE CASH LYING IN THE PD ACCOUNT. IN THE CIRCUMSTANCES, THE ASSESSEE HAD DONE ALL IT COULD D O SO AS TO ENSURE THAT CASH LYING IN THE PD ACCOUNT WOULD BE ADJUSTED TOWA RDS THE ADVANCE TAX LIABILITY. HOWEVER, IT SEEN THAT NO ACTION WAS ITA NO.290 /AGRA/2013 A.Y. 2010-11 5 TAKEN ON THE ASSESSEES P ETITION BY ANY OF THE AUTHORITIES BEFORE WHOM THE ASSESSEE HAS FILED THE PETITION. TO MY MIND, IT IS AN APPARENT INJUSTICE TO THE APPELLANT TO HOLD ON THE CASH BELONGING IN THE ASSESSEE IN THE GOVERNMENT ACCOUNT AND AT THE SAME TIME CHARGE INTEREST FOR NON-PAYMENT OF ADVANCE TAX ON THE DUE DATES. IT IS CLEAR THAT THE APPELLANTS APPLICATION FOR AD JUSTMENT HAS BEEN SUBMITTED BEFORE THE VARIOUS AUTHORITIES, THE SEIZE D CASH SHOULD HAVE BEEN EITHER BEEN ADJUSTED AS REQUESTED BY THE ASSES SEE TO MEET THE ADVANCE TAX OBLIGATIONS OR THE ASSESSEE SHOULD HAVE BEEN INFORMED THE REASONS WHY THE REQUEST MADE BY THE ASSESSEE CANNOT BE ACCEDED TO. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . SHRI JYOTINDRA B. MODI IN ORDER DATED 21.09.2011 HAS CLEARLY HELD THAT ONCE THE ASSESSEE OFFICERS TO TAX THE UNDISCLOSED INCOME INC LUDING THE AMOUNT SEIZED DURING SEARCH, THAN THE LIABILITY TO PAY ADV ANCE TAX IN RESPECT OF THAT AMOUNT ARISES EVEN BEFORE COMPLETION OF THE AS SESSMENT. THE HONBLE HIGH COURT FURTHER HELD THAT SECTION 132B(1 ) OF THE ACT, THUS NOT PROHIBIT THE UTILIZATION OF AMOUNT SEIZED DURIN G THE COURSE OF SEARCH TOWARDS THE ADVANCE TAX LIABILITY. THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. ASHOK KUMAR REPORTED IN 334 ITR 355 HAS ALSO HELD ON SIMILAR FACTS THAT THE ASSESSEE WA S ENTITLED TO ADJUSTMENT OF SEIZED CASH AGAINST ADVANCE TAX LIABI LITY AND THEREFORE, NO INTEREST COULD BE CHARGED U/S 234A & 234B IN THE EVENT OF THE DEPARTMENT NO RESPONDING TO ASSESSEES REQUEST FOR ADJUSTMENT OF CASH ITA NO. 161/JP/2016 THE DCIT , CENTRAL CIRCLE- 2, JAIPUR V S. LATE SMT. SUDHA PATNI, JAIPUR . 6 SEIZED AGAINST ADVANCE TAX LIABILITY. IN VIEW OF TH E FOLLOWING JUDGMENTS, THE ACTION OF THE AO IN CHARGING INTERES T UNDER 234A, 234B & 234C IS NOT JUSTIFIED AND HENCE, DIRECTED TO BE D ELETED... IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES O F THE CASE AND ALSO RESPECTFULLY FOLLOWING THE DECISION OF ITAT AGRA BE NCH IN THE CASE OF ACIT VS. SUNIL C GUPTA (SUPRA), WE FIND NO INFIRMIT Y IN THE ORDER OF THE LD. CIT(A) WHICH IS SUSTAINED. THUS THE APPEAL OF T HE REVENUE IS DISMISSED. 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/ 10/2016. SD/- SD/- DQY HKKJR HKKXPUN (KUL BHARAT) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/10/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CENTRAL CIRCLE- 2, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- LATE SMT. SUDHA PATNI, THRU: L/H S HRI MAHENDRA KR. PATNI), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.161/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR