ACIT, Madurai V. A.N.Palanisamy (HUF), Sivakasi

ITA 1759/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86320 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 19-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DURGESH SUMROTT IRS
• Assessee Lawyers: K V RAMAN
• Keywords: Depreciation; Search and seizure; Retrospective amendment
• Section: 234B; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . . , ! '# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER ./ I.T.A. NO.947/MDS/2014 ( / ASSESSMENT YEAR : 2009-2010) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, MADURAI ( $% /APPELLANT) VS SHRI. G. SHANMUGARAJ (HUF) NO.5A, CHAIRMAN A. SHUNMUGANADAR ROAD, SIVAKASI, VIRUDHUNAGAR DIST. [PAN:AABHG 6577M] ( &'$% /RESPONDENT) ./ I.T.A. NO.1759/MDS/2014 ( / ASSESSMENT YEAR : 2009-2010) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, MADURAI ( $% /APPELLANT) VS M/S. A.N. PALANISAMY (HUF) NO.5A, CHAIRMAN A. SHUNMUGANADAR ROAD, SIVAKASI, VIRUDHUNAGAR DIST. [PAN:AAAHA 7090J] ( &'$% /RESPONDENT) / APPELLANT BY : SHRI. DURGESH SUMROTT, IRS, CIT / RESPONDENT BY : SHRI. K.V. RAMAN, C.A., /DATE OF HEARING : 09.03.2015 /DATE OF PRONOUNCEMENT : 09.03.2015 -2- ITA NO.947/MDS/2014 & ITA NO.1759/MDS/2014. ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY REVENUE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE CIT(A)-I, MADURAI IN RESPECT OF ABOVE ASSESSEES FOR THE ASSESSMENT YEAR 2009-2010. 2. THE ISSUE IN THESE TWO APPEALS IS COMMON IN NATURE , HENCE THESE APPEALS ARE COMBINED, HEARD TOGETHER, AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. THE COMMON GROUN D IN THESE APPEALS IS AS FOLLOWS:- THE LEARNED COMMISSIONER (APPEALS) ERRED IN HOLDIN G THAT THE CASH SEIZED DURING SEARCH AND SEIZURE OPERATION IS TO BE ADJUSTED TOWARDS ADVANCE-TAX AND THEREAFTER INTEREST UNDER S ECTION 234A, 234B AND 234C HAS TO BE CALCULATED WHEN THE PROVISI ONS OF SECTION 132B PROVIDE FOR ADJUSTMENT OF CASH SEIZED ONLY AGAINST THE EXISTING LIABILITY AND SUCH EXISTING LIABILITY ARISES ON COMPLETION OF THE ASSESSMENT AND DEMAND IS CREATED . 3. THE FACTS OF THE CASE AS NARRATED IN ITA NO.947/201 4 IS AS BELOW. THERE WAS A SEARCH CONDUCTED IN THE BUSINESS AND RE SIDENTIAL PREMISES OF M/S. SRI KALISWARI FIREWORKS GROUP CONCERNS AND ITS PARTNERS ON 21.10.2008. CONSEQUENT TO THIS, ASSESSMENT ORDER WAS COMPLETED U/S.143(3) R.W.S. 153C OF THE INCOME TAX ACT IS AS UNDER:- -3- ITA NO.947/MDS/2014 & ITA NO.1759/MDS/2014. (AMOUNT IN J) TOTAL INCOME RETURNED 70,58,948 ADD: (I) CLAIM OF DEPRECIATION AND INTEREST ON CAR LOAN AS DISCUSSED IN PARA 3(A) 99,878 (II) DIFFERENCE IN CAPITAL GAIN ADMITTED AS DISCUSSED IN PARA 3(B) 8,11,632 (III) UNDISCLOSED GOLD JEWELLERY AS DISCUSSED IN PARA 3(C) 40,27,036 (IV) UNACCOUNTED CASH FOUND AS DISCUSSED IN PARA 3(D) 8,06,414 ------------- 57,44,960 TOTAL INCOME DETERMINED 1,28,03,908 TAX PAYABLE THEREON (AS PER ANNEXURE ENCLOSED) 35,62,301 4. THE ASSESSEE PRAYED BEFORE THE ASSESSING OFFICER T HAT THE AMOUNT SEIZED AT J6 LAKHS TO BE CONSIDERED TOWARDS ADVANCE TAX LIABILITY PAYABLE BY ASSESSEE ON ADDITIONAL INCOME DECLARED/ASSESSED IN ITS CASE. THE ASSESSING OFFICER DID NOT AGREE WITH THE CONTENTION OF THE AS SESSEE IN VIEW OF THE PROVISIONS OF SECTION 132B(1)(I) OF THE ACT. AGAINS T THIS, ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) PLACING RELI ANCE ON THE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI. RAM S. SARADA VS. DCI T IN ITA NO.1172/RJT/2010 DATED 02.11.2011 OBSERVED THAT CASH SEIZED DURING T HE COURSE OF SEIZURE IS -4- ITA NO.947/MDS/2014 & ITA NO.1759/MDS/2014. REQUIRED TO BE ADJUSTED AGAINST TAXES DUE INCLUDING ADVANCE TAX FOR PURPOSE OF COMPUTATION OF INTEREST UNDER SECTIONS 234A, 234 B AND 234C OF THE INCOME TAX ACT. AGAINST THESE FINDINGS OF CIT(A) THE REVE NUE IS IN APPEAL. 5. WE HAVE HEARD BOTH PARTIES AND PERUSE D THE RECORDS. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN VIEW OF THE JUDGMENT OF TRIBUNAL IN THE CASE OF GIANCHAND GUPTA VS. DCIT [8 0 ITD 548] (DELHI) WHEREIN HELD THAT THERE IS NO AUTOMATIC PAYMENT OF ADVANCE TAX ON THE DATE OF SEIZURE AND AMOUNT OF CASH SEIZED AND RETURNED BY THE ASSESSING OFFICER WOULD RELATE BACK TO THE ORDER U/S. 132(5) AND, THE REFORE, INTEREST OF UNDER SECTIONS 234A, 234B AND 234C IS CHARGEABLE UPTO THE DATE OF ADJUSTMENT ON THE TOTAL AMOUNT OF TAX AND THEREAFTER ON THE BALAN CE AMOUNT AND JUDGMENT IN THE CASE OF CIT VS. AMAR UBROMAL CHAWLA 77 TTJ 4 05 (NAGPUR), AND THE ISSUE HAS TO BE DECIDED IN FAVOUR THE DEPARTMENT. F URTHER, HE SUBMITTED THAT THERE WAS AMENDMENT TO SECTION 132B BY INSERTION OF EXPLANATION (2) TO BELOW SECTION 132(4)(B) THAT READS AS FOLLOWS. FROM THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE EXISTING LIABILITY DOES NOT INCLUDE ADVANCE TAX PAYABLE IN ACCORDANCE WITH THE PROVISIONS OF PART C OF CHAPTE R XVII. ACCORDING TO LD. DEPARTMENTAL REPRESENTATIVE, IT I S TO BE CONSIDERED AS RETROSPECTIVE EFFECT AND AN AMOUNT SEIZED TO BE ADJ USTED AGAINST EXISTING LIABILITY ONLY. -5- ITA NO.947/MDS/2014 & ITA NO.1759/MDS/2014 6. ON THE CONTRARY, THE LEARNED AUTHORISED REPRESENTAT IVE PLACED RELIANCE ON THE JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHRI. JYOTINDRA B. MODY IN ITA NO.3741 OF 2010 DATED 21 ST SEPTEMBER, 2011 WHEREIN OBSERVED AS UNDER:- 8. WE SEE NO MERIT IN THE ABOVE CONTENTION, BECA USE, ONCE THE ASSESSEE OFFERS TO TAX THE UNDISCLOSED IN COME INCLUDING THE AMOUNT SEIZED DURING THE SEARCH, THEN THE LIABILITY TO PAY ADVANCE TAX IN RESPECT OF THAT AMO UNT ARISES EVEN BEFORE THE COMPLETION OF THE ASSESSMENT. SECT ION 132B(1)(I) OF THE ACT DOES NOT PROHIBIT UTILIZATION OF THE AMOUNT SEIZED DURING THE COURSE OF SEARCH TOWARDS T HE ADVANCE TAX PAYABLE ON THE AMOUNT OF UNDISCLOSED IN COME DECLARED DURING THE COURSE OF SEARCH. IN THE PRESE NT CASE, THE ASSESSEE, PRIOR TO THE LAST DATE FOR PAYMENT OF LAST INSTALLMENT OF ADVANCE TAX, HAD IN FACT BY HIS LETT ER DATED 14 TH MARCH, 2007 REQUESTED THE ASSESSING OFFICER TO ADJ UST THE AMOUNTS TOWARDS THE EXISINT ADVANCE TAX LIABILI TY. SINCE ADVANCE TAX LIABILITY IS TO BE COMPUTED AND P AID IN ACCORDANCE WITH THE PROVISONS OF THE ACT EVEN BEFOR E THE COMPLETION OF THE ASSESSMENT, NO FAULT CAN BE FOUND WITH THE DECISION OF THE ITAT IN HOLDING THAT IN THE FA CTS OF THE PRESENT CASE, THE AMOUNTS IN QUESTION WERE LIABLE T O BE ADJUSTED TOWARDS THE EXISTING ADVANCE TAX LIABILITY . 7. FURTHER, WE ALSO FIND THAT SIMILAR ISSUE WAS CO NSIDERED BY CO-ORDINATE BENCH FOR THE ASSESSMENT YEAR 2009-10 IN THE CASE OF PUS HPANDRA SUBHASH CHANDRA VS. ACIT 37 CCH 127 (PUNE) AND IT WAS HELD THAT SECTION 132B(1) (I) OF THE ACT DOES NOT PROHIBIT UTILIZATION OF THE AMOUNT SEIZED DURIN G THE COURSE OF SEARCH TOWARDS THE ADVANCE TAX PAYABLE ON THE AMOUNT OF UN DISCLOSED INCOME DECLARED DURING THE COURSE OF SEARCH. -6- ITA NO.947/MDS/2014 & ITA NO.1759/MDS/2014 8. IN VIEW OF THE ABOVE JUDGMENT OF THE BOMBAY H IGH COURT WHICH IS A SUPERIOR JUDICIAL FORUM, IN OUR OPINION, IT IS APP ROPRIATE TO FOLLOW THE SAME RATHER THAN THE TRIBUNAL ORDER. ACCORDINGLY, WE AR E INCLINED TO HOLD THAT CASH SEIZED DURING THE COURSE OF SEARCH IS REQUIRED TO BE ADJUSTED AGAINST TAX DUE INCLUDING ADVANCE TAX FOR THE PURPOSE OF CO MPUTING THE INTEREST UNDER SECTIONS 234A, 234B AND 234C. THUS ORDER PAS SED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS IN CONFORMI TY WITH THE JUDGMENT OF BOMBAY HIGH COURT CITED SUPRA. 9. REGARDING INSERTION OF EXPLANATION 2 TO SECTION 132B, IN OUR OPINION, ALL SUBSTANTIVE PROVISIONS UNLESS THEY ARE SPECIFICALLY STATED AS BEING EFFECT TO RETROSPECTIVELY, INVARIABLY BE TAKEN TO APPLY FROM THE DATE INDICATED IN THE ENACTMENT OR AMENDMENT AS EFFECTIVE FROM. THE RULE OF INTERPRETATION OF AN ENACTMENT THAT IT MUST BE GIVEN A LITERAL INTERPRET ATION AND FURTHER IT WOULD BE TAKEN AS EFFECTIVE FROM THE DATE OF ENACTMENT GI VEN IN THE AMENDMENT. BUT, UNLESS AMENDMENT SPECIALLY INDICATES THAT IT I S TO BE GIVEN RETROSPECTIVE OPERATION, THE EXPLANATION 2 TO SECTION 132B BY FIN ANCE ACT, 2013 WHICH IS WITH EFFECT FROM 01.06.2013 SHALL HAVE ONLY PROSPEC TIVE EFFECT. IF ASSESSMENT -7- ITA NO.947/MDS/2014 & ITA NO.1759/MDS/2014 WAS COMPLETED BASED ON THE PROVISIONS THAT EXISTED ON THE STATUTORY BOOK, BY MEANS OF SUBSEQUENT AMENDMENTS, IT IS NOT PERMIS SIBLE TO HAVE THAT AMENDED PROVISIONS UNLESS THE AMENDMENT SPECIALLY S TATES THAT ITS EFFECTIVE FROM AN EARLIER DATE. BEING SO, WE ARE NOT IN A PO SITION TO APPRECIATE THE ARGUMENTS OF THE LD. DEPARTMENTAL REPRESENTATIVE ON THIS GROUND ALSO. 10. IN THE RESULT, BOTH APPEALS OF THE REVENUE IN I TA NOS.947/MDS/2014 AND 1759/MDS/2014 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON MONDAY, THE 9 TH OF MARCH, 2015 AT CHENNAI SD/- SD/- ( . . ) (S.S. GODARA) ! / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER !' /CHENNAI. #$ /DATED:09.03.2015. KV $% &' (' /COPY TO: 1. ) APPELLANT 2. / RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. '+, - /DR 6. ,. / /GF.