D.C.I.T, C.Cir-XXII, Kolkata, Kolkata V. M/s Manakamna Flour Mills (P) Ltd., Siliguri

ITA 1827/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4770 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIVASTAVA ARVIN
• Keywords: Gift; Search and seizure
• Section: 143(3); 234B; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO. 1827 / KOL / 2013 ASSESSMENT YEAR :2010-11 DCIT, CC-XXII, AAYAKAR BHAWAN POORVA, 110, SHANTIPALLY, KOLKATA-700 107 V/S . M/S MANAKAMMA FLOUR MILLS (P) LTD., EASTERN BYE PASS ROAD, CHAYAN PARA, SALUGARA, SILIGURI-734 008 [ PAN NO.AADCM 2984 R ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S.SRIVASTAVA, CIT-DR /BY RESPONDENT ARVIND AGARWAL, ADVOCATE /DATE OF HEARING 19-05-2016 /DATE OF PRONOUNCEMENT 03-06-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) CENTRAL-III, KOLKATA IN APPEAL NO.24/CC-XXII/CIT(A)C- III/12-13/KOL DATED 22.03.2013. ASSESSMENT WAS FRAM ED BY DCIT, CC-XXII, KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 14.12.2011 FOR ASSESSMEN T YEAR 2010-11. ITA NO.1827/KOL/2013 A.Y.2010-11 DCIT,CC-XXII KOL. V. M/S MANAKAMNA FLOUR MILLS ( P) LTD. PA GE 2 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS THAT LD. CIT(A) ERRED IN TREATING THE IMPOUNDED / SEIZED CASH AS ADVANCE TAX. FOR THI S, REVENUE HAS RAISED FOLLOWING GROUND:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) ERRED IN LAW IN DIRECTING TO TREAT THE SEIZED CASH AS PAYMENTS O F ADVANCE TAX BY THE ASSESSEE, IGNORING THE PROVISIONS OF SECTION 132B O F THE IT ACT ON APPLICATION OF SEIZED ASSETS, WHICH ALLOWS ADJUSTME NT OF LIABILITY EXISTING ON THE DAY OF SEARCH & SEIZURE OR REQUISITION ONLY UNDER THE INCOME TAX ACT., WEALTH TAX ACT, EXPENDITURE TAX ACT, GIFT TAX ACT AND INTEREST TAX AC AND LIABILITY DETERMINED ON COMPLETION OF ASSESS MENT OR ASSESSMENT UNDER SECTION 113(3)/154. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE LD. C IT(A) ERRED IN NOT CONSIDERING THE JUDGMENT OF MADRAS HIGH COURT IN TH E CASE OF P.P.KANNIAH VS. ITO (1981) 129 ITR 414 (MAD.) WHEREIN IT HAS BEEN HELD THAT THE CASH SEIZED BY THE DEPT. ARE KEPT AS A DEPOSIT IN THE PD ACCOUNT OF THE CIT, REMAINS AN ASSET OF THE ASSESSE E WHICH CAN BE ADJUSTED ONLY AFTER AN EXISTING LIABILITY CRYSTALLI ZES AFTER COMPLETION OF ASSESSMENT. 3. BRIEFLY STATED FACTS ARE THAT THERE WAS A SEARCH AND SEIZURE OPERATION CONDUCTED AT DIFFERENT RESIDENTIAL AND BUSINESS PRE MISES OF BEGRAJ GROUP ON 22.03.2010. THE ASSESSEE IN THE PRESENT CASE BELONG S TO BEGRAJ GROUP SO IT WAS COVERED UNDER THE SEARCH & SEIZURE OPERATION. A S A RESULT OF SEARCH SEVERAL ASSETS WERE FOUND INCLUDING CASH OF 8,04,300/-, AND IT DEPARTMENT SEIZED CASH OF 7.50 LAKH. THE ASSESSING OFFICER COMPLETED THE ASSE SSMENT AND RAISED DEMAND OF TAX FOR 11,26,470/- INCLUDING THE INTEREST U/S 234B OF THE ACT FOR AN AMOUNT OF 1,98,177/- BUT AO HAS NOT TREATED THE IMPOUNDED CASH AS ADVANCE TAX, THEREFORE INTEREST U/S. 234B W AS CHARGED ON THE ENTIRE OUTSTANDING DEMAND. THE ASSESSEE FILED A RECTIFICAT ION APPLICATION U/S 154 OF THE ACT ON DATED 31.01.2012 FOR ALLOWING CREDIT OF SEIZED CASH FOR 7.50 LAKH FOR CHARGING THE INTEREST U/S 234B OF THE ACT. HOWE VER, AO REJECTED THE SAID PETITION BY DISALLOWING TO TREAT THE SEIZED CASH AS ADVANCE PAYMENT OF TAX. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO DELETED THE ADDITION MADE BY AO BY OBSERVING AS UND ER:- ITA NO.1827/KOL/2013 A.Y.2010-11 DCIT,CC-XXII KOL. V. M/S MANAKAMNA FLOUR MILLS ( P) LTD. PA GE 3 I HAVE CAREFULLY PERUSED THE IMPUGNED ORDER U/S. 1 43(3) / 154 AND SUBMISSIONS MADE BY THE A/R. IN CONNECTION WITH THE ISSUE ON HAND REFERENCE MAY B MADE TO THE DECISION OF HON'BLE B BENCH OF THE KOLKATA ITAT IN ACIT V. VAIBHAV TULSYAN (ITA NO. 1 695/KOL/2011, DATE OF ORDER 20.04.2012) WHERE THE HON'BLE TRIBUNAL UPH ELD THE APPELLANTS CLAIM OF ADJUSTMENT OF THE CASH SEIZED DURING THE S EARCH TOWARDS THE ADVANCE TAX LIABILITY OF THE ASSESSEE AND CHARGE IN TEREST U/S 234B AND 234C AFTER CONSIDERING SUCH ADJUSTMENT. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) REVENUE IS IN APPEAL BEFORE US. 5. BEFORE US BOTH THE PARTIES ARE SUPPORTED THE ORD ERS OF AUTHORITIES BELOW AS FAVOURABLE TO THEM. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. LD. AR SUBMITTED PAPER BOOK WHICH IS RUNNIN G PAGES 1 TO 10. WE FIND THAT AO HAS NOT TREATED THE SEIZED CASH AS ADVANCE TAX BUT IN APPELLATE PROCEEDINGS LD. CIT(A) TREATED THE SAME AS ADVANCE TAX. NOW THE ISSUE BEFORE US IS AS WHETHER THE IMPOUNDED CASH FOUND DU RING THE SEARCH CAN BE TREATED AS PAYMENT OF ADVANCE TAX. WE FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN SIMILAR FACTS AND CIRCUMSTANCES ALLOWED TH E ISSUE IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE IN THE CASE OF CIT V. M/S BLB SECURITIES (P) LTD. IN GA NO. 3245 OF 2012 DATED 09.01.2013, FOR THE SAKE OF CLARITY, RELEVANT EXTRACT REPRODUCED BELOW:- THE COURT: THE LEARNED ITAT, BY IT ORDER DATED 25 TH JUNE 2012 UPHELD THE ORDER ALLOWING ADJUSTMENT OF THE SEIZED CASH AG AINST THE LIABILITY TO PAY TAX WHICH AROSE ON 30 TH SEPTEMBER, 2008. MRS. GHUTGHUTIA SUBMITTED THAT UNDER SECTION 132B(I ) OF THE INCOME TAX ACT, 1961, THE SEIZED CASH COULD BE ADJUSTED AGAINS T AN EXISTING LIABILITY AND COULD NOT HAVE BEEN ADJUSTED AGAINST A LIABILIT Y WHICH AROSE SUBSEQUENT THERETO. WE ARE UNABLE TO ACCEPT THIS SUBMISSION. IF THE SEI ZED CASH CAN BE ADJUSTED AGAINST AN EXISTING LIABILITY, THERE IS NO REASON WHY THE SEIZED CASH CANNOT BE ADJUSTED AGAINST A LIABILITY WHICH A ROSE IN FUTURE BECAUSE IN THAT THE SEIZED CASH WOULD AMOUNT TO SO ME SORT OF ADVANCE ITA NO.1827/KOL/2013 A.Y.2010-11 DCIT,CC-XXII KOL. V. M/S MANAKAMNA FLOUR MILLS ( P) LTD. PA GE 4 PAYMENT. WE ARE AS SUCH UNABLE TO FIND ANY MERIT IN THE CONTENTION OF MR. GHUTGHUTIA. MR. GHUTGHUTIA LASTLY SUBMITTED THAT IF SUCH ADJUST MENT IS PERMISSIBLE, THEN INTEREST WOULD BE PAYABLE BY THE ASSESSEE. BUT THAT QUESTION WAS NOT RAISED BEFORE THE LEARNED TRIBUNAL. THE LEARNED TRIBUNAL, THEREFORE, HAD NO OCCASION TO EXPRESS ANY OPTION WITH REGARD T HERETO. IN THE FACTS OF THE CASE, IT IS NOT POSSIBLE FOR US TO SAY THAT THE IMPUGNED JUDGMENT AND ORDER OF THE LEARNED TRIBUNAL IS ERRON EOUS IN LAW. TAKING A CONSISTENT VIEW OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF M/S BLB SECURITIES (P) LTD. (SUPRA) WE ARE OF THE OPINION THAT NO INTERFERENCE IS REQUIRED TO THE ORDER OF LD. CIT(A) AND THIS GROUND OF REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 03 /06/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP !- 03 / 06 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT,CC-XXII, AAYAKAR BHWAN POORVA, 110, SHANTIPALLY, KOL-107 2. /RESPONDENT-M/S MANAKAMNA FLOUR MILLS (P) LTD., EAS TERN BYE PASS ROAD, CHAYAN PARA, SA LUGARA, SILIGURI-734008 3. ) *+ , , - / CONCERNED CIT KOLKATA 4. , , -- / CIT (A) KOLKATA 5. 012 33*+, , *+ , / DR, ITAT, KOLKATA 6. 267 89 / GUARD FILE. BY ORDER/ , , /TRUE COPY/ / , *+ ,