The Assistant Commissioner of Income Tax, Amritsar. V. Sh. Parvinder Singh Prop., Amritsar.

ITA 197/ASR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63491 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-09-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Keywords: Question of law
• Section: 234B; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.197(ASR)/2012 ASSESSMENT YEAR:2009-10 PAN :ABZPS1687D ASSTT. COMMR. OF INCOME-TAX, VS. SH. PARVINDER SING H CENTRAL CIRCLE, AMRITSAR. PROP. M/S. MOHINDER SIN GH JEWELLERS, HAVELI JAMADAR, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. R.L. CHHANALIA, DR RESPONDENT BY:SH. SALIL KAPOOR, ADV DATE OF HEARING:27/09/2012 DATE OF PRONOUNCEMENT:04/10/2012 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A)-I, LUDHIANA, DATED 12.03.2012 FOR THE ASSESSMENT YEAR 2009-2010. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 1. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT TH AT THIS IS A LIMITED ISSUE OF THE REJECTION BY THE ASSESSING OFFICER OF THE APPLICATION FILED U/S 154/155 BY THE ASSESSEE AND N OT THE ISSUE OF GIVING CREDIT TO THE SEIZED AMOUNT LYING IN PD A CCOUNTS ITA NO.197(ASR)/2012 2 AGAINST THE ADVANCE TAX LIABILITY, AS HAS BEEN DISC USSED IN THE ORDER OF LD. CIT(A). 2. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THA T SINCE THERE WAS A SHORT FALL IN THE PAYMENT OF TAX ON THE RETURNED INCOME, THE INCIDENT OF INTEREST U/S 234B AND 234C WAS AUTOMATI C AND IN ACCORDANCE WITH THE INCOME-TAX ACT. 3. THE LD. CIT(A) FAILED TO APPRECIATE THE FACT THA T THE SECTION 132B(1) IS VERY CLEAR THAT THE SEIZED OR RELINQUISH ED ASSETS MAY BE DEALT WITH AGAINST EXISTING LIABILITY UNDER TH E INCOME-TAX ACT, AND NOT AGAINST THE ADVANCE TAX AND IN DOING S O LOST SIGHT OF THE VERY PURPOSE OF THE LEGISLATION OF SECTION 1 32B(1) OF THE INCOME-TAX ACT. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ADD, AN O R MORE GROUND(S) OF THIS APPEAL DURING THE PROCEEDINGS 3. THE BRIEF FACTS IN THE GROUNDS OF THE REVENUE AR E THAT A SEARCH UNDER SECTION 132 WAS MADE ON 05.02.2009, ON WHICH DATE T HE ASSESSEE SURRENDERED RS.10,00,00,000/- INCLUDING CASH OF RS .90,00,000/- OUT OF CASH IN HAND AVAILABLE AMOUNTING TO RS.94,19,500/-, AN A MOUNT OF RS.89,30,000/- WAS SEIZED BY THE INCOME-TAX DEPARTMENT. A NOTICE U NDER SECTION 156 ALOGWITH ORDER U/S 210 DATED 25.02.2009 WAS RECEIVE D BY THE ASSESSEE FOR A DEMAND OF RS.3,45,69,000/-. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED A LETTER DATED 03.03.2009 REQUESTING THAT THE SEIZE D AMOUNT OF RS.89,30,000/- BE ADJUSTED AGAINST ADVANCE TAX DEMAND OF RS.3,45,6 9,000/-. ON RECEIPT OF INTIMATION UNDER SECTION 143(1) OF THE ACT, IT WAS FOUND BY THE ASSESSEE THAT THE SAID SEIZED AMOUNT OF RS.89,30,000/- HAD NOT B EEN ADJUSTED. THE ASSESSEE ACCORDINGLY FILED AN APPLICATION U/S 154 O F THE ACT FOR RECTIFICATION ITA NO.197(ASR)/2012 3 FOR ADJUSTING THE SAID SEIZED AMOUNT OF RS.89,30,00 0/-. THE ASSESSEES APPLICATION U/S 154 WAS REJECTED BY THE AO VIDE ORD ER DATED 28.02.2011. 4. 4. BEFORE THE LD. CIT(A), THE ASSESSEE MADE SUBMIS SIONS WHICH WERE SENT TO THE A.O. WHO IN THE REMAND REPORT DATED 11 .01.2012, HOWEVER, CONFIRMED THE CLAIMS MADE BY THE ASSESSEE WERE FACT UALLY CORRECT. BUT THE AO, HOWEVER, OBSERVED HAT SECTION 132B/1 REFERS TO EXISTING LIABILITY AND ADVANCE TAX LIABILITY CAN NOT BE TAKEN TO BE EXISTI NG LIABILITY. HE FURTHER OPINED THAT THE EXISTING LIABILITY SHOULD BE THE LI ABILITY EXISTING ON THE DAY OF SEARCH. THE LD. COUNSEL FOR THE ASSESSEE APPEARING BEFORE THE LD. CIT(A) SUBMITTED HIS COMMENTS IN THE REJOINDER WHICH ARE A VAILABLE AT PAGES 4 & 5 OF THE CIT(A)S ORDER THAT THE MATTER IS COVERED B Y THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ASHOK KUMAR REPORTED IN 334 ITR 355 (P&H) ON IDENTICAL FACTS AND THEREFO RE, THE AO HAS GROSSLY ERRED IN HOLDING THAT EXISTING LIABILITY DOES NOT C OVER ADVANCE TAX LIABILITY. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPON T HE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT-I VS. SHRI JYO TINDRA B. MODY DATED 21.09.2011 ON THE IDENTICAL FACTS. 4.1. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATI ON OF THE ASSESSEE, THE REMAND REPORT AND THE COUNTER COMMENTS OF THE LD. C OUNSEL FOR THE ASSESSEE VIDE PARA 5 OF HIS ORDER ACCEPTED THE EXPLANATION O F THE ASSESSEE, HELD THAT ITA NO.197(ASR)/2012 4 AOS ACTION IN REJECTING APPLICATION U/S 154 OF THE ACT, WAS ERRONEOUS AND THEREFORE, INTEREST SO CHARGED UNDER SECTION 234A & 234B WAS DIRECTED TO BE DELETED. 5. THE LD. DR, MR. R.L. CHHANALIA, RELIED ON THE OR DER OF THE ASSESSING OFFICER AND THE REMAND REPORT OF THE A.O. AND PRAYE D TO REVERSE THE ORDER OF THE LD. CIT(A) BY RESTORING THE ORDER OF THE A.O. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE, SH. SALIL KAPOOR, ADVOCATE, APPEARED AND ARGUED THAT THE ISSUE IS SQU ARELY COVERED BY THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ASHOK KUMAR (SUPRA) AND THE DECISIONS OF THE HONB LE BOMBAY HIGH COURT IN THE CASE OF CIT-I VS. SHRI JYOTINDRA B. MODY DA TED 21.09.2011(SUPRA) ON THE IDENTICAL FACTS. MOREOVER, THE ASSESSEE HAD BEC OME LIABLE FOR ADVANCE TAX AND THE ADVANCE TAX WAS ALSO CREATED BY THE THEN AO BY ISSUE OF NOTICE U/S 210 BY ORDER DATED 25.09.2009 FOR ADVANCE TAX DEMAN D OF RS.3,45,69,000/- AFTER DEDUCTING ADVANCE TAX OF RS.10,00,000/- ALREA DY PAID AND NEXT INSTALLMENT OF ADVANCE TAX WAS PAYABLE ON 15.03.200 9. THEREFORE, IN THE INSTALMENT OF ADVANCE TAX DEMAND ON 15.03.2009, THE ASSESSEE HAD SUBMITTED LETTER DATED 03.03.2009 FOR ADJUSTMENT OF THE SEIZE D AMOUNT OF RS.89,30,000/- THEN THE ADVANCE TAX BECOMES THE EXI STING LIABILITY DUE ON ITA NO.197(ASR)/2012 5 15.03.2009. MR. SALIL KAPOOR, PRAYED TO CONFIRM THE ORDER OF THE LD. CIT(A) ACCORDINGLY. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ARGUMENTS MADE BY THE LD. COUNSEL FOR THE ASSES SEE, MR. SALIL KAPOOR, ADVOCATE, ARE FOUND TO BE CONVINCING THAT THE INCOM E TAX DEPARTMENT HAD ISSUED A NOTICE U/S 156 ALONGWITH ORDER UNDER SECT ION 210 DATED 25.02.2009 CREATING ADVANCE TAX DEMAND OF RS.3,45,69,000/- AND THEREFORE, THE ADVANCE TAX DEMAND BECOMES THE EXISTING LIABILITY FOR THE N EXT INSTALLMENT OF ADVANCE TAX PAYABLE ON 15.03.2009. THE ASSESSEE HAS ALSO FILED LETTER DATED 03.03.2009 REQUESTING THE DEPARTMENT TO ADJUST THE SEIZED AMOUNT OF RS.89,30,000/- LYING IN THE P.D. ACCOUNT OF THE CO MMISSIONER OF INCOME TAX (CENTRAL) LUDHIANA. THE ISSUE IS SQUARELY COVE RED ON IDENTICAL ISSUE BY THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF CIT VS. ASHOK KUMAR (SUPRA), DATED 30.09.2010. THE SAID DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IS REPRODUCED F OR THE SAKE OF CLARITY AS UNDER: THE APPEAL WAS ADMITTED BY THIS COURT VIDE ORDER D ATED 9 TH SEPT; 2004 FOR DETERMINATION OF THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: WHETHER THE AMOUNT SEIZED AT THE TIME OF SEARCH UN DER SECTION 132 CAN BE ADJUSTED TOWARDS THE ADVANCE TAX LIABILITY O F THE YEAR DURING WHICH SEARCH HAD BEEN CONDUCTED? ITA NO.197(ASR)/2012 6 2. BRIEFLY THE FACTS NECESSARY FOR DECIDING THE APP EAL AS CULLED OUT FROM THE RECORD ARE THAT A SEARCH WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 27 TH JULY, 1989. DURING THE COURSE OF SEARCH, A CASH AMOUNT OF R.6,20,580/- WAS FOUND OUT OF WHICH RS.5,90,000/- WAS SEIZED. THE ASSESSEE SURRENDERED A SUM OF RS.5,75,000/- IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT AS INCOME FOR THE ASSESSMENT YEAR IN QUESTION. THE ASS ESSEE FIELD ITS RETURN ON 5 TH MARCH, 1992 DECLARING AN INCOME OF RS.5,72,370/-. THE ASSESSEE VIDE LETTERS DATED 28 TH AUG; 1989 AND 12 TH SEPT; 1989 REQUESTED THAT THE ADVANCE TAX PAYABLE IN RESPECT O F THE ASSESSMENT YEAR UNDER CONSIDERATION AMOUNTING TO RS.3,14,213/- MAY BE ADJUSTED OUT OF CASH SEIZED AND HE MAY NOT BE HELD LIABLE FO R INTEREST UNDER SECTION 234B AND 234C. THE ASSESSEE DID NOT RECEIVE ANY RESPONSE THAT THE AFORESAID APPLICATIONS HAD BEEN REJECTED. HOWEVER, IN THE ASSESSMENT ORDER, INTEREST AMOUNTING TO RS.1,04,412 /- AND RS.1,47,024/- /S 234A AND 234B WAS CHARGED. BEING A GGRIEVED, THE ASSESSEE FILED APPEAL AGAINST DEDUCTION MADE AND AL SO CHARGING OF INTEREST UNDER SECTION 234A & 234B BEFORE THE CIT(A ) WHO VIDE ORDER DATED 5 TH JAN., 1996 DELETED THE INTEREST CHARGED U/S 234A A ND 234B OF THE ACT. FEELING DISSATISFIED, THE DEPARTMENT TOOK THE MATTER IN APPEAL AND THE TRIBUNAL VIDE ORDER DATED 23 RD JULY, 2003 DISMISSED THE APPEAL WHICH GAVE RISE TO THE REVENUE TO APPROACH T HIS COURT BY WAY OF INSTANT APPEAL. 3. WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES. 4. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD MADE A REQUEST VIDE LETTER DATED 28 TH AUGUST, 1989 AND REMINDER DATED 12 TH SEPT., 1989 FOR ADJUSTMENT OUT OF THE SEIZED AMOUNT TOWARDS ADV ADV ANCE TAX LIABILITY IN RESPECT OF THE ASSESSMENT YEAR IN QUESTION I.E. 1990-91. 5. IN CIT VS. ARUN KAPOOR, IT APPEAL NO.149 OF 2003 DECIDED ON 27 TH JULY, 2010 THIS COURT HAD OCCASION TO CONSIDER SIM ILAR ISSUE WHERE IT HAS BEEN HELD THAT THE ASSESSEE IS ENTITLE D TO ADJUSTMENT OF SEIZED AMOUNT TOWARDS ADVANCE TAX LIABILITY FROM TH E DATE OF MAKING THE APPLICATION IN THAT REGARD. IN THE PRESENT CASE , THE ASSESSEE HAD MADE REQUEST FOR ADJUSTMENT OF THE ADVANCE TAX LIAB ILITY OF RS.3,14,312/- AGAINST THE SEIZED AMOUNT OF RS.5,90, 000 ON 28 TH AUGUST, 1989. SINCE THE FIRST INSTALLMENT OF ADVANCE TAX WA S PAYABLE ON 15 TH SEPT; 1989 AND THE REQUEST FOR ADJUSTMENT HAVING BE EN MADE ON 28 TH AUG; 1989 AND REMINDER ON 12 TH SEPT; 1989, NO INTEREST WAS EXIGIBLE U/S 234A AND 234B OF THE ACT. THE TRIBUNAL HAS RIGH TLY HELD THAT THE ASSESSEE WAS ENTITLED TO ADJUSTMENT OF THE SAID AMO UNT AND NO INTEREST ITA NO.197(ASR)/2012 7 COULD BE CHARGED ON THAT BASIS. THEREFORE, NO FAULT COULD BE FOUND WITH THE APPROACH ADOPTED BY THE TRIBUNAL. 6. ACCORDINGLY, THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 7. CONSEQUENTLY, THE APPEAL IS DISMISSED. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE F IND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY DIRECTED T HE ASSESSING OFFICER TO DELETE THE INTEREST SO CHARGED UNDER SECTION 234A A ND 234B OF THE ACT. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED . 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NO.197(ASR)/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4TH OCTOBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 4TH OCTOBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. PARVINDER SINGH C/O M/S. MOHINDER SINGH JEWELLERS, AMRITSAR. 2. THE ACIT, CENTRAL CIRCLE, AMRITSAR. 3. THE CIT(A), AMRITSAR. 4. THE CIT, AMRITSAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL,