Bhushan KUMAR UPPAL, NEW DELHI V. ACIT, Central Circle-29, New Delhi

ITA 1986/DEL/2018

AI Insights

The case revolves around the appeal by Shri Manish Uppal, the legal heir of Bhushan Kumar Uppal, against the decision of the lower tax authorities regarding the non-adjustment of seized cash of Rs. 1.76 crores towards self-assessment tax. The cash was seized during a search operation under section 132 of the Income Tax Act, 1961, and was claimed to belong to the assessee. The primary legal contention was whether the seized cash could be adjusted against the self-assessment tax liability of the assessee for the Assessment Year 2015-16. The lower authorities had denied this adjustment, citing Explanation 2 to section 132B of the Act, which was contested in the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131136 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-04-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 21-03-2018
• Other Referred Cases: ACIT Vs. Narendra N. Thacker, Spaze Towers (P) Ltd Vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; TDS
• Section: 132; 143(3); 234B; 64

Judgement Text

Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No. 1986/Del/2018 (Assessment Year: 2015-16) Shri Manish Uppal (legal heir of Bhushan Kumar Uppal), N-55, Panchsheel Park, New Delhi-110017 Vs. ACIT, Central Circle-29, New Delhi (Appellant) (Respondent) PAN: AAAPU3998D Assessee by : Sh. Salil Agarwal, Sr. Adv Revenue by: Sh. Mahir Agarwal, Adv Date of Hearing 11/04/2023 Date of pronouncement 24/04/2023 O R D E R PER M. BALAGANESH, A. M.: 1. This appeal in ITA No.1986/Del/2018 for A.Y. 2015-16 arises out of the order by the Ld. Commissioner of Income Tax(Appeals), New Delhi in appeal No. 227/16-17/2661 dated 29.01.2018 (hereinafter referred to as ID. CIT(A) in short) against the order of assessment passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 31.03.2016 by the Ld. Dy. CIT, Delhi (hereinafter referred to as ld. AO). 2. Ground No. 2 raised by the assessee is seeking credit for cash in sum of Rs. 1.76 crores which was seized by the Income Tax Department at the time of search. 3. We have heard and rival submission and perused the materials available on record. ITA No. 1986/Del/2018 Shri Manish Uppal(legal heir of Bhushan Kumar Uppal) Page | 2 4. The assessee is an individual and had filed its return of income for AY 2015-16 on 31.08.2015 declaring total income of Rs. 11,33,54,240/-. A search and seizure action u/s 132 of the Act was carried out on 27.05.2014 on the car bearing registration No. DL3 CBE3592. The search authorization was issued in the name of assessee and Shri Achyut Kumar Gupta. At the time of search in the said car on 27.05.2014, the Income Tax Investigation Wing found that Shri Achyut Kumar Gupta, who was in the car was carrying cash of Rs. 1.76 crores, who claimed that the said cash belongs to assessee. In the statement recorded u/s 132(4) of the Act the assessee accepted that Shri Achut Kumar Gupta was his associate. He also confirmed that the cash of Rs. 1.76 crores found and seized in the car belongs to him and the same is not recorded in his books of accounts. Further, the assessee also accepted that the entries recorded in the seized loose sheets of two pages were not entered in the books of accounts. On the basis of seized documents, the assessee, in his statement recorded u/s 132(4) of the Act, accepted unaccounted income of Rs. 7 crores inclusive of cash seized of Rs. 1.76 crores. We have perused the return of income of the assessee filed on 31.08.2015, wherein, the assessee had indeed offered a sum of Rs. 7 crores in consonance with the statement recorded u/s 132(4) of the Act. This income was offered under the head “income from other sources”. During the year under consideration, the assessee earned income from salary, house property and other sources. 5. We find that the assessee had filed his regular return for the Assessment Year 2015-16 on 31.08.2015 declaring total income of Rs. 11,33,54,239/- and the tax liability thereon was arrived at Rs. 3,83,25,170/-. Against this tax liability of Rs. 3,83,25,170/-, the assessee was eligible for tax credit of Rs. 2,09,11,356/- comprising ITA No. 1986/Del/2018 Shri Manish Uppal(legal heir of Bhushan Kumar Uppal) Page | 3 of TDS of Rs. 1,61,71,260/-, advance tax of Rs. 35,00,000/- and self assessment tax of Rs. 12.40.096/-. The assessee requested for adjustment of the seized cash of Rs. 1.76 crores towards self assessment tax payable by the assessee. This claim was made by the assessee in the return of income filed on 31.08.2015 itself. The ld AO while completing the assessment u/s 143(3) of the Act (being the year of search) on 31.03.2016 made a small addition of Rs. 1,83,500/- and determined the total income of the assessee at Rs. 11,35,37,740/-. In the said assessment, the ld AO did not give credit for tax in the form of seized cash of Rs. 1.76 crores and accordingly raised a demand of Rs. 2,09,68,576/- which includes interest u/s 234B of Rs. 22,46,633/-. The assessee filed a rectification application u/s 154 of the Act wherein, the assessee made a request to treat the seized cash of Rs. 1.76 crores as advance tax payable for AY 2015- 16 and accordingly requested for recalculating the interest u/s 234B of the Act. This rectification application is enclosed at page No. 24 of the paper book. The ld AO disposed off the rectification application filed u/s 154 of the Act against assessee by applying the provisions of Explanation 2 to section 132B of the Act. For the sake of convenience, the said provision is reproduced herein below:- “Application of seized or requisitioned assets. 132B. (1) The assets seized under section 132 or requisitioned under section 132A may be dealt with in the following manner, namely:— ................................................... Explanation 2.—For 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 Chapter XVII.” 6. The seized cash of Rs. 1.76 crores was not given credit by the ld AO in this rectification order u/s 154 of the Act. ITA No. 1986/Del/2018 Shri Manish Uppal(legal heir of Bhushan Kumar Uppal) Page | 4 7. Aggrieved, the assessee preferred an appeal before the ld CIT(A), who upheld the action of the ld AO stating that the existing liability does not include advance tax payable and observed that by applying the provisions of Explanation 2 to section 132B of the Act, the assessee’s plea has been rightly rejected by the ld AO. 8. We are unable to comprehend ourselves to accept to the action of the lower authorities in the instant case. No doubt, in the rectification application made by the assessee u/s 154 of the Act, the assessee had erroneously requested the ld AO to treat the seized cash of Rs. 1.76 crores to be adjusted towards advance tax payable. This is infact not in consonance with provisions of Explanation 2 to section 132B of the Act. However, this rectification application arose from the order u/s 143(3) of the Act dated 31.03.2016 passed by the ld AO wherein, the ld AO had failed to give credit for treatment of seized cash of Rs. 1.76 crores as self assessment tax. In other words, seized cash of Rs. 1.76 crores was not given credit by the ld AO in the assessment framed u/s 143(3) of the Act dated 31.03.2016. It is not in dispute that the assessee had indeed made a claim for adjustment of seized cash of Rs. 1.76 crores with his self assessment tax payable by the assessee along with return of income on 31.08.2015 itself. This was conveniently ignored by the lower authorities. From the bare reading of provisions of section 132B of the Act together with Explanation 2 thereon, there is no prohibition to adjust the seized cash with self assessment tax. What is prohibited is only adjustment of seized cash with the advance tax. Hence, we hold that the assessee is entitled for adjustment of seized cash of Rs. 1.76 crores with self assessment tax payable by the assessee in the return of income. Our view is further fortified by the decision of the coordinate bench of Kolkata Tribunal in the case of ACIT Vs. Narendra N. Thacker reported in 82 taxmman.com 64 and the ITA No. 1986/Del/2018 Shri Manish Uppal(legal heir of Bhushan Kumar Uppal) Page | 5 decision of the Hon’ble Punjab and Haryana High Court in case of Spaze Towers (P) Ltd Vs. DCIT reported in 76 taxmann.com 371. 9. In view of the aforesaid observations and respectfully following the judicial precedents relied upon herein above, the ground No. 2 raised by the assessee is hereby allowed. 10. Ground No. 3 would be in consequential in nature with regard to chargeability of interest u/s 234B of the Act. With regard to chargeability of interest u/s 234C of the Act, the law is very settled that the same may be charged only on the returned income and not on the assessed income. 11. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 24/04/2023. - Sd/- -Sd/- (KUL BHARAT) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 24/04/2023 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. 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