SAS Hotels and Enterprises Limited, CHENNAI V. ACIT, CHENNAI

ITA 2146/CHNY/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1137 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2013
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 18-03-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 27-12-2011
• Court: TRIBUNAL
• Department Lawyers: S DAS GUPTA IRS
• Assessee Lawyers: S RAMACHANDRA RAO
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI S.S.GODARA, JUDICIAL MEMBER ITA NO.2146(MDS)/2011 ASSESSMENT YEAR : 2008-09 M/S. SAS HOTELS & ENTERPRISES LTD., 3-MANGESH STREET, T.NAGAR, CHENNAI-600 017. PAN AAECS1194C. VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE IV(2), CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.RAMACHANDR A RAO, C.A. RESPONDENT BY : SHRI S.DAS GUPTA, IRS , JCIT DATE OF HEARING : 18 TH MARCH, 2013 DATE OF PRONOUNCEMENT : 18 TH MARCH, 2013 O R D E R PER DR.O.K.NARAYANAN, VICE PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2008-09. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-I AT CHENNAI, - - ITA 2146 OF 2011 2 DATED 28-10-2011 AND ARISES OUT OF THE ASSESSMENT C OMPLETED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961. 2. THE GROUNDS RAISED BY THE ASSESSEE IN THE PRESE NT APPEAL READ AS BELOW:- 1. THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN NOT ALLOWING CREDIT FO R THE SUM OF ` FIFTY LAKHS SEIZED BY THE DEPARTMENT THOUGH THE APPELLANT HAD MADE A REQUEST TO THAT EFFECT TO THE ASSESSING OFFICER. 2. THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME-TAX(APPEALS) FAILED TO APPRECIATE THAT NO SUBSTANTIAL ADDITIONS HAVE BEEN MADE IN THE CASE OF THE APPELLANT OR GROUP CONCERNS EXCEPT ON TECHNICAL GROUNDS. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN ACCEPTING THE REMAND REPORT OF THE ASSESSING OFFICER IN TOTO WITHOUT AFFORDING AN OPPORTUNITY TO THE APPELLANT TO COUNTER THE CLAIMS OF THE ASSESSING - - ITA 2146 OF 2011 3 OFFICER OR VERIFYING THE CLAIM OF THE ASSESSING OFF ICER REGARDING EXISTENCE OF ARREARS IN THE APPELLANTS CASE. 4. THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME-TAX(APPEALS) BOTH ERRED IN THEIR VIEW THAT A SEIZED AMOUNT COULD BE ADJUSTED AGAINST ARREARS OF TAXES IGNORING THE APPELLANTS CLAIM FOR ADJUSTMENT TOWARDS THE CURRENT YEARS TAXES. 3. WE HEARD BOTH SIDES IN DETAIL. 4. THE HONBLE DELHI HIGH COURT IN THE CASE OF VISHWANATH KHANNA VS. UNION OF INDIA & OTHERS (W.P. (C) NO.21428 OF 2005 DATED 3 RD JUNE, 2011), AFTER CONSIDERING A SIMILAR ISSUE, HAS HELD THAT THE ADVANCE TAX PAYABL E BY THE ASSESSEE SHOULD BE ADJUSTED FROM THE AMOUNT LYING W ITH THE DEPARTMENT IN THE ASSESSEES OWN ACCOUNT WHEN THE A SSESSEE HAS GIVEN IN WRITING TO THE DEPARTMENT TO MEET THE ADVANCE TAX LIABILITY FROM SUCH AMOUNT WITHHELD BY THE DEPARTME NT. THE SAME VIEW WAS AGAIN TAKEN BY THE HONBLE DELHI HIGH COURT IN - - ITA 2146 OF 2011 4 THE CASE OF CIT VS. K.K.MARKETING, 278 ITR 596. IN THE SAID CASE THE HONBLE HIGH COURT HELD THAT THE DEPARTMENT SHO ULD HAVE APPROPRIATED THE AMOUNT AGAINST THE ADVANCE TAX LIA BILITY OF THE ASSESSEE AND AS SUCH THE ASSESSEE COULD NOT BE HELD RESPONSIBLE FOR PAYMENT OF INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT. 5. IN THE PRESENT CASE, THE DEPARTMENT HAS SEIZED ` 50 LAKHS FROM THE ASSESSEE IN THE COURSE OF SEARCH . THE ASSESSEE GAVE IN WRITING TO THE DEPARTMENT THAT THE SAID SEIZED AMOUNT MAY BE ADJUSTED AGAINST THE TAX LIABILITY AR ISING TO THE ASSESSEE OUT OF THE ASSESSMENT THAT WOULD BE COMPLE TED IN PURSUANCE OF SEARCH. ADVANCE TAX FOR THE IMPUGNED PREVIOUS YEAR ALSO FORMS PART OF THE LIABILITY OF TAX THAT W OULD ARISE AS A RESULT OF SEARCH. BUT, THE DEPARTMENT DID NOT DO S O. ON THE OTHER HAND, THE DEPARTMENT RAISED DEMAND ON COMPLET ION OF THE ASSESSMENT AFTER SEARCH, WHICH ALSO INCLUDED INTERE ST PROVIDED UNDER SECTIONS 234B AND 234C OF THE ACT. - - ITA 2146 OF 2011 5 6. NOW, WE FIND THAT IN VIEW OF THE ABOVE JUDGMENT S OF THE HONBLE DELHI HIGH COURT, THE REVENUE IS BOUND TO APPROPRIATE PART OF THE SEIZED AMOUNT TO THE EXTENT NECESSARY TOWARDS THE ADVANCE TAX LIABILITY OF THE ASSESSEE A ND ALSO TOWARDS ANY RESIDUAL LIABILITY REMAINED TO BE PAID ON COMPLETION OF THE ASSESSMENT. IN OTHER WORDS, THE AMOUNT SHOU LD FIRST BE SET OFF AGAINST THE TAX LIABILITY OF THE ASSESSEE A RISING OUT OF THE ASSESSMENT THAT WOULD BE COMPLETED IN PURSUANCE OF THE SEARCH. 7. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO APPROPRIATE THE AMOUNT OF ` 50 LAKHS TOWARDS THE ADVANCE TAX PAYMENT OF THE ASSESSEE DUE FOR THE IMPUGNED PREVIO US YEAR AND ALSO TOWARDS ANY POST ASSESSMENT TAX PAYABLE BY THE ASSESSEE RELATING TO THE IMPUGNED ASSESSMENT YEAR. WE ALSO MAKE IT CLEAR THAT IF ANY BALANCE AMOUNT IS AVAILAB LE WITH THE REVENUE AFTER SETTING OFF THE DEMAND AS STATED ABOV E, THE SAME SHALL BE ADJUSTED AGAINST THE BROUGHT FORWARD LIABI LITY OUTSTANDING AGAINST THE ASSESSEE, WHICH RELATED TO EARLIER ASSE SSMENT YEARS. - - ITA 2146 OF 2011 6 8. WITH THESE DIRECTIONS, THIS APPEAL IS DISPOSED OFF. THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON MONDAY, THE 18 TH OF MARCH, 2013 AT CHENNAI. SD/- SD/- (S.S.GODARA) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 18 TH MARCH, 2013. V.A.P. COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GF.