A/Dy.C.I.T., C.C., Agra V. Sh. Sunil Chand Gupta, Agra

ITA 290/AGR/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72798 (ITAT-AGRA)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-02-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 06-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH KUMAR
• Assessee Lawyers: DEEPENDRA MOHAN; PRARTHANA JALAN
• Keywords: Search and seizure
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO.290/AGRA/2013 ASSESSMENT YEAR: 2010-11 ASSTT. COMMISSIONER OF INCOME TAX, VS. SHRI SU NIL CHAND GUPTA, CENTRAL CIRCLE, AGRA. PROP. M/S TRAVEL BUREAU, 88, SECTOR-3, VIBHAV NAGAR, AGRA. (PAN ABPPG 1076 N). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIRUDH KUMAR, CIT (D.R.) RESPONDENT BY : SHRI DEEPENDRA MOHAN, C.A. & MISS. PRARTHANA JALAN, C.A. DATE OF HEARING : 24.02.2014 DATE OF PRONOUNCEMENT : 28.02.2014 ORDER PER PRAMOD KUMAR, ACCOUNTANT MEMBER: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 20 TH MAY, 2013, IN THE MATTER OF ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT 1961, FOR THE ASSESSME NT YEAR 2010-2011. 2. IN THE FIRST GROUND OF APPEAL THE APPELLANT HAS RAISED THE FOLLOWING GRIEVANCE:- ITA NO.290 /AGRA/2013 A.Y. 2010-11 2 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF RS.1,70,233/- MADE OUT OF DISALLOWANCES IN VARIOUS HEADS OF EXPENDITURE WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD. 3. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CONC ERNED, RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE WAS SUBJECTED TO SEARC H AND SEIZURE OPERATION. DURING THE COURSE OF RESULTANT ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT WHILE THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNTS, AND BILLS AND VOUCHERS IN SUPPORT OF VARIOUS EXPENSES, ON EXAMINATION OF BIL LS AND VOUCHERS, IT IS SEEN THAT SOME OF THE VOUCHERS ARE HANDMADE, AND, THEREFORE, CONSIDERING A FAIR AND REASONABLE VIEW, 10% OF THE ABOVE EXPENSES, I.E. RS .1,70,223/-, IS DISALLOWED AND ADDED IN THE INCOME OF THE ASSESSEE. AGGRIEVED, INTER ALIA , BY THIS DISALLOWANCE, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A) WHO DELETED THE DISALLOWANCE AND, WHILE DOING SO, OBSERVED AS FOLLO WS:- 2.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AS WELL AS THE WRITTEN SUBMISSION OF THE APPELLANT ALONG WITH THE REMAND REPORT AND THE REJOINDER. THE AO HAS MADE THE ADHOC ADDITION O N THE GROUND THAT SOME OF THE VOUCHERS WERE HAND MADE BUT HE HAS NOT POINTED OUT ANY SPECIFIC INSTANCE OR SPECIFIC EXPENDITURES OF NON V ERIFIABLE NATURE. THE AO HAS ALSO NOT POINTED OUT ANY SPECIFIC INSTANCE W HERE ANY OF THE EXPENDITURE WERE NOT INCURRED WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSE OF THE BUSINESS OF THE APPELLANT. IT IS ALSO SEEN T HAT NO ADDITION HAS BEEN MADE ON THE BASIS OF ANY INCRIMINATING DOCUMEN TS FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. THEREFO RE IN THIS BACKGROUND THE ADHOC DISALLOWANCE OF 10% OF AFORESA ID EXPENDITURES IS NOT CALLED FOR AND THE ADDITION IS ACCORDINGLY D IRECTED TO BE DELETED. ITA NO.290 /AGRA/2013 A.Y. 2010-11 3 4. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 5. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PE RUSED THE MATERIAL ON RECORD, WE ARE NOT INCLINED TO INTERFERE IN VERY WE LL REASONED FINDING OF THE LEARNED CIT(A). AS HE RIGHTLY OBSERVED, IN THE ABSENCE OF ASSESSING OFFICER HAVING POINTED OUT ANY SPECIFIC CASES OF NON VERIFIABLE EX PENSES OR ANY SPECIFIC CASES WHERE SUCH EXPENSES ARE NOT INCURRED FOR THE PURPOS E OF BUSINESS, THE DISALLOWANCE IS INDEED UNSUSTAINABLE IN LAW. WE APPROVE LEARNED CIT(A)S ORDER ON THIS ISSUE. 6. GROUND NO.1 IS THUS DISMISSED. 7. IN GROUND NO.2, THE ASSESSING OFFICER HAS RAISED THE FOLLOWING GRIEVANCE:- 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN DIRECTING THE ASSESSING OFFICER TO APPROPRIATE THE CASH SEIZED DU RING THE COURSE OF SEARCH AGAINST THE ADVANCE TAX LIABILITY AND IN CONSEQUENC E THERETO DELETE THE STATUTORY INTERESTS CHARGED U/S 234A, 234B & 234C AMOUNTING TO RS.30,90,449/-, RS.64,89,943/- AND RS.11,34,025/- R ESPECTIVELY IGNORING THE LEGAL PROVISIONS AS CONTAINED IN SECTION 132B READ WITH EXPLANATION-2 AS APPEARING THERE UNDER. 8. TO ADJUDICATE ON THIS GROUND, IT IS SUFFICIENT T O TAKE NOTE OF THE FACT THAT DURING THE SEARCH AND SEIZURE OPERATION ON 10.03.20 10, CASH OF RS.4,31,36,000/- WAS SEIZED AND DEPOSITED IN THE PD ACCOUNT, OUT OF WHICH, ADJUSTMENT WAS SOUGHT ITA NO.290 /AGRA/2013 A.Y. 2010-11 4 BY THE ASSESSEE TOWARDS, INTER ALIA , HIS ADVANCE TAX LIABILITY IN RESPECT OF HIS INCOME FOR THE YEAR 2010-11, FOR WHICH RETURN WAS F ILED ON 30.06.2010. THE ASSESSING OFFICER DID NOT MAKE THE ADJUSTMENT SO RE QUESTED BY THE ASSESSEE, NOR DID HE INFORM THE ASSESSEE AS TO WHY SUCH AN ADJUST MENT CANNOT BE MADE. WHEN THE MATTER WAS CARRIED IN APPEAL BEFORE THE CIT(A), LEARNED CIT(A) UPHELD THE GRIEVANCE OF THE ASSESSEE AND OBSERVED AS FOLLOWS:- 3.4 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AS WELL AS THE WRITTEN SUBMISSION OF THE APPELLANT, REMAND REPORT AND THE REJOINDER ON THIS ISSUE REMAND REPORT AND THE REJOINDER. IN T HIS CASE SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THE PREMISES O F SHRI SUNIL CHAND GUPTA ON 10.03.2010 WHEREIN CASH AMOUNTING TO RS.4,31,36,000/- WAS SEIZED FROM THE RESIDENCE AND LOCKER AND WAS DEPOSITED BY THE DEPARTMENT IN THE PD ACCOUNT ON 10 .03.2010 AND 19.03.2010. DURING THE COURSE OF SEARCH THE ASSESSE ES STATEMENT WAS RECORDED U/S 134 OF THE I.T. ACT WHEREIN THE ASSESS EE OFFERED TO PAY TAX ON AN INCOME OF RS.10 CRORE FOR THE F.Y. 2009-2 010. THE ESTIMATED TAX LIABILITY ON AN INCOME OF RS.10 CRORE WORKED OU T TO ABOUT RS.3 CRORE APPROX. SINCE THE LIABILITY TO PAY TAX HAD AR ISEN AND THE CASH BEING SEIZED BY THE DEPARTMENT, THE APPELLANT REQUE STED THE DEPARTMENT TO ADJUST RS.3 CRORE OUT OF THE RS.4,31, 36,000/- SEIZED AND DEPOSITED IN THE PD ACCOUNT. IT IS SEEN THAT THE AS SESSEE MADE A WRITTEN REQUEST ON 29.03.2010 TO THE CHIEF COMMISSI ONER OF INCOME TAX WHICH WAS DULY RECEIVED AND ALSO TO THE ADDITIO NAL DIRECTOR OF INCOME TAX INVESTIGATION, AGRA. IT ALSO SEEN THAT S IMILAR REQUEST FOR ADJUSTMENT LETTERS WERE WRITTEN TO THE DCIT CIRCLE- 1, AGRA ON 29.03.2010 WHICH WAS DULY RECEIVED IN THE OFFICE ON THE SAME DAY. FURTHER, ANOTHER LETTER WAS WRITTEN TO THE CIT-1 ON 21.03.2010. LETTER DATED 05/07/2010 WAS ALSO WRITTEN TO THE DCIT CENTR AL CIRCLE STATING THAT RETURN OF INCOME FOR A.Y. 2010-11 HAD BEEN FIL ED ON 30/6/10 WITH TAX PAYABLE OF RS.2,92,25,240/- AND THEREFORE REQUE STING THE AO ONCE AGAIN FOR ADJUSTMENT OF TAX LIABILITY WITH THE CASH LYING IN THE PD ACCOUNT. IN THE CIRCUMSTANCES, THE ASSESSEE HAD DON E ALL IT COULD DO SO AS TO ENSURE THAT CASH LYING IN THE PD ACCOUNT WOUL D BE ADJUSTED TOWARDS THE ADVANCE TAX LIABILITY. HOWEVER, IT SEEN THAT NO ACTION WAS ITA NO.290 /AGRA/2013 A.Y. 2010-11 5 TAKEN ON THE ASSESSEES PETITION BY ANY OF THE AUTH ORITIES BEFORE WHOM THE ASSESSEE HAS FILED THE PETITION. TO MY MIND, IT IS AN APPARENT INJUSTICE TO THE APPELLANT TO HOLD ON THE CASH BELO NGING IN THE ASSESSEE IN THE GOVERNMENT ACCOUNT AND AT THE SAME TIME CHAR GE INTEREST FOR NON-PAYMENT OF ADVANCE TAX ON THE DUE DATES. IT IS CLEAR THAT THE APPELLANTS APPLICATION FOR ADJUSTMENT HAS BEEN SUB MITTED BEFORE THE VARIOUS AUTHORITIES, THE SEIZED CASH SHOULD HAVE BE EN EITHER BEEN ADJUSTED AS REQUESTED BY THE ASSESSEE TO MEET THE A DVANCE TAX OBLIGATIONS OR THE ASSESSEE SHOULD HAVE BEEN INFORM ED THE REASONS WHY THE REQUEST MADE BY THE ASSESSEE CANNOT BE ACCE DED TO. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHRI JYOTINDRA B. MODI IN ORDER DATED 21.09.2011 HAS CLEARLY HELD THAT ONCE THE ASSESSEE OFFICERS TO TAX THE UNDISCLOSED INCOME INC LUDING THE AMOUNT SEIZED DURING SEARCH, THAN THE LIABILITY TO PAY ADV ANCE TAX IN RESPECT OF THAT AMOUNT ARISES EVEN BEFORE COMPLETION OF THE ASSESSMENT. THE HONBLE HIGH COURT FURTHER HELD THAT SECTION 132B(1 ) OF THE ACT, THUS NOT PROHIBIT THE UTILIZATION OF AMOUNT SEIZED DURIN G THE COURSE OF SEARCH TOWARDS THE ADVANCE TAX LIABILITY. THE HONB LE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. ASHOK KUMAR REPORTED IN 334 ITR 355 HAS ALSO HELD ON SIMILAR FACTS THAT THE ASSESSEE W AS ENTITLED TO ADJUSTMENT OF SEIZED CASH AGAINST ADVAN CE TAX LIABILITY AND THEREFORE, NO INTEREST COULD BE CHARGED U/S 234A & 234B IN THE EVENT OF THE DEPARTMENT NO RESPONDING TO ASSESSEES REQUE ST FOR ADJUSTMENT OF CASH SEIZED AGAINST ADVANCE TAX LIABILITY. IN VI EW OF THE FOLLOWING JUDGMENTS, THE ACTION OF THE AO IN CHARGING INTERES T UNDER 234A, 234B & 234C IS NOT JUSTIFIED AND HENCE, DIRECTED TO BE DELETED. 9. THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US. 10. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE ARE INCLINED TO CONFIRM AND APPROVE VERY WELL REASONED CONCLUSIONS ARRIVED AT BY THE CIT(A). THIS ISSUE, AS RIGHTLY O BSERVED BY THE LEARNED CIT(A), IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY A SERIES O F JUDICIAL PRECEDENTS, INCLUDING, ITA NO.290 /AGRA/2013 A.Y. 2010-11 6 SUCH AS IN THE CASES OF CIT VS. ASHOK KUMAR (334 IT R 355), AND CIT VS. KESAR KIMAM KARYALAYA (278 ITR 596). IT IS ALSO IMPORTAN T TO BEAR IN MIND THAT EXPLANATION-2 TO SECTION 132B OF THE ACT, WHICH RES TRICTS THE SCOPE OF EXISTING LIABILITY TO LIABILITIES OTHER THAN TAX PAYABLE, IS SPECIFICALLY ENACTED WITH EFFECT FROM 1 ST JUNE, 2013, WHEREAS AT PRESENT DEALING WITH ASSESS MENT YEAR 2010-11. LEARNED ASSESSING OFFICERS RELIANCE ON EXPLANATION-2 TO SE CTION 132B OF THE ACT, AS MADE OUT IN THE GROUND OF APPEAL, IS, THEREFORE, ILL-CON CEIVED. THIS PROVISION WAS NOT IN FORCE AT THE RELEVANT POINT OF TIME. ON THIS VIEW OF THE MATTER, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE STAND OF LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 11. GROUND NO.2 IS ALSO DISMISSED. 12. IN THE RESULT, THE APPEAL IS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2014) SD/- SD/- (BHAVNESH SAINI) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 28 TH FEBRUARY, 2014 PBN/* COPY OF THE ORDER FORWARDED TO :- APPELLANT/RESPONDENT/CIT (APPEALS) CONCERNED/CIT CO NCERNED/ D.R., ITAT, AGRA BENCH, AGRA/ GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY