Arvind Jain, Hyd, Hyderabad V. DCIT, Circle 7(1), Hyderabad, Hyderabad

ITA 332/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6055 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 16-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 18-03-2016
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Search and seizure
• Section: 234B

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 332/HYD/2016 ASSESSMENT YEAR: 2010-11 SHRI ARVIND JAIN, HYDERABAD. PAN AGLPJ7782K VS. THE DY COMMISSIONER OF INCOME TAX, CIRCLE 7(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T. CHAITANYA KUMAR REVENUE BY : SHRI K.J RAO DATE OF HEARING : 16-03-2017 DATE OF PRONOUNCEMENT : 22-03-2017 ORDER PER B. RAMAKOTAIAH, A.M: THE ONLY ISSUE AGITATED BY ASSESSEE IN THIS APPEAL IS WITH REFERENCE TO LEVY OF INTEREST U/S 234A, 234B & 234C OF THE IT ACT IN THE ORDER FOR A.Y 2010-11, WHILE THE DEPARTMENT WAS IN POSSESSION OF RS. 22 LAKHS BELONGING TO ASSESSEE SEIZED AND DEPOSITED IN THE PD ACCOUNT, BUT NOT ADJUSTED TO ADVANCE TAX AS REQUESTED.. 2. BRIEFLY STATED, THERE WAS A SEARCH AND SEIZURE OPERATION IN THE PREMISES OF ASSESSEE ON 10-03-2010. DURING THE COURSE OF SEARCH ASSESSEE WAS FOUND IN POSITION OF CASH OF RS. 22,34,150/-. OUT OF THE CASH FOUND, CASH OF RS. 22 LAKHS WAS SEIZED. ON 15-03-2010 ASSESSEE FILED A LETTER REQUESTING THE DEPARTMENT TO TREAT THE AMOUNT SEIZED AS HIS INCOME AND ADMITTED THAT THE SAME WILL BE OFFERED AS INCOME FOR THE CURRENT YEAR I.E F.Y 2009-10, CORRESPONDING 2 ITA NO. 332/HYD/2016 SHRI ARVIND JAIN, HYDERABAD. TO AY 2010-11. HE FURTHER REQUESTED, AS HE HAS TO PAY ADVANCE TAX ON THE INCOME, TO ADJUST THE CASH SEIZED TOWARDS ADVANCE TAX AND REFUND THE BALANCE AMOUNT TO ASSESSEE. THE COPY OF THE ABOVE LETTER WAS ACKNOWLEDGED ON 15-03-2010 BY THE OFFICE OF DIRECTORATE OF INCOME TAX (INVESTIGATION), HYDERABAD. THE A.O HOWEVER, SEEMS TO HAVE NOT ADJUSTED THE AMOUNT AND ACCORDINGLY RAISED THE DEMAND ON COMPLETION OF ASSESSMENT WHICH INCLUDED INTEREST TO AN EXTENT OF 1,48,610/-, UNDER THE ABOVE THREE SECTIONS. ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND RELIED ON THE FOLLOWING CASES: (I) CIT VS. ASHOK KUMAR (2011), 334 ITR 355 (P&H). (II) MJ RAMANI VS. DCIT, ITAT, BANGALORE, VIDE ITA NO. 383 & 384/BANG/2012 DATED 31-01-2013. (III) CIT VS. R.V. RAIBAG & CO. & OTHERS, ITA NO. 4 TO 10 OF 2003 DATED 29-03-2005 OF KARNATAKA HIGH COURT. 3. LD. CIT(A) HOWEVER, REJECTED ASSESSEES CONTENTIONS BY STATING AS UNDER: 5. INFORMATION ON RECORD IS CAREFULLY CONSIDERED. THE DUE DATE FOR FILING RETURN OF INCOME WAS 30-06-2010 WHEREAS THE SAME WAS FILED ON 24-08-2010. FURTHER, SECTION 132B DEALS WITH APPLICATION OF SEIZED ASSETS DURING SEARCH. AS PER THIS SECTION, THE SEIZED ASSETS CAN BE ADJUSTED TOWARDS 'EXISTING LIABILITY. EXPLANATION (2) WHICH WAS INTRODUCED BY FINANCE ACT, 2013 W.E.F. 01-06-2013, CLARIFIES THAT THE 'EXISTING LIABILITY' DOES NOT INCLUDE TAX PAYABLE. THE HON'BLE M.P. HIGH COURT IN CASE OF SRI RAMJLAL JAGANNATH & OTHERS VS ACIT (2000), 241 ITR 758 MP), HELD THAT SEIZED CASH CANNOT BE ADJUSTED TOWARDS TAX LIABILITY. AS THE, SEIZED CASH CAN BE ADJUSTED ONLY TOWARDS 'EXISTING LIABILITY' WHICH DOES NOT INCLUDE ADVANCE TAX, INTEREST U/S 234A, 234B & 234C IS LEVIABLE. FURTHER, CASE-LAWS RELIED UPON APPELLANT RELATE TO YEARS PRIOR TO INTRODUCTION OF EXPLANATION. 4. IT WAS THE CONTENTION OF THE LD. COUNSEL THAT CIT(A) WRONGLY RELIED ON EXPLANATION(2) WHICH WAS INTRODUCED BY 3 ITA NO. 332/HYD/2016 SHRI ARVIND JAIN, HYDERABAD. THE FINANCE ACT 2013 WITH EFFECT FROM 1-06-2013, WHEREAS, THE ASSESSMENT YEAR INVOLVED WAS A.Y 2010-11. WHILE CIT(A) RELIED ON THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE SRI RAMJILAL JAGNNATH & OTHERS VS ACIT (2000), 241 ITR 758 (MP), ASSESSEE RELIED ON A LATER JUDGMENT OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. ASHOK KUMAR (2011) 334 ITR 355. SINCE, THE DECISION IS FAVORABLE TO ASSESSEE THE SAME IS TO BE FOLLOWED. 5. LD. DR, HOWEVER, ADMITTED THAT SINCE THE AMOUNT CANNOT BE ADJUSTED TO / HAS NOT ADJUSTED TOWARDS ADVANCE TAX, LIABILITY TO INTEREST ARISES. 6. I HAVE CONSIDERED THE RIVAL CONTENTIONS. AS SUBMITTED BY ASSESSEE, THERE IS NOT DISPUTE THAT THE AMOUNT WAS SEIZED IN THE COURSE OF SEARCH AND ASSESSEE HAS MADE A SPECIFIC INTEREST ON 15-03-2010 TO ADJUST THE AMOUNT SEIZED AGAINST THE ADVANCE TAX PAYABLE FOR THE A.Y 2010-11. THIS FACT WAS ALSO ACKNOWLEDGED BY THE CIT(A) IN PARA 4 OF THE ORDER. THE EXPLANATION (2) RELIED ON BY THE CIT(A) IS EFFECTIVE FROM 01-06-2013 AND NOT APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR. THE LAW ON THE SUBJECT WAS THAT WHENEVER ASSESSEE REQUESTS FOR ADJUSTMENT OF SEIZED AMOUNT TOWARDS ADVANCE TAX, INTEREST UNDER 234A, 234B, 234C OF THE IT ACT IS NOT LEVIABLE. ON SIMILAR FACTS THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. ASHOK KUMAR (2011) 334 ITR 355 AS HELD AS UNDER: 4. IT-IS NOT IN DISPUTE THAT ASSESSEE HAD MADE A REQUEST VIDE LETTER DATED AUGUST 28, 1989 AND REMINDER DATED SEPTEMBER 12,1989 FOR ADJUSTMENT OUT OF THE SEIZED AMOUNT 4 ITA NO. 332/HYD/2016 SHRI ARVIND JAIN, HYDERABAD. TOWARDS ADVANCE TAX LIABILITY IN RESPECT OF THE ASSESSMENT YEAR IN QUESTION, I.E., 1990-91. 5. IN CITV. ARUN KAPOOR--I. T A. NO. 149 OF 2003, DECIDED ON JULY 22, 2010, 5 (2011) 334 ITR 351 (P&H), THIS COURT HAD OCCASION TO CONSIDER A SIMILAR ISSUE WHERE IT HAS BEEN HELD THAT ASSESSEE IS ENTITLED TO ADJUSTMENT OF SEIZED AMOUNT TOWARDS ADVANCE TAX LIABILITY FROM THE DATE OF MAKING THE APPLICATION IN THAT REGARD. IN THE PRESENT CASE, ASSESSEE HAD MADE REQUEST FOR ADJUSTMENT OF THE ADVANCE TAX LIABILITY OF RS. 3, 14,312 AGAINST THE SEIZED AMOUNT OF RS. 5, 90,000 ON AUGUST 28,1989. SINCE THE FIRST INSTALMENT OF ADVANCE TAX WAS PAYABLE ON SEPTEMBER 15, 1989 AND THE REQUEST FOR ADJUSTMENT HAVING BEEN MADE ON AUGUST 28, 1989 AND REMINDER ON SEPTEMBER 12, 1989, NO INTEREST WAS EXIGIBLE UNDER SECTIONS 234A AND 234B OF THE ACT. THE TRIBUNAL HAS RIGHTLY HELD THAT ASSESSEE WAS ENTITLED TO ADJUSTMENT OF THE SAID AMOUNT AND NO INTEREST COULD BE CHARGED ON THAT BASIS. THEREFORE, NO FAULT COULD BE FOUND WITH THE APPROACH ADOPTED BY THE TRIBUNAL. 6.1 SINCE, ASSESSEE MADE A SPECIFIC REQUEST FOR ADJUSTMENT OF TAX AND ALSO ON THE FACT THAT SEIZED AMOUNT WAS AVAILABLE WITH DEPARTMENT WHICH COULD HAVE BEEN ADJUSTED TOWARDS ADVANCE OF LIABILITY FOR THE IMPUGNED ASSESSMENT YEAR, I AM OF THE OPINION THAT NO INTEREST COULD BE CHARGED U/S 234A, 234B, 234C OF THE IT ACT, FOLLOWING THE PRINCIPLES LAID DOWN IN THE ABOVE REFERRED CASE. ASSESSEE CONTENTIONS ARE ACCORDINGLY ALLOWED AND A.O IS DIRECTED TO WITH DRAW THE LEVY OF INTERESTS U/S 234A, 234B AND 234C. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2017. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED: 22 ND MARCH, 2017 5 ITA NO. 332/HYD/2016 SHRI ARVIND JAIN, HYDERABAD. KRK 1) SHRI ARVIND JAIN C/O R JASRAJ & CO, ADVOCATES 15-1-91/4/A/1, 2 ND FLOOR, PAPALAL PLAZA, OLD FEELKHANA HYDERABAD - 12 2) THE DCIT, CIRCLE-7(1), HYDERABAD. 3) CIT(A) -3, HYDERABAD 4) PCIT -3, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE