Shri Shri Kantilal Chajed, Buldhana V. ACIT.Central Cir 1(4), Nagpur

ITA 343/NAG/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1019 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 06-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C W AWGULKAR
• Assessee Lawyers: P R GANDHI
• Keywords: Principle of natural justice
• Section: 143(3); 153A; 234B; 69; 6; 139

Judgement Text

1 ITA NOS.306 & 343/NAG/2013 & C.O. NO. 21/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T. A. NO. 343/NAG/2013 ASSESSMENT YEAR : 2009 - 10. SHRI KANTILAL M. CHAJED, ASSTT. COMMISSIONER OF INCOME - TAX, BHAGVAN MAHAVIR MARG, V/S. CENTRAL CIRCLE - 1(4), NAGPUR. BULDHANA. APPELLANT RESPONDENT. I.T.A.NO.306/NAG/2013 ASSESSMENT YEAR : 2009 - 10. ASSTT. COMMISSIONER OF INCOME - TAX, SHRI KANTILAL M. CHAJED, CENTRAL CIRCLE - 1(4), NAGPUR . V/S. BULDHANA. APPELLANT. RESPONDENT. C.O. NO.21/NAG/2013 (IN ITA NO.306/NAG/2013/) ASSESSMENT YEAR : 2009 - 10. SHRI KANTILAL M. CHAJED, ASSTT. COMMISSIONER OF INCOME - TAX, BULDHANA. V/S. CENTRAL - 1(4), NAGP UR. CROSS OBJECTOR. RESPONDENT. ASSESSEE BY : SHRI P.R. GANDHI. DEPARTMENT BY : SHRI C.W. AWGULKAR. DATE OF HEARING : 20 - 05 - 2015 DATE OF PRONO UNCEMENT : 17 TH JULY, 2015. 2 ITA NOS.306 & 343/NAG/2013 & C.O. NO. 21/NAG/2013 O R D E R PER SHRI MUKUL K. SHRAWAT, J.M. THE CROSS APPEALS HAVE BEEN FILED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 09 - 05 - 2013 AND THE ASSESSEE HAS ALSO FILED A CROSS OBJECTION. WE SHALL FIRST DECIDE THE APPEAL OF THE REVENUE DEPARTMENT. 2. A. ITA NO. 306/NAG/2013 (REVENUES APPEAL) REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW. WHETHER THE LD. CIT(A) ERRED IN DIRECTING THE ASSESS ING OFFICER TO TREAT THE SEIZED CASH OF ` .12,00,000/ - TOWARDS ADVANCE TAX LIABILITY, WHICH WAS NOT AN EXISTING LIABILITY AS ON THE DATE OF SEARCH. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW. WHETHER THE LD. CIT(A) ERRED IN APPLYING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN INCOME TAX APPEAL NO. 3741 OF 2010, DATED 21/09/2011, IN THE CASE OF CIT V/S. SHRI JYOTINDRA B. MODY, WHICH IS CONTRARY TO THE EXTANT PROVISIONS OF SECTION 132B(1)(I) OF THE I .T. ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW. WHETHER THE LD. CIT(A) ERRED IN DIRECTING TO RECALCULATE THE INTEREST U/S 234A, 234B AND 234C, AFTER GIVING CREDIT TO THE AMOUNT OF ` .12,00,000/ - . 2.1) AN ASSESSMENT WAS MADE UNDER SECTION 143(3) DATED 27 - 12 - 2010 ACCORDING TO WHICH FACTS WERE THAT AN ACTION UNDER SECTION 132(1) WAS CONDUCTED ON THE ASSESSEE ON 20 TH MARCH, 2009 ALONG WITH THE BULDHANA URBAN COOPERATIVE CREDIT SOCIETY. THEREUPON A RETURN WAS FILED UNDER SEC TION 139 READ WITH SECTION 153A BY THE ASSESSEE ON 20 TH OF DEC., 2010 DECLARING AN INCOME OF ` .66,50,120/ - . THE ASSESSING OFFICER HAD MADE AN OBSERVATION THAT THE SAID DECLARED INCOME 3 ITA NOS.306 & 343/NAG/2013 & C.O. NO. 21/NAG/2013 INCLUDED THE ADDITIONAL INCOME DISCLOSED DURING THE ACTION UNDER 132( 1) AMOUNTING TO ` .62,99,981/ - . FACTS OF THE CASE HAVE REVEALED THAT CERTAIN LOCKERS WERE FOUND AT THE TIME OF SEARCH CONTAINING THE JEWELLERY OF THE FAMILY MEMBERS WHICH WERE OFFERED BY THE ASSESSEE UNDER SECTION 69 AMOUNTING TO ` .20,99,600/ - . FURTHER THE ASSESSEE HAS ALSO OFFERED CASH AMOUNT OF ` .42,00,381/ - UNDER SECTION 69A OF THE I.T. ACT. IN THE LIGHT OF THE ABOVE BACKGROUND, THE ASSESSEE HAD MADE A REQUEST AND OFFERED THAT AN AMOUNT OF ` .12 LAKHS WHICH WAS SEIZED BY THE REVENUE DEPARTMENT AT THE TIME OF SEARCH UNDER SECTION 132(1) SHOULD BE CONSIDERED AS PAYMENT OF ADVANCE TAX. IT WAS PLEADED THAT THE INTEREST CHARGED UNDER SECTION 234A, 234B AND 234C WAS WRONGLY LEVIED ON THE ASSESSEE. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHO RITY, THE LEARNED CIT(APPEALS) HAS FOLLOWED THE DECISION OF HONBLE BOMBAY HIGH COURT PRONOUNCED IN THE CASE JYOTINDRA B. MODY ( INCOME TAX APPEAL NO. 3741 OF 2010 DATED 21 - 09 - 2011. LEARNED CIT(APPEALS) HAS DIRECTED THE ASSESSING OFFICER TO CONSIDER THE AM OUNT OF ` .12 LAKHS AS ADVANCE TAX AND, THEREFORE, RECALCULATE THE LEVY OF INTEREST. FOR READY REFERENCE, THE RELEVANT PARAGRAPH OF LEARNED CIT(APPEALS) IS REPRODUCED BELOW : 11.0 I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE APPELLANT. THE DECISION OF HONBLE BOMBAY HIGH COURT IN INCOME TAX APPEAL NO. 3741 OF 2010 DATED 21.09.2011 IN THE CASE OF CIT V/S. JYOTINDRA B. MODI IS APPLICABLE TO THE FACTS OF THE APPELLANTS CASE. IN THIS CASE THE HONBLE JURISDICTIONAL HIGH CO URT HAS HELD AS FOLLOWS: THE BASIC ARGUMENT OF THE REVENUE IS THAT UNDER SECTION 132B(1)(I) OF THE INCOME TAX ACT, 1961, THE AMOUNT SEIZED DURING THE COURSE OF 4 ITA NOS.306 & 343/NAG/2013 & C.O. NO. 21/NAG/2013 SEARCH CAN BE DEALT WITH FOR DISCHARGING THE EXISTING LIABILITY UNDER THE ACTS SET OUT THEREIN. IN THE PRESENT CASE, THE TAX LIABILITY RELATING TO THE ASSESSMENT YEAR IN QUESTION WOULD GET CRYSTALLIZED ONLY AFTER THE ASSESSMENT IS COMPLETED AND THEREFORE, THE REQUEST OF THE ASSESSEE FOR ADJUSTMENT OF THE AMOUNTS IN QUESTION TOW ARDS THE ADVANCE TAX LIABILITY COULD NOT BE ENTERTAINED. WE SEE NO MERIT IN THE ABOVE CONTENTION, BECAUSE ONCE THE ASSESSEE OFFERS TO TAX THE UNDISCLOSED INCOME INCLUDING THE AMOUNT SEIZED DURING THE SEARCH, THEN THE LIABILITY TO PAY ADVANCE T AX IN RESPECT OF THAT AMOUNT ARISES EVEN BEFORE THE COMPLETION OF THE ASSESSMENT. SECTION 132B(1)(I) OF THE ACT DOES NOT PROHIBIT UTILIZATION OF THE AMOUNT SEIZED DURING THE COURSE OF SEARCH TOWARDS THE ADVANCE TAX PAYABLE ON THE AMOUNT OF UNDI SCLOSED INCOME DECLARED DURING THE COURSE OF SEARCH. IN THE PRESENT CASE, THE ASSESSEE, PRIOR TO THE LAST DATED FOR PAYMENT OF LAST INSTALLMENT OF ADVANCE TAX, HAD IN FACT BY HIS LETTER TO REQUEST THE ASSESSING OFFICER TO ADJUST THE AMOUNTS TOWARDS THE EXISTING ADVANCE TAX LIABILITY. SINCE ADVANCE TAX LIABILITY IS TO BE COMPUTED AND PAID IN ACCORDANCE WITH THE PROVISION OF THE ACT EVEN BEFORE THE COMPLETION OF THE ASSESSMENT, NO FAULT CAN BE FOUND WITH THE DECISION OF THE ITAT IS HOLDING THAT IN THE FACTS OF THE PRESENT CASE, THE AMOUNT IS QUESTION WERE LIABLE TO BE ADJUSTED TOWARDS THE EXISTING ADVANCE TAX LIABILITY. 12.0 THE RATIO OF THE SAID DECISION IS SQUARELY APPLICABLE TO THE FACTS DOF THE APPELLANTS CASE. WHEN AMOUNT SEI ZED FROM THE APPELLANT WAS AVAILABLE WITH THE DEPARTMENT FROM 20.03.2009 ITSELF, NON ADJUSTMENT OF THIS AMOUNT TOWARDS APPELLANTS TAX DUES IS NOT JUSTIFIED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE HONBLE BOMBAY HIGH COURT, I HOLD THAT THE AO HAS ERRED IN NOT TREATING THE PAYMENT OF ` .12,00,000/ - AS ADVANCE TAX. THE AO IS DIRECTED TO TREAT THE AMOUNT AS PAYMENT TOWARDS ADVANCE TAX AND REWORK THE INTEREST LEVIED. THESE GROUNDS OF APPEAL OF THE APPELLANT ARE ALLOWED. 4. AFTER H EARING SUBMISSIONS OF BOTH THE SIDES AND APPRECIATING THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED CIT(APPEALS) HAS RIGHTLY 5 ITA NOS.306 & 343/NAG/2013 & C.O. NO. 21/NAG/2013 FOLLOWED THE DECISION OF HONBLE BOMBAY HIGH COURT PRONOUNCED IN THE CASE OF JYOTINDRA B MODY ( SUPRA ). LD. CIT (A) HAS REPRODUCED THE RELEVANT PORTION OF THE VERDICT. WE HAVE PERUSED THE SAME. THE ISSUE AS RAISED BY THE ASSESSEE WAS DIRECTLY COVERED BY THIS PRECEDENT. WE, THEREFORE , FIND NO FALLACY IN THE DECISION OF LD. CIT(A). THE SAME IS HEREBY CONFIR MED. EVEN THIS TRIBUNAL ( NAGPUR BENCH ) HAS ALSO TAKEN THE SAME VIEW IN NUMBER OF JUDGMENTS PRONOUNCED, FOR REFERENCE ACIT VS. M/S CONCRETA DEVELOPERS ( ITA NO. 380/NAG./2012 ( A.Y. 2009 - 10 ) ORDER DATED 30/06/201 5. 5. THEREFORE, RESPECTFULLY FOLLOWING T HE CASE LAWS AS CITED, WE HEREBY AFFIRM THE FINDINGS OF LEARNED CIT(APPEALS) AND DISMISS THE GROUND OF THE REVENUE. 6. REVENUES APPEAL IS DISMISSED. 7. B ITA NO. 343/NAG/2013/ (ASSESSEES APPEAL). THE GROUND RAISED BY THE ASSESSEE IS ONLY IN RESPECT OF CHARGING OF INTEREST UNDER SECTION 234A, 234B AND 234C WITH A PRAYER THAT THE SAME WAS DIRECTED TO BE DELETED. 8. AT THE OUTSET, WE HAVE BEEN INFORMED THAT THIS APPEAL OF THE ASSESSEE WAS BELATEDLY FILED BY 49 DAYS. IN THIS REGARD A PETITION FOR CONDON ATION OF DELAY WAS FILED. THE ASSESSEE HAS MENTIONED THAT A WRONG ADVISE WAS GIVEN BY AN ADVOCATE AT BULDHANA THAT NO APPEAL COULD BE FILED AGAINST THE CHARGING OF INTEREST BUT WHEN HE CONTACTED AN ADVOCATE AT NAGPUR THEN HE WAS ADVISED TO FILE THE APPEAL . DUE TO THE SAID CONFUSION THERE WAS A DELAY OF ABOUT 44 DAYS WHICH WAS REQUESTED TO BE CONDONED. CONSIDERING THE TOTALITY OF THE CIRCUMSTANCES AND AFTER HEARING BOTH THE SIDES, WE HEREBY CONDONE THIS DELAY AND ADMIT THIS APPEAL FOR ADJUDICATION ON MERIT S. 6 ITA NOS.306 & 343/NAG/2013 & C.O. NO. 21/NAG/2013 9. ASSESSEES ARGUMENT IS THAT A SPECIFIC GROUND HAS BEEN RAISED BEFORE THE LEARNED CIT(APPEALS) TO CONSIDER THE PAYMENT OF ` . 12 LAKHS AS PAYMENT OF ADVANCE TAX, HENCE IN CONSEQUENCE THEREUPON, THE INTEREST WAS NOT TO BE CHARGED UNDER SECTION 234A, 23 4B AND 234C OF THE I.T. ACT. IT HAS ALSO BEEN PLEADED THAT THIS GROUND WAS NOT ADJUDICATED UPON BY LEARNED CIT(APPEALS). HOWEVER, AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE OPINION THAT THE LEARNED CIT(APPEALS) HAS DULY ADJUDICATED THIS ISSUE. 9.1) WHEN LD. A.R. WAS ASKED TO CLARIFY HIS STAND , HE HAS MODIFIED HIS SUBMISSIONS AND PLEADED THAT THE ISSUE OF CHARGING OF INTEREST U/S 243A & 234 B WAS INN RESPECT OF THE OF JEWELLERY TAXED IN THE HANDS OF THE ASSESSEE OF RS. 20,99, 600/ - . THE SAID INCOME WAS TAXED U/S 69 & 69A WHICH WAS DETERMINED BY THE A.O. AFTER THE CLOSE OF THE ACCOUNTING PERIOD, THEREFORE, IN SITUATION WHEN THE ASSESSEE WAS NOT AWARE ABOUT THE IMPUGNED ADDITION AT THE POINT OF TIME WHEN HE WAS SUPPOSED PAY THE A DVANCE - TAX , THEN HOW COULD HE BE RESPONSIBLE TO PAY THE INTEREST U/S 234B & 234C . CONSIDERING THIS PLANK OF THE ARGUMENT WE FOUND THAT UNDISPUTEDLY THE DIRECTION OF LEARNED CIT(APPEALS) AS PER THE LAST PARAGRAPH, ALREADY REPRODUCED ABOVE, WAS TO TREAT T HE AMOUNT OF ` .12 LAKHS AS PAYMENT TOWARDS ADVANCE TAX AND TO REWORK THE INTEREST LEVIED. BUT THERE WAS NO ADJUDICATION ON THIS LEGAL ISSUE. THE ISSUE IS THAT IN A SITUATION WHEN THE INCOME WAS DETERMINED U/S 69 & 69A THEN WHETHER THE PROVISIONS OF SEC. 20 7 R.W.S. 210 SHOULD BE APPLIED OR NOT ? 9.1 SINCE THE LEARNED CIT(APPEALS) HAS ONLY GIVEN A DIRECTION FOR THE RECALCULATION OF THE INTEREST, BUT THERE WAS NO FINDING ON THIS ISSUE , THEREFORE, IN THE INTEREST OF NATURAL JUSTICE WE DEEM IT PROPER AS ALS O JUSTIFIABLE TO RESTORE THIS 7 ITA NOS.306 & 343/NAG/2013 & C.O. NO. 21/NAG/2013 ISSUE BACK TO THE FILE OF LD.C.I.T.(A) TO DECIDE AS PER LAW. THE GROUND IS THEREFORE ALLOWED AS PER THE DIRECTION. 10. C C.O.NO.21/NAG/2013 (BY THE ASSESSEE) THE CROSS OBJECTION IS REPRODUCED BELOW : THERE WAS SEARCH A ND SEIZURE OPERATION ON 20 - 03 - 2009. INTEREST U/S 234A, 234B, 234C IS CHARGED ON INCOME TAXED U/S 69 & 69A WHICH IS DETECTED AS A RESULT OF SEARCH. THE ASSESSEE HAS GIVEN A CASH OF ` . 4 LAKHS AND D.D. OF ` . 8 LAKHS ON 21 - 03 - 2009 FOR ESTIMATED TAX LIABIL ITY. THE SAME IS CLAIMED AS ADVANCE TAX IN RETURN FILED. THE A.O. ASSESSED ` .42,00,038/ - US/ 69A WHICH IS AMOUNT SURRENDERED FOR TAXATION AS A RESULT OF SEARCH CONDUCTED ON 20/03/2009. THIS INCOME BEING EARNED AFTER 15/03/2009, NOT LIABLE FOR AD. TAX A ND NO INTEREST CAN BE CHARGED UNDER SECTION 234B, 234C. 11. A VIEW HAS ALREADY BEEN EXPRESSED BY US WHILE DECIDING THE ABOVE APPEAL OF THE ASSESSEE. IN THE LIGHT OF THE ABOVE DISCUSSION THE CROSS OBJECTION MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PU RPOSE BECAUSE THE ISSUE AS RAISED IN THE GROUND IS YET TO BE DECIDED BY CIT (A). 12. IN THE RESULT, THE APPEALS OF THE REVENUE IS DISMISSED AND THE APPEAL OF ASSESSEE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE, BOTH MAY BE TREATED AS PARTLY ALLOWE D THAT TOO FOR STATISTICAL PURPOSE ONLY. ORDER PRONOUNC ED IN THE OPEN COURT ON THIS 17 TH DAY OF JULY, 2015. SD/ - SD/ - ( SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER. JUDICIAL MEMBER NAGPUR, DATED: 17 TH JULY, 2015. 8 ITA NOS.306 & 343/NAG/2013 & C.O. NO. 21/NAG/2013 COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE