Smt. Kamla Mehta, Amritsar. V. The Assistant Commissioner of Income Tax, Amritsar.

ITA 350/ASR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7827 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-07-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 20-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GHULAM MUSTAFA MUGHL OO
• Assessee Lawyers: P N ARORA
• Keywords: Search and seizure; Retrospective amendment; Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER I.T.A NO. 350/(ASR)/2016 ASSESSMENT YEAR: 2007-08 PAN: ACEPM1028L SMT. KAMLA MEHTA C/O M/S. S.K. TRADING CO. 94-LAWRENCE ROAD, AMRITSAR, PUNJAB. VS. ASST. COMMISSIONER OF INCOME TAX-CENTRAL CIRCLE AMRITSAR. (APPELLANT) (RESPONDENT) I.T.A NO. 351/(ASR)/2016 ASSESSMENT YEAR: 2007-08 PAN: ACEPM1029M SMT. SHELLY MEHTA C/O M/S. S.K. TRADING CO. 94-LAWRENCE ROAD, AMRITSAR, PUNJAB. VS. ASST. COMMISSIONER OF INCOME TAX-CENTRAL CIRCLE AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P. N. ARORA (ADV.) RESPONDENT BY: SH. GHULAM MUSTAFA MUGHLOO (D. R. ) DATE OF HEARING: 23.08.2017 DATE OF PRONOUNCEMENT: 31.08.201 7 ORDER PER T. S. KAPOOR (AM): THESE ARE TWO APPEALS FILED BY TWO DIFFERENT ASSESS EES AGAINST THE SEPARATE ORDERS OF LD. CIT(A), LUDHIANA BOTH DATED 18.05.2016 FOR ASST. YEAR: 2007-08. THE IDENTICAL ISSUE IS INVOLVED IN T HESE APPEALS AND THESE ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 2 APPEALS WERE HEARD TOGETHER AND THEREFORE FOR THE S AKE OF CONVENIENCE, A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. 2. THE ONLY ISSUE RAISED BY ASSESSEES IN THESE APPE ALS IS THE ACTION OF LD. CIT(A) BY WHICH HE HAS SUSTAINED THE PENALTY WH ICH THE ASSESSING OFFICER HAD IMPOSED U/S 271AAA OF THE ACT. 3. AT THE OUTSET, THE LD. AR SUBMITTED THAT DURING SEARCH AND SEIZURE, THE ASSESSEES HAD SURRENDERED CERTAIN AMOU NTS AND FOR WHICH THE ASSESSING OFFICER HAD IMPOSED PENALTY U/S 271AA A OF THE ACT. THE LD. AR SUBMITTED THAT THE ISSUE UNDER APPEAL IS DUL Y COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF AMRITSAR BENCH IN THE CASE OF GURDHIAN SINGH VS. ACIT IN ITA NO. 420 & 421/ASR/2016 AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 78 TO 91, WHERE A COPY OF SUCH ORDER WAS PLACED. THE LD. AR FURTHER SUBMITTED THAT THE ISSUE WAS ALSO COVERED BY HON'BLE ITAT AMRITSAR BENCH IN THE CASE OF SURINDER KUMAR KHINDRI AND PARVINDER SINGH IN ITA NO. 185 AND 385 RESPECTIVELY. THE LD. AR FURTHER SUBMITTED THAT THE ORDER OF ITAT AMR ITSAR BENCH IN THE CASE OF SURINDER KUMAR KHINDRI WAS CONFIRMED BY HON 'BLE PUNJAB & HARYANA HIGH COURT IN ITA NO. 250 VIDE ORDER DATED 28.02.2017. 4. INVITING OUR ATTENTION TO THE FACTS OF THE CASES , THE LD. AR SUBMITTED THAT ASSESSEES HAD SURRENDERED THE AMOUNT S DURING SEARCH AND SEIZURE AND HAD ADMITTED IN THE STATEMENT U/S 1 32(4) AND HAD ALSO DEMONSTRATED THE MANNER IN WHICH SUCH INCOME WAS DE RIVED AND THEREFORE HE SUBMITTED THAT THE FINDINGS OF LD. CIT (A) THAT THE ASSESSEE ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 3 HAD NOT ADMITTED THE UNDISCLOSED INCOME DURING SEAR CH AND SEIZURE ARE INCORRECT. THE LD. AR INVITED OUR ATTENTION TO PAPE R BOOK PAGE 67 TO 68 WHERE A COPY OF STATEMENT RECORDED U/S 132(4) OF SH ELLY MEHTA WAS PLACED. THE LD. AR SUBMITTED THAT IN THE STATEMENT BY SMT. SHELLY MEHTA, SHE HAD STATED THAT HIS HUSBAND SUNIL MEHTA OPERATES THE BANK ACCOUNTS AND SHE HAD AUTHORIZED HIM TO GIVE STATEME NT ON HER BEHALF. THE LD. AR ALSO INVITED OUR ATTENTION TO PAPER BOOK PAGE 68 WHEREIN REPLY TO Q. NO. 12, SMT. SHELLY MEHTA HAD STATED TH AT THE DEAL FOR SALE OF HOUSE IN PALM GROVES WAS DONE BY SUNIL MEHTA ON HER BEHALF. OUR SPECIFIC ATTENTION WAS ALSO INVITED TO Q. NO. 3 PLA CED AT PAPER BOOK PAGE 67 WHEREIN IN REPLY TO QUESTION NO. 3 SMT. SHELLY M EHTA HAD STATED THAT HER HUSBAND SHRI. SUNIL MEHTA MANAGES HER BANK ACCO UNTS AND SHE HAD FURTHER AUTHORIZED HIM TO MAKE STATEMENT ON HER BEH ALF. 5. THE LD. AR FURTHER INVITED OUR ATTENTION TO PAPE R BOOK PAGE 69 AND 70 WHERE SMT. KAMLA MEHTA HAD STATED THAT HER SON S UNIL MEHTA MANAGES THE BANK ACCOUNT ON HER BEHALF AND SHE HAD AUTHORIZED HIM TO MAKE A STATEMENT ON HER BEHALF. INVITING OUR ATTENT ION TO THE STATEMENT OF SH. SUNIL MEHTA PLACED AT PAPER BOOK PAGE 74 ONW ARD, THE LD. AR INVITED OUR ATTENTION TO ANSWER TO QUESTION NO. 6 W HERE SHRI. SUNIL MEHTA HAD SUBMITTED THAT ORIGINALLY THE PROPERTY WAS PURC HASED BY HIM AND WHICH WAS SOLD TO SMT. SHELLY MEHTA AND SMT. KAMLA MEHTA AND WHICH IN TURN WAS SOLD BY THEM. THE LD. AR FURTHER INVITE D OUR ATTENTION TO PAPER BOOK PAGE 59 WHERE A PART OF COPY OF STATEMEN T RECORDED BY SUNIL MEHTA WAS PLACED AND OUR SPECIFIC ATTENTION WAS INV ITED TO ANSWERS TO Q. ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 4 NO. 20 AND Q. NO. 38. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEES HAD OWNED THE UNDISCLOSED INCOME IN THE RETURNS OF INCOME AND ASSESSING OFFICER HAD ACCEPTED THE INCOME IN THIER HANDS, THEREFORE THE FINDINGS OF LD. CIT(A) THAT THE ASSESSEES HAD NOT A DMITTED UNDISCLOSED INCOME AND HAD NOT SUBMITTED THE MANNER IN WHICH UN DISCLOSED INCOME WAS DERIVED WAS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. AS REGARDS THE PAYMENT OF TAX, THE LD. AR SUBMIT TED THAT THE ASSESSEE HAD REQUESTED TO THE AUTHORITIES TO ADJUST THE TAX AMOUNT FROM THE SEIZED AMOUNT AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO COPIES OF LETTERS DATED 31.07.2017, 03.08.2017, 02.02.2008 , 29.10.2008 AND 24.03.2009 WHEREBY THE ASSESSEE REQUESTED TO LD. CI T TO ADJUST THE AMOUNT OF TAX FROM THE AMOUNTS LAYING IN PDA ACCOUN T. THE LD. AR FURTHER INVITED OUR ATTENTION TO PAPER BOOK PAGE 37 AND 38 WHERE A COPY OF THE LETTER DATED 10.02.2010 AGAINST THE IMPOSITI ON OF PENALTY U/S 271AAA WAS PLACED. THE LD. AR SUBMITTED THAT SECTIO N 271AAA PROVIDES FOR PENALTY ON INCOME FOUND DURING SEARCH AND SEIZU RE BUT NO PENALTY IS LEVIABLE ON ADMITTED INCOME IF THE CONDITIONS FOR N ON- IMPOSITION OF PENALTY ARE SATISFIED. ONE OF THE CONDITIONS IS DEP OSITED OF TAX AND SINCE THE QUANTIFICATION OF AMOUNT OF UNDISCLOSED INCOME CAN BE DONE ONLY AT THE COMPLETION OF ASSESSMENT, IT WAS HELD BY THE HO N'BLE TRIBUNAL THAT NO OUTER HAS BEEN FIXED FOR DEPOSIT OF TAX. THE LD. AR SUBMITTED THAT IT WAS HELD THAT WHERE THERE WAS A SHORT PAYMENT BY WA Y OF SELF ASSESSMENT BUT WAS PAID BEFORE COMPLETION OF ASSESS MENT; IT WAS HELD THAT THERE WAS NO SCOPE OF PENALTY U/S 271AAA OF TH E ACT. ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 5 7. THE LD. AR SUBMITTED THAT IN VIEW OF A VARIOUS R EQUESTS MADE BY ASSESSEE FOR ADJUSTMENT OF TAX OUT OF SEIZED AMOUNT THERE WAS NO SCOPE FOR IMPOSITION OF PENALTY. OUR ATTENTION WAS FURTHE R INVITED TO PAPER BOOK PAGE 5 AND 6 WHERE COMPUTATION OF INCOME WAS PLACED AND WHERE IT WAS SPECIFICALLY REQUESTED FOR ADJUSTMENT OF TAXES. THE LD. AR IN VIEW OF THESE JUDGMENTS AND JUDICIAL PRECEDENTS ARGUED THAT THE P ENALTIES SUSTAINED BY LD. CIT(A) BE DELETED. 8. THE LD. DR ON THE OTHER HAND HEAVILY PLACED HIS RELIANCE ON THE ORDER OF AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THOUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE PENALTY U/S 271A AA IS NOT LEVIABLE IN THE CASES WHERE THREE CONDITIONS ARE SATISFIED. FOR THIS PURPOSE, IT IS NECESSARY TO VISIT THE PROVISIONS OF SUB-SECTION 2 OF SECTION 271AAA WHICH READS AS UNDER: (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APP LY IF THE ASSESSEE- (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER S UB-SECTION (4) OF SECTION 132, ADMITS THE UNDISCLOSED INCOME AND SPEC IFIES THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED I NCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN RE SPECT OF THE UNDISCLOSED INCOME. AS REGARDS THE FIRST CONDITION THE LD. CIT(A) HAS H ELD THAT THE ASSESSEE HAS NOT ADMITTED UNDISCLOSED INCOME AND IN STEAD SHRI. SUNIL MEHTA HAD ADMITTED OF UNDISCLOSED INCOME. HOWEVER W E FIND THAT THIS ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 6 FINDING OF LD. CIT(A) IS NOT CORRECT IN VIEW OF THE FACT THAT SMT. SHELLY MEHTA AND SMT KAMLA MEHTA IN THIER STATEMENTS RECOR DED U/S 132(4) HAD AUTHORIZED SHRI SUNIL MEHTA TO GIVE A STATEMENT ON THEIR BEHALF AND IN THIS CONTEXT TO AN ANSWER TO QUESTION NO. 3 SMT. SHELLY MEHTA HAD SUBMITTED AS UNDER: MY HUSBAND SH. SUNIL MEHTA HANDLES AND MANAGES MY BANK ACCOUNT AND HE CAN GIVE STATEMENT ON MY BEHALF REGA RDING THESE BANK ACCOUNT. I AUTHORIZED HIM TO GIVE STATEMENT ON MY BEHALF. FURTHER THE QUESTION NO. 12 AND ITS ANSWER GIVEN B Y SHELLY MEHTA PLACED AT PAPER BOOK PAGE 68 IS REPRODUCED BELOW: Q.NO. 12. YOU HAVE SOLD HOUSE IN PALM GROOVES AMRI TSAR TO SH. J.K. SOKHEY AND HIS FAMILY IN WHICH YOU HAD SHARE. PLE ASE GIVE DETAILS OF THE TRANSACTION AND HOW MUCH MONEY WAS R ECEIVED? ANS. THE DEAL WAS DONE BY MY HUSBAND SH. SUNIL ME HTA AND REPLY TO THE QUESTION HAS ALREADY BEEN GIVEN BY MY HUSBAND. SIMILARLY SMT. KAMLA MEHTA HAD AUTHORIZED HIS SON SHRI. SUNIL MEHTA TO RECORD THE STATEMENT ON HER BEHALF, IN REP LY TO Q. NO. 3 SMT. KAMLA MEHTA HAD STATED AS UNDER: MY SON HANDLES AND MANAGES MY BANK ACCOUNT AND HE CAN GIVE STATEMENT ON MY BEHALF REGARDING THESE ACCOUNTS. I AUTHORIZED TO GIVE STATEMENT ON MY BEHALF . FURTHER Q. NO. 12 AND ITS ANSWER GIVEN BY KAMLA ME HTA PLACED AT IN PAPER BOOK PAGE 71 IS REPRODUCED BELOW: Q.NO. 12. PLEASE TELL YOU HAVE FILED A HOUSE IN P ALM GROVE TO SH. J.S. SOKHEY AND HIS SON IN WHICH YOU HAD HALF SHARE AND HOW MUCH MONEY WAS RECEIVED? ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 7 ANS. THE DEAL WAS DONE BY MY SON SH. SUNIL MEHTA A ND HE CAN REPLY TO THIS QUESTION. SH. SUNIL MEHTA IN HIS STATEMENT VIDE REPLY TO QU ESTION NO. 20 PLACED IN PAPER BOOK PAGE 59 HAD REPLIED AS UNDER: I MANAGE AND CONTROL THE BANK ACCOUNT OF SMT. SHEL LY MEHTA AND SMT. KAMLA MEHTA. I CAN GIVE REPLY ON THIS BEHALF R EGARDING BANK ACCOUNTS FURTHER MR. SUNIL MEHTA HAD EXPLAINED THE MANNER I N WHICH THE UNDISCLOSED INCOME WAS EARNED VIDE REPLY TO QUESTIO N NO. 38 PLACED IN PAPER BOOK PAGE 62 WHICH IS REPRODUCED BELOW: THE PLOT WAS PURCHASED ON 06.06.2004 FOR A SUM OF RS. 6 LACS IN MY NAME. LATER PLOT WAS SOLD TO MY WIFE & MOTHER FO R ELEVEN LACS ON 06.01.2006. I DO NOT REMEMBER EXACT AMOUNT SPENT ON CONSTRUCTION BEFORE SALE. HOWEVER, 45 LACS RUPEES W AS SPENT ON CONSTRUCTION ON WHOLE HOUSE, APPROXIMATELY. LATER O N, THE HOUSE WAS SOLD TO SH. J.J. SOKHEY FOR RS. 72 LACS. FROM THE ABOVE EXTRACTED QUESTIONS AND ANSWERS IT CAN SAFELY BE CONCLUDED THAT ASSESSEES HAD ADMITTED THE UNDISCLOS ED INCOMES IN THIER STATEMENTS RECORDED U/S 132(4) AND HAD ALSO DISCLOS ED THE MANNER IN WHICH THESE WERE EARNED. FURTHER WE FIND THAT ASSESSING OFFICER DURING ASSE SSMENT PROCEEDINGS HAD ACCEPTED THE UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEES. 10. IN VIEW OF THE FACTS AND CIRCUMSTANCES, WE HOLD THAT ASSESSEES HAD SATISFIED THE FIRST TWO CONDITIONS FOR NOT BEING HI T BY THE PENALTY PROVISIONS OF SECTION 271AAA. ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 8 11. AS REGARDS THE THIRD CONDITION OF PAYMENT OF TA X, WE FIND THAT ASSESSEES HAD BEEN REQUESTING THE AUTHORITIES BELOW TO ADJUST THE TAX AMOUNT OUT OF THE SEIZED CASH BUT THE AUTHORITIES B ELOW DID NOT DO THE SAME. THE HON'BLE AMRITSAR BENCH IN THE CASE OF GUR DHIAN SINGH IN ITA NO. 420 & 421/ASR/2016 HAS ELABORATELY DEALT WITH T HE ISSUE AND FURTHER HON'BLE ITAT AMRITSAR BENCH IN THE CASE OF SH. PARV INDER SINGH IN ITA NO. 85 AND IN THE CASE OF SURINDER KUMAR KHINDRI HA D ALSO DECIDED THE SIMILAR ISSUE IN FAVOUR OF ASSESSEE. THE DECISION O F ITAT IN THE CASE OF SURINDER KUMAR KHINDRI HAS BEEN UPHELD BY HON'BLE P UNJAB & HARYANA HIGH COURT VIDE ITS ORDER DATED 28.02.2017 IN ITA N O. 25 OF 2016. FOR THE SAKE OF CONVENIENCE THE RELEVANT ORDER OF HON'BLE C OURT IS REPRODUCED BELOW: A FEW FACTS RELEVANT FOR THE DECISION OF THE CON TROVERSY INVOLVED AS NARRATED IN THE APPEAL MAY BE NOTICED. ON 09.09.2010, DURING THE COURSE OF SEARCH, CASH OF RS. 99,00.000 - WAS SEIZED FROM THE RESIDENCE AND BANK LOCKERS OF THE RESPONDE NT-ASSESSEEE. VIDE LETTER DATED 15.09.2010, THE ASSESSEE REQUESTE D THE ASSESSING OFFICER TO ADJUST THE CASH SEIZED DURING SEARCH AGA INST HIS EXPECTED ADVANCE TAX LIABILITY. THE REQUEST OF THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AS ASSESSING OFFICER WAS O F THE VIEW THAT SEIZED CASH COULD NOT BE ADJUSTED AGAINST ADVANCE T AX LIABILITY AS THE SAME WAS NOT EXISTING LIABILITY. THE ASSESSEE F ILED RETURNED INCOME OF RS. 3,04,23,555 - ON 30.03.2012 IN WHICH RS. 3,00,00,000/ - WAS SHOWN AS UNDISCLOSED INCOME. THE ASSESSEE DID NOT PAY ANY TAX AS ACCORDING TO HIM, HIS LIABIL ITY' TO PAY TAX AND INTEREST ON RETURNED INCOME WAS LESS THAN THE AMOUN T OF CASH SEIZED DURING SEARCH. RETURNED INCOME WAS ACCEPTED BY THE ASSESSING OFFICER VIDE ORDER DATED 28.02.2013 UNDER SECTION 143(3) OF THE ACT. SEIZED CASH OF THE ASSESSEE WAS ADJUSTE D AGAINST THE REGULAR TAXES AND INTEREST PAYABLE. LIABILITY DETER MINED ON COMPLETION OF ASSESSMENT ORDER WAS HIGHER THAN THE AMOUNT OF CASH SEIZED DUE TO CHARGING OF INTEREST UNDER SECTIONS 2 34B AND 234C' OF THE ACT. THE ASSESSING OFFICER INITIATED PROCEEDING S UNDER SECTION 271 AAA OF THE ACT AS ALL THE CONDITIONS SPECIFIED FOR NON APPLICATION OF PENALTY UNDER THE SAID PROVISION WER E NOT FULFILLED. THE ASSESSEE PLEADED THAT HE HAD PAID ALL THE TAXES AND INTEREST IN RELATION TO UNDISCLOSED INCOME AND HENCE NO PENALTY COULD BE ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 9 LEVIED. THE ASSESSING OFFICER DID NOT ACCEPT THE PL EA OF THE ASSESSEE TO THE EFFECT THAT SEIZED CASH COULD BE ADJUSTED TO WARDS EXISTING TAX LIABILITY AND NOT AGAINST ADVANCE TAX. THE ASSESSIN G OFFICER FURTHER HELD THAT EXPLANATION 2 TO SECTION 132B OF THE ACT WHICH STATES THAT EXISTING LIABILITY DOES NOT INCLUDE ADVANCE TAX PA YABLE IN ACCORDANCE WITH THE PROVISIONS OF PART C OF CHAPT ER XVII IS CLARIFICATORY IN NATURE AND HENCE APPLIES TO ALL PE NDING PROCEEDINGS. IT WAS CONCLUDED THAT THE ASSESSEE WAS IN DEFAULT F OR HAVING FAILED TO PAY THE TAXES AND INTEREST IN RELATION TO UNDISC LOSED INCOME DECLARED AND LEVIED PENALTY UNDER SECTION 271 AAA O F THE ACT VIDE ORDER DATED 26.08.2013, ANNEXURE A.I. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)]. VIDE ORDER DATED 27.01.2015, AN NEXURE A.2, THE CIT(A) HELD THAT EXPLANATION 2 TO SECTION 132B OF T HE ACT INSERTED BY FINANCE ACT. 2013 WAS CLARIFICATORY IN NATURE. I T WAS FURTHER HELD THAT THE SAID AMENDMENT DID NOT HAVE RETROSPECTIVE EFFECT. THUS, THE CIT(A) ALLOWED THE RELIEF TO THE ASSESSEE. NOT SATI SFIED WITH THE ORDER, THE DEPARTMENT FILED AN APPEAL BEFORE THE TR IBUNAL. VIDE ORDER DATED 31.08.2015, ANNEXURE A.3. THE TRIBUNAL UPHELD THE DECISION TAKEN BY THE CIT(A) AND DISMISSED THE APPE AL FILED BY THE DEPARTMENT. HENCE, THE INSTANT APPEAL BY THE REVENU E. 3. WE HAVE HEARD LEARNED COUNSEL FOR THE PARTIES. 4. LEARNED COUNSEL FOR THE APPELLANT-REVENUE RELIED UPON A SINGLE BENCH JUDGMENT OF THE MADHYA PRADESH HIGH CO URT IN RAMJILAL JAGANNATH AND OTHERS VS. ASSISTANT COMMISS IONER, (2000) 241 ITR 758 (MP) TO CONTEND THAT THE AMOUNT SEIZED COULD NOT BE ADJUSTED TOWARDS THE ADVANCE TAX. RELIANCE WAS ALSO PLACED ON EXPLANATION 2 TO SECTION 132B OF THE ACT INTRODUCED WITH EFFECT FROM 01.06.2013 BY URGING THAT IT WAS CLARIFICATORY AND WOULD OPERATE RETROSPECTIVELY. 5. ON THE OTHER HAND, LEARNED COUNSEL FOR THE RESPO NDENT- ASSESSEE SUPPORTED THE IMPUGNED ORDER. 6. WE DO NOT FIND ANY MERIT IN THE SUBMISSION MADE BY THE LEARNED COUNSEL FOR THE APPELLANT-REVENUE. THE ISSU E HAS ALREADY BEEN DECIDED BY THIS COURT AGAINST THE REVENUE IN I NCOME TAX APPEAL NO. 36 OF 2004 COMMISSIONER OF INCOME TAX VS . ASHOK KUMAR, (2011) 334 ITR 353 WHEREIN IT WAS RECORDED A S UNDER:- 'IN COMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA VS. ARUN KAPOOR, ITA NO. 149 OF 2003 DECIDED ON 27.07.2010, THIS COURT HAD OCCASION TO CONSIDER SIMILAR ISSUE WHERE IT HAS BEEN HELD THAT THE ASSESSEE IS ENTITLED TO ADJUSTME NT OF SEIZED AMOUNT TOWARDS ADVANCE TAX LIABILITY FROM TH E DATE OF MAKING THE APPLICATION IN THAT REGARD. IN THE PRESE NT CASE, THE ASSESSEE HAD MADE REQUEST FOR ADJUSTMENT OF THE ADVANCE TAX LIABILITY OF X 3,14,312 - AGAINST THE S EIZED AMOUNT OF X 5,90,000 - ON 28.08.1989. SINCE THE FIR ST INSTALLMENT OF ADVANCE TAX WAS PAYABLE ON 15.09.198 9 AND THE REQUEST FOR ADJUSTMENT HAVING BEEN MADE ON 28.0 8.1989 AND REMINDER ON 12.09.1989, NO INTEREST WAS EXIGIBL E UNDER SECTIONS 234-A AND 234-B OF THE ACT. THE TIBUNAL HA S RIGHTLY ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 10 HELD THAT THE ASSESSEE WAS ENTITLED TO ADJUSTMENT O F THE SAID AMOUNT AND NO INTEREST COULD BE CHARGED ON THAT BAS IS. THEREFORE, NO FAULT COULD BE FOUND WITH THE APPROAC H ADOPTED BY THE TRIBUNAL. 7. SIMILARLY, IN ITA NO.427 OF 2014 (COMMISSIONER O F INCOME TAX (CENTRAL), LUDHIANA VS. M/S COSMOS BUILDERS AND PROMOTERS LIMITED) DECIDED ON 14.07.2015, THE ISSUE WAS ADJUD ICATED AGAINST THE REVENUE. THE ASSESSEE HAS BEEN HELD ENTITLED TO ADJUSTMENT OF CASH SEIZED AGAINST ITS ADVANCE TAX DUES. IT HAS FU RTHER BEEN HELD THAT THE EXPLANATION 2 TO SECTION 132B OF THE ACT I S NOT RETROSPECTIVE IN NATURE. THE SLP AGAINST THE SAID JUDGMENT HAS AL READY BEEN DISMISSED BY THE APEX COURT VIDE ORDER DATED 06.05. 2016. MOREOVER, EXPLANATION 2 TO SECTION 132B OF THE ACT CAME INTO FORCE ON 01.06.2013 WHEREAS THE PRESENT CASE RELATES TO T HE ASSESSMENT YEAR 2011-12. FURTHER, THE RELEVANT FINDINGS RECORD ED BY THE TRIBUNAL READ THUS:- WE FIND THAT THE EXPLANATION 2 TO SECTION 132B. AS FINANCE ACT, 2013 CLEARLY STATES IS EFFECTIVE FROM T' JUNE. 2013. WHEN THE LAW SO SPECIFICALLY STATES, THERE IS NO SCOPE O F HOLDING THAT IT IS RETROSPECTIVE IN EFFECT. THIS PROVISION RESTRICTS THE SCOPE OF ADJUSTMENT OF SEIZED CASH, AND, THEREFORE, IS TO BE TREATED AS ADVANCE TO THE ASSESSEE. AS HELD BY HON BLE SUPREME COURT IN THE CASE OF CIT VS. VATIKA TOWNSHI P PRIVATE LIMITED, (2014) 367 ITR 466 (SC), THE LEGIS LATION WHICH MODIFIES ACCRUED RIGHTS OR WHICH IMPOSES OBLI GATIONS OR IMPOSE NEW DUTIES OR ATTACH A NEW DISABILITY HAV E TO BE TREATED AS PROSPECTIVE, UNLESS THE LEGISLATIVE INTE NT IS CLEARLY TO GIVE THE ENACTMENT A RETROSPECTIVE EFFECT. IN VI EW OF THESE DISCUSSIONS AND CONSISTENT WITH THE STAND TAKEN BY THE CO- ORDINATE BENCH, WE APPROVE THE REASONING ADOPTED BY THE CIT(A). ACCORDINGLY WE APPROVE THE ORDER OF THE CIT (A) AND DECLINE TO INTERFERE IN THE MATTER. 8. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY GROUND TO INTERFERE WITH THE IMPUGNED ORDER DATED 31.08.2015. ANNEXURE A.3, PASSED BY THE TRIBUNAL. THE JUDGMENT OF LEARNED SINGLE BEN CH OF MADHYA PRADESH HIGH COURT IN RAMJILAL JAGANNATHS CASE (SUPRA) DOES NOT COME TO THE RESCUE OF THE REVENUE IN VIEW OF BINDING DECISIONS OF THE DIVISION BENCHES OF THIS COURT AS NOTICED HEREINBEFORE. CONS EQUENTLY, NO SUBSTANTIAL QUESTION OF LAW ARISES AND THE APPEAL S TANDS DISMISSED. IN THE PRESENT CASES THE LD. CIT(A) HAD NOT ACCEPT ED THE PLEA OF ASSESSEE FOR ADJUSTMENT OF TAX LIABILITY ON THE GRO UND THAT THE AMOUNT WAS SEIZED FROM THE BANK ACCOUNTS OF SARUP CHAND AN EMPLOYEE OF THE ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 11 ASSESSEE NOT FROM THE POSSESSION OR PREMISES OF ASS ESSEES. THE LD. CIT(A) HAS HELD THAT ASSESSING OFFICER WAS NOT IN A POSITION TO KNOW AS TO WHETHER THERE WOULD BE ANY LIABILITY AGAINST SARUP CHAND AND THEREFORE HE HAS HELD THAT ASSESSING OFFICER HAD RIGHTLY ADJU STED THE SEIZED AMOUNT ONLY AFTER THE ASSESSMENT IN THE CASE OF SAR UP CHAND WAS COMPLETED. HOWEVER WE FIND THAT IN THE AFFIDAVIT DA TED 03.08.2007 (PLACED AT PAPER BOOK PAGE 15 TO 17) DULY SIGNED AN D SWORN BY SARUP CHAND HE HAD DISOWNED THE BANKS ACCOUNTS AND WE FUR THER FIND THAT SH. SUNIL MEHTA IN HIS STATEMENT RECORDED U/S 132(4) HA D OWNED UP THE BANK ACCOUNTS OF SH. SARUP CHAND AND HAD ACCEPTED T HAT THE FUNDS DEPOSITED IN THE ACCOUNT OF SH. SARUP CHAND WERE FO R THE SALE OF HOUSE AT PALM GROVE WHICH WAS SOLD BY HIM ON BEHALF OF SH ELLY MEHTA AND KAMLA MEHTA. THIS FACT IS VERIFIABLE FROM ANSWER TO Q. NO. 18 PLACED IN PAPER BOOK PAGE 57 WHICH FOR THE SAKE OF COMPLETENE SS IS REPRODUCED BELOW: THE BANK ACCOUNT IN THE NAME OF SH. SARUP CHAND OPENED IN THE STANDARD CHARTERED BANK HAD OPERATED AND MANAGED BY ME. SHRI. SARUP CHAND IS MY SERVANT AND THE CASH IN HIS ACCOU NT BELONGS TO ME AND I AM THE OWNER OF THIS ACCOUNT. I HAVE ACCEP TED THE OWNERSHIP OF ACCOUNT DURING SEARCH PROCEEDINGS. ANS. EARNED OUT ON 17.07.2007. THE MONEY IN THIS A CCOUNT IS FROM MY FAMILY PROPERTIES TRANSACTIONS INCLUDING THE SAL E OF HOUSE AT PALM GROVES, AJNALA ROAD AMRITSAR TO SH. J.J. SOKHE YS, RESIDENT OF 77, THE MALL AMRITSAR. 12. THE RETURNS OF INCOME BY SMT. SHELLY MEHTA AND KAMLA MEHTA WERE FILED ON 18.02.2008 PLACED AT P. B. PAGE 5 ONW ARDS AND SELF ASSESSMENT TAX WAS ALSO PAID. IN THE RETURN OF INCO ME ALSO THE ASSESSEES HAD REQUESTED FOR ADJUSTMENT OF TAX OUT OF SEIZED A MOUNT. IN THE RETURNS ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 12 OF INCOME THE ASSESSEES HAD DECLARED INCOME FROM SA LE OF HOUSE AND WHICH THE ASSESSING OFFICER HAD ACCEPTED IN ASSESSM ENT COMPLETED U/S 143(3) OF THE ACT. WE FURTHER FIND THAT ASSESSMENT IN THE CASE OF SH. SARUP CHAND WAS ALSO COMPLETED AND NO ADDITION WAS MADE. COPY OF ASSESSMENT ORDERE IS PLACED AT P.B. PAGE (20 & 21). WE FURTHER FIND THAT THAT ASSESSING OFFICER VIDE L ETTER DATED 26.06.2009 PLACED ON P.B. PAGE 39 HAD GIVEN CREDIT OF THE SEIZED AMOUNT FOR ADJUSTMENT AGAINST TAXES PAYABLE BY SMT. KAMLA MEHTA AND SMT. SHELLY MEHTA. THE PENALTY ORDER WAS PASSED ON 28.02 .2011 I.E. AFTER THE AUTHORITIES HAD AGREED FOR ADJUSTMENT OF THE SEIZED AMOUNT AGAINST TAXES. THESE ALL FACTS PUT TOGETHER CLEARLY ESTABLISHES T HAT MONEY NEVER BELONGED TO SH. SARUP CHAND AND HE WAS ONLY A BENAM I HOLDER OF THE ACCOUNT AND THE MONEY ACTUALLY BELONGED TO SMT. SHE LLY MEHTA AND KAMLA MEHTA FOR WHICH ASSESSING OFFICER SHOULD HAVE GIVEN CREDIT FOR ADJUSTMENT AGAINST TAXES AND THEREFORE NO PENALTY W AS IMPOSABLE U/S 271AAA OF THE ACT AND THEREFORE WE DELETE THE SAME. 13. IN VIEW OF THE ABOVE, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.08.2017 SD/- SD/- (N. K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31.08.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: ITA NOS. 350 & 351(ASR)/2016 ASSESSMENT YEAR: 2007-08 13 (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER