The Asstt. Commissioner of Income-tax, Jammu V. Sh. Subhash Gupta, Jammu

ITA 382/ASR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63567 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Assessee Lawyers: JOGINDER SINGHCA
• Keywords: Rectification of order; Opportunity of being heard; Principle of natural justice; Question of law
• Section: 143(3); 234B; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.382(ASR)/2012 ASSESSMENT YEAR:2009-2010 PAN :AGPPG4001J ASSTT. COMMR. OF INCOME TAX, VS. SH. SUBHASH GUPTA, CENTRAL CIRCLE, JAMMU. 40, RANBIR MARKET, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. R.L. CHHANALIA, DR RESPONDENT BY:SH. JOGINDER SINGH,CA DATE OF HEARING:21/11/2012 DATE OF PRONOUNCEMENT:27/11/2012 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER O F THE CIT(A)-I, LUDHIANA, DATED 03/07/2012 FOR THE ASSESSMENT YEAR 2009-2010. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND O N FACTS IN ADJUDICATING UPON THE ORDER U/S 154 DATED 26.06.201 1 WHICH HAS BECOME INFRUCTUOUS IN VIEW OF THE FACT THAT THE AO AGAIN PASSED THE ORDER UNDER THE SAME SECTION ON 05.07.20 11 GIVING CREDIT OF TAX ADJUSTMENT OUT OF P.D. ACCOUNT. 2. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE WAS NOT AFFORDED OPPORTUN ITY OF BEING ITA NO.382(ASR)/2012 2 HEARD IN VIEW OF THE FACT THAT BEFORE FILING OF APP EAL AS THE ASSESSEE AVAILED FULL OPPORTUNITY WITHIN THE AMBIT OF EQUITY AND NATURAL JUSTICE BY SECURING RECTIFICATION U/S 154 O N 05.07.2011. 3. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN HOLDING THAT HONBLE JURISDICTIONAL J & K HIGH COU RT ADJUDICATED AND SEIZED CASH LYING IN THE PD A/C CAN BE TREATED AS ADVANCE TAX WHEN FACT REMAINS THAT HONBLE J & K HIGH COURT HAS, SO FAR, NOT GIVEN ANY SUCH VERDICT IN AN Y CASE. 4. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DIRECTING THE AO TO GIVE CREDIT OF THE SEIZED CASH LYING IN PD A/C AS ADVANCE TAX IN VIEW OF THE FACT THAT RETURN FORM IS STATUTORY AND NEITHER THE ASSESSEE CAN CLAIM CREDI T OF ANY CASH SEIZED DURING SEARCH LYING IN THE P.D. ACCOUNT, AS ADVANCE TAX IN THE ABSENCE OF ANY PARTICULARS COLUMN IN THE RET URN NOR THE AO IS EMPOWERED TO DO SO. 2. THE LD. COUNSEL FOR THE ASSESSEE, SH. JOGINDER S INGH, CA, AT THE OUTSET RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT (A), WHICH ARE REPRODUCED AT PAGES 2 TO 4 IN PARA 2 OF CIT(A)S OR DER, WHICH FOR THE SAKE OF CLARITY ARE REPRODUCED AS UNDER: BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZ URE OPERATION WAS CONDUCTED U/S 132 OF THE ACT AT THE BUSINESS/RE SIDENTIAL PREMISES OF THE ASSESSEE ON 15/01/2009. THE ASSESS EE AND GROUP AS A WHOLE DISCLOSED AN AMOUNT OF RS.750 LAKH S U/S 132(4) OF THE ACT, IN THE FINANCIAL YEAR 2008-09 RE LEVANT TO A.Y. 2009-10. OUT OF THE TOTAL DISCLOSURE, THE ASSESSEE HAS DISCLOSED RS.483 LAKHS IN THE YEAR UNDER CONSIDERATION. DURI NG THE COURSE OF SEARCH OPERATION, CASH AMOUNTING TO RS.55 LAKHS WAS SEIZED FROM THE RESIDENCE OF THE ASSESSEE. AT THE T IME OF GIVING DISCLOSURE LETTER DATED 20.01.2009, THE ASSESSEE RE QUESTED TO THE DY. DIRECTOR OF INCOME TAX (INV.) TO ADJUST THE SEI ZED CASH AMOUNT TOWARDS ADVANCE TAX, SINCE ADVANCE TAX INSTA LMENT OF 15 TH MARCH WAS DUE. COPY OF LETTER ENCLOSED AS ANNEXURE -A. THE ASSESSEE AGAIN REQUESTED TO THE AO FOR ADJUST O F SEIZED ITA NO.382(ASR)/2012 3 AMOUNT TOWARDS ADVANCE TAX ON 09/11/2009. COPY OF L ETTER IS ENCLOSED AS ANNEXURE B. THE AO COMPLETED THE ASSESSMENTS OF THE ASSESSEE FO R THE SEARCH PERIOD FROM ASSESSMENT YEAR 2003-04 TO 2009- 10 ON 29/12/2010. IN THE YEAR UNDER CONSIDERATION, THE AO HAS GIVEN THE DUE CREDIT OF ALL THE PREPAID TAXES AS WELL AS THE CASH SEIZED IN THE SEARCH OPERATION IN THE ASSESSMENT ORDER. SU BSEQUENTLY, THE ASSESSEE FILED RECTIFICATION APPLICATION U/S 15 4 OF THE ACT ON 03.03.2011 REQUESTING TO MAKE RECTIFICATION IN THE ORDER AS THE NORMAL RATE OF TAX HAS WRONGLY BEEN APPLIED ON LONG TERM CAPITAL GAIN. COPY OF THE LETTER ENCLOSED AS ANNEX URE C. THE AO ACCORDINGLY PASSED AN ORDER U/S 154 OF THE A CT ON 20.03.2011 BY ACCEPTING THE ASSESSEES PLEA OF CHA RGING THE SPECIAL RATE OF TAX ON CAPITAL GAIN. THE AO ALSO W ITHDRAW THE CREDIT OF SEIZED AMOUNT OF RS. 55 LAKHS AS WAS EARL IER ALLOWED IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) DATED 29.12.2010 ARBITRARILY AND WITHOUT PROVIDING OPPORT UNITY OF BEING HEARD TO THE ASSESSEE WHICH IS AGAINST THE PR INCIPLE OF NATURAL JUSTICE. COPY OF ORDER ENCLOSED AS ANNEXURE D. THAT A BARE PERUSAL OF SECTION 154(3) OF THE ACT TH AT LD. AO CANNOT MAKE ANY AMENDMENT, WHICH HAS THE EFFECT OF ENHANCING AN ASSESSMENT OR REDUCING A REFUND OR OTHERWISE INC REASING THE LIABILITY OF THE ASSESSEE WITHOUT PROVIDI9NG AN AD EQUATE OPPORTUNITY OF BEING HEARD. THAT THE ADJUSTMENT OF CASH SEIZED AGAINST THE ADVA NCE TAX LIABILITY IS HIGHLY DEBATABLE, AS THERE IS NO JUDGM ENT OF JURISDICTIONAL HIGH COURT ON THE ISSUE. THE POWER O F RECTIFICATION U/S 154 OF THE ACT COULD NOT BE EXERC ISED BY THE AO WHERE THE ISSUE IS DEBATABLE. WITH REGARD TO THE ISSUE INVOLVED IN THE RECTIFICATION ORDER, MOST OF THE HI GH COURTS ( I.E. PUNJAB & HARYANA , DELHI HIGH COURT & BOMBAY HIGH C OURT) ARE IN FAVOAUR OF ASSESSEE, EXCEPT THE HIGH COURT O F MADHYA PRADESH. IN THE CASE OF T.S. BALARAM, ITO VS. VOLKART BROTHE RS (1971) 82 ITR 50, THE SUPREME COURT, WHILE CONSIDERING THE SC OPE OF SECTION 154 OF THE ACT, CATEGORICALLY LAID DOWN THA T A MISTAKE APPARENT ON RECORD MUST BE AN OBVIOUS AND PATENT MI STAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG-DR AWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY B E CONCEIVABLY TWO OPINIONS. THEIR LORDSHIP FURTHER HE LD THAT A ITA NO.382(ASR)/2012 4 DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTA KE APPARENT FROM THE RECORD. FOLLOWING THE DICTUM LAID DOWN IN THE CASE OF T.S. BALARAM, ITO VS. VOLKART BROTHERS (1971) 82 ITR 50, THE CALC UTTA HIGH COURT IN VIJAY MALLYA VS. ASST. CIT (2003) 263 ITR 41 HELD AS UNDER (PAGE 48) : SECTION 154 CAN BE INVOKED FOR R ECTIFICATION OF A MISTAKE APPARENT FORM THE RECORD. THE MISTAKE CONTEMPLATED UNDER SECTION 154 MUST BE A MISTAKE AP PARENT ON THE FACE OF THE RECORDS. IT MUST BE OBVIOUS, CLEAR AND PATENT. IT MUST NOT BE A MISTAKE, TO ESTABLISH WHICH A LONG AN D ELABORATE REASONING AND ARGUMENTS IS REQUIRED ON POINTS ON WH ICH THERE MAY CONCEIVABLY BE TWO OPINIONS. IT MUST NOT BE A D EBATABLE POINT OF LAW. IT MUST BE A PATENT AND APPARENT MIST AKE IN THE ASSESSMENT. IT MUST NOT BE A QUESTION WITH REGARD T O WHICH TWO DIFFERENT VIEWS MAY BE POSSIBLE OR WITH REGARD TO W HICH TWO DIFFERENT OPINIONS CAN BE FORMED. IT MUST BE A GLAR ING, OBVIOUS OR SELF-EVIDENT MISTAKE OF FACT OR A MISTAKE OF LAW , IN RESPECT OF WHICH THERE CANNOT BE ANY TWO OPINIONS AND IT SHOUL D NOT BE ONE IN ORDER TO ESTABLISH WHICH A LONG DRAWN PROCES S OF ARGUMENT OR REASONING IS TO BE ADVANCED. IN VIEW OF THE ABOVE, THE RECTIFICATION ORDER PASSE D BY THE LD. AO ON HIS OWN WITHOUT AFFORDING OPPORTUNITY OF BEIN G HEARD AS REQUIRED IN THE PROVISIONS OF THE ACT AND TOO ON DE BATABLE ISSUE IS ILLEGAL, UNJUSTIFIED NEEDS TO BE QUASHED. WITHOUT PREJUDICE TO THE ABOVE SUBMISSION, EVEN ON MERIT, THE ADJUSTMENT OF CASH SEIZED AGAINST THE ADVANCE TAX L IABILITY ON THE REQUEST OF THE ASSESSEE IS ALLOWED IN FAVOUR OF ASSESSEE BY DIFFERENT HIGH COURTS AND TRIBUNALS JUDGMENTS: (2011) 334 ITR 335 (P&H), IT WAS HELD THAT AFTER A DJUSTMENT OF CASH SEIZED AGAINST ADVANCE TAX PAYABLE, THERE BEIN G NO TAX LIABILITY REMAINING PAYABLE, NO INTEREST WAS CHARGE ABLE U/S 234A, 234B & 234C. CIT VS. KESR KIMAN KARYALYA (2005) 278 ITR 596 (DEL ), IT WAS HELD THAT TRIBUNAL HAVING DELETED THE LEVY OF INTER EST U/S 234B AND 234C HOLDING THAT ASSESSEES REQUEST FOR ADJUST MENT OF SEIZED CASH AGAINST THE ADVANCE TAX LIABILITY OUGHT TO HAVE BEEN ALLOWED AND FURTHER THAT SUCH REQUESTS MADE BY THE PARTNERS WERE BINDING ON THE FIRM AND NO INTEREST COULD BE C HARGED IN THE CASE OF FIRM ALSO, NO SUBSTANTIAL QUESTION OF LAW A RISES. SUDHAKAR M SHETTY VS. ACIT (2008) 10 DTR (MUBAI) (T RIB) 173 ASSESSEE HAVING REQUESTED THE DEPARTMENT TO ADJ UST THE ITA NO.382(ASR)/2012 5 CASH WHICH WAS SEIZED DURING THE SEARCH AGAINST HIS TAX LIABILITY, THE DEPARTMENT HAS TO ADJUST THE SEIZED AMOUNT TOWARDS THE ADVANCE TAX ETC FROM THE DATE WHEN IT WAS SEIZED. SAT PAUL D AGGARWAL (HUF) VS. ACIT (1998) 66TTJ (MU MBAI) 98, ITS HELD THAT CASH SEIZED HAS TO BE TREATED AS PAYMENT TOWARDS ADVANCE TAX OF THE SAME YEAR, AND LIABILITY TO PAY INTEREST U/S 234A, 234B AND 23$C SHOULD BE DETERMIN ED ACCORDINGLY. IN VIEW OF THE ABOVE, IT IS THEREFORE PRAYED THAT T HE AO MAY BE DIRECTED TO ADJUST THE CASH SEIZED DURING SEARCH AG AINST THE ADVANCE TAX LIABILITY AND LIABILITY TO PAY INTEREST U/S 234A,234B & 234C RECTIFICATION ORDER PASSED BY THE AO ON HIS OWN WITHOUT AFFORDING OPPORTUNITY OF BEING HEARD AS REQUIRED IN THE PROVISIONS OF THE ACT AND TOO ON DEBATABLE ISS UE IS ILLEGAL, UNJUSTIFIED NEEDS TO BE QUASHED. 3. THE LD. CIT(A) VIDE PARA 3 OF HIS ORDER DIRECTED THE AO TO GIVE CREDIT FOR SEIZED CASH AS CLAIMED BY THE ASSESSEE. 4. THE LD. DR, ON THE OTHER HAND, APPEARING FOR THE REVENUE ARGUED THAT THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE CRE DIT AS ADVANCE TAX LIABILITY. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT THE AO HAD PROCEEDED TO INCREASE TAX LIABILITY DUE FROM THE ASSESSEE IN THE FORM OF ENHANCED INTEREST U/S 234A, 234B & 234C ON ACCOUNT OF WITHDRAWAL OF C ASH SEIZED AT THE TIME OF SEARCH TO THE TUNE OF RS. 55 LACS, WITHOUT GIVIN G ANY OPPORTUNITY TO THE ASSESSEE. THIS ADJUSTMENT HAD BEEN MADE MECHANICALL Y AS IF IT WAS A MISTAKE APPARENT FROM RECORD. IT IS A MATTER OF RECORD THA T ASSESSEE HAD REQUESTED THE ITA NO.382(ASR)/2012 6 DEPARTMENT TO ADJUST THE CASH SEIZED DURING THE COU RSE OF SEARCH OPERATION TOWARDS THE ADVANCE TAX LIABILITY. THE SAID ADJUSTM ENT HAD BEEN MADE AT THE TIME OF ASSESSMENT VIDE ORDER DATED 29.12.2010 FOR THE A.YS. 2003-04 TO 2009-2010. THEREFORE, THERE WAS NO REASON FOR THE A O TO PROCEED OTHERWISE ESPECIALLY U/S 154 OF THE ACT, IN VIEW OF THE SUBMI SSIONS MADE BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE THE L.D CIT(A) AND BEFORE US. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY DIRECTED THE AO TO GIVE THI S CREDIT FOR SEIZED CASH AS ADVANCE TAX LIABILITY. THUS, ALL THE GROUNDS OF THE REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NO.382(ASR)/2012 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH NOVEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27TH NOVEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. SUBHASH GUPTA, JAMMU. 2. THE ACIT, CC, JAMMU. 3. THE CIT(A),JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER