The Dy.Commissioner of Incoem-tax, Amritsar. V. Sh. Surinder Kumar Khindri, Amritsar.

ITA 392/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0773 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-05-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 11-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Assessee Lawyers: SUMIT CHANDAN I ADVS
• Keywords: Search and seizure; Retrospective amendment
• Section: 234B; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.392(ASR)/2014 ASSESSMENT YEAR:2011-12 PAN: AAXPK1809L DY. COMMR. OF INCOME TAX, VS. SH. SURINDER KUMAR KH INDRI, CENTRAL CIRCLE, AMRITSAR. PROP. M/S. SURINDER KUMA R & SONS, (APPELLANT) (RESPONDENT) APPELLANT BY: SH.S.S. KANWAL, DR RESPONDENT BY: SH.SALIL KAPOOR & SH. SUMIT CHANDAN I, ADVS. DATE OF HEARING: 12/05/2016 DATE OF PRONOUNCEMENT: 16/05/2016 ORDER THIS IS THE DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2011-12, AGAINST THE ORDER DATED 25.02.2014, PASSED BY THE L D. CIT(A)-1, LUDHIANA. THE DEPARTMENT HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A)-1, LUDHIANA HAS ERRED IN LA W AND ON FACTS IN ADJUDICATING UPON ORDER U/S 154 DIRECTING THE AO TO ACCEPT THE APPLICATION OF THE ASSESSEE FOR ADJUSTIN G SEIZED CASH AGAINST ADVANCE TAX LIABILITY AND REDUCE THE I NTEREST U/S 234B AND 234C ACCORDINGLY. 2. THAT THE LD. CIT(A) ERRED BOTH IN LAW AND ON FAC TS IN DIRECTING THE AO TO TREAT THE AMOUNT LYING IN P.D. ACCOUNT A S ADVANCE TAX OF THE ASSESSEE, IGNORING THE SPECIFIC PROVISIO NS OF SECTION 132B(1), WHICH ARE AS UNDER: I) THE AMOUNT OF EXISTING LIABILITY MAY BE RECOVERE D OUT OF SEIZED AMOUNT. II) THE AO MAY APPLY SUCH SEIZED MONEY IN THE DISCH ARGE OF THE LIABILITIES AND THE ASSESSEE SHALL BE DISCHA RGED OF SUCH LIABILITY TO THE EXTENT OF THE MONEY SO APP LIED. 3. THAT THE LD. CIT(A) ERRED BOTH IN LAW AND ON FAC TS IN NOT APPRECIATING THE LEGAL POSITION AS PROVIDED U/S 132 B(1) ITA NO.392(ASR)/2014 A.Y. 2011-12 2 ACCORDING TO WHICH ADVANCE TAX LIABILITY IS NOT IN CLUDED IN THE EXISTING LIABILITY. 4. THAT THE LD. CIT(A) FAILED TO APPRECIATE THE FA CT THAT SECTION 132B(1) IS VERY CLEAR THAT THE SEIZED OR REQUISITIO NED ASSETS MAY BE DEALT WITH AGAINST ANY EXISTING LIABILITY UNDER THE INCOME TAX ACT AND NOT AGAINST THE ADVANCE TAX AND IN DOING SO LOST SIGHT OF THE VERY PURPOSE OF THE LEGI SLATION OF SECTION 132B(1) OF THE INCOME TAX ACT. 2. THE FACTS ARE THAT VIDE ORDER, DATED 21.02.2013 , PASSED UNDER SECTION 154 OF THE ACT, THE AO REJECTED THE ASSESSE ES REQUEST FOR ADJUSTMENT OF SEIZED CASH OF RS.82,00,000/- AGAINST ADVANCE TAX. 3. THE LD. CIT(A), VIDE IMPUGNED ORDER, ALLOWED THE ASSESSEES APPEAL. 4. THE DEPARTMENT IS NOW IN APPEAL BEFORE US. 5. THE LD. DR CONTENDED THAT THE LD. CIT(A) HAS ERR ED IN LAW AND ON FACTS IN ADJUDICATING UPON THE ORDER U/S 154 DIRE CTING THE AO TO ACCEPT THE APPLICATION OF THE ASSESSEE FOR ADJUSTING SEIZE D CASH AGAINST ADVANCE TAX LIABILITY AND REDUCE THE INTEREST U/S 234B AND 234C. HE FURTHER STATED THAT THE LD. CIT(A) HAS ALSO ERRED IN DIRECT ING THE AO TO TREAT THE AMOUNT LYING IN THE P.D. ACCOUNT AS ADVANCE TAX OF THE ASSESSEE, IGNORING THE SPECIFIC PROVISIONS OF SECTION 132B(1) OF THE ACT. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE RELIED ON THE IMPUGNED ORDER. 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT(A), WHILE ACCEPTIN G THE ASSESSEES REQUEST, MADE THE FOLLOWING OBSERVATIONS: I HAVE PERUSED THE ORDER OF THE OF THE ASSESSING O FFICER PASSED UNDER SECTION 154 AND THE FACTS OF THE CASE. IT IS A MATTER OF RECORD ITA NO.392(ASR)/2014 A.Y. 2011-12 3 THAT AN AMOUNT OF RS.82,00,000/- HAS BEEN SEIZED DU RING THE COURSE OF SEARCH AND SEIZURE OPERATION ON 09.09.201 0 AND THE ASSESSEE HAD REQUESTED FOR THE ADJUSTMENT OF THE SA ME AGAINST THE ADVANCE TAX DUE FOR THE YEAR UNDER CONSIDERATION VI DE HIS LETTER DATED 15.09.2010 WHICH WAS RECEIVED IN THE OFFICE O F DDIT(INV.), AMRITSAR ON 17.09.2010, LETTER DATED 07.10.2010 WHI CH WAS RECEIVED IN THE OFFICE OF INCOME TAX OFFICER, WARD 2(2), AMRITSAR ON 11.10.2010 AND LETTER DATED 26.08.2011 WHICH WAS RE CEIVED IN THE OFFICE OF THE COMMISSIONER OF INCOME TAX(CENTRAL CI RCLE), LUDHIANA BUT THE SAME WERE NOT ACCEPTED. THE FACTS OF THE CA SE ARE SIMILAR TO THE FACTS IN RESPECT OF CIT V/S ASHOK KUMAR, 335 I TR 355, WHEREIN THE HON'BLE JURISDICTIONAL HIGH COURT HAS D IRECTED THE ADJUSTMENT OF SEIZED CASH TOWARDS ADVANCE TAX LIABI LITY. IT IS HOWEVER TO BE NOTICED THAT THE ASSESSEE HAD MADE A PPLICATIONS FOR ADJUSTMENT OF SEIZED CASH ON 15.09.2010 AND 07.10.2 010 AND THEREFORE THE ONUS TO MAKE THE IMPUGNED ADJUSTMENT CANNOT BE PUT ON THE ASSESSING OFFICER. THE FACTS OF THE CASE UNDER CONSIDERATION ARE THEREFORE LITTLE DIFFERENT IN THI S REGARD. IT HOWEVER, REMAINS FACT THAT AT THE TIME OF FILING OF THE RETU RN OF INCOME THE SELF ASSESSMENT TAX COULD HAVE BEEN TAKEN OUT OF TH E SEIZED CASH OF RS.82,00,000/- LEADING TO REDUCTION IN THE IMPOSITI ON OF INTEREST U/S 234BC. 3. THE AMENDMENT TO SECTION 132B IN FINANCE ACT 201 3 HAS ALSO BEEN CONSIDERED WHILE DECIDING THE APPEAL UNDER CON SIDERATION. THE AMENDMENT BROUGHT IN BY THE FINANCE ACT 2013 RE ADS AS UNDER:- 'FOR THE REMOVAL OF DOUBTS, IT IS THEREBY DECLARED THAT THE 'EXISTING LIABILITY' DOES NOT INCLUDE ADVANCE TAX P AYABLE IN ACCORDANCE WITH THE PROVISION OF PART C OF CHAPTER XVII. IT IS ALSO SEEN THAT THE SAID AMENDMENT IS EFFECTIV E FROM THE DATE OF PASSING OF FINANCE ACT 2013. SINCE THE AMENDMENT BR OUGHT IN BY THE FINANCE ACT 2013 IS CLARIFICATORY IN NATURE, A QUESTION ARISES AS TO WHETHER IT IS RETROSPECTIVE IN ITS IMPACT OR NO T. THE AR IN THIS REGARD HAS BROUGHT MY ATTENTION TO THE AMENDMENT TO SECTION 9 EXPLANATION 4 WHEREIN THE LEGISLATURE HAS EXPRESSLY SPECIFIED THAT IT WOULD BE RETROSPECTIVE W.E.F. 01.06.1976 EVEN THOUG H IT HAD BEEN INSERTED BY THE FINANCE ACT, 2012.THE LANGUAGE OF T HE EXPLANATION 4 REFERRED TO ABOVE READS AS UNDER: FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED . SIMILARLY THE LANGUAGE USED IN RESPECT OF AMENDMEN T BROUGHT IN TO SECTION 132B BY FINANCE ACT, 2013 REA DS AS UNDER: ITA NO.392(ASR)/2014 A.Y. 2011-12 4 FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT 4. IN VIEW OF THE ABOVE ANALYSIS IT BECOMES CLEAR THAT THE AMENDMENT BROUGHT IN BY THE FINANCE AC, 2013 DOES N OT HAVE RETROSPECTIVE EFFECT AND THEREFORE THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. AS HOK KUMAR, 334 ITR 355 REMAINS THE LAW FOR THE PURPOSES OF ISSUE U NDER CONSIDERATION. THEREFORE, THE AO IS DIRECTED TO REW ORK THE INTEREST LEVIABLE U/S 234BC. 8. IT REMAINS UNDISPUTED THAT RS.82,00,000/- WAS S EIZED IN THE SEARCH CONDUCTED ON THE ASSESSEE. IT ALSO HAS NOT B EEN DISPUTED THAT THE ASSESSEE HAS REQUESTED FOR ADJUSTMENT OF ASSESSEES CASH AGAINST ADVANCE TAX DUE, VIDE HIS LETTER DATED 15.09.2010, ADDRESSED TO THE DDIT (INVESTIGATION), AMRITSAR, LETTER DATED 7.10.2010 ADDRESSED TO THE ITO, WARD 2(2), AMRITSAR AND LETTER DATED 26.08.2011 ADD RESSED TO THE CIT (CENTRAL CIRCLE), LUDHIANA. THESE LETTERS WERE NOT ACCEPTED. THE LD. CIT(A) HAS FOLLOWED THE DECISION IN THE CASE OF CIT VS. A SHOK KUMAR, 334 ITR 355 (P&H) WHEREIN, SEIZED CASH WAS DIRECTED TO BE A DJUSTED TOWARDS ADVANCE TAX LIABILITY UNDER SIMILAR CIRCUMSTANCES. THE LD. CIT(A) HAS NOTED THAT SINCE THE ASSESSEE HAD FILED APPLICATIO NS FOR ADJUSTMENT ON 15.09.2010 AND 7.10.2010, THE ONUS TO MAKE THE IMPU GNED ADJUSTMENT WAS NOT THAT OF THE A.O. HOWEVER, THE LD. CIT(A) ALSO TOOK NOTE OF THE FACT THAT AT THE TIME OF FILING THE RETURN OF INCO ME, THE SELF- ASSESSMENT TAX COULD HAVE BEEN TAKEN OUT OF THE SEIZED CASH LE ADING TO REDUCTION IN THE IMPOSITION OF THE INTEREST U/S 234B & 234C. 9. THE FACTUM OF THE AMENDMENT TO SECTION 132B, BRO UGHT IN BY THE FINANCE ACT, 2013, BEING PROSPECTIVE, HAS BEEN DULY TAKEN NOTE OF BY THE ITA NO.392(ASR)/2014 A.Y. 2011-12 5 LD. CIT(A). THIS HAS ALSO BEEN CONSIDERED BY THIS B ENCH VIDE ORDER, DATED 31.08.2015, PASSED IN ITA NO. 185(ASR)/2015 FOR THE ASSESSMENT YEAR 2011-12 IN THE CASE OF THE ASSESSEE ITSELF, WHEREIN , THE ISSUE WAS OF PENALTY UNDER SECTION 27AAA. IT WAS OBSERVED THEREI N, AS UNDER: WE FIND THAT THE EXPLANATION 2 TO SECTION 132B, AS FINANCE ACT, 2013 CLEARLY STATES IS EFFECTIVE FROM IST JUNE, 201 3. WHEN THE LAW SO SPECIFICALLY STATES, THERE IS NO SCOPE OF HOLDI NG THAT IT IS RETROSPECTIVE IN EFFECT. THIS PROVISION RESTRICTS T HE SCOPE OF ADJUSTMENT OF SEIZED CASH, AND, THEREFORE, IS TO BE TREATED AS ADVANCE TO THE ASSESSEE. AS HELD BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. VATIKA TOWNSHIP PVT. LTD., (2014) 367 ITR 466 (SC) THE LEGISLATION WHICH MODIFIES ACCRUED RIGHTS OR W HICH IMPOSES OBLIGATIONS OR IMPOSES NEW DUTIES OR ATTACHES A NEW DISABILITY HAS TO BE TREATED AS PROSPECTIVE, UNLESS THE LEGISLATIV E INTENT IS CLEARLY TO GIVE THE ENACTMENT A RETROSPECTIVE EFFECT. IN V IEW 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) AN D DECLINE TO INTERFERE IN THE MATTER. 10. AS EVIDENT, CIT VS. VATIKA TOWNSHIP PVT. LTD. , 367 ITR 466 (SC) HAS BEEN CONSIDERED THEREIN. 11. SIMILAR WAS THE POSITION BEFORE THE CHANDIGARH BENCH OF THE TRIBUNAL WHERE IN THE CASE OF SHRI HANS RAJ GANDHI , IN ITA NO.739/CHD/2014 FOR THE ASSESSMENT YEAR 2008-09, VI DE ORDER DATED 18.11.2014, THE TRIBUNAL UPHELD THE ACTION OF THE L D. CIT(A) IN DIRECTING THE AO TO REDUCE THE INTEREST U/S 234B OF THE ACT. 12. MERE FILING OF S.L.P. BY THE DEPARTMENT AGAINST THE ORDER PASSED BY THE HONBLE HIGH COURT IS NOT ENOUGH FOR THE INCOME TAX AUTHORITIES NOT TO FOLLOW THE ORDERS OF THE HONBLE HIGH COURT, WH ICH ARE BINDING IN NATURE. ITA NO.392(ASR)/2014 A.Y. 2011-12 6 12. IN VIEW OF THE ABOVE, FINDING NO MERIT IN THE G RIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT, THE SAME IS HEREBY REJECT ED. THE ORDER OF THE LD. CIT(A) IS CONFIRMED. 13. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/05 / 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 16/05/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. SURINDER KUMAR KHINDRI, AMRITSAR 2. THE DCIT, CENTRAL CIRCLE, AMRITSAR. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.