Pramod Kumar Jain , Hyderabad V. Assistant Commissioner of Income Tax ,Central Circle-3(3), Hyderabad

ITA 417/Hyd/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7424 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2018-2019
• Appeal Filed On: 13-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift
• Section: 132; 154; 2; 143(3); 153A; 234B

Judgement Text

ITA Nos.416 to 418/Hyd/2021 1 IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad (Through Video Conferencing) Before Shri S.S. Godara, Judicial Member AND Shri Laxmi Prasad Sahu, Accountant Member ITA No.416/Hyd/2021 Assessment Year: 2018-19 Anand Kumar Jain, C/o. Katrapati & Associates, 1-1-298/2/B3, 1 st Floor, Ashok Nagar, Hyderabad – 500 020 PAN : AECPJ1189F Vs. The Asst.Commissioner of Income Tax, Central Circle – 3(3), Hyderabad. (Appellant) (Respondent) ITA No.417/Hyd/2021 Assessment Year – 2018-19 Pramod Kumar Jain, C/o. Katrapati & Associates, 1-1-298/2/B3, 1 st Floor, Ashok Nagar, Hyderabad – 500 020 PAN : AETPJ7173G Vs. The Asst.Commissioner of Income Tax, Central Circle – 3(3), Hyderabad. (Appellant) (Respondent) ITA No.418/Hyd/2021 Asseesment Year – 2018-19 Mahaveer Kumar Jain, C/o. Katrapati & Associates, 1-1-298/2/B3, 1 st Floor, Ashok Nagar, Hyderabad – 500 020 PAN : AECPJ1184J Vs. The Asst.Commissioner of Income Tax, Central Circle – 3(3), Hyderabad. Assessee by: Shri K.A. Sai Prasad Revenue by : Sri Rohit Mujumdar. Date of hearing: 25/11/2021 Date of pronouncement: 29/11/2021 ITA Nos.416 to 418/Hyd/2021 2 O R D E R Per S. S. Godara, J.M. These three assessees’ appeals for A.Y. 2018-19 arise from the Commissioner of Income Tax (Appeals)-11, Hyderabad’s separate orders; all dated 01.09.2021, in case No.10503, 10502 and 10501/2017-18, involving proceedings u/s. 154 of the Income Tax Act, 1961 [in short, ‘the Act’], respectively. Heard both the parties. Case files perused. 2 We come to the lead assessee Shri Anand Kumar Jain’s appeal ITA 416/Hyd/2021 raising the following substantive grounds : “1. The learned First Appellate Authority, in the facts and circumstances of the case, is not justified in rejecting the appellant’s claim for adjustment of seized cash towards self- assessment tax for the purpose of charging interest u/s 234B of the Act in the order passed u/s 153A. 2. The learned First Appellate Authority, failed to appreciate the fact that since the appellant claimed the adjustment of seized cash as self-assessment tax, the Ld. Assessing Officer is not justified in charging interest u/s 234B of I.T Act, 1961 in facts and circumstances of the case. 3. The appellant craves leave to add, amend, delete or substitute any ground or grounds during the course of the hearing.” 3 Next comes the CIT(A)’s detailed discussion upholding the Assessing Officer’s rectification action as under : ITA Nos.416 to 418/Hyd/2021 3 “6. The Decision: In the instant case, the appellant filed his return of income on 18.08.2018 for AY 2018-19 admitting income of Rs.89,40,700/- which included additional income of Rs.75,35,065/- admitted u/s 132(4) during the course of search operations held at his premises on 21.11.2017. The assessment was completed u/s 143(3) dt.31.12.2019 accepting the returned income of Rs.89,40,700/ -. Subsequently the order u/s 143(3) was rectified vide order u/s 154 of I.T. Act dated 23.11.2020 by levying interest u/s 2348 amounting to Rs4,53,882/- as against Rs.15,795/-levied in the assessment order. During the appeal proceedings, the appellant contended that it had made the specific claim amounting of Rs.21,55,000/--, out of the total cash seized, be treated as Self Assessment tax. Further, the appellant treated that since the amount has been seized on 21.11.2017 which is FY 2017-18 relevant to A.Y 2018-19, the same has to be treated as advance tax. The Assessing Officer initially had no.t levied the interest, however, the same was rectified u/s 154 and the demand was raised accordingly along with the levy of interest u/s 234B as per law. The relevant provisions of Section 132B which deals with application of seized or requisitioned assets are reproduced as under: Application of seized or requisitioned assets. 132B. (1) The assets seized under section 132 or requisitioned under section 132A may be dealt with in the following manner, namely:- (i) the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-lax Act, 1987 (35 of 1987), the Gift-tax Act, 1958 (18 of 1958) and the Interest-tax Act, 1974 (45 of 1974), and the amount of the liability determined on completion of the assessment under section 153A and the assessment. of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is deemed to be in default) or the amount of liability arising on an application made before the Settlement Commission under sub-section (1) of section 245C, may be recovered out of such assets: Explanation. 1.-In this section,- (i) "block period" shall have the meaning assigned to it in clause (a) of section 158B; (ii) "execution of an authorisation for search or requisition" shall have the same meaning as assigned to it in Explanation 2 to section 158BE. Explanation, 2.-For the removal of doubts, it is hereby declared that the "existing liability" does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII. " ITA Nos.416 to 418/Hyd/2021 4 It is important to note that the advance tax payable by the appellant thus cannot be adjusted against the cash seized and when the appellant files the return, it is mandatory to pay all the taxes due as on the date-of the return for the same co be valid along with the relevant interest u/s 234B and 234C. The Self-assessment tax is nothing but the payment of advance tax with applicable interest. Further, it is pertinent to mention here that in the Explanation 2 to Section 132B reproduced above, it has been clearly stated that 'existing liability' does not include advance tax payable. Further, the Central Board of Direct. Taxes ('CBDT') has issued Circular No. 20/2017, date 12-6-2017 in which it has been clarified that Explanation 2 to section 132B of the Act, inserted with effect from 1-6-2013 and which states that "existing liability does not. include advance tax payable in accordance with the provisions of Part-C of Chapter XVII of the Act", shall have prospective application. The circular is brought out as under: "Subject: Applicability of Explanation :3 to Section 132B of the I. T. Act, 1961reg. - Section 132B of the Income Tax Act 1961, provides for adjustment of seized assets requisitioned assets against the amount under the Income Tax Act, 1961, (the Act), the Wealth-tax Act, 1957, the Expenditure-tax Act, 1987, the Gift-tax Act, 1958 and the Interest-tax Act, 1974, and the amount of the liability determined on completion of the assessment under section 153A of the Act and the. assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is deemed to be in default, or the amount of liability arising on an application made before the Settlement Commission under sub-section (1) of section 245C of the Act. 2. Dispute arose between the Department and the aseessees with regard to adjustment of such seized / requisitioned cash against advance tax liability etc. Several Courts held that on an application made by the assessee, the seized money is to be adjusted against the advance tax liability Of the assessee. Subsequently, Explanation 2 to Section 132B of the Act was inserted by the Finance Act, 2013 w.e.f. 01-06-2013, clarifying that "existing liability" does not include advance tax payable in accordance with the provisions of Part C of Chapter x.vn of the Act. However, the dispute continued on the issue as to whether the amendment was clarificatory in nature having retrospective applicability or it has only prospective applicability. 3. Several Courts have held that the insertion of Explanation 2 to section 132B of the Act, is prospective in nature and not applicable to cases prior to 06.2013. The SLPs filed by the Department against the judgement of the Hon’ble Punjab and Haryana High Court in the case of Cosmos Builders and Promoters Ltd'! and the Hon'ble Allahabad High Court in the case of Sunil Chandra Guptas, have been dismissed. Subsequently, the CBDT has also accepted the judgment of the Hon'ble Punjab & Haryana High Court in the ITA Nos.416 to 418/Hyd/2021 5 case of Spaze Towers Put. Ltd. dated 17.11.2016, wherein it was held that the Explanation 2 to Section 132B of the Act is prospective in nature. 4. Accordingly, it has now been settled that insertion of Explanation 2 to Section 132B of the Act shall have a prospective application and so, appeals may not be filed by the Department on this issue for the cases prior to 01.06.2013 and those already filed may be withdrawn/ not pressed upon. 5. The above may be brought to the notice of ail concerned” The operation of the Explanation is from the date of insertion which is 01.06.2013 and was very much in existence on the date of seizure which was 21.11.2017. The case laws relied by the appellant itself relate to the period prior to 01-06-2013 and in the case laws, it has been clearly held that after 0106-2013, the appellant would not be entitled to such request. The Assessing Officer has rightly levied the interest in view of the unambiguous provision of Section 1328 and its explanations. There are no two views on the above issue and therefore the action of the Assessing Officer is upheld accordingly. In view of the same, the ground no.2 and 3 are dismissed.” 4 We have given our thoughtful consideration to rival contentions and find no merit in the Revenue’s stand that section 132B of the Act has been rightly quoted in the foregoing detailed lower appellate discussion denying the assessee’s claim to treat the cash seized on 21.11.2017 as advance tax. We are admittedly dealing with correctness of the learned lower authorities’ action invoking section 154 rectification thereby seeking to recompute section 234B interest as Rs.4,38,087/- than already accepted (after giving credit of seized cash as advaces) to the tune of Rs.15,795/- only The question as to whether the learned lower authorities would invoke section 154 rectification in such an instance, in our considered opinion, goes in assessee’s favour and against the department. Hon’ble apex court’s landmark decision in T.S. Balram Vs M/s. Volkart Brothers (1971) 82 ITR 50 (SC) has settled the law that a mistake apparent on record must be an obvious and patent one than something which could be established by a long drawn process of reasoning involving more than one opinions. The factual position is no different before us wherein the assessee’s case all along has sought to treat the cash seized as self-assessment and not advance ITA Nos.416 to 418/Hyd/2021 6 tax covered u/s 132B Explanation 2 of the Act. We accordingly hold that the learned lower authorities have erred in law in invoking section 154 jurisdiction in the very terms as per strict interpretation of principles invoked in Commissioner of Customs Vs. Dilip Kumar (2018) 9 SCC 11 (SC) (FB). We thus accept the assessee’s instant lead appeal in 416/Hyd/2021 in case of the first and foremost assessee Shri Ashok Kumar Jain. Same order should follow in the remaining twin cases ITA Nos.417 and 418/Hyd/2021 raising the very issue involving varying sums. A copy of this common order be placed in respective case files. 5. These three assesses’ appeals are allowed in above terms. Order pronounced in the Open Court on 29 th November, 2021. Sd/- Sd/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER Hyderabad, dated 29 th November, 2021. TYNM/sps Copy to: S.No Addresses 1 Anand Kumar Jain, C/o. Katrapati & Associates, 1-1-298/2/B3, 1 st Floor, Ashok Nagar, Hyderabad – 500 020. 2 Pramod Kumar Jain, C/o. Katrapati & Associates, 1-1-298/2/B3, 1 st Floor, Ashok Nagar, Hyderabad – 500 020. 3 Mahaveer Kumar Jain, C/o. Katrapati & Associates, 1-1-298/2/B3, 1 st Floor, Ashok Nagar, Hyderabad – 500 020. 4 The Asst.Commissioner of Income Tax, Central Circle – 3(3), Hyderabad. 5 CIT (A)-11, Hyderabad 6 Pr. CIT (Central), Hyderabad 7 DR, ITAT Hyderabad Benches 8 Guard File By Order ITA Nos.416 to 418/Hyd/2021 7