Mr. Zakirhusen Daudbhai Momin, Ahmedabad V. The ADIT, CPC, Bangaluru Present Juridiction The ITO, Ward-3(3)(5), Ahmedabad

ITA 499/AHD/2023

AI Insights

The case revolves around an appeal by Zakirhusen Daudbhai Momin against the order of the National Faceless Appeal Centre (NFAC), Delhi, which sustained the charging of interest under section 234C of the Income Tax Act for the assessment year 2020-21. The assessee had received a gift of immovable property valued at Rs. 81,28,250 on 16.12.2019 and had paid the requisite advance tax on 09.03.2020, which was before the due date of the fourth quarter. The primary contention was whether the assessee was liable to pay advance tax in the third quarter for an income that was received in the last quarter. The Tribunal, referencing the provisions of the Income Tax Act and previous case laws, concluded that the assessee was not in default and thus, the interest charged under section 234C was unjustified.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131582 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-09-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 12-06-2023
• Other Referred Cases: Kumari Kumar Advani vs. ACIT, Bill and Peggy Marketing Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Deemed to accrue or arise in india
• Section: 234B; 143(1); 208

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: Ms. Suchitra Kamble, Judicial Member Zakirhusen Daudbhai Momin, 147, Nano Mominvas, Narimanpura, Sarkhej Road, Daskroi, Ahmedabad-382210 PAN: ARAPM3331P (Appellant) Vs The ADIT, (CPC) Bangalore Present Jurisdiction ITO, Ward-3(3)(5) Ahmedabad (Respondent) Assessee by: None (Written Submission) Revenue by: Ms. Saumya Pandey Jain, Sr. D.R. Date of hearing : 05-09-2023 Date of pronouncement : 13-10-2023 आदेश/ORDER This is an appeal filed against the order dated 31-05-2023 passed by National Faceless Appeal Centre (NFAC), Delhi for assessment year 2020-21. 2. The grounds of appeal are as under:- “1. The Learned CIT (Appeals) has erred in the law and on facts by sustaining the order passed u/s 143(1) charging interest u/s 234C of the ITA in spite of the fact that the income being gift of an immovable property was received in the last quarter of the year and the appellant was not liable to pay advance tax in the third quarter of the year and therefore Learned CIT (Appeals) had acted against the law and facts. For these and such other reasons as may be urged at the time of hearing, the order of the Id. CIT (A) may be vacated. ITA No. 499/Ahd/2023 Assessment Year 2020-21 I.T.A No. 499/Ahd/2023 A.Y. 2020-21 Page No. Mr. Zakirhusen Daudbhai Momin vs. ADIT, CPC, Bangalore (Present Jurisdiction ITO) 2 2. The appellate craves leave to add, amend, alter or delete any of the above grounds of appeal during the course of the appellate proceedings before the Hon’ble ITAT." 3. The return of income for A.Y. 2020-21 was filed on 01.10.2020 and assessee received the intimation u/s 143(1) from the CPC, Bangalore on 09.01.2021 which was replied by the assessee. The return was processed u/s 143(1) of the Act with the addition of Rs. 2,979 as difference between Rs. 28,807/- as interest on tax u/s 234B as per return instead calculating Rs. 31,786/- as interest on tax u/s 234B as computed u/s 143(1) and Rs. 96,813/- as difference between Rs. 4,801/- as interest on tax u/s 234C as per return instead calculating Rs. 1,01,614/- as interest on tax u/s 234C as computed u/s 143(1). 4. Being aggrieved by the intimation order dated 09.01.2021, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. At the time of hearing none appeared on behalf of the assessee. The registry of the Tribunal received letter dated 07.08.2023 signed by the assessee along with written submissions, thereby stating that the appeal may be decided on the basis of written submission. Therefore, the appeal is taken for hearing and the written submissions of the assessee are taken into account. 6. The assessee submitted in the written submission that the assessee filed return on 01.10.2020 and received intimation u/s 143(1) of the Act on 09.01.2021 making addition to the interest payable of Rs. 2,979/- u/s 234B and Rs. 96,813/- u/s 234C of the Act. The assessee along with his five relatives had received gift of an immovable property I.T.A No. 499/Ahd/2023 A.Y. 2020-21 Page No. Mr. Zakirhusen Daudbhai Momin vs. ADIT, CPC, Bangalore (Present Jurisdiction ITO) 3 with his share in the property worth Rs. 81,28,250/- on 16.12.2019 vide registered conveyance deed. The said gift received by the assessee falls within the meaning of Section 56(2)(x) of the Income Tax Act, 1961 is liable to be taxed under the head “Income from other sources” and accordingly the assessee had shown the said gift income in the return of income filed for the year with payment of taxes. Since the assessee received a gift of an immovable property by way of registered conveyance deed on 16.12.2019, he is required to pay advance tax on such income in the last quarter i.e. on or before 15.03.2020 and the assessee paid advance taxes of Rs. 19,94,500/- on such gift income on 09.03.2020. The assessee had not defaulted in payment of advance tax as the resultant income accrued and received by the assessee in the last quarter of F.Y. 2019-20. Accordingly, assessee was not required to pay any interest u/s 234C of the Income Tax Act, 1961. As per Section 208 of the Income Tax Act, 1961, advance tax shall be payable during the financial year in every case where the amount of such tax payable by the assessee during that year, as computed as per provisions, is ten thousand rupees or more. As per Section 234C of the Act, an assessee who is liable to pay advance tax u/s 208 of the Act has failed to pay tax or not paid advance tax on returned income as per the limit prescribed in the said section then the said assessee shall be liable to pay simple interest at the rate of one percent per month for a period of three months on the amount of the shortfall from fifteen per cent or forty-five per cent or seventy-five per cent, as the case may be, of the tax due on the returned income. The advance tax is to be paid on the basis of estimation of returned income for the assessment year and the returned income could be estimated only if the assessee is aware about the income would be received by him. In the assessee’s case, the assessee had returned income comprising of income from other sources being receipt of an immovable property received without consideration as gift vide I.T.A No. 499/Ahd/2023 A.Y. 2020-21 Page No. Mr. Zakirhusen Daudbhai Momin vs. ADIT, CPC, Bangalore (Present Jurisdiction ITO) 4 conveyance deed dated 16.12.2019. The assessee had received Gift of share in immovable property was not in nature of a regular recurring income which could not be allocated throughout the year or can be estimated. The deemed income from gift is based on the will of the donor which cannot be estimated. Therefore, the advance tax liability cannot be estimated without the actual receipt of the gift. The assessee submitted that the CIT(A) erred in law in alleging that the assessee would have paid the advance tax before 31.12.2019 as the assessee had known about the fact that the due dates for payment of advance tax is 15 th June, 15 th September, 15 th December and 15 th March of the respective financial year. As the assessee received gift after the due date of third quarter, the assessee paid more than 90% of the tax payable on 09.03.2020 before due date of fourth quarter. There is no such provisions in the Act or any instructions by CBDT that the assessee should have pay the advance tax before expiry of quarter in which any income is earned or will be earned by the assessee. The assessee relied upon the order of the Tribunal in case of Kumari Kumar Advani vs. ACIT (ITA No. 7661/Mum/2013) and the decision of the Hon’ble Delhi High Court in case of Bill and Peggy Marketing Pvt. Ltd. (no citation given). 7. The Ld. DR relied upon the order of the CIT(A). 8. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee received the immovable property through gift and the conveyance deed is registered on 16.12.2019. The assessee received the same after the due date of third quarter. Therefore, the contentions of the assessee that since the assessee received a gift of an immovable property by way of registered conveyance deed on 16.12.2019, he is required to pay advance tax on such income in the last quarter i.e. on or before 15.03.2020 and the I.T.A No. 499/Ahd/2023 A.Y. 2020-21 Page No. Mr. Zakirhusen Daudbhai Momin vs. ADIT, CPC, Bangalore (Present Jurisdiction ITO) 5 assessee paid advance taxes of Rs. 19,94,500/- on such gift income on 09.03.2020, appears to be justifiable and as per the provisions of advance tax payment. Thus, the finding of the CIT(A) assessee had defaulted in payment of advance tax is not correct. In fact, as the said income accrued and received by the assessee in the last quarter of F.Y. 2019-20, the assessee has paid more than 90% of the tax payable on 09.03.2020 before the due date of fourth quarter. There is no loss of revenue in this case. Therefore, charging the interest u/s 234C of the Act is not valid. The appeal of the assessee is allowed. 9. In result, appeal of the assessee is allowed. Order pronounced in the open court on 13-10-2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad : Dated 13/10/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद