ENEM FREIGHT FORWARDERS, MUMBAI V. DCIT 22(3),

ITA 5036/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8180 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 06-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 04-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Section: 133A; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES (E), MUMBAI BEFORE SHRI. P. K. BANSAL, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5036/MUM/2013 ASSESSMENT YEAR:2006-07 EMEM FREIGHT FORWARDERS 718, 8 TH FLOOR, BUSINESS PARK CITY OF JOY, ACC CEMENT ROAD MULUND (WEST) MUMBAI V. DCIT-22(3) MUMBAI TAN/PAN:AABFE0221G (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI NISHIT GANDHI RESPONDENT BY: SHRI B.S. BIST, D.R. DATE OF HEARING: 21 12 2016 DATE OF PRONOUNCEMENT: 15 02 2017 O R D E R PER SHRI P.K. BANSAL, A.M: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER OF THE LD. CIT(A)-33, MUMBAI DATED 30.11.2010 PERTAINING TO AS SESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS EVEN THOUGH TAKEN SIX GROUNDS OF A PPEAL, BUT GROUNDS NO.2 TO 6 WERE NOT PRESSED, THEREFORE, THEY ARE DISMISSED AS NOT PRESSED. 3. THE ONLY GROUND, WHICH SURVIVED FOR OUR DISPOSAL RE ADS AS UNDER:- ITA NO.5036/MUM/2013, A.Y. 2006-07 2 1. THE LD. CIT(A)-33 ERRED IN NOT REDUCING INTEREST CH ARGED UNDER SECTION 234B AND 234C OF RS.9,58,591/- AS AGAINST I NTEREST CHARGEABLE OF RS.1,66,906/- IN THE FACTS AND CIRCUM STANCES OF THE CASE. 4. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF FREIGHT FORWARDING. THERE HAD BEEN A SURVEY AT THE PREMISES OF THE ASSE SSEE ON 5.3.2008. DURING THE COURSE OF SURVEY, FEW DISCREPANCIES WERE NOTICED AND THE ASSESSEE TO AVOID LITIGATION DISCLOSED/OFFERED A SU M OF RS.90 LAKHS DETAILED AS UNDER:- (A) NON-DEDUCTION OF TDS ON CERTAIN EXPENSES RS.67 LAKH S (B) FOR CASH PAYMENT RS.23 LAKHS TOTAL RS.90 LAKHS 5. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT DETE RMINING THE TOTAL INCOME AT RS.95,84,870/-. THE ASSESSING OFFICER LEVIED INTEREST UNDER SECTION 234B AND 234C OF THE ACT AMOUNTING TO RS.9,58,591/- FROM 1.4.2006 TO THE DATE OF ASSESSMENT. THE ASSES SEE WENT IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) DISMISSED TH E APPEAL OF THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY C ONSIDERED THE SAME ALONG WITH THE ORDERS OF THE AUTHORITIES B ELOW. THE ONLY QUESTION BEFORE US, AS ARGUED BY THE LD. A.R. OF TH E ASSESSEE AS WELL AS BY THE LD. D.R., IS THAT WHETHER THE INTEREST HAS T O BE LEVIED FROM THE DATE OF SURVEY TO THE COMPLETION OF THE ASSESSMENT OR FROM 1.4.2006 TO THE DATE OF ASSESSMENT. THE LD. A.R. OF THE ASSESS EE IN THIS REGARD VEHEMENTLY RELIED ON THE ORDER OF THE HON'BLE KARNA TAKA HIGH COURT IN ITA NO.5036/MUM/2013, A.Y. 2006-07 3 THE CASE OF T.P. INDRAKUMAR VS. ITO, 322 ITR 454 (K ARN.), IN WHICH THE HON'BLE HIGH COURT HELD AS UNDER:- HELD, (I) THAT THE ASSESSEE PRE-EMPTED ALL FURTHER PROBE AND CONSEQUENTIAL ACTS BY OFFERING AN ADDITIONAL AMOUNT OF RS. 10 LAKHS BY WAY OF INCOME. THIS AMOUNT WAS MENTIONED A S CASH CREDIT, WHICH IN TERMS OF THE ACT, CAN BE ADDED BY WAY OF INCOME. THE ASSESSMENT MADE WAS VALID. (II) THAT THE ASSESSEE HAD OFFERED A SUM OF RS. 10 LAKHS AS AN ADDITIONAL INCOME IN ADDITION TO THE INCOME ALREADY OFFERED IN HIS RETURN ONLY TO BUY PEACE WITH THE DEPARTMENT AND TH AT HAD BEEN ACCEPTED BY THE ASSESSING OFFICER WITHOUT FURTHER S CRUTINY. IN SUCH A SITUATION, IT COULD NOT BE HELD THAT THE ASSESSEE HAD DEFAULTED IN PAYMENT OF INSTALMENT OF ADVANCE TAX, AS THE AMOUNT OF RS. 10 LAKHS WAS OFFERED BY WAY OF INCOME FOR THE FIRST TI ME AS PER THE ASSESSEE'S LETTER DATED FEBRUARY 28, 2000, TO BUY P EACE AND AVOID FURTHER ADVERSE CONSEQUENCES AND THE ASSESSING AUTH ORITY HAVING ACTED UPON THIS PROPOSITION OF THE ASSESSEE AND HAV ING REGARD TO THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE, THE ADDITION OF INCOME UNDER SECTIONS 234A AND 234B IN THE CASE OF THE ASSESSEE WAS NOT NECESSARY AND NOT JUSTIFIED. 7. WE HAVE PERUSED THE FACTS OF THIS CASE. WE NOTED T HAT IN THIS CASE THE ASSESSING OFFICER, WHEN THE CASE WAS TAKEN FOR SCRUTINY, NOTED THERE WERE DISCREPANCIES IN THE CAPITAL ACCOUNT AND INVESTMENT MADE AS CLAIMED BY THE ASSESSEE. THE ASSESSEE OFFERED A SU M OF RS.10 LAKHS TO BUY PEACE WITH THE DEPARTMENT TO AVOID FURTHER SCRU TINY. THE ASSESSING OFFICER SIMPLY ACCEPTED THE OFFER OF THE ASSESSEE O F RS.10 LAKHS AS ADDITIONAL INCOME AND LEVIED INTEREST UNDER SECTION 234A AND 234B OF THE ACT. THE ASSESSEE WENT IN APPEAL AGAINST THE L EVY OF INTEREST, WHICH WAS DISMISSED BY THE LD. CIT(A). THE TRIBUNAL ALSO UPHELD THE ORDERS OF THE LOWER AUTHORITIES BUT WHEN THE MATTER WENT BEFO RE THE HON'BLE HIGH COURT, THE HIGH COURT, ON THE PECULIAR FACTS OF THE CASE, DELETED THE INTEREST LEVIED UNDER SECTION 234A AND 234B OF THE ACT. THE LEVY OF INTEREST, IN OUR OPINION, IS MANDATORY IN VIEW OF T HE DECISION OF THE ITA NO.5036/MUM/2013, A.Y. 2006-07 4 HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ANJUM M.H. GHASWALA & ORS. IN APPEAL (CIVIL) NO. 2421 OF 2000, BUT THE QUESTION BEFORE US IS WHETHER THE ASSESSEE IS LIABLE TO PAY INTEREST FROM 1.4.2006 OR NOT. WHETHER THE PROVISIONS OF SECTION 234B AND 234C OF THE ACT ARE APPLICABLE OR NOT. THE PROVISIONS OF SECTION 234B( 1) OF THE ACT LAYS DOWN AS UNDER:- 234B. INTEREST FOR DEFAULTS IN PAYMENT OF ADVANCE TAX. (1) SUBJECT TO THE OTHER PROVISIONS OF THIS SECTION , WHERE, IN ANY FINANCIAL YEAR, AN ASSESSEE WHO IS LIABLE TO PAY AD VANCE TAX UNDER SECTION 208 HAS FAILED TO PAY SUCH TAX OR, WHERE TH E ADVANCE TAX PAID BY SUCH ASSESSEE UNDER THE PROVISIONS OF SECTI ON 210 IS LESS THAN NINETY PER CENT OF THE ASSESSED TAX, THE ASSES SEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF [ONE] PER CENT FOR EVERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FR OM THE 1ST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEAR [TO THE DATE OF DETERMINATION OF TOTAL INCOME UNDER SUB- SECTION (1 ) OF SECTION 143 [AND WHERE A REGULAR ASSESSMENT IS MADE, TO THE DATE OF SUCH REGULAR ASSESSMENT, ON AN AMOUNT]] EQUAL TO THE ASS ESSED TAX OR, AS THE CASE MAY BE, ON THE AMOUNT BY WHICH THE ADVA NCE TAX PAID AS AFORESAID FALLS SHORT OF THE ASSESSED TAX. 8. FROM THE SAID PROVISION, IT IS APPARENT THAT THIS S ECTION IS APPLICABLE ONLY IF AN ASSESSEE IS LIABLE TO PAY ADV ANCE TAX UNDER SECTION 208 OF THE ACT AND HAS FAILED TO PAY THE SAME OR WH ERE THE ADVANCE TAX PAID BY SUCH ASSESSEE UNDER THE PROVISIONS OF SECTI ON 210 IS LESS THAN NINETY PER CENT OF THE ASSESSED TAX. SECTION 208 O F THE ACT CASTES DUTY ON AN ASSESSEE TO PAY ADVANCE TAX DURING THE FINANC IAL YEAR IN EVERY CASE WHERE THE AMOUNT OF SUCH TAX PAYABLE BY THE AS SESSEE DURING THAT YEAR HAS BEEN COMPUTED IN ACCORDANCE WITH THE PROVI SIONS OF CHAPTER XVII-C IS RS.10,000/- OR MORE. SECTION 210 OF THE ACT REQUIRES THE ASSESSEE TO PAY ADVANCE TAX AT HIS OWN OR IN PURSUA NCE OF THE ORDER OF THE ASSESSING OFFICER ON OR BEFORE EACH OF THE DUE DATES SPECIFIED UNDER ITA NO.5036/MUM/2013, A.Y. 2006-07 5 SECTION 211 OF THE ACT. IN THE INSTANT CASE, THE A SSESSMENT YEAR INVOLVED IS 2006-07. SURVEY OPERATION UNDER SECTIO N 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSES SEE ON 5.3.2008 I.E. AFTER CLOSE OF THE FINANCIAL YEAR RELEVANT TO THE A SSESSMENT YEAR 2006- 07. NOW THE QUESTION ARISES WHETHER THE ASSESSEE A S PER THE PROVISIONS OF SECTION 210 READ WITH SECTION 208 OF THE ACT FOR THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2006-07 FOR WHICH I T DECLARED THE INCOME ON 5.3.2008 IS LIABLE TO PAY ADVANCE TAX DUR ING FINANCIAL YEAR 2005-06. THIS INCOME WAS NOT IN EXISTENCE DURING F INANCIAL YEAR 2005- 06 NEITHER AS PER ASSESSEES OWN ACCOUNT OR IN PURS UANCE OF THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 210 OF THE A CT, AS THIS INCOME HAS ARISEN ONLY WHEN SURVEY HAS TAKEN PLACE AS ON 5.3.2 008. THE ASSESSEE CANNOT FORESEE DURING FINANCIAL YEAR 2005-06 THAT T HERE WILL BE SURVEY IN 2008 AND AS PER REVENUE, THEY HAVE FOUND CERTAIN DI SCREPANCIES AND ASSESSEE WILL BE COMPELLED TO DISCLOSE INCOME FOR A SSESSMENT YEAR 2006-07 TO BUY PEACE AND AVOID LITIGATION. THERE I S NO IOTA OF EVIDENCE BROUGHT BY THE REVENUE THAT THIS INCOME HAS ACTUALL Y ARISEN IN ASSESSMENT YEAR 2006-07. EVEN THE PROVISIONS OF SEC TION 209(1) OF THE ACT TALKS OF THE PAYMENT OF ADVANCE TAX IN THE FINA NCIAL YEAR. IN OUR VIEW, IN VIEW OF THE PECULIAR FACTS OF THIS CASE, I N THE FINANCIAL YEAR NEITHER THE ASSESSEE CAN FORESEE ACCRUAL OF THE INC OME WHICH HAS ARISEN AS ON 5.3.2008 NOR THE ASSESSING OFFICER COULD HAVE REQUIRED THE ASSESSEE TO PAY ADVANCE TAX IN PURSUANCE OF AN ORDE R MADE UNDER SECTION 210 OF THE ACT. IN VIEW OF THIS FACT, WE A RE OF THE VIEW THAT DUE TO THE CLEAR MANDATE OF SECTION 234B (1) OF THE ACT , SINCE THE ASSESSEE WAS NOT LIABLE TO PAY ADVANCE TAX UNDER SECTION 208 OR 210 OF THE ACT, THEREFORE, THAT THE ASSESSEE WAS NOT LIABLE TO PAY ADVANCE TAX IN RESPECT OF INCOME OF RS.90 LAKHS WHICH HE DECLARED ON 5.3.2 008. SINCE THE ITA NO.5036/MUM/2013, A.Y. 2006-07 6 ASSESSEE WAS NOT LIABLE TO PAY ADVANCE TAX, NO QUES TION OF DEFERMENT OF ADVANCE TAX UNDER SECTION 234C OF THE ACT ARISES. IN VIEW OF THIS FACT, WE ARE OF THE VIEW THAT IT IS A CASE WHERE INTEREST CANNOT BE LEVIED UNDER SECTION 234B AND 234C OF THE ACT ON THE ASSES SEE. WE ACCORDINGLY SET ASIDE THE ORDER OF THE LD. CIT(A) A ND DELETE THE INTEREST. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN ACCORDANCE WITH RULE 34(4) BY PUTTING ON NOTICE BOARD ON THIS DAY, THE 15 TH FEBRUARY 2016. SD/- SD/- [PAWAN SINGH] [P. K. BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 15 TH FEBRUARY, 2017 JJ:3001 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR