M/s. Vedika Nut Craft Pvt. Ltd., Delhi V. DCIT, New Delhi

ITA 5081/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6600 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 10-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAY KR JIWANI
• Assessee Lawyers: GAUTAM JAIN PIYUSH KR KAMAL
• Keywords: Search and seizure
• Section: 153A; 234B; 147; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: BENCH B NEW DELHI BEFORE SRI R.K.PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO S . 5081 & 5082 /DEL/201 5 A.Y. 20 10 - 11 & 2011 - 12 VEDIKA NUT CRAFT PVT. LTD. VS. DCIT, CENTRAL CIRCLE - 28 (FORMERLY KNOWN AS VEDIKA OVERSEAS NEW DELHI TRADEX P.LTD.) 110, TILAK BAZAR KHARI BAOLI DELHI 110 006 PAN: AACCV1767A (APPELLANT) (RESPONDENT) APPELLANT BY: S/SHRI GAUTAM JAIN, PIYUSH KR. KAMAL, ADV. AND SH. LALIT MOHAN, C.A. RESPONDENT BY: SRI VIJAY KR. JIWANI , SR. D.R. DATE OF HEARING: 2 3.07. 2018 DATE OF PRONOUNCEMENT : 24 TH JULY, 2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEALS HAVE BEEN FILED BY ASSESSEE AGAINST ORDER DATED 12/06/15 PASSED BY LD.CIT(A) - 29, NEW DELHI, FOR A SSESSMENT Y EAR 2010 - 11 AND 2011 - 12 ON THE FOLLOWING GROUNDS OF APPEAL: ITA NO. 5081/ DEL/2015 (ASST YR: 2010 - 11) 1. THAT LEVY OF INTEREST OF RS. 325397/ - U/S 234B OF THE ACT IN AN ORDER DATED 20.3.2014 U/S 154 OF THE ACT IS WITHOUT JURISDICTION AND THEREFORE DESERVES TO BE QUASHED AS SUCH. ITA NOS. 5081 & 5082/DEL/15 A.Y.:2010 - 11 & 2011 - 12 VEDIKA NUT CRAFT PVT.LTD. VS. DCIT, CC - 28, N.D. 2 2. THAT FURTH ERMORE EVEN OTHERWISE ON MERITS THE LEVY OF INTEREST WAS CONTRARY TO STATUTORY PROVISIONS CONTAINED IN S .234B OF THE ACT IN FACTS AND CIRCUMSTANCES OF THE APPELLANT COMPANY AND THEREFORE UNTENABLE. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHILE UPHOLDING THE ORDER AND LEVY OF INTEREST HAS ERRONEOUSLY APPLIED THE JUDGMENT OF APEX COURT IN THE CASE OF CIT VS. HINDUSTAN BULK CARRIERS REPORTED IN 259 ITR 449 AND FAILED TO APPRECIATE THE ORDER OF S ETTLEMENT C OMMISSION IN THE CASE OF OMAX AUTOS LIMITED VS.CIT (CENTRAL), GURGAON FOLLOWING THE JUDGMENT OF KARNATAKA HIGH COURT IN THE CASE OF VIJAY KUMAR SABOO (HUF) AND ANOTHER VS. ACIT REPORTED IN 340 ITR 382 AND KERALA HIGH COURT IN THE CASE OF CIT VS. B. LAXMIKANTHAN REPORTED IN 19 8 TAXMAN 485. 4 . THAT EVEN OTHERWISE THE LD.CIT(A) HAS FAILED TO APPRECIATE THAT THE ISSUES WERE DEBATABLE AND THEREFORE NO INTEREST WAS OTHERWISE LEVIABLE IN AN ORDER U/S 154 OF THE ACT. IT IS THEREFORE, PRAYED THAT IT BE HELD THAT ORDER FRAMED UNDER SECTION 154 OF THE ACT WAS WITHOUT JURISDICTION AND THEREFORE, BE QUASHED AND IN THE ALTERNATIVE THAT INTEREST LEVIED IS NOT IN ACCORDANCE WITH LAW AND THEREFORE , DELETED AND APPEAL OF THE APPELLANT MAY KINDLY BE ALLOWE D . ITA NO. 5082/ DEL/2015 (ASST YR: 2011 - 12) 1. THAT LEVY OF INTEREST OF RS. 26,67,371/ - - U/S 234B OF THE ACT IN AN ORDER DATED 20.3.2014 U/S 154 OF THE ACT IS WITHOUT JURISDICTION AND THEREFORE DESERVES TO BE QUASHED AS SUCH. 2. THAT FURTHERMORE EVEN OTHERWISE ON MERITS THE LEVY OF INTEREST WAS CO NTRARY TO STATUTORY PROVISIONS CONTAINED IN S.234B OF THE ACT IN FACTS AND CIRCUMSTANCES OF THE APPELLANT COMPANY AND THEREFORE UNTENABLE. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WHILE UPHOLDING THE ORDER AND LEVY OF INTEREST HAS ERRONEOU SLY APPLIED THE JUDGMENT OF APEX COURT IN THE CASE OF CIT VS. HINDUSTAN BULK CARRIERS REPORTED IN 259 ITR 449 AND FAILED TO APPRECIATE THE ORDER OF SETTLEMENT COMMISSION IN THE CASE OF OMAX AUTOS LIMITED VS.CIT (CENTRAL), GURGAON FOLLOWING THE JUDGMENT O F KARNATAKA HIGH COURT IN THE CASE OF VIJAY KUMAR SABOO (HUF) AND ANOTHER ITA NOS. 5081 & 5082/DEL/15 A.Y.:2010 - 11 & 2011 - 12 VEDIKA NUT CRAFT PVT.LTD. VS. DCIT, CC - 28, N.D. 3 VS. ACIT REPORTED IN 340 ITR 382 AND KERALA HIGH COURT IN THE CASE OF CIT VS. B. LAXMIKANTHAN REPORTED IN 19 8 TAXMAN 485. 4. THAT EVEN OTHERWISE THE LD.CIT(A) HAS FAILED TO APPRECI ATE THAT THE ISSUES WERE DEBATABLE AND THEREFORE NO INTEREST WAS OTHERWISE LEVIABLE IN AN ORDER U/S 154 OF THE ACT. IT IS THEREFORE, PRAYED THAT IT BE HELD THAT ORDER FRAMED UNDER SECTION 154 OF THE ACT WAS WITHOUT JURISDICTION AND THEREFORE, BE QUASHED AN D IN THE ALTERNATIVE THAT INTEREST LEVIED IS NOT IN ACCORDANCE WITH LAW AND THEREFORE. DELETED AND APPEAL OF THE APPELLANT MAY KINDLY BE ALLOWED. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: A SSESSEE IS ONE OF THE GROUP COMPANIES OF ANURAG GARG GROUP. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT I N THE BUSINESS AND RESIDENTIAL PREMISES OF ANURAG G ARG GROUP, INCLUDING ASSESSEE. POST SEARCH ASSESSEE AND THE GROUP CONCERN S FILED A PPLICATION BEF ORE S ETTLEMENT C OMMISSION UNDER SECTION 245 OF THE INCOME TAX ACT, 1961 (THE ACT ) . THE A PPLICATION BEFORE S ETTLEMENT C OMMISSION WAS DISPOSED OF ON 29/05/13 , CONSEQUENT TO WHICH LD. AO PASSED ORDER DATED 23/08/13 , GIVING EFFECT TO ORDER PASSED BY SETTLE MENT C OMMISSION. LD.AO CHARGED INTEREST UNDER SECTION 234B (1) OF THE A CT FROM THE 1 ST DAY OF THE A SSESSMENT Y EAR RELEVANT TO THE YEAR UNDER CONSIDERATION. 2.1 . AGGRIEVED BY ORDER OF LD. AO, ASSESSEE CHALLENGED THE LEVY OF PENALTY UNDER SECTION 234B(1) OF THE A CT AND SUBMITTED THAT THE INTEREST SHOULD HAVE BEEN CHARGED UNDER SECTION 234B (3) OF THE A CT, BEFORE LD. CIT (A). 2.2 . LD. CIT (A) AFTER DEALING WITH VAR IOUS JUDICIAL PRECEDENTS RELIED UPON BY ASSESSEE HELD AS UNDER: 7. I HAVE GONE THROUGH THE FACTS AND EVIDENCES ON RECORD AND HAVE CONSIDERED THE JUDICIAL PRONOUNCEMENTS AND CASE LAWS RELIED UPON BY THE APPELLANT. 7.1 IN MY HUMBLE VIEW, THE DECISION OF HON'BLE SETTLEMENT COMMISSION IN THE CASE OF OMAXE AUTOS LTD. (SUPRA) WHICH HAS BEEN RELIED UPON BY THE APPELLANT DOES NOT COME TO THEIR RESCUE BECAUSE IN THAT CASE THE ASSESSEE ( I.E. OMAXE AUTO) HAD ULTIMATELY TO AVOID ANY DISPUTE HAD COMPUTED THE INTERE ST UNDER ITA NOS. 5081 & 5082/DEL/15 A.Y.:2010 - 11 & 2011 - 12 VEDIKA NUT CRAFT PVT.LTD. VS. DCIT, CC - 28, N.D. 4 SECTION 234B(1) AND NOT UNDER SECTION 234B(3). (REFER PARA 10 AND 17 OF SETTLEMENT COMMISSIONER S ORDER IN OMAXE S CASE). 7.2. FURTHER ALL THE OTHER DECISIONS WHICH ARE RELIED UPON BY THE APPELLANT RELATES TO THE ASSESSMENT OR REASSESSMENT FRAMED U/S 147 OR 153A AND NOT TO THE INCOME COMPUTED U/S 245. 7.3. IN FACT, IN THE FACTS OF THE APPELLANT S CASE, THE DECISION OF APEX COURT IS SQUARELY APPLICABLE WHEREIN NO UNCERTAIN TERM THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. HINDUSTAN BULK CARRIE RS {(259 ITR 449 ) (SC)} HAVE HELD THAT ON THE PORTION OF INCOME DETERMINED BY THE COMMISSION NOT DISCLOSED TO THE A.O., INTEREST IS TO BE CHARGED U/S 234B FOR THE PERIOD BEGINNING FROM THE 1 ST DAY OF APRIL NEXT FOLLOWING THE RELEVANT FINANCIAL YEAR.......... THE RELEVANT HEAD NOTES OF THE CASE READS AS UNDER: - ' INTEREST UNDER S. 234 B - CHARGEABILITY AND COMPUTATION - COMPUTATION CONSEQUENT UPON SETTLEMENT OF CASE BY SETTLEMENT COMMISSIO N - SETTLEMENT COMMISSION ASSUMES JURISDICTION TO DEAL WITH THE MATTER AFTER IT DECIDES TO PROCEED WITH THE APPLICATION MADE UNDER S. 245C AND CONTINUES TO HAVE THE JURISDICTION TILL IT MAKES AN ORDER UNDER S.245D - CONTENTION THAT THERE IS NO REQUIREMENT T O PAY INTEREST UNDER S. 234B AS NO POINTS OF TERMINUS HAVE BEEN FIXED IS UNTENABLE BECAUSE THE LEVY IS MANDATORY - EQUALLY, THE CONTENTION THAT NO INTEREST IS CHARGEABLE FOR THAT PORTION OF INCOME WHICH WAS DETERMINED BY THE COMMISSION AND WAS NOT DISCL OSED BEFORE THE A.O. HAS NO SUBSTANCE - INTEREST UNDER S.234B HAS TO BE CHARGED FOR THE PERIOD BEGINNING FROM THE FIRST DAY OF APRIL NEXT FOLLOWING THE RELEVANT FINANCIAL YEAR UPTO THE DATE OF SETTLEMENT COMMISSION'S ORDER UNDER S. 245D{4}, ON THE CONS OLIDATED INCOME I.E., BOTH DISCLOSED AND UNDISCLOSED INCOME - THERE IS NO QUESTION OF CHARGE OF INTEREST ON INTEREST. I 7.4. IT MAY BE ADDED HERE THAT THE SUPREME COURT HAS NOT ALTERED THE ABOVE POSITION FOR CHARGING INTEREST UNDER SECTION 234B{1} EXCE PT THAT IN THE CASE OF BRIJ LAL AND OTHERS VS. CIT (328 ITR 477 ) (SC) THE HON'BLE SUPREME COURT HAS HELD THAT INTEREST IS TO BE CHARGED ONLY UPTO THE DATE OF ORDER UNDER SECTION 245D(1) AND NOT UPTO THE DATE OF ORDER U/S 245D(4). IN THE CASE OF BRIJ LAL (SUPRA), THE ISSUE OF CHARGEABILITY OF INTEREST U/S 234B(1) OR 234B(3) WAS NEVER CONSIDERED. HENCE FROM THE ABOVE DISCUSSIONS, IN MY HUMBLE VIEW FOLLOWING THE DECISION IN THE CASE OF HINDUSTAN BULK CARRIERS (SUPRA), IN THE FACTS OF THE APPELLANT'S CASE THE INTEREST IS TO BE CHARGED UNDER SECTION 234B(1) AND NOT UNDER SECTION 234B(3), ERGO THE ACTION OF THE A O IN THIS REGARD IS CORRECT] 3. AGGRIEVED BY THE ORDER OF LD.CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. ITA NOS. 5081 & 5082/DEL/15 A.Y.:2010 - 11 & 2011 - 12 VEDIKA NUT CRAFT PVT.LTD. VS. DCIT, CC - 28, N.D. 5 4. AT THE OUTSET LD.COUNSEL SUBMITTED THAT ISSUE STANDS SQUARELY COVERED AGAINST ASSESSEE BY ORDER DATED 27/04/18 PASSE D BY THIS TRIBUNAL IN ITA NO. 5063/ D EL/2015 IN THE C ASE OF M/S BNG TRADELINKS PVT.LTD. VS. DCIT , WHICH IS ONE OF THE GROUP CONCERN OF ANURAG GARG GROUP. HE SUBMITTED THAT SIMILAR FINDINGS BY LD.CIT(A) HAVE BEEN UPHELD BY THIS T RIBUNAL IN CASE OF M/S BNG TRADELINKS PVT.LTD. VS. DCIT (SUPRA) BY OBSERVING AS UNDER: 5. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS ON EITHER SIDE. INSOFAR AS FACTS ARE CONCERNED, ABS OLUTELY, THERE IS NO DISPUTE. SUBSEQUENT TO THE SEARCH OPERATIONS, THE ASSESSEE AND THE GROUP CONCERNS FILED AN APPLICATION BEFORE THE ITSC U/S 245D(1) ON 16.11.2011 AND THE ITSC PASSED AN ORDER IN ALL THE GROUP CONCERN CASES U/S 245D(4) ON 25.9.2013. DE PARTMENT GAVE EFFECT TO THE SAID ORDER OF THE ITSC BY PASSING ORDER DATED 2.7.2013 WHERE UNDER THE INTEREST WAS LEVIED U/S 234B(1). ASSESSEE SOUGHT RECTIFICATION OF THE SAME BY APPLICATION U/S 154 OF THE ACT AND IT WAS REJECTED. 6. THERE IS NO DISPUTE THAT THERE WAS NO ORDER PASSED U/S 147 OR 153A/153C OF THE ACT. ASSESSEE FAILED TO DEMONSTRATE BEFORE US THAT THE LEARNED CIT(A) COMMITTED ANY ERROR IN HIS OBSERVATION THAT IN ALL THE DECISIONS RELIED UPON BY THE ASSESSEE THERE WAS RE - ASSESSMENT FRAMED U/S 147 OR 153A OF THE ACT AND NOT U/S 245 OF THE ACT. SO ALSO IT IS NOT THE CONTENTION OF THE ASSESSEE THAT IN OMAXE AUTO CASE (SUPRA), THE ASSESSEE HAD COMPUTED THE INTEREST U/S 234B(3) OF THE ACT AND 234B(1) OF THE ACT. FURTHER THE CHARGEABILITY OF INTERE ST U/S 234B(1 ) O R 234B(3 ) HAD NOT CROPPED UP FOR CONSIDERATION OF THE HON'BLE APEX COURT IN THE CASE OF BRI J LAL (SUPRA). IT, THEREFORE, GOES WITHOUT SAYING THAT LEARNED CIT(A ) WAS PERFECTLY RIGHT IN OBSERVING THAT THE HON'BLE APEX COURT HAD NOT ALTERED THE PRINCIPLE LAID DOWN IN THE CASE OF HINDUSTAN BULK CARRIER (SUPRA) AND HE HAD RIGHTLY FOLLOWED THE SAME. WE, THEREFORE, DO NOT FIND ANY ILLEGALITY OR IRREGULARITY IN THE ORDERS OF THE L D. CIT(A ) . THE GROUND OF APPEAL, THEREFORE, FAIL AND THE APPEAL IS L IABLE TO BE DISMISSED. THE APPEAL IS ACCORDINGLY DISMISSED. 5. LD. DR SUPPORTED THE ORDER OF LD. CIT (A). 6. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. 7. IT IS OBSERVED THAT THE ONLY ISSUE THAT HAS BEEN CHALLENGED BY ASSESSEE IS IN RESPECT OF INTEREST LEVIED UNDER SECTION 234B(1) OF THE A CT FOR WHICH ASSESSEE SO UGHT RECTIFICATION APPLICATION UNDER SECTION 154 OF THE A CT. IT IS OBSERVED THAT ORDER REJECTING RECTIFICATION WAS PASSED ON 20/ 02/14 BY ITA NOS. 5081 & 5082/DEL/15 A.Y.:2010 - 11 & 2011 - 12 VEDIKA NUT CRAFT PVT.LTD. VS. DCIT, CC - 28, N.D. 6 LD.AO. FURTHER IT IS NOT IN DISPUTE THAT THERE WAS NO ORDER UNDER SECTION 147 OR 153A/153C OF THE A CT IN THE PRESENT CASE. ON SIMILAR FACTS THIS TRIBUNAL HAD DISMISSED APPEAL FILED BY M/S BNG TRADELINKS P.LTD. (SUPRA). THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THIS T RIBUNAL IN THE CASE OF M/S BNG TRADELINKS PVT.LTD. VS. DCIT (SUPRA) WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT (A). ACCORDINGLY GROUNDS RAISED BY ASSESSEE STANDS DISMISSED FOR BOTH THE A SSESS MENT Y EARS. 8. IN THE RESULT , BOTH THE APPEAL S FILED FOR A SSESSMENT Y EAR 2010 - 11 AND 2011 - 12 STAND DISMISSED. ORDER PRONOUNCED IN THE O PEN C OURT ON 2 4 T H JULY, 2018. S D / - S D / - (R.K.PANDA) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 2 4 T H JULY , 2018 *MANGA COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES