SHRI VAIBHAV GATTANI, JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR

ITA 56/JPR/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5971 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 16-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDAR MEHTA
• Keywords: Retrospective amendment
• Section: 2; 234B; 208

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC H A JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA- @ ITA NO. 56/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2016-17 VAIBHAV GATTANI, 2126, GATTANI BHAWAN, GANGORI BAZAR, JAIPUR CUKE VS. DCIT, CENTRAL CIRCLE-3, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AXEPG7208H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : NONE JKTLO DH VKSJ LS @ REVENUE BY : SH. VARINDAR MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 01/10/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 03/10/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-4, JAIPUR DATED 01.11.2018 WHEREIN THE ASSESSEE HAS TA KEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LEARNED CIT(APPEALS) HAS ERRED IN HOLD ING THAT THE ASSESSING OFFICER WAS JUSTIFIED IN CHARGING INTERES T U/S 234C ON THE DISCLOSURE MADE FOR THE ENTIRE FINANCIAL YEAR AND C ONFIRMING THE ACTION OF THE ASSESSING OFFICER IN CHARGING INTEREST U/S 2 34C IN RESPECT OF FIRST AND SECOND INSTALLMENTS ALSO. 2. THAT CHARGING OF INTEREST U/S 234C FOR THE FIRST AND SECOND INSTALLMENTS OF THE ADVANCE TAX IS ILLEGAL AND UNJU STIFIED AS THE INCOME WAS DISCLOSED BY THE ASSESSEE IN SEARCH PROCEEDINGS CONDUCTED ON ITA NO. 56/JP/2019 VAIBHAV GATTANI , JAIPUR VS. DCIT, JAIPUR 2 7.1.2016 AND HENCE, INTEREST WAS PAYABLE ONLY FOR T HE PERIOD AFTER 7.1.2016. THE ACTION OF CHARGING INTEREST IS UNJUST IFIED. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE, THOUGH THE NOTICE HAS BEEN SENT BY THE REGISTRY INFORMING THE ASSESSEE OF THE SCHEDULED DATE OF HEARING WHICH IS FIXED FOR TODAY. IT WAS ACCORDINGLY DECID ED TO DISPOSE OFF THE MATTER AFTER HEARING THE LD DR AND MATERIAL AVAILABLE ON R ECORD. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SEARCH WAS CONDUCTED ON 07.01.2016 IN THE CASE OF K. K. GATTANI GROUP, JAIP UR TO WHICH THE ASSESSEE BELONGS. IN HIS STATEMENT RECORDED U/S 132(4) OF TH E ACT DURING THE COURSE OF SEARCH, THE ASSESSEE HAS OFFERED ADDITIONAL INCOME OF RS. 8,05,000/- ON ACCOUNT OF UNDISCLOSED CASH SEIZED DURING THE COURS E OF SEARCH AND AN AMOUNT OF RS. 14,15,00,000/- ON ACCOUNT OF UNDISCLOSED COM MISSION INCOME. THE ASSESSEE FILED HIS RETURN OF INCOME ON 16.10.2016 D ECLARING TOTAL INCOME OF RS. 15,11,35,560/- WHICH INCLUDES ADDITIONAL INCOME OF RS. 14,23,05,000/-. THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 1 5,11,52,060/-, INTEREST U/S 234A, 234B & 234C WERE DIRECTED TO BE CHARGED SEPAR ATELY AND NOTICE OF DEMAND U/S 156 WAS RAISED ON THE ASSESSEE. 4. BEFORE THE LD. CIT(A), THE ASSESSEE TOOK THE GRO UND THAT THE ASSESSING OFFICER HAS CHARGED INTEREST U/S 234C FOR THE ENTIR E YEAR AS AGAINST FOR THE PERIOD STARTING DATE OF SEARCH I.E. 7 TH JANUARY, 2016 TO 31 ST MARCH, 2016. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED AS UNDER:- IN THIS CONNECTION, IT IS SUBMITTED THAT THE SEARC H HAD TAKEN PLACE IN THIS CASE IN JANUARY, 2016 AND THE SURRENDER OF THE INCOME HAS BEEN MADE BY THE ASSESSEE ON 8.1.2016. WHEN THE SUR RENDER ITSELF HAS BEEN MADE AFTER THE DUE DATE OF INSTALLMENT OF ADVANCE TAX ON ITA NO. 56/JP/2019 VAIBHAV GATTANI , JAIPUR VS. DCIT, JAIPUR 3 15 TH SEPTEMBER AND 15 TH DECEMBER 2015 THERE WAS NO QUESTION OF ANY PAYMENT OF ADVANCE TAX. THE ASSESSEE COULD NEVE R FORESEE THAT HE WOULD BE SURRENDERING ANY INCOME IN JANUARY 2016 AND HENCE, THERE IS NO QUESTION OF PAYMENT OF ANY ADVANCE TAX IN RESPECT T OF THE INSTALLMENTS DUE BEFORE JANUARY 2016. IT IS SUBMITTED THAT THE LEGAL DICTUM 'LEX NON COGI T AD IMPOSSIBILIA' MEANS 'LAW CANNOT COMPEL YOU TO DO THE IMPOSSIBLE'. IN THIS CASE ALSO THE ASSESSEE COULD VISUALIZE THAT THE HE WOULD BE SURRENDERING ANY INCOME IN JANUARY 2016 AND HENCE, THERE IS NO F AULT ON THE PART OF THE ASSESSEE IN PAYMENT OF ADVANCE TAX AND INTER EST U/S 234C WAS NOT PAYABLE IN RESPECT OF SHORTFALL IN PAYMENT OF F IRST AND SECOND INSTALLMENTS. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION O F HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NATIONAL DAIRY DE VELOPMENT BOARD 397 ITR 543 WHERE IT WAS HELD THAT IF ANY LIABILITY FOR PAYMENT OF ADVANCE TAX ARISES ON ACCOUNT OF SUBSEQUENT AMENDME NT BROUGHT INTO STATUTE WITH RETROSPECTIVE EFFECT, NO INTEREST CAN BE CHARGED WHERE THERE WAS NO SHORTFALL PRIOR TO PREVAILING ST ATUTORY PROVISION. THUS, IT IS VERY CLEAR THAT THE AO IN THIS CASE WAS NOT JUSTIFIED IN CHARGING INTEREST U/S 234C FOR THE ENTIRE FINANCIAL YEAR AND INTEREST COULD HAVE BEEN CHARGED ONLY FOR THE PERIOD FROM 7. 1.2016 ONWARDS I.E. THE DATE OF SEARCH UPTO 31.3.2016. 5. THE LD. CIT(A) HOWEVER CONFIRMED THE ACTION OF T HE AO AND THE RELEVANT FINDINGS OF THE LD CIT(A), WHICH HAS BEEN RELIED UP ON BY THE LD DR, READS AS UNDER:- ITA NO. 56/JP/2019 VAIBHAV GATTANI , JAIPUR VS. DCIT, JAIPUR 4 8. BASIC CONTROVERSY IS LIKE THIS. THE APPELLANT W AS SUBJECTED TO SEARCH U/S 132(1) OF THE ACT ON 7.1.2016. ON THIS DATE THE APP ELLANT MADE CERTAIN DISCLOSURE WHICH WAS HONORED WHILE FILING THE RETUR N OF INCOME U/S 153A. THE AO HAS CHARGED INTEREST U/S 234C FOR THE ENTIRE FYR. 2015-16. ON THE OTHER HAND THE APPELLANT CONTENDS THAT INTEREST U/S 234C SHOULD BE CHARGED FROM THE DATE OF SEARCH WHEN DISCLOSURE WAS MADE AND NOT FOR THE ENTIRE FYR. 8.2 I AM IN AGREEMENT WITH THE AO WHILE CHARGING I NTEREST ON DISCLOSURE MADE FOR THE ENTIRE FYR. AS THE ADDITION AL INCOME IS REASONABLY PRESUMED TO HAVE BEEN EARNED OVER ENTIRE FYR. IF AP PELLANT WISH TO CLAIM THAT INTEREST SHOULD BE CHARGED FROM THE DATE OF SE ARCH THEN IT IS TO, PROVE THAT ENTIRE ADDITIONAL INCOME WAS EARNED ON T HE DATE OF SEARCH. NO EVIDENCE IS FILED OR IS FORTH COMING FOR THIS CONTE NTION. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THUS I AM OF THE VIE W THAT AO IS CORRECT IN CHARGING INTEREST FOR THE ENTIRE FYR. GROUND NO. 2 IS DISMISSED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE LIMITED ISSUE I S REGARDING LEVY OF INTEREST U/S 234C IN RESPECT OF ADDITIONAL INCOME SURRENDERED BY THE ASSESSEE FOR THE PERIOD PRIOR TO DATE OF SEARCH WHICH WAS CONDUCTED ON 07.01.2016. THE PROVISIONS OF SECTION 234C WHICH ARE RELEVANT FOR A DJUDICATION OF PRESENT DISPUTE READS AS UNDER:- 234C. (1)[WHERE IN ANY FINANCIAL YEAR, (A ) AN ASSESSEE, OTHER THAN 70 [THE ASSESSEE REFERRED TO IN CLAUSE (B )], WHO IS LIABLE TO PAY ADVANCE TAX UNDER SECTION 208 HAS FAILED TO PAY SUCH TAX OR (I ) ) THE ADVANCE TAX PAID BY SUCH ASSESSEE ON ITS CURREN T INCOME ON OR ITA NO. 56/JP/2019 VAIBHAV GATTANI , JAIPUR VS. DCIT, JAIPUR 5 BEFORE THE 15TH DAY OF JUNE IS LESS THAN FIFTEEN PER CENT OF THE TAX DUE ON THE RETURNED INCOME OR THE AMOUNT OF SUCH AD VANCE TAX PAID ON OR BEFORE THE 15TH DAY OF SEPTEMBER IS LESS THAN FORTY- FIVE PER CENT OF THE TAX DUE ON THE RETURNED INCOME OR T HE AMOUNT OF SUCH ADVANCE T AX PAID ON OR BEFORE THE 15TH DAY OF DECEMBER IS LESS THAN SEVENTY- FIVE PER CENT OF THE TAX DUE ON THE RETURNED INCOME, THEN, THE ASSESSEE SHALL 71 BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF ONE PER CENT PER MONTH FOR A PERIOD OF THREE MONTHS ON THE AMOUNT OF THE SHORTFALL FROM FIFTEEN PER CENT O R FORTY- FIVE PER CENT OR SEVENTY- FIVE PER CENT, AS THE CASE MAY BE, OF THE TAX DUE ON THE RETURNED INCOME; (II ) THE ADVANCE TAX PAID BY THE ASSESSEE ON THE CURRENT INCOME ON OR BEFORE THE 15TH DAY OF MARCH IS LESS THAN THE TAX D UE ON THE RETURNED INCOME, THEN, THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF ONE PER CENT ON THE AMOUNT OF THE SHORTFALL FROM THE TAX DUE ON THE RETURNED INCOME: 7. IN LIGHT OF ABOVE PROVISIONS, AS FAR AS THE PAY MENT OF ADVANCE TAX INSTALLMENTS DUE ON OR BEFORE 15 TH JUNE, 2015, 15 TH SEPTEMBER AND 15 TH DECEMBER, 2015 ARE CONCERNED, THERE WAS NO OCCASION FOR ASSESSEE TO COMPUTE AND PAY ADVANCE TAX ON THE UNDISCLOSED INCO ME FOUND DURING THE COURSE OF SEARCH ON 07.01.2016 AS THE DUE DATE FOR PAYMENT OF THESE THREE INSTALLMENTS FALL PRIOR TO THE ACTION TAKEN BY THE REVENUE BY WAY OF SEARCH PROCEEDINGS PURSUANT TO WHICH THE ASSESSEE SURRENDE RED THE UNDISCLOSED INCOME. HOWEVER, THE ADVANCE TAX INSTALLMENT DUE ON OR BEFORE 15 TH MARCH, 2015 IS VERY MUCH APPLICABLE IN THE INSTANT CASE AN D THEREFORE, THE MATTER IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSES FOR COMPUTING THE INTEREST LIABILITY AS PER CLAUSE (II) OF 234C(1)(A) OF THE ACT. ITA NO. 56/JP/2019 VAIBHAV GATTANI , JAIPUR VS. DCIT, JAIPUR 6 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISPOSED O FF IN LIGHT OF AFORESAID DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 03/10/2019. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03/10/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- VAIBHAV GATTANI, GANGORI BAZAR, JAIP UR 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CENTRAL CIRCLE-03, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 56/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR