MILAN JEWELLERS, MUMBAI V. ACIT CEN CIR 21, MUMBAI

ITA 6053/MUM/2009

• Counselvise Citation: 605319914 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 20-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-11-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PAWAN VED
• Assessee Lawyers: REEPAL G TRALSHAWALA
• Keywords: Search and seizure; Loose papers; Document seized; Documents seized
• Section: 132; 153A; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G, MUMBAI BEFORE SHRI R.S. SYAL (A.M.) AND SHRI D.K.AGARWAL (J M) ITA NO.6053/MUM/2009 (ASSESSMENT YEAR: 2006-07) MILAN JEWELLERS, 1002, PANCHRATNA, OPERA HOUSE, MUMBAI-400004 PAN:AAAFM7721J ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-21, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 APPELLANT V/S RESPONDENT DATE OF HEARING : 20.12.2011 DATE OF PRONOUNCEMENT : 23.12.2011 APPELLANT BY : SHRI REEPAL G.TRALS HAWALA RESPONDENT BY : SHRI PAWAN VED. O R D E R PER D.K.AGARWAL (JM) THIS APPEAL, PREFERRED BY THE ASSESSEE, ARISES AS A RESULT OF ORDER DATED 28.1.2011 PASSED BY THE TRIBUNAL IN MA NO.735/MUM/2010, WHEREIN THE TRIBUNAL HAS RECALLED ITS EX-PARTE ORDER PASSED ON 25.8.2010. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS A PARTNERSHIP FIRM AND IS ENGAGED IN THE BUSINESS OF IMPORT, MANUFACTURING AND EXPORT O F DIAMONDS. A SEARCH AND SEIZURE OPERATION U/S 132 ( 1) ITA NO.6053/MUM/2009 AY-2006-07 2 OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT) WAS CARRIED OUT AT THE BUSINESS AND OTHER PREMISES INCLUDING THE RESIDENCE OF THE ASSESSEE. IN RESPONS E TO THE NOTICE ISSUED U/S 153A OF THE ACT, THE ASSESSEE FILED RETURN DECLARING UNDISCLOSED INCOME OF RS.1,95,65,750/-. THE ASSESSMENT WAS ALSO COMPLETED AT THE SAME INCOME OF RS.1,95,65,750/- VIDE ORDER DATED 31.12.2007 PASSED U/S 143(3)/153A OF THE ACT . 3. ON APPEAL BEFORE THE LD.CIT(A), THE ASSESSEE HA S CHALLENGED THE LEVY OF INTEREST U/S 234B AND 234C OF THE ACT. THE LD. CIT(A) AFTER CONSIDERING SUBMISSI ONS OF THE ASSESSEE THAT THE AO SHOULD HAVE ADJUSTED SEIZED ASSETS FOR ADVANCE TAX SO THAT THE LIABILIT Y U/S 234B AND 234C IS AVOIDED, HELD THAT IN VIEW OF THE PROVISIONS OF SECTION 132B(1), THE AO WAS NOT IN A POSITION TO ADJUST THE SEIZED ASSETS TOWARDS THE ADVANCE TAX AND FURTHER HELD THAT IT IS A SETTLED LAW THAT THE CHARGING OF THE INTEREST U/S 234B AND 234C IS MANDATORY AND ACCORDINGLY HE UPHELD THE LEVY OF INTEREST. ITA NO.6053/MUM/2009 AY-2006-07 3 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF LEVY OF INTEREST U/S 234B AND 234C. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE LD. CIT(A) FURTHER SUBMITS THA T IN VIEW OF THE VARIOUS LETTERS WRITTEN TO THE ADIT (IN V) AND THE AO APPEARING IN THE PAPER BOOK OF THE ASSESSEE, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOL DING THE INTEREST U/S 234B AND 234C OF THE ACT. THE RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN B. M. MALANI V/S CIT (200 8) 306 ITR 196(SC). HE THEREFORE SUBMITS THAT THE LE VY OF INTEREST U/S 234B AND 234C BE DELETED. 6. ON THE OTHER HAND, THE LD. DR WHILE RELYING ON THE ORDERS OF THE AO AND THE LD. CIT(A) SUBMITS TH AT THE DECISION RELIED UPON BY THE LD. COUNSEL FOR TH E ASSESSEE IN THE CASE OF B. M. MALANI V/S CIT (SUPR A) IS ON THE ISSUE OF LEVY OF INTEREST U/S 220(2A) OF THE ACT, WHEREAS IN THE CASE OF THE ASSESSEE THE DIS PUTE ITA NO.6053/MUM/2009 AY-2006-07 4 IS ON THE LEVY OF INTEREST CHARGED U/S 234B AND 23 4C, THEREFORE, THE SAID DECISION IS DISTINGUISHABLE AN D NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HE, THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE FIND THAT DURING THE COURSE OF ASSESSM ENT PROCEEDINGS THE ASSESSEE HAS RAISED VARIOUS OBJECTIONS BEFORE THE AO NAMELY (1) THAT THE XEROX COPIES OF THE SEIZED DOCUMENTS HAVE NOT BEEN MADE AVAILABLE TO THE ASSESSEE, HOWEVER, THE AO OBSERVE D THAT IN THE LETTER DATED 23.01.06 OF THE ASSESSEE, IT WAS CLEARLY MENTIONED THAT THE ENTIRE XEROX COPIES OF THE SEIZED MATERIAL AND VARIOUS STATEMENTS WERE TAK EN OUT BY THE ASSESSEE AND NEEDS NO FURTHER EXPLANATIO N, (2) THAT THE DEPARTMENT DID NOT HAVE ANY BASIS FOR THE ISSUE OF NOTICE U/S 153A OF THE ACT. THE AO HAS D EALT WITH THIS ISSUE AT PAGE 3 OF THE ASSESSMENT ORDER AND HELD THAT LARGE NUMBER OF BOOKS AND LOOSE PAPERS FI LES CONTAINING INCREMENTING ENTRIES WERE SEIZED FROM TH E OFFICE AND BRANCH CUM FACTORY PREMISES OF THE ITA NO.6053/MUM/2009 AY-2006-07 5 ASSESSEE AT MUMBAI AND OTHER PLACES. THERE WAS SEIZURE OF UNACCOUNTED STOCK OF JEWELLERY, DIAMOND AND CASH OF RS.152.43 LACS FROM THE DIFFERENT BRA NCH OFFICE OF THE ASSESSEE. THE ASSESSEE HAD MADE A DISCLOSURE OF RS.3 CRORES IN HIS STATEMENT RECORDED U/S 132(4) DATED 4.2.2006 AND HENCE THE OBJECTION RAIS ED BY THE ASSESSEE IS NOT SUSTAINABLE, AND (3) THAT ON THE DECLARATION OF UNDISCLOSED INCOME OF RS.3 CRORE S, THE AO HELD THAT THE ASSESSEE HAS NOT FURNISHED TH E DETAILS OF SUCH INCOME DERIVED, PERSONS FROM WHOM RECEIVED, AND APPLICATION THEREOF. THEREFORE, IN VI EW OF THE IMMUNITY FROM PENALTY U/S 271(1) (C) READ W ITH EXPLANATION 5 TO SECTION IS NOT APPLICABLE AND HE NCE HE INITIATED PROCEEDING U/S 271(1) (C) OF THE ACT . THE AO AFTER CONSIDERING THE JOURNAL ENTRIES PASSED IN THE RESPECTIVE ACCOUNTS COMPLETED THE ASSESSMENT A T AN INCOME OF RS.1,95,65,750/-. WE FURTHER FIND TH AT ALL THESE FINDINGS OF THE AO HAVE NOT BEEN CHALLEN GED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(A). ON A SPECIFIC QUERY RAISED BY THE BENCH A S TO WHAT HAPPENED IN THE OTHER CASES OF THIS GROUP, THE LD. COUNSEL FOR THE ASSESSEE FILED A COPY OF THE O RDER OF THE TRIBUNAL IN SUMMIT JEWELLERY V/S ACIT IN ITA ITA NO.6053/MUM/2009 AY-2006-07 6 NO.6054/MUM/2009(AY 2006-07) DATED 22.7.2011 TO SUBMIT THAT THE TRIBUNAL HAS DISMISSED THE APPEAL BUT THAT ASSESSEE IS FILING MISCELLANEOUS PETITION BEFO RE THE TRIBUNAL. 8. IN THE LIGHT OF THE ABOVE FACTUAL BACKGROUND, WE OBSERVE THAT IN THE CASE OF SISTER CONCERN OF THE ASSESSEE VIZ. SUMMIT JEWELLERY V/S ACIT (SUPRA), TH E TRIBUNAL HAS REJECTED THE SIMILAR CLAIM OF THE ASSESSEE VIDE FINDING RECORDED IN PARAGRAPH 7 OF IT S ORDER WHICH IS REPRODUCED AS UNDER : WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES, PERUSED THE RECORD, AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAWS CITED. THE ONLY IS FOR OUR CONSIDERATION BEFORE US IS THAT WHETHER THE VALUE OF SEIZED JEWELLERY CAN BE ADJUSTED FOR THE PURPOSE OF PAYMENT OF ADVANCE TAX OR NOT. THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE SEIZED JEWELLERY CAN BE ADJUSTED AGAINST THE ADVANCE TAX PAYMENT, CANNOT BE ACCEPTED AS THE MONEY ONLY CAN HE ADJUSTED AGAINST THE ADVANCE TAX PAYMENT, WHICH IS SEIZED IN THE SEARCH PROCEEDINGS AND NOT JEWELLERY. THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE ON FACTS TO THE CASE OF THE ASSESSEE, THEREFORE, THEY ARE NOT OF ANY TO HELP TO THE ASSESSEES CASE. THE CASE OF THE ASSESSEE IS THAT EVEN SEIZED JEWELLERYS VALUE CAN BE ADJUSTED FOR THE PURPOSE OF PAYMENT OF ADVANCE TAX. HOWEVER, THE CIT(A) BY REFERRING 132B(1)(I) HAS RIGHTLY HELD THAT THE ASSET WAS SEIZED WAS JEWELLERY AND, THEREFORE. IT CANNOT BE ADJUSTED TOWARDS PAYMENT OF ADVANCE TAX. CHARGING OF INTEREST U/S 234B AND 234C ARE MANDATORY IN NATURE, THEREFORE, WE FIND NO ITA NO.6053/MUM/2009 AY-2006-07 7 INFIRMITY IN THE ORDER PASSED BY THE CIT(A) IN CONFIRMING THE AOS ACTION IN CHARGING INTEREST U/S 234B AND 234C OF THE ACT. ACCORDINGLY. WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS RAISED BY THE ASSESSEE ON THIS COUNT. 9. IN THE CASE OF B.M.MALANI(SUPRA) IT HAS BEEN OBSERVED AND HELD (PAGES 196,197, HEADNOTE) : THE PROVISION FOR LEVY OF INTEREST FOR NON-PAYMENT OF TAX WITHIN TIME, ALTHOUGH STATUTORY IN NATURE, HAS TO BE INTERPRETED BY THE PRINCIPLE OF PURPOSIVE CONSTRUCTION. THAT PRINCIPLE SHOULD ALSO BE APPLIED FOR THE PURPOSE OF DETERMINING WHETHER ANY HARDSHIP HAD BEEN CAUSED OR NOT. THE INGREDIENTS OF GENUINE HARDSHIP MUST BE DETERMINED BY THE DICTIONARY MEANING THEREOF AND THE LEGAL CONSPECTUS ATTENDING THERETO. FOR THAT PURPOSE ANOTHER WELL KNOWN PRINCIPLE, NAMELY, THAT A PERSON CANNOT TAKE ADVANTAGE OF HIS OWN WRONG, MAY ALSO HAVE TO BE BORNE IN MIND. ANOTHER PRINCIPLE THAT HAS TO BE BORNE IN MIND IS THAT A STATUTORY AUTHORITY MUST ACT WITHIN THE FOUR CORNERS OF THE STATUTE. A GENUINE HARDSHIP WOULD, INTER ALIA, MEAN A GENUINE DIFFICULTY. THAT PER SE WOULD NOT LEAD TO THE CONCLUSION THAT A PERSON HAVING LARGE ASSETS WOULD NEVER BE IN DIFFICULTY AS HE CAN SELL THOSE ASSETS AND PAY THE AMOUNT OF INTEREST LEVIED. THE COMMISSIONER HAS DISCRETION NOT TO ACCEDE TO THE REQUEST OF THE ASSESSEE BUT THAT DISCRETION HAS TO BE JUDICIOUSLY EXERCISED. HE HAS TO ARRIVE AT TH E SATISFACTION THAT THE THREE CONDITIONS LAID DOWN IN SECTION 220(2A) OF THE INCOME-TAX ACT, 1961, HAVE BEEN SATISFIED. THEY ARE : (I) PAYMENT OF THE AMOUNT HAS CAUSED OR WOULD CAUSE GENUINE HARDSHIP TO THE ASSESSEE ; (II) DEFAULT IN PAYMENT OF THE AMOUNT ON WHICH INTEREST HAS BEEN PAID OR WAS PAYABLE WAS DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE AND (III) THE ASSESSEE HAS ITA NO.6053/MUM/2009 AY-2006-07 8 CO-OPERATED IN ANY INQUIRY RELATING TO THE ASSESSMENT OR ANY PROCEEDING FOR THE RECOVERY OF THE AMOUNT DUE FROM HIM. [THE SUPREME COURT, ACCORDINGLY, ON THE FACTS, REMITTED THE MATTER TO THE COMMISSIONER FOR CONSIDERATION OF THE MATTER.] 10. WHEREAS IN THE CASE BEFORE US, IT IS NOT THE CA SE OF THE WAIVER OF INTEREST AND THE ASSESSEE HAS NOT SHOWN ANY GENUINE HARDSHIP. THIS BEING SO AND KEEPING IN VIEW THAT THE LEVY OF INTEREST U/S 234B AND 234C IS MANDATORY IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. ANJUM M H GHASWALA (2001) 252 ITR 1 (SC), WE ARE OF THE VIEW THAT THE DECISION RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IS DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 11. IN THIS VIEW OF THE MATTER AND KEEPING IN VIEW THAT THE ASSESSEE HAS NOT CHALLENGED THE FINDING O F THE AO IN RESPECT OF THE VALIDITY OF THE NOTICE U /S 153A OF THE ACT AND THE DECLARATION OF THE UNDISCLOSED INCOME OF THE ASSESSEE WAS NOT FOUND BY THE AO IN ACCORDANCE WITH THE EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT AND ALSO KEEPING IN V IEW THAT THE LETTERS WRITTEN BY THE ASSESSEE TO APPROPR IATE ITA NO.6053/MUM/2009 AY-2006-07 9 THE VALUE OF THE SEIZED JEWELLERY ARE GENERAL IN NATURE AND NOT SPECIFIC TO THE CORRESPONDING ADDITI ON OF JEWELLERY, WE ARE OF THE VIEW THAT THE LD. CIT(A ) WAS FULLY JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE AND ACCORDINGLY, THE ORDER PASSED BY THE L D. CIT(A) IS UPHELD. THE GROUNDS TAKEN BY THE ASSESSE E ARE, THEREFORE, REJECTED. 12. IN THE RESULT, THE ASSESSEES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DEC.,2011. SD S D ( R.S. SYAL) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, 23RD DECEMBER, 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI