GIRISH VIPINCHANDRA PATEL, MUMBAI V. INCOME TAX OFFICER 35(1) (4), MUMBAI

ITA 674/MUM/2022

AI Insights

The case involves Girish Vipinchandra Patel, who appealed against the order of the Commissioner of Income Tax (Appeals) - 49, Mumbai, which confirmed the addition of Rs. 12,00,000 to his income for the Assessment Year 2017-18. The cash was seized during a search operation and was initially not declared in the return of income. The assessee argued that the cash was intended to be deposited under the PMGKY scheme, but due to departmental inaction, this was not accomplished. The ITAT found that the assessee had made reasonable attempts to comply with the PMGKY scheme and directed the Assessing Officer to consider these attempts and the tax rate applicable under the scheme.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 123650 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: G
• Next Hearing Date: 31-10-2022
• Assessment Year: misc
• Appeal Filed On: 12-01-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure
• Section: 131; 132; 142(1); 133A; 153A; 69A; 43; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA No. 674/MUM/2022 Assessment Year: 2017-18 Girish Vipinchandra Patel, 159/B, Lalita Sadan, S.V. Road, Bandra (West), Mumbai-400050. Vs. Income Tax Officer- 35(1)(4), Bandra Kurla Complex, Mumbai-400051. PAN No. AAFPP 4072 L Appellant Respondent Assessee by : Mr. Girish Vipinchandra Patel, (in Person) Revenue by : Mr. R.N. D’Souza, DR Date of Hearing : 01/11/2022 Date of pronouncement : 22/12/2022 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the assessee against the order dated 11 th February 2022 passed by the Ld. Commissioner of Income Tax (Appeals) – 49, Mumbai [in short, ‘the Ld. CIT(A)’] for A.Y. 2017-18, raising following grounds: 1. On the facts and circumstances of the case, the Ld. Commissioner of Income Tax (A) 49, Mumbai has erred in confirming the addition of Rs 12 Lacs added by the assessing officer by erroneously holding that the assesse has not been able to explain the source of this money and also by ignoring that assesse had requested, within time that a part of the seized amount should be deposited under the PMGKY scheme. 2. Because the Ld CIT (A) as also the AO has failed to deal with the fact that the PCIT Range35 had confirmed receipt of letter on 30.3.2017 (Written as early as on 10.3.2017) regarding the appellants desire to take benefit of PMGKY scheme and the only reason given was non availability of appraisal report. These, the appellant submit, relate to internal function of the Department and this non deposit ought not to be held detrimental to the case of the Appellant. 3. Because the only reason the appellant did not reiterate the evidence already in possession of the Department (as regards the source of cash) was to put a quietus to the entire matter in terms of the scheme floated by the Government of India. The findings returned by both the A0 and the CIT (A) to the effect that the Appellant has not been able to declare the source of cash is completely perverse. In response to notice issued under S. 142(1) of the Act, the appellant had declared the source of cash belonging to one Anil Thakkar and Kunal Kalsaria who had also filed affidavits in support of such statement. 2. Briefly stated the facts of the case are that the Air Intelligence Unit (AIU) of Income-tax Department, Mumbai intercepted Ms. Naveen Goelon arrival at Mumbai Airport, who was carrying cash of Rs.34,00,000/- in demonetized notes of Rs.500 and Rs.1000 while traveling from Delhi to Mumbai on 06.12.2016,and recorded her statement u/s 131 of Income-tax Act, 1961 (in short ‘the Act’). In her statement, she admitted that Rs.12,00,000/- out of Rs.34,00,000/- found from her belonged to the assessee. In view of her statement, the assessee was summoned u/s 131of the Act and his statement was recorded. In the statement he admitted that said money was given by him to her for legal services. For verification of claim of the assessee,the Income-tax Department carried out survey u/s 133A of the Act at his office.During survey he stated to have been engaged as Consultant in Debt Recovery Tribunal. The Income-tax Department, further carried out a search and seizure action u/s. 132 of the Actat the residential premises of the assessee on 08.12.2016. In the statement recorded u/s. 132(4) of the Act, the assessee admitted that Rs.12,00,000/- was given by him to Ms. Naveen Goel and expressed his inability in providing documentary evidences with regard to the source of old currency notes. He further, agreed to pay tax on Rs.12,00,000/- for the A.Y. 2017-18 relevant to the F.Y. 2016-17.Thereafter, the assessee filed return of income for the year under consideration u/s. 153A of the Act on 28.12.2017 declaring total income at Rs. 7,00,950/-, however, the cash foundof Rs. 12,00,000/- and admitted u/s. 132(4) of the Act, was not offered in the return of income filed. 3. The Assessing Officer issued statutory notices under the Act for assessment of income. During assessment proceedings, the assessee pleaded for considering the cash seized of Rs.12,00,000/- under the Pradhan Mantri Garib Kalyan Yojna (PMGKY), scheme , 2016. The Assessing Officer rejected the contention of the assessee and completed the assessment after making addition of Rs. 12,00,000/- u/s. 69A of the Act. 4. The assessee could not find favour before the ld. CIT(A) also. 5. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before the Income-tax Appellate Tribunal (ITAT) by way of raising grounds as reproduced above. 6. Before us, the assessee appeared in person and filed a Paper Book (pages 1 to 14) containing letters addressed to the lower authorities and affidavits from Shri Anil Bhagwandas Thakkar and Shri Kunal Kasaria in support of source of cash. 7. In the grounds raised, the assessee is aggrieved on two issues. The first issue is that application of the assessee for opting the PMGKY has not been considered and consequent benefit of PMGKY has not been provided to the assessee. The second issue in alternate is that source of the cash of Rs. 12,00,000/- in the hands of the assessee was explained by the assessee before the AO but same was not examined either by the AO or by the Ld. CIT(A). Both these issues have been agitated partly in ground no. 1.The ground no. 2 of the appeal specifically relates to rejection of the prayer of the assessee for the benefit of PMGKY scheme. The ground No.3 relates to explanation of source of cash found. 8. The brief facts qua the first issue in dispute are that since the assessee had not offered the amount of Rs.12,00,000/- in his return of income although admitted in his statement recorded on oath u/s. 132(4) of the Act, during the course of assessment proceedings, he was show caused vide notice dated 24.12.2018 as to why the same should not be added to his total income. In response to the same, the assessee vide his letter dated 26.12.2018 stated that he had requested to office of the Pr. Commissioner of Income Tax-35, Mumbai (PCIT) vide letter dated 28.04.2017 that he would go ahead with the scheme of PMGKY as was requested to the Deputy Director of Income-tax (Investigation) on 10/03/2017 and explained that he was under the impression that his payment was already made under the said scheme, which was valid till 31/03/2017 (sic). 8.1 But, we find that the Ld. PCIT vide his letter dated 31.05.2017had intimated to the assessee that no cognizance of the assessee’s request could be taken because firstly, neither appraisal report was received from Investigation Wing of Income-tax Department nor any other intimation was received from DDIT(inv.), secondly, the assessee did not file any proof of deposit of 25% undisclosed cash in PMGKY scheme till 31.03.2017 and thirdly, as per Circular-2 of CBDT dated 18.01.2017, deposit under PMGKY cannot be madefrom the seized amount. 8.2 Accordingly, the Assessing Officer took the view that the assessee was not eligible under the ‘PMGKY’ scheme as the conditions of deposit of 25% amount under the scheme was not satisfied. Further, according to the Assessing Officer, no explanation about the source of cash found of Rs. 12,00,000/-, was given, so he made the addition of Rs. 12,00,000/- u/s. 69A of the Act to the total income of the assessee. 9. Before the ld. CIT(A), the assessee referred to letter dated 10.03.2017 filed with the Deputy Director of Investigation, Unit 5(3), Mumbai and letter dated 28/04/2017 filed before the Ld. PCIT where he requested for depositing the money under PMGKY Scheme and give consequent benefit. However, the Ld. CIT(A) declined his request observing as under: “6.1.5 The assessee in his submissions filed before me has put a lot of emphasis that he was willing to offer this amount in Pradhan Mantri Garb Kalyan Yojna(PMGKY) 2016, but due to the circumstances as explained in his submissions, he was not able to avail the benefits of the scheme. The claim of the assessee is that he failed to avail the benefit of the scheme for the reasons which are attributable to PCIT, DDIT (In.) etc. In this regard, I am of the considered view that the assessee could file an appeal in respect of an addition and while deciding the said appeal it is not under my jurisdiction to verify whether there was any genuine cause or reason which prevented the assessee from availing a scheme of voluntary disclosure of income. The fact of the matter is that it is an undisputed fact that this amount was not offered under PMGKY 2016, and therefore the AO had a valid jurisdiction to make the assessment of the income which was found to be belonging to the assessee and which was not offered as income in the return of income filed by the assessee.” 10. Before us, the assessee appeared in person and pleaded that in the whole process of availing the benefit under the PMGKY scheme, there is no fault on the part of the assessee and that the funds for deposit under the scheme were always lying with the department itself. Hence, it is not a case where any of the conditions to avail the benefit under the PMGKY scheme was not fulfilled and therefore, the tax liability on the amount of Rs.12,00,000/- should be restricted in accordance with the said scheme. On the other hand, the Ld. Departmental Representative relied on the orders of the Assessing Officer and ld. CIT(A). 11. We have considered the submissions made by the assessee and Ld. DR and have perused the material on record. The issue involved here is that the assessee had offered his income of Rs.12,00,000/- under ‘PMGKY’ schemeand requested the DDIT, Mumbai forconsidering deposit of 25% of the amount under account specified by the RBI and pay the tax amount ( i.e. at the rate of 50 % of undisclosed cash ) from the seized amount, so as to avail the benefit under the PMGKY, 2016 scheme. Relevant part of his request letter is reproduced as under: “A cash amount of Rs. 12,00,000/- was seized from me under Punchnama dated 08-12-2016 while carrying out search under warrant no. 12631. 1 desire to declare the said amount from my current year income, under sub-section (1) of section 199C of the Taxation and Investment Regime for Pradhan Mantri Garb Kalyan Yojana, 2016 as per Notification dated 16-12-2016 read with circular no. 2 of 2017, issued by Ministry of Finance, Department of Economic Affairs, Government of India Therefore, as per the notification out of the said amount of Rs. 12,00,000/- your office is authorized to pay and adjust: A) An amount of Rs. 5,98,800/- i.e. 50 per cent towards tax, surcharge and penalty. B) An amount of Rs. 3,00,000/- i.e. 25 % be deposit in the Pradhan Mantri GaribKalyan Deposit Scheme, 2016 C) Balance amount of Rs. 3,01,200/- be transferred to my saving account bearing no. 03840100018932 with Bank of Baroda, Turner Road Branch, Bandra (West) Mumbai. I am ready and willing to sign and execute necessary forms and applications as may be required. As of now I have no other assets. In the circumstances you are requested to do the needful in the matter at the earliest.” 11.1 Later, he also made an application before the Ld. PCIT for considering his request for opting the PMGKY scheme. The PCIT, however intimated to the assessee that he was required to deposit 25% of the undisclosed cash under the PMGKY separately and not out of the seized amount therefore, hedid not give cognizance to the application of the assessee. 11.2 For ready reference, the provision of the PMGKY scheme explained in Circular no. 43 of 2016 [F.No. 142/33/2016-TPL] are reproduced as under: “Explanatory Notes on Provisions of the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 as contained in Chapter IX-A of the Finance Act, 2016 Introduction 1. The Taxation Laws (Second Amendment) Act, 2016 has been enacted by Parliament on 15.12.2016. The said Act has inter alia amended the provisions of Finance Act, 2016 and inserted a new Chapter on, 'The, Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (hereinafter 'the Scheme') in the Finance Act, 2016. 2. The Scheme provides an opportunity to persons having undisclosed income in the form of cash or deposit in an account maintained with a specified entity (which includes barks, post office etc.) to declare such income and pay tax, surcharge and penalty totaling in all to 499 per cent. of such declared income. Besides, the Scheme provides that a mandatory deposit of not less than 25% of such income shall be made in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016 (hereinafter 'the PMGKY Deposit Scheme) which has separately been notified by the Department of Economic Affairs. The Scheme has commenced on 17.12.2016 and shall remain open for declarations/ deposit upto 31.03.2017. Scope of the Scheme 3. A declaration under the aforesaid Scheme may be made in respect of any income in the form of cash or deposit in an account maintained by the person with a specified entity, chargeable to tax under the Income-tax Act for any assessment year commencing on or before the ist day of April, 2017. No deduction in respect of any expenditure or allowance or set-off of any loss shall be allowed against the income in respect of which a valid declaration is made under the Scheme. Tax, surcharge, penalty & deposit under the Scheme 4.The person making a declaration under the Scheme would be liable to pay tax at the rate of thirty per cent. of the undisclosed income as increased by surcharge to be called the Pradhan Mantri Garib Kalyan Cess calculated at the rate of thirty-three per cent. of such tax. In addition, penalty at the rate of ten per cent. of the undisclosed income shall be payable. The declarant shall also be required to deposit an amount not less than twenty-five per cent. of the undisclosed income in the PMGKY Deposit Scheme. The deposit shall bear no interest and the amount deposited shall have a lock-in period of four years.” 11.3 Further, the letter issued by the Reserve Bank of India as how to deposit the amount under scheme in Banks is also reproduced for ready reference as under: RBI/2016-17/187 IDMD.CDD.No.1453/14.04.050/2016-17 December16,2016 (UpdatedasonApril20, 2017) TheChairman&ManagingDirector All Authorised Banks Dear Sir/Madam, PradhanMantriGaribKalyanDepositScheme(PMGKDS),2016 The Government of India has vide the notification no. S.O. 4061 (E) dated December 16,2016announced the “Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS)”. This SchemeshallbeapplicabletoeverydeclarantundertheTaxationandInvestmentRegimefor Pradhan Mantri Garib Kalyan Yojana, 2016. Thetermsandconditionsoftheschemeareasunder: 2. Eligibility for Deposits.—ThedepositsunderthisSchemeshallbemadefromthe17 th day of December, 2016 till 31 st day of March, 2017, by any person who declared undisclosed income under sub-section (1) of section 199C of the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 3. Form of the deposits.— The deposits shall be held at the credit of the declarant in BondsLedgerAccountmaintainedwithReserve Bank of India.Acertificateofholdingshall be issued to declarant in Form I.The Reserve Bank of India shall transfer the depositreceived under this Scheme into the designated Reserve Fund in the Public account of the Government of India. 4. Authorisedbanks.—(a)Applicationforthe deposit intheformofBondsLedger Account shall be received by any banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (hereinafter referred to as Authorised Banks). (b) The Authorised Bank shall electronically furnish the details of deposit made in Form Vto the Department of Revenue, Ministry of Finance, Government of India not later than next working day to enable the Department to verify the information of the deposit before accepting the declaration. (c) The authorised bank shall upload the details of deposit into Reserve Bank of India’s Core Banking Solution ‘e-Kuber’. (d) The Reserve Bank of India and Authorised Bank shall maintain the confidentiality of the data received in this regard. 5. Subscription and Mode of investment in the Bonds Ledger Account .— (a) The deposits shall be accepted at all the Authorised Banks . (b) Thedepositsshallbemadeinmultiplesofrupeesonehundred. (c) The deposit by a declarant shall not be less than twenty-five per cent of the undisclosed income declared under sub-section (1) of section 199C of the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016. (d) The entire deposit shall be made, in one or more payments, before filing declaration under sub-section (1) of section 199C ibid. (e) The deposit shall be made in the form of cash or draft or cheque drawn in favour of the authorised bank accepting such deposit or by electronic transfer. 6. Effective date of deposit 1 . –The effective date of opening of the Bonds Ledger Account shall be the date of receipt of deposits by the Reserve Bank of India from the authorized banks; wherein the due tax, surcharge and penalty has been received till 31st March, 2017. Also, the date of deposit shall in no case be extended beyond 30 th April, 2017. 7. Applications.— (a) An application for the deposit under this Scheme shall be made in Form IIclearly indicating the amount, full name, Permanent Account Number (hereinafter referred to as “PAN”), Bank Account details (for receiving redemption proceeds), and address of the declarant. Provided that if the declarant does not hold a PAN, he shall apply for a PAN and provide the details of such PAN application along with acknowledgement number. (b)Theapplicationundersub-paragraph(a)shallbeaccompanied byanamountwhichshall notbelessthantwenty-fivepercent.oftheundisclosedincomeintheformof cashordraft or cheque or through electronic transferas providedunder sub-paragraphs (c) and (d) of paragraph 5. 8. Nomination.— (a) A sole holder or a sole surviving holder of a Bonds Ledger Account, beingan individual, may nominate in Form III, oneormorepersonswhoshallbeentitled totheBonds Ledger Accountandthepaymentthereon in the event of his death. (b) Where any amount is payable to two or more nominees and either or any of them diesbeforesuchpaymentbecomesdue,thetitletotheBondsLedgerAccountshallvest in the surviving nominee or nominees and the amount being due thereon shall be paid accordingly. In the event of the nominee or nominees predeceasing the holder, the holder may make a fresh nomination. (c) A nomination made by a holder of Bond Ledger Account may be varied by a fresh nomination, or may be cancelled by giving notice in writing to the Authorised Bank in FormIV. 1 AmendedonthebasisofGovernmentofIndianotificationdatedApril19,2017 (d) Every nomination and every cancellation or variation shall be registered at the Reserve Bank of India through the authorised bank and shall be effective from the date of such registration. (e) If the nominee is a minor, the holder of Bonds Ledger Account may appoint any person to receive the Bonds Ledger Account or the amount due in the event of his death. 9. Transferability.—The transferability of the Bonds Ledger Account shall be limited to nominee or to the legal heir of an individual holder, in the event of his death. 10. Interest.—Thedepositsshallnotbearanyinterest. 11. TradabilityagainstBonds.—TheBondsLedgerAccountshallnotbetradable. 12. Repayment.—The Bond Ledger Account shall be repayable on the expiration of four years from the date of deposit and redemption of such Bond Ledger Account before its maturity date shall not be allowed. 13. Interpretation.—Thewordsandexpressionsusedbutnotdefinedinthisnotificationbut definedintheIncome-taxAct,1961(43of1961),theGovernmentSecuritiesAct,2006(38of 2006) or the Finance Act,2016(28 of2016) shall have the meaningsrespectively assignedto them in those Acts. Yours faithfully Sd/- (Rajendra Kumar) General Manager” 11.4 Thus, we find that prima-facie the assessee fulfils the conditions of declaration of undisclosed income in the form of cash on or before 1/4/2017. For fulfilling other conditions of deposit of 25 % of undisclosed income in the PMGKY Deposit Scheme, and payment of taxes thereon, he requested the Income-tax department, who was in possession of his undisclosed income in the form of cash. Butno attempt 25% of the amount of undisclosed cash under the specified account for PMGKY Deposit scheme. T both did not heed to the request of amount under the scheme, on the ground that CBDT instruction did not provide for deposit of 25% amount under the scheme out seized cash. 11.5 We have also gone through the Clarifications issued by CBDT vide Circular no. 2 of 2017 [F.No. 142/33/2016 18 th January, 2017, relevant extract of which is reproduced as under:- “Clarifications on the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (hereinafter ‘the Scheme’) provides an opportunity to persons having undisclosed income in the form of cash or deposit in an account maintained with a specified entity to decla and penalty totaling in all to 49.9 per cent of such declared income and make a mandatory deposit of not less than 25% of no attempts were made by the Department for deposit of 25% of the amount of undisclosed cash under the specified account PMGKY Deposit scheme. The ld. Assessing Officer and ld. CIT(A) did not heed to the request of the assessee for deposit of the amount under the scheme, on the ground that CBDT instruction did not provide for deposit of 25% amount under the scheme out We have also gone through the Clarifications issued by CBDT vide Circular no. 2 of 2017 [F.No. 142/33/2016- January, 2017, relevant extract of which is reproduced as Clarifications on the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (hereinafter ‘the Scheme’) provides an opportunity to persons having undisclosed income in the form of cash or deposit in an account maintained with a specified entity to declare such income and pay tax, surcharge and penalty totaling in all to 49.9 per cent of such declared income and make a mandatory deposit of not less than 25% of Girish Vipinchandra Patel. ITA No. 674/M/2022 14 were made by the Department for deposit of 25% of the amount of undisclosed cash under the specified account he ld. Assessing Officer and ld. CIT(A) for deposit of the amount under the scheme, on the ground that CBDT instruction did not provide for deposit of 25% amount under the scheme out of We have also gone through the Clarifications issued by CBDT -TPL(Part) dated January, 2017, relevant extract of which is reproduced as Clarifications on the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 The Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 (hereinafter ‘the Scheme’) provides an opportunity to persons having undisclosed income in the form of cash or deposit in an account maintained with a re such income and pay tax, surcharge and penalty totaling in all to 49.9 per cent of such declared income and make a mandatory deposit of not less than 25% of such income in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016. The Scheme has commenced on and shall remain open for declarations/deposit upto 31.03.2017. Queries have been received from the stakeholders seeking further clarity on certain provisions of the Scheme. The Central Government has considered the queries and decided to clar the same in the form of questions and answers as follows: ...... Question No. 4 148/ 153A/ 153C of the Income person for an assessment year, will such person be eligible for making a declaration under the Scheme Answer: Yes such person is eligible to avail the Scheme subject to fulfilment of conditions specified in the Scheme. Question No. 5 : Can a person against whom a search survey operation has been initiated, file declaration under the Scheme and whether the cash seized during search operation can be declared under the Scheme? Answer : Yes, a person against whom a search/survey operation has been initiated is eligible to file declaration under the Scheme in respect of undisclose income represented in the form of cash or deposit in an account maintained with specified entity. such income in the Pradhan Mantri Garib Kalyan Deposit , 2016. The Scheme has commenced on and shall remain open for declarations/deposit upto 31.03.2017. Queries have been received from the stakeholders seeking further clarity on certain provisions of the Scheme. The Central Government has considered the queries and decided to clar the same in the form of questions and answers as follows: Question No. 4 :Where a notice under section 142(1)/ 143(2)/ 148/ 153A/ 153C of the Income-tax Act has been issued to a person for an assessment year, will such person be eligible for a declaration under the Scheme? Yes such person is eligible to avail the Scheme subject to fulfilment of conditions specified in the Scheme. Question No. 5 : Can a person against whom a search survey operation has been initiated, file declaration nder the Scheme and whether the cash seized during search operation can be declared under the Scheme? Answer : Yes, a person against whom a search/survey operation has been initiated is eligible to file declaration under the Scheme in respect of undisclose income represented in the form of cash or deposit in an account maintained with specified entity. Girish Vipinchandra Patel. ITA No. 674/M/2022 15 such income in the Pradhan Mantri Garib Kalyan Deposit , 2016. The Scheme has commenced on 17.12.2016 and shall remain open for declarations/deposit upto Queries have been received from the stakeholders seeking further clarity on certain provisions of the Scheme. The Central Government has considered the queries and decided to clarity the same in the form of questions and answers as follows: Where a notice under section 142(1)/ 143(2)/ tax Act has been issued to a person for an assessment year, will such person be eligible for Yes such person is eligible to avail the Scheme subject to fulfilment of conditions specified in the Scheme. Question No. 5 : Can a person against whom a search survey operation has been initiated, file declaration nder the Scheme and whether the cash seized during search operation can be declared under the Scheme? Answer : Yes, a person against whom a search/survey operation has been initiated is eligible to file declaration under the Scheme in respect of undisclosed income represented in the form of cash or deposit in an Question No. 11 search and seizure action of the Department and deposited in Public Deposit Account is allowed to be adjusted against the payments required to be made under the Scheme? Answer : The adjustment of cash seized by the Department and deposited in the Public Deposit Account may be allowed to be adjusted for making payment of tax, surcharge and penalty under the Scheme on the request of the person from whom the cash is seized. However, the said amount shall not be allowed to be adjusted for making deposits under the Pradhan Mantri Garib Kalyan Deposit Scheme. 11.6 We find that under the reproduced in above answer to question No.5 the form of cash found and seized during the search i the PMGKY Scheme explained that said seized amount might be adjusted against the tax amount but shall not be allowed to be deposited und Scheme. There is obvious contradiction in th question no. 9 of the CBDT on the Scheme. The money of the Question No. 11 Whether the cash seized during a search and seizure action of the Department and deposited in Public Deposit Account is allowed to be adjusted against the payments required to be made under the Scheme? Answer : The adjustment of cash seized by the ent and deposited in the Public Deposit Account may be allowed to be adjusted for making payment of tax, surcharge and penalty under the Scheme on the request of the person from whom the cash is seized. However, the said amount shall not be allowed to be djusted for making deposits under the Pradhan Mantri Garib Kalyan Deposit Scheme. We find that under the various queries and their answer above Circular/instruction (supra), the CBDT answer to question No.5 has explained that undisclo the form of cash found and seized during the search i the PMGKY Scheme, But in answer to question No. 11 has explained that said seized amount might be adjusted against the tax amount but shall not be allowed to be deposited und Scheme. There is obvious contradiction in this of the CBDT on the Scheme. The money of the Girish Vipinchandra Patel. ITA No. 674/M/2022 16 Whether the cash seized during a search and seizure action of the Department and deposited in Public Deposit Account is allowed to be adjusted against the payments required to be made Answer : The adjustment of cash seized by the ent and deposited in the Public Deposit Account may be allowed to be adjusted for making payment of tax, surcharge and penalty under the Scheme on the request of the person from whom the cash is seized. However, the said amount shall not be allowed to be djusted for making deposits under the Pradhan Mantri and their answer , the CBDT in explained that undisclosed income in the form of cash found and seized during the search is eligible for , But in answer to question No. 11 has explained that said seized amount might be adjusted against the tax amount but shall not be allowed to be deposited under the explanation in of the CBDT on the Scheme. The money of the assessee was seized and in the possessi Department, which Department in a separate current account ( Deposit or PD Account) of PCIT objection for admitting seized cash under PMGKY scheme but on the other hand did not that money under the Scheme CBDT and consequent not in the spirit of the scheme legislature. The fact of the matter is that the already lying with the repeatedly requested account under scheme intimated that he did not any other asset s deposit of 25% amount under the scheme. completely beyond the control of the assessee to make separate deposit to the RBI under PMGKY Rs.12,00,000/- remained assessee was seized and in the possession of the Income which remained deposited with the Income in a separate current account (Namely Personal ount) of PCIT. The CBDT on one side had no objection for admitting seized cash under PMGKY scheme but on did not heed to request of the assessee that money under the Scheme. The instruction on the part of the CBDT and consequent inaction on the part of lower not in the spirit of the scheme and not as per intention of the The fact of the matter is that the undisclosed already lying with the Income Tax Department and repeatedly requested for transferring those funds scheme but not to his avail. The assessee specifically intimated that he did not any other asset separately ith him for deposit of 25% amount under the scheme. In such a situation, it is completely beyond the control of the assessee to make separate under PMGKY, when the amount of income of remained with the department in the form of cash Girish Vipinchandra Patel. ITA No. 674/M/2022 17 on of the Income-tax with the Income-tax Namely Personal . The CBDT on one side had no objection for admitting seized cash under PMGKY scheme but on assessee to deposit instruction on the part of the lower authorities is and not as per intention of the isclosed funds are and assessee has funds to specified The assessee specifically eparately ith him for In such a situation, it is completely beyond the control of the assessee to make separate hen the amount of income of with the department in the form of cash seizure. The assessee in his request before the DDIT made it clear that he was not having any other assets for separate deposit under scheme. In our considered view, the assessee cannot be burdened with an action which is impossible or completely beyond his control. The Department in availing the benefit under the PMGKY scheme Department was sitting over the undisclosed cash of the assessee We find that the ass all the conditions prescribed under the PMGKY, 2016 no reason as to why the benefit be granted to the assessee under the said scheme. embodied in the legal maxims 'lex non cogitadimpossibilia' and 'impotentiaexcusatlegem' could come to the rescue in such situations. Simply put, law does not compel a man to do that which cannot possibly be performed (lex non cogit ad impossibilia), and law wi is unable to perform a duty created by law without any default in him and where he has no remedy (impotentiaexcusatlegem). The assessee in his request before the DDIT made it clear that he was not having any other assets for separate deposit under In our considered view, the assessee cannot be burdened ich is impossible or completely beyond his Department was under obligation to assist in availing the benefit under the PMGKY scheme Department was sitting over the undisclosed cash of the assessee We find that the assessee is not in fault and if heotherwise all the conditions prescribed under the PMGKY, 2016 no reason as to why the benefit of tax rate[ i.e. @ 50% be granted to the assessee under the said scheme. died in the legal maxims 'lex non cogitadimpossibilia' and 'impotentiaexcusatlegem' could come to the rescue in such situations. Simply put, law does not compel a man to do that which cannot possibly be performed (lex non cogit ad impossibilia), and law will generally excuse a default if a party is unable to perform a duty created by law without any default in him and where he has no remedy (impotentiaexcusatlegem). Girish Vipinchandra Patel. ITA No. 674/M/2022 18 The assessee in his request before the DDIT made it clear that he was not having any other assets for separate deposit under In our considered view, the assessee cannot be burdened ich is impossible or completely beyond his was under obligation to assist the assessee in availing the benefit under the PMGKY scheme because the Department was sitting over the undisclosed cash of the assessee. otherwise fulfills all the conditions prescribed under the PMGKY, 2016, then, there is @ 50% ]should not be granted to the assessee under the said scheme. The principles died in the legal maxims 'lex non cogitadimpossibilia' and 'impotentiaexcusatlegem' could come to the rescue in such situations. Simply put, law does not compel a man to do that which cannot possibly be performed (lex non cogit ad ll generally excuse a default if a party is unable to perform a duty created by law without any default in him and where he has no remedy (impotentiaexcusatlegem). 11.7 We, therefore restore the matter back Officer and direct him complied to the provision the extent of provided under the PMGKY Scheme. ground no. 1 and 2 of the appeal are allowed purposes. Ground no. 3 12. The ground no. 3 of the appeal relates to the explanation of the assessee about the and that the same should not be added to his total income. The brief facts qua this issue are Rs.12,00,000/- was offered in the statement recorded on oath u/s. 132(4) of the Act, the same was not declared in the return of income filed u/s. 153A of the Act. In the course of assessment proceedings, in response to notice issued u/s. 142(1) stated that the source of cash and Shri Kunal Kalsaria restore the matter back to the Ld. Assessing m to consider the assessee as deemed to have provisions of the PMGKY scheme and provided under the PMGKY Scheme.In the result, the ground no. 1 and 2 of the appeal are allowed The ground no. 3 of the appeal relates to the explanation of the assessee about the source of the cash found of Rs. and that the same should not be added to his total income. The brief facts qua this issue are that although the income of was offered in the statement recorded on oath u/s. 132(4) of the Act, the same was not declared in the return of income filed u/s. 153A of the Act. In the course of assessment proceedings, in response to notice issued u/s. 142(1) of the Act, th that the source of cash belonged to one Shri Anil Thakkar and Shri Kunal Kalsariaand for which their Affidavit were also filed. Girish Vipinchandra Patel. ITA No. 674/M/2022 19 to the Ld. Assessing consider the assessee as deemed to have of the PMGKY scheme and charge tax to In the result, the ground no. 1 and 2 of the appeal are allowed for statistical The ground no. 3 of the appeal relates to the explanation of source of the cash found of Rs.12,00,000/- and that the same should not be added to his total income. The that although the income of was offered in the statement recorded on oath u/s. 132(4) of the Act, the same was not declared in the return of income filed u/s. 153A of the Act. In the course of assessment proceedings, of the Act, the assessee to one Shri Anil Thakkar for which their Affidavit were also filed. However, on perusal of the assessment order and the order of the Ld. CIT(A), we find that the considered earlier by any of the authorities below. In the circumstance, we deem fit that the said issue source of Rs.12.00 lakhs Assessing Officer for deciding in accordance w to mention that adequate opportunity of being heard shall be provided to the assessee. Accordingly, the said ground of appeal is allowed for statistical purposes. 13. We would like to mention that raised in ground no. 3 for examining the source of Rs. 12,00,000/ in the hands of the assessee should be dealt by the Assessing Officer. In case he succeeds Ground No. 1 will become infructuous. However, if does not succeed on plea Officer should follow our directions given on the issue of plea of the assessee for considering the benefit under the PMGKY, 2016 scheme. However, on perusal of the assessment order and the order of the CIT(A), we find that the affidavits of those parties have not considered earlier by any of the authorities below. In the circumstance, we deem fit that the said issue of explanation of source of Rs.12.00 lakhs be restored back to the file of the Assessing Officer for deciding in accordance with law. It is needless to mention that adequate opportunity of being heard shall be provided to the assessee. Accordingly, the said ground of appeal is allowed for statistical purposes. We would like to mention that firstly, the plea of the assessee aised in ground no. 3 for examining the source of Rs. 12,00,000/ in the hands of the assessee should be dealt by the Assessing succeeds on this ground, then direction given in Ground No. 1 will become infructuous. However, if does not succeed on plea in ground No. 3, then the Assessing Officer should follow our directions given on the issue of plea of the assessee for considering the benefit under the PMGKY, 2016 Girish Vipinchandra Patel. ITA No. 674/M/2022 20 However, on perusal of the assessment order and the order of the se parties have not been considered earlier by any of the authorities below. In the of explanation of be restored back to the file of the ith law. It is needless to mention that adequate opportunity of being heard shall be provided to the assessee. Accordingly, the said ground of appeal is the plea of the assessee aised in ground no. 3 for examining the source of Rs. 12,00,000/- in the hands of the assessee should be dealt by the Assessing on this ground, then direction given in Ground No. 1 will become infructuous. However, if the assessee , then the Assessing Officer should follow our directions given on the issue of plea of the assessee for considering the benefit under the PMGKY, 2016 14. The appeal of the assessee is accordingly allowed partly for statistical purposes. Order pronounced under Rule 34(4) of the ITAT Rules, 1963 on 22/12/2022. Sd/- (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 22/12/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// The appeal of the assessee is accordingly allowed partly for Order pronounced under Rule 34(4) of the ITAT Rules, 12/2022. Sd/- RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary) ITAT, Mumbai Girish Vipinchandra Patel. ITA No. 674/M/2022 21 The appeal of the assessee is accordingly allowed partly for Order pronounced under Rule 34(4) of the ITAT Rules, - OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Sr. Private Secretary) ITAT, Mumbai