RAJAN JHIRIWAL, Alwar V. DCIT, Alwar

ITA 73/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5525 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 23-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Section: 143(3); 234B; 154

Judgement Text

ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 73/JP/13 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 VK;DJ VIHY LA-@ ITA NO. 72/JP/13 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 VKNS'K@ ORDER FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05.11.2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 22 /01/2016.1 VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, AM THESE ARE TWO COMMON APPEALS FILED BY THE ASSESSEES AGAINST THE TWO SEPARATE ORDER OF THE CIT(A), CENTRAL, JAIPUR V IDE HIS ORDER DATED 29.11.2012 WHEREIN FOLLOWING GROUNDS OF APPEAL HAVE BEEN TAKEN. SHRI RAJAN JHIR IW AL, 262 BASANT VIHAR SCHEME NO.3, ALWAR CUKE VS. DCIT, CENTR A L CIRCLE, ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AHZPJ 5802 F SHRI ROBIN JHIRI W AL, 262 BASANT VIHAR SCHEME NO.3, ALWAR CUKE VS. DCIT, CENTR A L CIRCLE, ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ADWPJ 5200F ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 2 ITA NO. 73/JP/13 (I) THAT THE LD. AO IS SERIOUSLY ERRED BY MAKING N ADDIT ION OF RS. 97,794/- ON A/C OF UNDISCLOSED INCOME IN 3, MOTI D UNGRI, ALWAR. THE LD. AO HAS FAILED TO UNDERSTAND THE PROVISIONS OF SECTION 55A ALONGWITH RULE 11AA. HENCE THE ACTION MADE ON A CCOUNT OF UNDISCLOSED INVESTMENTS OF RS. 97,794/- IS DESERVED TO BE DELETED. (II) THAT THE LD. AO HAS SERIOUSLY ERRED WHILE MAKING A SSESSMENT BY CONSIDERING PURCHASE OF MACHINERY AMOUNTING TO RS . 25,500/- TO BE UNDISCLOSED INCOME OF THE ASSESSEE. DURING THE PREVIOUS YEAR ASSESSEE AND HIS FAMILY WITHDRAW RS. 3 1,85,751/- TO MEET THE HOUSEHOLD EXPENSES AND MARRIAGE EXPENSES ALONGWITH THE EXPENDITURE. WE HAVE PURCHASED MACHI NERY OF RS. 25,500/- TOWARDS HOUSEHOLD EXPENSES OF RS. 31,8 5,751/-. BUT THE AO DID NOT UNDERSTAND THE FACTS AND CIRCUMST ANCES OF THE CASE. HENCE ADDITION OF RS. 25,500/- IS DESERVE D TO BE DELETED. (III) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE ORDER PASSED U/S 143(3) OF IT ACT, 1961 IS ILLEGAL & BAD IN LAW AS I T IS CHARGED INTEREST U/S 234B & 234C N DISCLOSED INCOME RS. 19,0 0,000/- SEIZED DURING THE COURSE OF SEARCH. ITA NO. 72/JP/13 (I) THAT THE LD. AO IS SERIOUSLY ERRED BY MAKING AN ADD ITION OF RS. 97,794/- ON ACCOUNT OF UNDISCLOSED INCOME IN 3, MOT I DUNGRI ALWAR . THE AO HAS FAILED TO UNDERSTAND THE PROVISIONS OF SECTION 55A ALONGWITH RULE 111AA. HENCE, ADDITION M ADE ON ACCOUNT OF UNDISCLOSED INVESTMENTS OF RS. 97,794/- IS DESERVED TO BE DELETED. (II) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 IS ILLEGAL & BAD IN LAW S IT IS CHARGED THE INTEREST U/S 234B & 234C ON DISCLOSED INCOME RS. 19,00,000/- SEIZED DURING THE COURSE OF SEARCH. ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 3 2. REGARDING GROUND NO 1 WHICH IS COMMON IN BOTH THE APP EALS, RELEVANT FACTS RELEVANT FOR ISSUE UNDER CONSIDERATION ARE AS FOLLOWS. 2.1 BOTH THE ASSESSEES ARE PARTNER IN M/S RAJAN JHIR IWAL FROM WHERE THEY DERIVE INCOME IN FORM OF REMUNERATION AND SHARE OF PROFIT. BOTH THESE ASSESSEES STARTED CONSTRUCTION OF HOUSE IN F.Y. 2 007-08 WHICH WAS CONTINUED UPTO F.Y. 2009-10. THE COST OF CONSTRUCTI ON AMOUNTING TO RS. 1,09,06,256/- WAS DECLARED AND BORNE BY BOTH TH E ASSESSEES EQUALLY. THE AO REFERRED THE DETERMINATION OF COST OF CONSTRUCTION TO THE DVO WHO DETERMINED THE SAME AT RS. 1,19,03,24/. ACCORDINGLY, THE VARIATION IN THE COST OF CONSTRUCTION IN THE HANDS OF BOT H THE ASSESSEES IS AS UNDER: FINANCIAL YEAR COST DECLARED BY THE ASSESSEE (AMOUNT RS.) COST ESTIMATED BY THE DVO (AMOUNT IN RS.) DIFFERENCE 2007 - 08 32,39,761/ - 35,35,662/ - 2,95,901/ - 2008 - 09 55,28,267/ - 60,33,805/ - 5,05,538/ - 2009 - 10 21,38,228/ - 23,33,817/ - 1,95,589/ - TOTAL 1,09,06,256/ - 1,19,03,284/ - 9,97,028/ - IN COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE SUBMITTE D THAT THE DIFFERENCE IN THE ACTUAL COST AND COST ESTIMATED BY T HE DVO IS ONLY 9.14% AND THE DVO HAS NOT CONSIDERED THE COST OF MATER IAL RECOVERED FROM DEMOLISHING THE EXISTING HOUSE WHICH WAS ALSO USED IN CONSTRUCTION. THE AO HOWEVER, HELD THAT ASSESSEE HAS NOT BROUGHT ON RECORD ANY MATERIAL TO CONTROVERT THE FINDING OF THE DVO AND THEREFORE HE MADE ADDITION OF RS. 97,794/- IN HANDS OF EACH OF TH E TWO ASSESSEES, BEING 50% OF TOTAL VARIATION OF RS. 1,95,589/- RELEVANT FOR THE SUBJECT YEAR. ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 4 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) WHO SUSTAINED THE ADDITION HOLDING THAT EXPLANA TION OF THE ASSESSEE THAT OLD BUILDING MATERIAL OF DEMOLISHED HOUS E IS USED IS NOT SUPPORTED BY ANY INDEPENDENT AUTHORITATIVE EVIDENCES . 2.2 DURING THE COURSE OF HEARING, LD AR SUBMITTED THA T THE DIFFERENCE IN THE ACTUAL COST OF CONSTRUCTION AND THAT DETERMINED BY DVO IS ONLY 9.14%. THIS DIFFERENCE IS ONLY BECAUSE OF THE ESTIMAT ION. THE PATNA HIGH COURT IN CASE OF BIMLA SINGH V. CIT 308 ITR 71 HAS HE LD THAT PRACTICAL EXPERIENCE SHOWS THAT THE DETERMINATION OF VALUE OF TH E HOUSE PROPERTY BY A VALUER IS GENERALLY A MATTER OF ESTIMAT E BASED TO SOME EXTENT ON GUESS AND DESPITE UTMOST BONAFIDE, THE ESTIM ATE OF THE VALUE OF THE HOUSE IS BOUND TO VARY. DIFFERENCE BETWEEN COST OF CONSTRUCTION SHOWN BY THE ASSESSEE AND AS DETERMINED BY VO, BEING LESS THAN 15% THE SAME IS TO BE IGNORED FOR THE PURPOSES OF THE ADDITI ON, MORE SO WHEN THE CONSTRUCTION WAS SPREAD OVER A PERIOD OF 7 YEA RS. THE RATIO OF THIS DECISION IS FULLY APPLICABLE IN THE PRESENT CAS E AND THEREFORE, THE ADDITION CONFIRMED BY CIT(A) BE DELETED. FURTHER, IT WAS SUBMITTED THAT THE DVO HAS ASCERTAI NED THE COST OF CONSTRUCTION BY APPLICATION OF CPWD RATES INSTEAD OF LOCA L PWD RATES. THE RAJASTHAN HIGH COURT IN CASE OF CIT VS. PREM KUMA R MURDIA 296 ITR AND 303 ITR 128 HAS HELD THAT WHERE CIT(A) ALLOW TH E DEDUCTION OF 20% FROM THE COST OF CONSTRUCTION ESTIMATED BY DVO ON ACCOUNT OF DIFFERENCE IN THE COST ON ACCOUNT OF CPWD RATES INSTEAD OF LOCAL PWD RATES WHICH IS CONFIRMED BY TRIBUNAL, SUCH FINDING OF FACT CANNOT BE DISTURBED BY THE COURT. THE CIT(A) HAS ALSO OBSERVED THAT THERE IS VARIATION IN THE ESTIMATE OF DVO DUE TO ADOPTION OF CPWD RATES INSTEAD OF PWD RATED BUT HE HAS CONFIRMED THE ADDITION ONLY BEC AUSE ASSESSEE HAS NOT TAKEN THIS ARGUMENT. IT IS SUBMITTED THAT ON CE THE FACT OF VARIATION IN THE ESTIMATE OF COST MADE BY DVO ON ACCOUNT OF NON- APPLICATION OF PWD RATES IS ACCEPTED. CIT(A) OUGHT TO H AVE DELETED THE ADDITION. IN VIEW OF ABOVE, THE ADDITION CONFIRMED BY CI T(A) BE DELETED. ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 5 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED T HE MATERIAL ON RECORD. THE AO HAS MADE AN ADDITION OF RS. 97,794/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN HOUSE NO.3, MOTI DUNGRI, ALWA R IN THE HANDS OF BOTH THE ASSESSEES NAMELY SHRI RAJAN JHIRIWAL AND SHRI ROBIN JHIRIWAL. THE ADDITION IS ON ACCOUNT OF DIFFERENCE IN THE ACTUAL COST OF CONSTRUCTION AS DISCLOSED BY THE ASSESSEE AND THE COST WHICH IS DETERMINED BY THE DVO. AS PER THE ASSESSEE, THE DI FFERENCE BETWEEN THE ACTUAL COST OF CONSTRUCTION AND THE COST ESTIMATED B Y THE DVO IS ONLY 9.14%. AS PER THE ASSESSEE, THE REASON FOR THE DIFFERENCE IS ON ACCOUNT OF THE FACT THAT THE DVO HAS NOT CONSIDERED THE COST OF DEMOLISHED MATERIAL OF THE OLD BUILDING PURCHASED ALONG WITH LAND AND WHICH WAS USED IN CONSTRUCTION OF THE NEW BUILDING. F URTHER THE LD. AR HAS DRAWN OUR REFERENCE TO THE DECISION OF HONBLE PATN A HIGH COURT IN CASE OF BIMLA SINGH V. CIT 308 ITR 71, THE RELEVANT FINDINGS ARE CONTAINED AT PARA 11 OF ITS ORDER WHICH IS REPRODUCED A S UNDER: ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 6 HAVING APPRECIATED THE RIVAL SUBMISSION, WE FIND SU BSTANCE IN THE SUBMISSION OF MR. RASTOGI. TRUE IT IS THAT THE JUDG EMENT OF THE SUPREME COURT IN K.P. VARGHESE (SUPRA) IS IN RELATION TO CA PITAL ASSETS IN THE LIGHT OF SECTION 52 OF THE ACT AND THAT PROVISION IS DELE TED. HOWEVER, WE ARE OF THE OPINION THAT IN VALUATION OF THE HOUSE PROPE RTY, BONAFIDE DIFFERENCE IS BOUND TO OCCUR. IN THE ABSENCE OF AN Y STATUTORY PROVISION NO HARD AND FAST RULE CAN BE LAID DOWN IN REGARD TO THE PERCENTAGE OF DIFFERENCE WHICH CAN BE IGNORED. IT IS WELL KNOWN FACT BORNE OUT OF PRACTICAL EXPERIENCE THAT THE DETERMINATION OF VALU E OF THE HOUSE PROPERTY BY A VALUER IS GENERALLY MATTER OF ESTIMATE BASED ON SOME EXTENT ON GUESS AND DESPITE UTMOST BONAFIDE, THE EST IMATE OF THE VALUE OF THE HOUSE IS BOUND TO VARY. IN THE PRESENT CASE , WE ARE CONCERNED WITH THE HOUSE PROPERTY AND THE DIFFERENCE BETWEEN THE ASSESSEE AND THE VALUER IS LESS THAN 15 PERCENT . NOT ONLY THIS THE CONSTRUCTION OF THE HOUSE SPREAD OVER A PERIOD OF 7 YEARS. IN THE FACT S OF THE PRESENT CASE, WE ARE OF THE OPINION THAT THE DIFFERENCE BETWEEN T HE PLEA OF THE ASSESSEE ON THE ISSUE ON INVESTMENT ON HOUSE PROPERT Y AND VALUERS REPORT IS SO MEAGER THAT ONE CAN ASSUME IT TO BE BONA FIDE DIFFERENCE FIT TO BE IGNORED. 2.4 IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT T HE ASSESSEES HAVE JOINTLY PURCHASED THE LAND ALONGWITH THE BUILDING FOR RS. 30 LACS AND THEREAFTER THE CONSTRUCTION WAS CARRIED ON OVER A PER IOD OF 3 YEARS. FURTHER, IT IS CORRECT THAT PROVISIONS OF SECTION 55A RE AD WITH RULE 111AA ARE NOT APPLICABLE IN THE INSTANT CASE BUT AT THE SA ME TIME, WE AGREE WITH THE LD AR THAT SIMILAR FACTUAL MATTER WAS UNDE R CONSIDERATION BEFORE THE HONBLE PATNA HIGH COURT IN CASE OF BIMLA SI NGH (SUPRA) ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 7 WHEREIN THE HIGH COURT HAS ALLOWED RELIEF TO THE ASSES SEE IN THE MATTER OF VALUATION OF PROPERTY. IN THE INSTANT CASE, THE DIFFERENCE IN THE COST OF CONSTRUCTION AS DETERMINED BY THE ASSESSEE AND AS D ETERMINED BY THE DVO IS ONLY 9.14% AND THE CONSTRUCTION HAS SPREAD OVER A PERIOD OF 3 YEARS. FURTHER, GIVEN THAT THE ASSESSEE HAS PURC HASED THE LAND ALONGWITH BUILDING, THE EXPLANATION OF THE ASSESSEE TH AT THEY HAD USED SOME OF THE BUILDING MATERIAL RECOVERED FROM THE OLD BU ILDING WHILE CONSTRUCTING THE NEW BUILDING APPEARS TO BE BONAFIDE. IN LIGHT OF THIS FACTS AND FOLLOWING THE DECISION OF THE HONBLE PATNA HIGH COUR T IN CASE OF BIMLA SINGH (SUPRA), THE ADDITION MADE IN THE HAND S OF BOTH THE ASSESSEES ON ACCOUNT OF UNDISCLOSED INVESTMENT IN THE HOUSE PROPERTY IS HEREBY DELETED. HENCE, GROUND NO 1 IN BOTH THE AP PEALS ARE ALLOWED. 3. GROUND NO.2 IS SPECIFIC TO ITA NO. 73/JP/13 AND IS REGARDING ADDITION OF RS. 25,500/- ON ACCOUNT OF UNDISCLOSED INVEST MENT IN PURCHASE OF MACHINERY IN HANDS OF RAJAN JHIRIWAL. 3.1 BRIEFLY THE RELEVANT ARE THAT IN SEARCH A PAPER SHOWING PURCHASE OF MACHINERY OF RS. 22500/- WAS FOUND. IN ASSESSMEN T PROCEEDINGS, ASSESSEE EXPLAINED THAT HE PURCHASED THE MACHINE IN CASH FROM THE ACCUMULATED CASH BALANCE WITHDRAWN TO MEET THE HOUSEH OLD EXPENSES. THE AO, HOWEVER, HELD THAT ASSESSEE HAS NOT ABLE TO PR OVE ITS ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 8 CONTENTION WITH DOCUMENTARY EVIDENCE AND THEREFORE, HE MADE THE ADDITION. BEFORE CIT(A), IT WAS EXPLAINED THAT ASSESSEE AND HI S FAMILY HAS WITHDRAWN RS. 31,85,75/- TO MEET THE HOUSEHOLD EXPENS ES, MARRIAGE EXPENSES AND OTHER EXPENSES OUT OF WHICH PURCHASE OF M ACHINERY OF RS.25,500/- WAS ALSO MADE. HOWEVER, THE CIT(A) CONFIRM ED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED THE INVOICE OF THE MACHINERY TO ASCERTAIN THE DATE OF PURCHASE AND TO LI NK IT WITH THE SPECIFIC WITHDRAWAL FROM THE CAPITAL ACCOUNT. 3.2 BEFORE US, LD AR SUBMITTED THAT THERE IS NO DENI AL OF THE FACT THAT THERE IS WITHDRAWAL OF RS. 31,85,751/- IN THE YEAR U NDER CONSIDERATION. THE ASSESSEE HAS FILED THE RETURN DECLARING INCOME O F RS. 9,83,760/- (EXCLUDING SHARE OF EXEMPTED PROFIT OF RS. 1,13,63,012 /-). IN THESE CIRCUMSTANCES EXPLANATION OF THE ASSESSEE THE PURCHAS E OF MACHINERY OF RS. 25,500/- IS MADE OUT OF THE HOUSEHOLD WITHDRAWAL S OF RS. 3,85,751/- COULD NOT BE DOUBTED. IN VIEW OF ABOVE, TH E ADDITION CONFIRMED BY THE CIT(A) BE DELETED. 3.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED T HE MATERIAL ON RECORD. GIVEN THE UNDISPUTED FACT THAT THE ASSESSEE HAD WITHDRAWN A SUM OF RS 31,85,751 FROM ITS BANK ACCOUNT. THE EXPLAN ATION OF THE ASSESSEE THAT BESIDES OTHER EXPENSES, MACHINERY WORT H ONLY RS 25,500 WAS ALSO PURCHASED OUT OF SAID WITHDRAWAL APPEARS REAS ONABLE. IN LIGHT OF THIS, ADDITION OF RS 25,500 IS DELETED AND GROUND NO. 2 IS ALLOWED. 4. GROUND NO.3 IN CASE OF SHRI RAJAN JHIRIWAL AND GROU ND NO.2 IN CASE OF SHRI ROBIN JHIRIWAL WHEREIN COMMON ISSUE IS INVOLVED WHICH IS REGARDING LEVY OF INTEREST U/S 234B & 234C BY NOT CONS IDERING THE ADJUSTMENT OF CASH OF RS. 19 LACS SEIZED IN COURSE OF S EARCH AND DEPOSITED IN THE PD A/C. 4.1 BRIEFLY THE FACTS ARE THAT A SEARCH WAS CONDUCTE D ON THE ASSESSEE ON 08.10.2009 AND CASH OF RS. 19 LACS WAS SEIZED. AT THE TIME OF FILING ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 9 OF THE RETURN ON 21.09.2010, THE ASSESSEE SHOWN SAID C ASH DEPOSIT AS PART OF ADVANCE TAX IN THE RETURN OF INCOME AND IN THE COMPUTATION OF INCOME. HOWEVER, AO DIDNT CONSIDER THE SAID SEIZED C ASH TOWARDS ADVANCE TAX AND THE ASSESSMENT ORDER WAS PASSED ON 27 .12.2011 WHERE INTEREST U/S 234B AND 234C WAS CHARGED. IN COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE AGAIN R EQUESTED THE AO VIDE LETTER DATED 30.03.2011 TO ADJUST THE CASH LYIN G IN THE PD A/C AGAINST THE ADVANCE TAX LIABILITY. SUBSEQUENT TO PA SSING OF ASSESSMENT ORDER AND IN RESPONSE TO APPLICATION FILED BY ASSESSEE UNDER SECTION 154 OF THE ACT, THE AO FINALLY ADJUSTED THIS AMOUNT AGAINST THE OUTSTANDING DEMAND RAISED BY HIM. BEING AGGRIEVED, THE ASSESSEE RAISED ADDITIONAL GROUN D BEFORE LD CIT(A) AGAINST CHARGING OF INTEREST U/S 234B & 234C. THE C IT(A) ADMITTED THE ADDITIONAL GROUND BUT REFERRING TO SECTION 132B AND THE CBDT INSTRUCTION DATED 13.07.2006 HELD THAT SEIZED CASH C AN BE ADJUSTED ONLY AGAINST THE EXISTING LIABILITY AND SINCE ADVANCE TA X PAYMENT IS NOT AN EXISTING LIABILITY U/S 132B, THE INTEREST LEVIED/S 234B & 234C IS CORRECT AND DECISION OF ITAT RELIED UPON BY THE ASSESSEE IN TH E CASE OF ANAND SHANKAR MITTAL VS. DCIT IS NOT APPLICABLE. 4.2 BEFORE US, THE LD AR SUBMITTED THAT THE INTEREST U/S 234B & 234C IS CHARGEABLE WHEN THE ADVANCE TAX IS NOT PAID. IN THE PRESENT CASE, CASH OF RS. 19 LACS WAS SEIZED. THE ASSESSEE AT THE TIME OF FILING OF THE RETURN ON 21.09.2010 CONSIDERED THE AMOUNT OF RS. 19 LA CS AS ADVANCE TAX PAID ON 08.10.2009 AND ACCORDINGLY FILED THE RETU RN. THEREFORE ON AMOUNT OF RS. 19 LACS, THE LEVY OF INTEREST FOR THE PER IOD 1.4.2010 TO 26.12.2011 I.E. FOR 21 MONTHS AND LEVY OF INTEREST U/S 234C IS NOT ATTRIBUTABLE TO THE ASSESSEE. FURTHER, EVEN AFTER S PECIFYING THAT THIS AMOUNT BE CONSIDERED AS ADVANCE TAX AT THE TIME OF FIL ING OF THE RETURN ON 21.09.2010, THE AO HAS NOT TAKEN ANY STEP TO ADJUST THE AMOUNT LYING IN THE PD A/C AGAINST THE TAX DUE AS PER RETU RN. THEREFORE, AT LEAST FOR THE PERIOD 21.09.2010 TO 26.12.011, NO INTEREST U/ S 234B IS LEVIABLE ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 10 IN AS MUCH AS ON THE DATE OF FILING OF THE RETURN, AS SESSEE HAS MADE A SPECIFIC REQUEST TO ADJUST THE AMOUNT LYING IN THE P D /C AGAINST HIS TAX LIABILITY. THE RELIANCE BY CIT(A) ON THE PROVISIONS OF SECTION 132B AND THE CBDT INSTRUCTIONS IS MISPLACED IN VIEW OF THE DEC ISION GIVEN BY VARIOUS TRIBUNALS/HIGH COURT WHERE IT WAS HELD THAT IF THE AMOUNT OF CASH SEIZED BY THE DEPARTMENT AND LYING IN THE PD A /C IS NOT ADJUSTED, THEN INTEREST FOR THAT PERIOD CANNOT BE LEVIED ON THE A SSESSEE. RELIANCE IN THIS CONNECTION IS PLACED ON FOLLOWING CASES: CIT VS. ARUN KAPOOR (2011)334 ITR 351 (P&H) CIT VS. ASHOK KUMAR 334 ITR 355 (P&H) SATYA PRAKSH SHARMA VS. ACIT 20 DTR 561 (DELHI ITAT ) ANAND SHANKAR MITTAL VS. DCIT 34 DTR 589 (JP) VISHWANATH KHNNA VS. UNION OF INDIA & ORS. 335 ITR 54 8 ACIT VS. HANSRAJ GANDHI ITA NO. 739/CHD/2014 DT. 18. 11.14/2014 AY 2008-09 SUDHAKAR M. SHETTY VS. ACIT 10 DTR 173 (MUM) (TRIB) SHREE RAM SARDA VS. DCIT ITA NO. 1172/RJT/2010 DT. 0 2.11.2011 FOR AY 2008-09 ACIT VS. JOHARILAL SODHANI ITA NO. 145/JP/13 FOR AY. 10-11 DT. 07.09.2015 4.3 THE LD DR VEHEMENTLY ARGUED THE MATTER AND SUBM ITTED THAT IN VIEW OF CBDT CIRCULAR AS REFERRED ABOVE, SEIZED CASH CANNOT BE ADJUSTED AGAINST THE ADVANCE TAX LIABILITY. FURTHER, LD DR DRAWN OUR REFERENCE TO THE DECISION OF HONBLE MADHYA PRADESH HIGH COURT IN C ASE OF RAMJILAL JAGANNATH AND OTHERS 241 ITR 758. ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 11 4.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED T HE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT A SEARCH WAS CONDUCTED ON 08.10.2009 AT THE PREMISES OF THE ASSESSEE AND CASH AMOUNTING TO RS. 19 LACS WAS SEIZED. THE ASSESSEE WHILE FILING HIS RETURN OF INCOME ON 21.09.2010 CONSIDERED RS. 19 LACS TOWARDS ADVANCE TAX PAYMENT . SUBSEQUENTLY THE ASSESSEE VIDE LETTER DATED 30.03.2 011 REQUESTED FOR ADJUSTMENT OF CASH AGAINST ADVANCE TAX LIABILITY. T HE ASSESSMENT WAS COMPLETED ON 27.12.01 WHEREIN THE AO DID NOT GIVE CRED IT FOR RS. 19 LACS OF SEIZED CASH AGAINST THE ADVANCE TAX LIABILIT Y AND ALSO LEVIED INTEREST U/S 234B & 234C OF THE ACT. SUBSEQUENTLY, PURSUANT TO RECTIFICATION APPLICATION U/S 154 OF THE I.T. ACT, THE AO ACCEPTED THE ADJUSTMENT OF RS. 19 LACS FROM PD ACCOUNT TOWARDS THE TAX LIABILITY BUT REJECTED THE CLAIM OF THE APPELLANT FOR NON-CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT. THE LD. CIT(A) CONFIRMED T HE LEVY OF INTEREST U/S 234B & 234 C OF THE ACT AND HELD THAT THE ADVANC E TAX PAYMENT CANNOT BE SAID TO BE AN EXISTING LIABILITY WITHIN THE MEANING OF EXISTING LIABILITY DEFINED IN SECTION 132B OF THE ACT. IN TH IS REGARD, IT WOULD BE ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 12 RELEVANT TO NOTE THAT AN EXPLANATION NO 2 TO SECTION 132B OF THE ACT HAS BEEN INSERTED BY FINANCE ACT 2013 W.E.F. 1 ST JUNE, 2013 WHICH READS AS UNDER: EXPLNATION-2- FOR THE REMOVAL DOUBTS, IT IS HEREBY DECL ARED THAT THE EXISTING LIABILITY DOES NOT INCLUDE ADVANCE TAX PAY ABLE IN ACCORDANCE WITH THE PROVISIONS OF PART C OF CHAPTER XVU. AS IT IS CLEAR FROM THE AMENDMENT, THE SAME HAS BEEN MADE EFFECTIVE PROSPECTIVELY W.E.F. 01.06.2013. THE COORDINATE BENCH OF ITAT IN CASE OF KANISHKA PRINTS PVT. LTD. 143 ITD 716 (AHMD.) HAS ALSO HELD THAT THE SAID AMENDMENT IS PROSPECTIVE IN NATURE. GIVEN THAT THE SAME IS PROSPECTIVE IN NATURE, THE SAID EXPLANATION CANNOT BE INVOKED IN THE INSTANT MATTER. FOR THE PERIOD PRIOR TO INTRODUCTION OF EXPLANATION 2 TO SE CTION 132B OF THE ACT, TWO CONTRARY DECISIONS OF HONBLE HIGH COURT OF P UNJAB AND HARYANA IN CASE OF ARUN KAPOOR AND HONBLE HIGH COURT OF MADHYA PRADESH IN CASE OF RAMJILAL JAGANNATH HAVE BEEN REF ERRED BY THE RIVAL PARTIES AND BROUGHT TO OUR ATTENTION BESIDES A NUMBER OF TRIBUNAL ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 13 DECISIONS FAVOURING THE ASSESSEE. GIVEN THAT THERE I S NO JURISDICTIONAL HIGH COURT DECISION, DECISION OF PUNJAB AND HARYANA HIG H COURT DECISION IS FAVOURING THE ASSESSEE AND WHICH HAS BEEN CONSISTENTLY BEEN FOLLOWED BY THE COORDINATE BENCHES OF ITAT. WE SH ALL BE GUIDED BY THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COU RT AND THE SAME SHALL APPLY AND BEING FOLLOWED IN THE INSTANT CA SE. FOLLOWING THE DECISION OF PUNJAB AND HARYANA HIGH COURT IN CASE OF AR UN KAPOOR, WE ARE THUS OF THE VIEW THAT WHERE THERE IS A LIABILITY TOWARDS ADVANCE TAX, THE SEIZED CASH DURING THE COURSE OF SEARCH CAN BE AD JUSTED AGAINST THE ADVANCE TAX LIABILITY WHERE THE SAID LIABILITY SO EX IST. IN THE INSTANT CASE IT IS NOT IN DISPUTE THAT THE AS SESSEE HAS FILED THE RETURN OF INCOME FOR A.Y. 2010-11 WHEREIN IT HAS DISCL OSED THE ADDITIONAL INCOME SURRENDERED DURING THE COURSE OF SEAR CH BY VIRTUE OF WHICH LIABILITY TOWARDS THE ADVANCE TAX HAS CLEARLY ARISEN. THE QUESTION THAT NOW ARISES FOR CONSIDERATION IS WHERE THERE IS AN ADVANCE TAX LIABILITY AND THERE IS A CASH WHICH IS SEIZED AND LYING IN THE ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 14 PD A/C, WOULD THE AO BE EMPOWERED TO ADJUST THE SAME AUTOMATICALLY OR WOULD THAT REQUIRE A SPECIFIC AUTHORIZATION FROM THE ASSESSEE. IN THE DECIDED CASES AS REFERRED ABOVE, IT HAS BEEN HELD T HAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF SEIZED CASH FROM THE DATE OF APPLICATION MADE TO THE AO. IN OTHER WORDS, A SPECIFIC AUTHORIZATION IS THUS REQUIRED TO ENABLE THE AO TO MAKE SUCH AN ADJUSTMENT. FURTHER, REFERENCE CAN BE DRAWN TO PROVISIONS OF SECTION 245 OF THE ACT WHICH EMP OWERS THE AO TO ADJUST THE REFUND AGAINST THE SUM REMAINING PAYA BLE UNDER THIS ACT ONLY AFTER GIVING AN INTIMATION IN WRITING TO SUCH PER SON OF THE ACTION PROPOSED TO BE TAKEN UNDER THAT SECTION AND WHERE SUCH PERSON CAN OBJECT TO SUCH ADJUSTMENT. IN OTHER WORDS, THE AO IS SEEKING THE NECESSARY AUTHORIZATION FROM THE PERSON TO ADJUST THE RE FUNDS AGAINST ANY OTHER LIABILITY. FOLLOWING THE SAME PRINCIPLE, IT WOULD BE ESSENTIAL THAT IN RESPECT OF THE CASH SEIZED, WHICH BELONGS TO THE ASSESSEE, THOUGH LYING WITH THE DEPARTMENT, THE ASSESSEE AUTHOR IZES THE DEPARTMENT TO ADJUST THE SAME AGAINST THE ADVANCE TA X LIABILITY. ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 15 IN THE INSTANT CASE THE ASSESSEE HAS SUBMITTED THAT HE HAS SHOWN THE CASH SEIZED AMOUNTING TO RS. 19 LACS TOWARDS ADVANCE T AX PAYMENT IN HIS RETURN OF INCOME. FURTHER THE ASSESSEE HAS WRIT TEN A LETTER DATED 30.03.2011 REQUESTING FOR ADJUSTMENT OF CASH AGAINST ADVANCE TAX LIABILITY. IN OUR VIEW, IT WOULD BE DIFFICULT TO SAY THAT SHOWING ADJUSTMENT OF SEIZED CASH AGAINST ADVANCE TAX LIABIL ITY IN THE RETURN OF INCOME TANTAMOUNT TO AN AUTHORIZATION TO THE AO. RATHER, THE SAID DISCLOSURE IS AKIN TO SHOWING AN INTENT TO ADJUST AND S UCH ADJUSTMENT IS POSSIBLE ONLY ON RECEIPT OF SPECIFIC AUTHORIZATION. IT I S THE LETTER DATED 30.03.2011 FILED BY THE ASSESSEE WITH THE AO WHICH AUTHORIZES THE DEPARTMENT TO ADJUST THE SEIZED CASH AGAINST ADVANCE TAX LIABILITY. ACCORDINGLY, WE ARE OF THE VIEW THAT THE SEIZED CASH OF RS. 19 LACS SHOULD BE ADJUSTED AGAINST THE ADVANCE TAX LIABILITY AND THE SAID ADJUSTMENT SHOULD BE EFFECTIVE FROM THE DATE OF AUTHORI ZATION I.E. 30.03.2011. THE AO IS ACCORDINGLY DIRECTED TO ADJUST SEIZED CASH AGAINST THE ADVANCE TAX LIABILITY EFFECTIVE 30.03.2 011 AND RECOMPUTE ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 16 THE INTEREST LIABILITY U/S 234B & 234C OF THE ACT. ACCORDINGLY THIS GROUND IS PARTLY ALLOWED. IN THE RESULT, THE APPEAL OF BOTH OF THE ASS ESSES ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/ 01 / 2016 SD/- SD/- VKJ-IH-RKSYKUH FOE FLAG ;KNO (R.P.TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 22/ 01 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 2. THE RESPONDENT- THE ACIT, CENTRAL CIRCLE, ALWAR 3. THE CIT(A)-CENTRAL JAIPUR 4. THE CIT, ALWAR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO 73/JP/13 & 72/JP/13) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR. ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 17 SL. NO. DATE INITIAL 1 DATE OF DICTATION 2 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER OTHER MEMBER 3 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S 4 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. 6 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8 THE DATE ON WHICH THE FILE GOES TO THE ITA NO. 73/JP/13 & ITA NO. 72/JP/13 SHRI RAJAN JHIRIWAL & SHRI ROBIN JHIRIWAL 18 ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER 9 DATE OF DISPATCH OF THE ORDER