Asstt. Commissioner of Income Tax-1, Kanpur V. M/s Shri Murlidhar Agarwal, Kanpur

ITA 777/LKW/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2063 (ITAT-LUCKNOW)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-08-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 17-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 153A; 234B; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.777/LKW/2014 ASSESSMENT YEAR 2004-05 M/S SHRI MURLIDHAR AGARWAL, 51/47, NAYA GANJ, KANPUR PAN AAVPA 5630 B R VS THE COMMISSIONER OF INCOME TAX-1, KANPUR (RESPONDENT) (APPELLANT) SHRI AMIT NIGAM, DR APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY 27/08/2015 DATE OF HEARING 04 /0 9 /2015 DATE OF PRONOUNCEMENT O R D E R PER SUNIL KUMAR YADAV, JM. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-II, KANPUR, INTER ALIA ON THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPALS )-II, KANPUR HAS ERRED IN LAW AND ON FACTS IN ADMITTING THE NON-MAINTAINABLE APPEAL FILED BY THE ASSESSEE WITHOUT APPRECIATING THE FACTS THAT THE AS SISTANT COMMISSIONER OF INCOME TAX-I, 1961 BUT HE HAS SIMPLY INTIMATED THE F ACTS TO THE ASSESSEE THAT HIS RECTIFICATION APPLICATION DATED 19.06.2006 WAS DISPOSED OF BY THE DEPUTY COMMISSIONER OF INCOME TAX, CC-IX, NEW DELHI O N 18.09.2006 BY RECTIFYING THE INTEREST CHARGED U/S 234A. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS )-II, KANPUR HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ASSESSEES PETITION U/S 154 WAS DISPOSED OF VIDE ORDER DATED 18.09.2006 REC TIFYING THE INTEREST U/S 234A AND GRANTING RESULTANT REFUND OF RS.11,60,962/ - IN CONSEQUENT TO WHICH THE ASSESSEE MOVED PETITION FOR WAIVER OF INT EREST U/S 234B AND 234C BEFORE CHIEF COMMISSIONER OF INCOME TAX, CENTRAL CIR CLE, NEW DELHI ON 21.09.2006, THIS CLEARLY SHOWS THAT THE ASSESSEE WA S FULLY AWARE ABOUT THE 2 DISPOSAL OF HIS PETITION ON 18.09.2006 AND HE DID N OT PREFER TO CHALLENGE THE ORDER DATED 18.09.2006 PASSED U/S 154 BEFORE THE AP PELLATE AUTHORITY. 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPALS) -II, KANPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE INTEREST U/S 234B AND 234C OF THE ACT WITHOUT APPRECIATING THE FACTS THAT SEIZED CASH CAN NOT BE TREATED AS ADVANCE TAX IN VIEW OF SECTION 132B OF THE INCOME T AX ACT WHICH STATES THAT THE CASH SEIZED CAN ONLY BE ADJUSTED AGAINST T HE EXISTING LIABILITY OR THE AMOUNT OF LIABILITY DETERMINED ON COMPLETION OF ASS ESSMENT AND THAT EXISTING LIABILITY DOES NOT INCLUDE ADVANCE TAX PAY ABLE. 4. THAT THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-II, KANPUR DATED 15.07.2014 BE QUASHED. 5. THAT THE APPELLANT CRAVES LEAVE TO MODIFY ANY OF THE GROUNDS OF APPEAL MENTIONED ABOVE AND/OR TO ADD FRESH GROUNDS AS AND WHEN IT IS REQUIRED TO DO SO. 2. THE FACTS IN BRIEF RELATING TO IMPUGNED ISSUE AR E THAT THE ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) VIDE HER ORDER DATED 26.05.2006 IN WHICH THE AO ISSUED DIRECTION TO CHARGE INTEREST U/S 234A, 234B AND 234C OF THE A CT. THE ASSESSEE MOVED AN APPLICATION U/S 154 OF THE ACT, VIDE APPLICATION DATED 19.06.2006 REQUESTING THE ASSESSING OFFICER THAT DURING THE CO URSE OF SEARCH A SUM OF RS.5,40,00,000/- HAS BEEN SEIZED, THEREFORE, THE AD VANCE TAX FOR THE AY 2004-05 BE ADJUSTED AGAINST THE SEIZED AMOUNT LYING WITH P.D. ACCOUNT OF THE DEPARTMENT. THIS APPLICATION OF THE ASSESSEE WA S NOT DISPOSED OF. THE AO, HOWEVER, ISSUED I.T.N.S.-150 IN WHICH THE ADJUS TMENT OF THE ADVANCED TAX FOR AY 2004-05 WAS NOT MADE AND THE ASSESSING O FFICER HAS CHARGED INTEREST U/S 234A OF THE ACT. THE ASSESSEE FURTHER ISSUED THE REMINDERS TO THE CHIEF COMMISSIONER VIDE HIS LETTER DATED 20.09. 2006 WITH A REQUEST THAT SEIZED MONEY BE ADJUSTED AGAINST THE ADVANCE TAX AN D NO INTEREST U/S 234B AND 234C OF THE ACT BE CHARGED. THE ASSESSEE FINALL Y MOVED AN APPLICATION BEFORE THE ASSESSING OFFICER ON 11.06.2013 WITH THE REQUEST TO DISPOSE OF HIS EARLIER APPLICATION FOR RECTIFICATION IN WHICH ADJUSTMENT OF ADVANCE TAX FOR AY 2004-05 WAS SOUGHT AND ALSO FOR THE DELETION OF INTEREST CHARGED U/S 234B AND 234C OF THE ACT. THIS APPLICATION WAS REJE CTED BY THE ASSESSING 3 OFFICER VIDE HIS LETTER DATED 30.07.2013 HOLDING TH EREIN THAT THE RECTIFICATION WAS SOUGHT AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ASSESSMENT ORDER WAS PASSED. 3. AGGRIEVED THE ASSESSEE HAS PREFERRED AN APPEAL B EFORE THE CIT(A) WITH THE SUBMISSION THAT THE ASSESSING OFFICER HAS NOT DISPOSED OF THE APPLICATION OF THE ASSESSEE SEEKING RECTIFICATION U /S 154 OF THE ACT WITH RESPECT TO THE ADJUSTMENT OF ADVANCE TAX AGAINST TH E SEIZED AMOUNT AND THE NON CHARGEABILITY OF INTEREST U/S 234B AND 234C OF THE ACT. HE HAS ALSO INVITED/ATTENTION OF THE CIT(A) THAT IN REPLY TO TH E CHIEF COMMISSIONER THE ASSESSING OFFICER HAS ADMITTED THAT HE HAS ISSUED I .T.N.S.-150 RAISING DEMAND, BUT NO REFERENCE WAS MADE WITH RESPECT TO A N ORDER OF DISPOSING OF THE APPLICATION OF THE ASSESSEE U/S 154 OF THE A CT. THE CIT(A) TOOK THE COGNIZANCE OF ALL THESE FACTS AND HELD IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS THAT THE ADVANCE TAX CAN BE ADJUSTED AGAINST THE SEIZED AMOUNT AT THE REQUEST OF THE ASSESSEE. THEREFORE, T HE INTEREST U/S 234B AND 234C OF ACT CAN NOT BE CHARGED. HE, ACCORDINGLY, DE LETED THE INTEREST U/S 234B AND 234C OF THE ACT. 4. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US, WI TH THE SUBMISSION THAT THE APPLICATION FILED U/S 154 AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ASSESSMENT ORDER WA S PASSED, IS NOT MAINTAINABLE, THEREFORE, THE AO HAS RIGHTLY REJECTE D THE APPLICATION OF THE ASSESSEE. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND SUBMITTED THAT THE ASSESSEE MOVED AN APPLICATION BEFORE THE AO U/S 154 OF THE ACT SEEKING RECTIFICATION THEREIN WITH RESPECT TO ADJUSTMENT OF ADVANCE TAX FOR AY 2004- 05 AGAINST THE SEIZED AMOUNT AND ALSO FOR THE DELET ION OF INTEREST CHARGED U/S 234B AND 234C OF THE ACT. THE ASSESSING OFFICER SIMPLY ISSUED I.T.N.S.- 150 TOTALING THE COMPUTATION OF INCOME BUT HAS NOT DISPOSED OF THE APPLICATION OF THE ASSESSEE BY PASSING A SPEAKING O RDER. THESE FACTS WERE 4 INDIRECTLY ADMITTED BY THE ASSESSING OFFICER WHILE SUBMITTING REPLY TO THE CHIEF COMMISSIONER OR COMMISSIONER IN RESPONSE TO T HE APPLICATIONS FILED BEFORE THE COMMISSIONER AND THE CHIEF COMMISSIONER FOR THE DELETION OF THE INTEREST CHARGED U/S 234B AND 234C OF THE ACT. THER EFORE, THE ASSESSING OFFICER CANNOT TAKE THIS GROUND BEFORE THE TRIBUNAL . THE ASSESSING OFFICER COULD NOT PLACE THE ORDER PASSED BY HIM DISPOSING T HE APPLICATION U/S 154 OF THE ACT. THEREFORE, THE APPLICATION OF THE ASSESSEE DATED 11 .06.2013 CANNOT BE DISMISSED ON THE GROUND THAT THE RECTIFICATION A PPLICATION WAS FILED AFTER THE EXPIRY OF PERIOD OF FOUR YEARS FROM THE END OF FINANCIAL YEAR IN WHICH THE ASSESSMENT ORDER WAS PASSED. 6. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSION, WE ARE OF THE VIEW THAT UNDISPUTEDLY THE APPLICATION FOR RECTIFICATION DATED 19.09.2006 WAS NOT DISPOSED OF BY THE ASSESSING OFFICER BY PASSING ANY SPEAKING ORDER. HE , HOWEVER, ISSUED I.T.N.S.-150 TOTALING THE COMPUTATION OF INCOME ALO NG WITH INTEREST. IT IS ALSO CLEAR FROM THE RECORD THAT AFTER ISSUANCE OF I .T.N.S.-150, THE ASSESSEE APPROACHED THE COMMISSIONER AND THE CHIEF COMMISSIO NER VIDE HIS LETTER DATED 20.09.2006 AND ON 13.04.2011 WITH A REQUEST O F ADJUSTMENT OF THE ADVANCE TAX AGAINST THE SEIZED AMOUNT. IN RESPONSE TO THESE LETTERS, THE CIT(A) AND CCIT HAS CALLED REPORT FROM THE ASSESSIN G OFFICER IN WHICH THE ASSESSING OFFICER HIMSELF HAS ADMITTED THAT I.T.N.S .-150 WAS PASSED ON 18.09.2006. BUT HE HAS NOT PRODUCED ANY ORDER PASSE D ON THE APPLICATION FILED U/S 154 OF THE ACT. THEREFORE, IT HAS BECOME ABUNDANTLY CLEAR FROM THE RECORD THAT THE ASSESSING OFFICER HAS NOT DISPOSED OF THE APPLICATION DATED 19.06.2006 FILED U/S 154 OF THE ACT BY PASSING SPEA KING ORDER. THUS, THE REJECTION OF SUCCEEDING APPLICATION IS NOT PROPER O N THE GROUND THAT THESE RECTIFICATION APPLICATIONS WERE FILED AFTER FOUR YE ARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER WAS PASSED. IN SU CH CIRCUMSTANCES, TWO OPTIONS ARE LEFT WITH US; ONE IS EITHER TO SENT THE MATTER BACK TO THE AO FOR PASSING THE ORDER ON APPLICATION U/S 154 OF THE ACT AND THE SECOND ONE IS TO 5 DECIDE THE DISPUTE OF ADJUSTMENT OF SEIZED AMOUNT A GAINST THE ADVANCED TAX FOR THE AY 2004-05 AND IN THAT CASE THE INTEREST U/ S 234B AND 234C WOULD NOT BE CHARGED. IN THIS REGARD OUR ATTENTION WAS IN VITED TO THE LEGAL POSITION BY PLACING RELIANCE UPON THE VARIOUS JUDICIAL PRONO UNCEMENTS. WE HAVE BEEN CARRIED THROUGH THE JUDGMENT OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF SATYA PRAKASH SHARMA VS. ACIT IN ITA NO.1735(DEL ) OF 2008 IN WHICH IT HAS BEEN HELD THAT ON REQUEST FOR ADJUSTING THE SEI ZED CASH AGAINST THE ADVANCE TAX DUE IT SHOULD BE DONE AND NO INTEREST U /S 234 B & 234C CAN BE CHARGED FOLLOWING THE JUDGMENT OF THE HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS. K.K. MARKETING REPORTED IN 278 ITR 596 ( DEL). THE SIMILAR VIEW WAS EXPRESSED BY THE MUMBAI BENCH OF THE TRIBUNAL I N THE CASE OF VIPUL D. DOSHI VS. ACIT REPORTED IN 118 TAXMANN 30 IN WHICH IT HAS BEEN HELD THAT SEIZED CASH SHOULD BE TREATED AS ADVANCE TAX FOR TH E PURPOSE OF COMPUTATION OF INTEREST AND THEREFORE, NO INTEREST U/S 234A TO 234C IS LEVIABLE AND AGAIN IN THE CASE OF CIT VS. K.K. MARK ETING REPORTED IN 196 CTR 611 HONBLE DELHI HIGH COURT HAS HELD THAT SINCE TH ERE IS NOTHING TO PROHIBIT THE ASSESSEE FROM MAKING A REQUEST FOR ADJUSTMENT O F THE CASH SEIZED AGAINST ADVANCE TAX LIABILITIES, EQUITY DEMANDS THA T THE CASH AMOUNT OUGHT TO HAVE BEEN ADJUSTED AS PRAYED FOR BY THE ASSESSEE TO SAVE IT FROM ANY LIABILITY OF INTEREST. AGAIN THE SIMILAR VIEW WAS E XPRESSED BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF NIKKA MAL BABU RAM VS. ACIT REPORTED IN 41 SOT 407 BESIDES REFERENCE WAS ALSO MADE ON VA RIOUS ORDERS OF THE TRIBUNAL. 7. IN THE LIGHT OF AFORESAID LEGAL POSITION IT HAS BECOME CLEAR THAT ONCE THE ASSESSEE MAKES THE REQUEST FOR THE ADJUSTMENT O F SEIZED AMOUNT AGAINST THE ADVANCE TAX, THE SAME SHOULD BE ACCEPTE D AND AFTER ADJUSTING THE ADVANCE TAX AGAINST THE SEIZED AMOUNT NO INTERE ST U/S 234A AND 234C BE CHARGED. UNDER THESE CIRCUMSTANCES, WE ARE OF TH E VIEW THAT CIT(A) HAS RIGHTLY ADJUDICATE THE ISSUE HIMSELF AND HAS DELETE D THE INTEREST CHARGED U/S 234B AND 234C HAVING ALLOWED THE ADJUSTMENT OF THE SEIZED AMOUNT AGAINST 6 THE ADVANCE TAX FOR AY 2004-05. WE, THEREFORE, DO N OT FIND ANY INFIRMITY IN THE ORDERS OF THE CIT(A) AND ACCORDINGLY WE CONFIRM THE SAME. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (A.K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04/09/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. RE GISTRAR