Shri Jamanbhai D. Kalaria, RAJKOT-GUJARAT V. The Deputy Commissioner of Income Tax, Central Circle-2, RAJKOT-GUJARAT

ITA 8/RJT/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8644 (ITAT-RAJKOT)
• Duration Of Justice: 6 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 02-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJEET SINGH
• Assessee Lawyers: DM RINDANI
• Keywords: Sale consideration of property below Jantri Value; Search and seizure; Loose papers; Source of fund; Cost of acquisition; Avoidance of tax; Set aside
• Section: 143(3); 2(14); 153A; 234B; 191; 192; 48; 13; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [ CONDUCTED THROUGH E-COURT AT AHMEDABAD ] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER I.T.A. NO.08/RJT/2014 (ASSESSMENT YEAR : 2011-12) SHRI JAMANBHAI D.KALARIA KRIMISH 31, SAI NAGAR KALAWAD ROAD RAJKOT VS. THE DCIT CENTRAL CIRCLE-2 RAJKOT [PAN NO. ADWPK 6635 N] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI D.M. RINDANI, AR RESPONDENT BY : SHRI RANJEET SINGH, CIT-DR DATE OF HEARING 26/11/2019 DATE OF PRONOUNCEMENT 06/01/2020 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S)IV, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO. CIT(A)-IV/58R/CC-2/12-13 DATED 13/11/2013 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S. 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 30/01 /2013 RELEVANT TO ASSESSMENT YEAR (AY) 2011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 2 - 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) - IV, AHMEDABAD ERRED IN SUSTAINING THE ADDITION TO THE EXTENT OF 26,83,137/-, BEING 33% OUT OF ADDITION OF 81,30,720/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INCOME FROM SHORT T ERM CAPITAL GAIN. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) - IV, AHMEDABAD ERRED IN TREATING A DULY REGISTERED TRANSACTION OF PURCHASE OF IMPUGNED LAND AS A 'COLORABLE DEVICE'. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) - IV, AHMEDABAD ERRED IN HOLDING THAT THE APPELLANT REDUCED SHORT TERM CAPITAL GAIN IN HI S HANDS BY INCREASING THE COST OF ACQUISITION OF LAND. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) - IV, AHMEDABAD FAILED TO APPRECIATE THAT THE ACTUAL COST OF ACQUISITION OF LAND IN F.Y. 2009 -10 WHICH WAS DULY DISCLOSED IN THE BOOKS HAS COME TO BE ACCEPTED BY THE DEPARTMENT AS PART OF AS SESSMENT FOR A.Y. 2010-11 VIDE ORDER U/S. 153A OF THE ACT AND HENCE THE SAME COULD NOT HAVE B EEN ALTERED BY THE ASSESSING OFFICER IN THE YEAR OF SALE OF THE IMPUGNED LAND BY THE APPELLANT. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) - IV, AHMEDABAD ERRED IN NOT GRANTING CREDIT FOR CASH OF 15,00,000/- SEIZED ON 24-06-2010 AS AND BY WAY OF ADVANCE TAX PAYMENT FOR THE ASSESSMENT YEAR 2011-12. 6. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) - IV, AHMEDABAD ERRED IN DIRECTING ASSESSING OFFICER TO CHARGE INTEREST U/S. 234B OF T HE ACT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND WITHDRAW ANY GROUND OF APPEAL ANYTIME UP TO THE HEARING OF THIS APPEAL. 2. THE FIRST INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 1 TO 4 IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE OR DER OF THE ASSESSING OFFICER BY SUSTAINING THE ADDITION OF 26,83,137/- BEING 33% OF THE TOTAL ADDITION ON ACCO UNT OF SHORT-TERM CAPITAL GAIN. 3. THE FACTS IN THE PRESENT CASE ARE THAT THE AS SESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF DEALING IN SHARES & SECURITIES, LANDS AND ALSO DRAWING SALARY & SHARE OF PROFIT. THE ASSESSEE HAS PURCHASED A PIECE OF LAND IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR DATED 20 FEBRUARY 2010 FR OM HIS WIFE (SHARE 33%) AND FRIENDS WIFE (SHARE 67%) AS DETAILED UNDER: ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 3 - SN NAME OF THE SELLERS AND THEIR SHARE SURVEY NO. WHETHER AGRICULTURAL OR NOT AMOUNT PAID DATE OF SALE AREA IN SQ METERS 1 SMT KETNA J KALARIA (33%) SMT KAVITA H GOSWAMI (67%) 191 AGRICULTURAL 3,00,00,000 20.2.2010 40873 3.1. THE ABOVE LAND WAS PURCHASED BY THE AFORESA ID LADIES DATED 3 FEBRUARY 2007 FOR AN AMOUNT OF RS. 4,95,000.00 WHICH WAS SUBSEQUE NTLY SOLD TO THE ASSESSEE AT VERY HIGH PRICE AS DISCUSSED ABOVE. THE JANTRI VALU E OF THE IMPUGNED LAND PURCHASED BY THE ASSESSEE IS OF RS. 200 PER SQUARE METER BUT THE ASSESSEE HAS PURCHASED THE SAME AT 734 PER SQUARE METER. 3.2. HOWEVER, THE AO WAS OF THE VIEW THAT THE TRANS ACTION REPRESENTING THE PURCHASE OF LAND BY THE ASSESSEE FROM THE AFORESAID LADIES INCLUDING HIS WIFE IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR IS THE COLORABL E DEVICE TO AVOID THE LEGITIMATE PAYMENT OF TAX IN THE HANDS OF THE ASSES SEE. THE IMPUGNED LAND WAS AGRICULTURAL LAND WHICH WAS SUBSEQUENTLY CONVERTED TO NONAGRICULTURAL BY THE ASSESSEE. AS SUCH, THE GAIN ON THE SALE OF SUCH AGR ICULTURAL LAND WAS CLAIMED EXEMPTED BY THE AFORESAID LADIES UNDER THE PROVISIO NS OF SECTION 2(14)(III)(B) OF THE ACT ON THE SALE OF THE LAND. ACCORDINGLY THE ASSESS EE HAS PURCHASED THE IMPUGNED LAND AT A MUCH HIGHER VALUE IN ORDER TO GENERATE MO RE CAPITAL GAIN INCOME IN THE HANDS OF THESE LADIES WHICH WAS EXEMPTED IN THEIR H ANDS. SIMULTANEOUSLY, THE PURCHASE COST OF THE LAND WAS HIGHER IN THE HANDS O F THE ASSESSEE WHICH WAS ADJUSTED AGAINST THE SUBSEQUENT SALE OF THE LAND AF TER PLOTTING. THUS THE ENTIRE TRANSACTION OF PURCHASE OF LAND AT A HIGHER PRICE T HAN THE JANTRI VALUE WAS TO ESCAPE FROM THE PAYMENT OF ALLEGED TAX ON THE INCOME FROM THE SALE OF SUCH LAND AFTER THE ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 4 - PLOTTING. IN VIEW OF THE ABOVE THE AO SOUGHT CLARIF ICATION FROM THE ASSESSEE FOR SUBSTITUTING THE COST OF ACQUISITION DECLARED BY TH E ASSESSEE WITH THE JANTRI VALUE. 3.3. THE ASSESSEE IN RESPONSE SUBMITTED THAT TH E LAND IN QUESTION WAS ADJACENT TO METODA GIDC - AN AREA WHICH WAS UNDER THE DEVELOPME NT. THEREFORE THE PRICE OF THE LAND HAS GONE MANIFOLD HIGH THAN THE JANTRI VAL UE. ACCORDINGLY, THE ASSESSEE CLAIMED THAT HE HAS SOLD THE IMPUGNED LAND AT AN AV ERAGE RATE OF 2000 PER SQUARE METERS DESPITE THE JANTRI VALUE IS AT RS. 800 SQUAR E METERS WHICH WAS OFFERED TO TAX AS SHORT-TERM CAPITAL GAIN. 3.4. THE ASSESSEE ALSO CLAIMED THAT HE HAS ALSO PURCHASED THE IMPUGNED LAND FROM THE NON-RELATED PARTY BEING THE WIFE OF HIS FR IEND SMT. KAVITA H GOSWAMI HOLDING MAJOR SHARE IN THE IMPUGNED LAND I.E. 67%. AS SUCH, THERE WAS NO REASON FOR THE ASSESSEE TO PURCHASE THE IMPUGNED LAND AT A HIGHER VALUE FROM THE UNRELATED PARTY. 3.5. THE ASSESSEE ALSO SUBMITTED THAT THERE IS NO PROVISION UNDER THE ACT UNDER WHICH THE COST OF THE ACQUISITION FOR THE IMPUGNED LAND CAN BE DISTURBED. 3.6. THE ASSESSEE ALSO JUSTIFIED THE PURCHASE P RICE OF THE IMPUGNED LAND BY COMPARING THE COST OF ACQUISITION THE SIMILAR/COMPA RABLE CASES AND ACCORDINGLY SUBMITTED THAT THE ADJACENT LAND WAS SOLD AT 1,634 PER SQUARE METER WHEREAS THE JANTRI VALUE IS OF RS. 400.00 PER SQUARE METER. ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 5 - 3.7. THE ASSESSEE ALSO CONTENDED THAT HE HAS SO LD THE IMPUGNED LAND AFTER PLOTTING AT AN AVERAGE PRICE OF RS. 2,000.00 PER SQ UARE METER WHEREAS THE JANRI VALUE STANDS AT 800 ONLY. ACCORDINGLY HE REQUESTED TO TREAT THE SAL E PRICE AT PAR WITH THE JANTRI VALUE. 3.8. HOWEVER, THE AO DISAGREED WITH THE CONTENT ION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS MOVED AN APPLICATIO N FOR THE CONVERSION OF AGRICULTURAL LAND TO NON-AGRICULTURE LAND VIDE APPL ICATION DATED 13.12.2009 BEFORE THE DATE OF PURCHASE OF LAND BY HIM. 3.9. THE ASSESSEE IMMEDIATELY AFTER THE TRANSFER OF THE PROPERTY HAS TAKEN THE LOAN FROM THE HUSBAND OF SMT. KAVITA GOSWAMI FOR RS. 2.0 1 CRORES WHICH EVIDENCES THAT THE AMOUNT PAID BY THE ASSESSEE ON THE PURCHAS E OF LAND HAS COME BACK FROM THE SELLER. 3.10. THE AO ALSO OBSERVED THAT THE ACTUAL CAPIT AL GAIN CAN ONLY BE WORKED OUT AFTER REDUCING THE CORRECT COST OF ACQUISITION OF T HE LAND UNDER THE PROVISIONS OF SECTION 48 OF THE ACT. IN VIEW OF THE ABOVE THE AO HELD THAT THE ASSESSEE HAS CLAIMED INFLATED COST OF ACQUISITION AGAINST THE SH ORT-TERM CAPITAL GAIN DECLARED BY HIM. ACCORDINGLY HE WORKED OUT THE AMOUNT OF SHORT- TERM CAPITAL GAIN WHICH WAS NOT DISCLOSED IN THE INCOME TAX RETURN AMOUNTING TO 81,30,720.00 AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARN ED CIT(A). ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 6 - 4. THE ASSESSEE BESIDES REITERATING THE SUBMISSIO NS MADE BEFORE THE AO FURTHER CONTENDED THAT THE AO HAS NOT DOUBTED THE PREVAILIN G MARKET RATE AT THE TIME OF PURCHASE OF THE LAND. HE HAS JUST COMPARED THE MARK ET RATE DECLARED BY THE ASSESSEE WITH THE JANTRI VALUE. 4.1. THE ASSESSEE ALSO SUBMITTED THAT HE HAS PUR CHASED ADJACENT NON-AGRICULTURE LAND IN THE ADJACENT AREA ADMEASURING 4856.40 SQUAR E METER OF LAND ON WHICH THE SELLER HAS INCURRED CONVERSION EXPENSES AMOUNTING T O 51,80,160 I.E. RS. 1067 PER SQUARE METER. THUS THE PREVAILING MARKET RATE SHOUL D CERTAINLY BE OVER AND ABOVE THE AMOUNT OF 1100 PER SQUARE METER. BUT THE AO HAS NOT DOUBTED T HE COST OF ACQUISITION OF SUCH LAND ONLY ON THE GROUND THAT TH IS LAND WAS BEING NON- AGRICULTURE AND THE INCOME FROM THE SAME WAS NOT EX EMPTED. ACCORDINGLY, THE ASSESSEE CLAIMED THAT COST OF ACQUISITION OF THE LA ND CANNOT BE DOUBTED MERELY ON THE GROUND THAT THE INCOME FROM THE SALE OF SUCH AG RICULTURAL LAND WOULD GENERATE TAX FREE INCOME. 4.2. SIMILARLY, THE ASSESSEE ALSO FURNISHED THE D ETAILS OF THE ADJACENT LANDS WHERE THESE LANDS WERE SOLD MORE THAN THE JANTRI VALUE. 4.3. THE ASSESSEE ALSO CONTENDED THAT THE AO BEFO RE ALTERING THE COST OF ACQUISITION CLAIMED BY THE ASSESSEE SHOULD HAVE REF ERRED THE MATTER TO THE DVO FOR THE DETERMINATION OF THE PREVAILING MARKET RATE AT THE TIME OF ACQUISITION OF THE IMPUGNED LAND. BUT THE AO HAS NOT DONE SO. ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 7 - 4.4. THE ASSESSEE ALSO CLAIMED THAT THE AMOUNT O F LOAN TAKEN FROM THE HUSBAND OF SMT. KAVITA H GOSWAMI CANNOT BE COMPARED WITH THE P URCHASE OF THE LAND AS BOTH ARE DIFFERENT TRANSACTION AND CANNOT BE COMPARED. 4.5. THE LEARNED CIT(A) AFTER CONSIDERING THE SUB MISSION OF THE ASSESSEE DELETED THE ADDITION MADE BY THE AO IN PART BY OBSERVING AS UNDER: (X) THE CONTENTION OF THE APPELLANT APPEARS TO BE CORRECT PARTLY AS THE WIFE OF THE APPELLANT IS ONLY 33% OWNER OF THE RELEVANT LAND IN QUESTION, TH E REMAINING 67% IS OWNED BY SMT. KAVITA H. GOSWAMI WIFE OF APPELLANT'S FRIEND SHRI HITESHGIRI GOSWAMI WHO HAS GIVEN UNSECURED LOAND OF RS.2,01,00,000/- TO THE APPELLANT. IN ORDER TO CHEC K THE SOURCES OF INCOME OF SMT. KAVITA H. GOSWAMI & SHRI HITESHGIRI GOSWAMI, DETAILS OF THEIR BANK ACCOUNT, STATEMENT OF INCOME AND BALANCE SHEET WERE CALLED. IT IS SEEN THAT SHRI HIT ESHGIRI GOSWAMI IS ASSESSED TO TAX AND HAS FILED RETURN OF INCOME FOR AY 2011-12 DECLARING INCOME OF RS.33,16,134/-. SHRI HITESHGIRI GOSWAMI HAS CAPITAL OF RS.1,76,62,294/-. THIS SHOWS THAT SH RI HITESHGIRI GOSWAMI HAS THE CAPACITY TO ADVANCE LOAN TO THE APPELLANT. SIMILARLY, SMT. KAVI TA H. GOSWAMI IS REGULARLY ASSESSED TO TAX AND FOR AY 2011-12 SHE HAD FILED RETURN OF INCOME D ECLARING TOTAL INCOME OF RS.45,96,647/- AND SHE HAS CAPITAL OF RS.3,44,92,352/-. THEREFORE FINA NCIAL CREDIT WORTHINESS OF SMT. KAVITA H. GOSWAMI IS ALSO NOT DOUBTFUL. FROM THESE FACTS, IT CANNOT BE SAID THAT SMT. KAVITA H. GOSWAMI OR HER HUSBAND SHRI HITESHGIRI GOSWAMI ARE BENAMIDARS OF APPELLANT AND WERE USED BY THE APPELLANT AS PER HIS WISHES. BOTH THE PERSONS ARE R EGULAR TAX PAYERS WITH SUFFICIENT FINANCIAL CAPACITY AND THE RELEVANT TRANSACTIONS HAVE BEEN DU LY REFLECTED IN THEIR BOOKS. 5.2.2. IN VIEW OF THE ABOVE NOTINGS, IT IS HELD T HAT AS FAR AS PURCHASE OF LAND BY THE APPELLANT FROM SMT. KAVITA H. GOSWAMI IS CONCERNED, IT CANNOT BE SAID THAT THE APPELLANT HAS USED A 'COLORABLE DEVICE' TO EVADE TAXES AS BOTH OF THEM A RE NEITHER RELATED PARTIES NOR PERSONS OF IN- SUFFICIENT FINANCIAL MEANS. BUT APPELLANT HAS DEFIN ITELY USED A 'COLORABLE DEVICE' AS FAR AS 33% OF LAND PURCHASED FROM HIS WIFE IS CONCERNED. ACCORDIN GLY, IT IS HELD THAT 33% OF THE ADDITION OF RS. 81,30,720/- WHICH COMES TO RS.26,83,137/- IS TO BE SUSTAINED AS IN APPELLANT HAS EVADED TAXES IN RESPECT OF THIS AMOUNT. THE APPELLANT GETS THE REL IEF FOR BALANCE 67% OF THE ADDITION RELATED TO SMT.KAVITA H.GOSWAMI. THIS GROUND IS PARTLY ALLOWE D. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) , THE ASSESSEE IS IN APPEAL BEFORE. 5. THE LEARNED AR BEFORE US FILED A PAPER BOOK RU NNING FROM PAGES 1 TO 26 AND SUBMITTED AS UNDER: ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 8 - THEREIN ACTUAL COST OF IMPUGNED LAND IS SHOWN AS I NVESTMENT, IN B/S - SUCH ACTUAL COST HAS COME TO BE ACCEPTED BY THE DEPT. AND ASSESSED I N A.Y. 2010-11. HENCE, ACTUAL COST CANNOT BE DISTURBED. NO PROVISION UNDER 'CAPITAL GA INS' TO REDUCE THE SAME. [PAGE 17] IN HANDS OF SELLERS, FOR A.Y. 2010-11, THE TRANSACT ION OF SALE WAS DISCLOSED AND EXEMPT GAIN AS DISCLOSED AT DOCUMENTED VALUE IS NOT DISBEL IEVED BY SAME A.O. IN SAME CIRCLE [23 - 26] - STAMP DUTY WAS PAID BY PURCHASER. [SEE ORDER OF SMT. KAVITA HITESHGIRI GOSWAMI ON PAGE NO. 25] IN CASE OF ONE SELLER WHO IS NON-RELATIVE, THERE CA N'T BE A COLOURABLE DEVICE. DUE STAMP - DUTY AT HIGHER VALUE IS PAID BY ASSESSEE-BUYER. TRA NSACTION IS WITHIN FOUR CORNERS OF LAW, BECAUSE LAW ITSELF TREATED THE SALE AS EXEMPT INCOM E - THERE IS NOTHING TO SHOW THE TRANSACTION AS SHAM OR BOGUS [326 ITR 0001 - SC]. WIFE HAD MINORITY SHARE IN LAND. THE FUNDS RECEIVED BY ASSESSEE FROM HUSBAND OF JOINT-SELLER ARE REFUNDED IN LATER YEARS ON WHICH EVEN INTEREST WAS PAID IN ONE OF THE YEARS. CIT(A) HAS GIVEN A F INDING THAT HE HAD ENOUGH CAPITAL TO ADVANCE. ASSESSEE BOUGHT IMPUGNED LAND AT HIGHER THAN STAMP DUTY VALUE. BUT HE BOUGHT ADJOINING LAND ONE YEAR LATER ALSO AT HIGHER THAN JANTRI VALU E. EVEN HIS SALE OF IMPUGNED LAND IS AT HIGHER THAN JANTRI VALUE. 6. ON THE OTHER HAND, THE LEARNED DR BEFORE US VE HEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE IN THE PRESENT CASE HAS PURCHASED A PIECE OF LAND IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR DATED 20 TH FEBRUARY 2010. THE PURCHASE PRICE OF SUCH LAND WAS VERY HIGH THAN THE JANTRI VALUE. ACCORDINGLY THE AO WAS OF THE VIEW THAT THE ASSESSE E KNOWINGLY HAS PURCHASED THE IMPUGNED LAND FROM THE SELLER BEING HIS WIFE AND HI S FRIENDS WIFE AT THE HIGHER PRICE IN ORDER TO SHIFT THE INCOME IN THE HANDS OF THE RESPECTIVE LADIES. IT WAS DONE ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 9 - DUE TO THE FACT THAT THE INCOME IN THE HANDS OF THE LADIES ON THE SALE OF THE LAND WAS EXEMPTED BEING AGRICULTURAL LAND. HOWEVER, THE LEAR NED CIT(A) DELETED THE ADDITION MADE BY THE AO PERTAINING TO THE AMOUNT OF CAPITAL GAIN INCOME IN CONNECTION WITH THE TRANSACTION FOR THE PURCHASE OF PROPERTY FROM THE WIFE OF HIS FRIEND. HOWEVER, THE LEARNED CIT (A) WAS PLEASED TO CONFIRM THE ADDITION MADE BY THE AO IN CONNECTION WITH THE TRANSACTION CARRIED O UT BY THE ASSESSEE WITH HIS WIFE. 7.1. ADMITTEDLY, THE ASSESSEE HAS PURCHASED THE LAND FROM HIS WIFE (HOLDING 33% SHARE IN THE LAND) AT RS. 734 PER SQUARE METER WHER EAS THE JANTRI VALUE WAS 200 PER SQUARE METER. ACCORDINGLY, THE AO DOUBTED THE T RANSACTION ON THE PURCHASE OF LAND SHOWN BY THE ASSESSEE. THUS THE ENTIRE THRUST OF THE AO HOLDING THE TRANSACTION OF THE ASSESSEE AS A COLORABLE DEVICE W AS BASED ON THE DIFFERENCE BETWEEN THE PURCHASE PRICE DECLARED BY THE ASSESSEE VIZ A VIZ JANTRI VALUE OF SUCH LAND. IN THIS REGARD, WE FIND THAT THE ASSESSEE DUR ING THE ASSESSMENT PROCEEDINGS HAS JUSTIFIED THE PURCHASE PRICE BY FURNISHING THE COMPARABLE CASES BUT THE SAME WAS REJECTED BY THE AO AFTER POINTING OUT CERTAIN D EFECTS THERE IN. HOWEVER, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED HIS PR IMARY ONUS BY FURNISHING THE NECESSARY DETAILS TO JUSTIFY THE COST OF ACQUISITIO N. NOW, THE ONUS WAS ON THE REVENUE TO BRING ON RECORD THE DETAILS OF THE CASES TO JUSTIFY THE ACTUAL PREVAILING MARKET RATE AT THE TIME OF THE PURCHASE OF LAND BY THE ASSESSEE. BUT THE AO HAS JUST REJECTED THE CONTENTION OF THE ASSESSEE AND GROSSLY FAILED TO BRING ANYTHING ON RECORD SUGGESTING THAT THE PREVAILING MARKET RATE A T THE TIME OF PURCHASE OF LAND WAS AT PAR WITH THE JANTRI VALUE. 7.2. INDEED, THE AGRICULTURAL LAND PURCHASED B Y THE ASSESSEE FROM HIS WIFE WAS NOT SUBJECT TO CAPITAL GAIN IN PURSUANCE TO THE PRO VISIONS OF SECTION 2(14) OF THE ACT. ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 10 - BUT TO OUR MIND THE EXEMPTION PROVIDED UNDER THE ST ATUTE CANNOT BE USED TO HOLD THAT THE TRANSACTION WAS A COLORABLE DEVICE TO ESCA PE FROM THE TAX LIABILITY UNTIL AND UNLESS THE REVENUE PROVES BASED ON DOCUMENTARY EVID ENCE. AS SUCH WE STRONGLY FEEL THAT THE ONUS WAS ON THE REVENUE TO PROVE THAT THE MARKET RATE PREVAILING AT THE TIME OF PURCHASE OF LAND BY THE ASSESSEE WAS AT PAR WITH THE JANTRI VALUE. THUS IN THE ABSENCE OF SUCH NECESSARY DETAILS, WE ARE NOT I MPRESSED WITH THE FINDING OF THE AUTHORITIES BELOW. 8. THE MAIN ALLEGATION/FINDING OF THE AO, WHICH W AS LATER CONFIRMED BY THE LD. CIT(A), THAT ASSESSEE HAS USED THIS TRANSACTION AS A COLORABLE DEVICE TO REDUCE ITS TAX LIABILITY BY DIVERTING THE INCOME. REGARDING TH IS WE NOTE THAT HONORABLE SUPREME COURT IN CASE OF MCDOWELL & CO. LTD VS. COM MERCIAL TAX OFFICER (154 ITR 148) DATED 17-4-1985 OBSERVED THAT TAX PLANNING WITHIN THE LAW IS PERMITTED, BUT COLORABLE DEVICES CANNOT BE PART OF TAX PLANNIN G. 8.1. IN THE CASE OF MCDOWELL & CO, THE ASSESSEE WAS NOT COLLECTING THE SALES TAX LIABILITY ON THE EXCISE DUTY EVEN AFTER THE AMENDME NT IN THE DISTILLERY RULES 76 & 79 W.E.F. 4-8-1981. AS SUCH BEFORE THE AMENDMENT IN TH E RULES, I.E., DISTILLERY RULES 76 & 79 W.E.F. 4-8-1981, THE BUYERS WERE LIABLE TO DEP OSIT THE EXCISE DUTY DIRECTLY TO THE STATE GOVERNMENT. THEREFORE THE ASSESSEE DID NO T COLLECT THE SALES TAX ON SUCH EXCISE DUTY. IT IS PERTINENT TO NOTE THAT THE HONB LE SC BEFORE THE AMENDMENT IN THE RULES 76 & 79 DECIDED THE ISSUE IN FAVOR OF THE ASS ESSEE REPORTED IN 1 SCR 914 DATED 25-10-1976. BUT WHEN THE ASSESSEE DEFAULTED T O COMPLY THE AMENDED DISTILLERY RULES 76 & 79 W.E.F. 4- 8-1981, THE HON BLE APEX COURT DECIDED THE ISSUE IN FAVOR OF REVENUE. HENCE WE ARE OF THE CONSIDERED VIEW THAT THE PRINCIPLES LAID ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 11 - DOWN BY THE HONBLE APEX COURT CANNOT BE APPLIED IN THE CASE BEFORE US AS THE FACTS ARE DIFFERENT. 8.2. IT IS ALSO PERTINENT TO NOTE HERE THAT THE H ONBLE APEX COURT IN CASE OF UNION OF INDIA AND ANR VS. AZADI BACHAO ANDOLAN (263 ITR 705 ) DISCUSSED THE CASE OF MCDOWELL & CO. LTD VS. COMMERCIAL TAX OFFICER (SUPR A) IN DETAIL AND DISTINGUISHED FROM IT BY OBSERVING AS UNDER: WE MAY IN THIS CONNECTION USEFULLY REFER TO THE JU DGMENT OF THE MADRAS HIGH COURT IN M.V.VALLIPAPPAN AND OTHERS V. ITO , WHICH HAS RIGHTLY CONCLUDED THAT THE DECISION IN MCDOWELL CANNOT BE READ AS LAYING D OWN THAT EVERY ATTEMPT AT TAX PLANNING IS ILLEGITIMATE AND MUST BE IGNORED, O R THAT EVERY TRANSACTION OR ARRANGEMENT WHICH IS PERFECTLY PERMISSIBLE UNDER LA W, WHICH HAS THE EFFECT OF REDUCING THE TAX BURDEN OF THE ASSESSEE, MUST BE LO OKED UPON WITH DISFAVOUR. THOUGH THE MADRAS HIGH COURT HAD OCCASION TO REFER TO THE JUDGMENT OF THE PRIVY COUNCIL IN IRC V. CHALLENGE CORPORATION LTD. , AND DID NOT HAVE THE BENEFIT OF THE HOUSE OF LORDS'S PRONOUNCEMENT IN CR AVEN , THE VIEW TAKEN BY THE MADRAS HIGH COURT APPEARS TO BE CORRECT AND WE ARE INCLINED TO AGREE WITH IT. 8.3. FURTHER, WE ALSO NOTE THAT HONBLE JURISDIC TIONAL HIGH COURT IN CASE OF BANYAN AND BERRY VS. COMMISSIONER OF INCOME TAX (22 2 ITR 831) HELD THAT TAX PLANNING WITHIN THE LAW IS PERMISSIBLE AND ONLY IF ANY TRANSACTION WHICH IS REDUCING THE TAX LIABILITY CANNOT BE REGARDED AS A COLORABLE DEVICE. THE COURT ALSO DISCUSSED THE MEANING OF COLORABLE DEVICE AND CASE OF MCDOWELL & CO. LTD VS. COMMERCIAL TAX OFFICER (SUPRA) IN DETAIL. THE RELEVANT EXTRACT OF THE ORDER IS REA D AS UNDER: FROM THE AFORESAID, IT IS APPARENT THAT ON THE FAC TUAL ASPECT THE COURT WAS CONSIDERING THE CASE WHERE IN A GOING BUSINESS A LI ABILITY TO PAY DUTY WHICH WAS LEGALLY OF THE ASSESSEE AND WHICH ON SUCH PAYMENT W AS TO BECOME PART OF ITS COST OF COMMODITY SOLD BY IT AND TO BECOME PART OF ITS SELLING PRICE TO THE BUYERS, WAS AS A RESULT OF ARRANGEMENT BETWEEN THE SELLER A ND BUYER SPLIT INTO TWO, NAMELY - DUTY SO FAR PAID SEPARATELY DIRECTLY TO T HE TAX AUTHORITIES AND THE BALANCE SO PAID TO THE SELLER; THE ARRANGEMENT WAS EXISTING SOLELY FOR THE PURPOSE OF NOT PAYING THE TAX AND IT IS NOT A TR ANSACTION IN REALITY OF RECEIVING ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 12 - LESS PRICE THAN THE ONE ON WHICH IT WAS MARKETING. THE COURT NO WHERE SAID, THAT EVERY ACTION OR INACTION ON THE PART OF THE TAXPAYER WHICH RESULTS IN REDUCTION OF TAX LIABILITY TO WHICH HE MAY BE SUBJE CTED IN FUTURE, IS TO BE VIEWED WITH SUSPICION AND BE TREATED AS A DEVICE FOR AVOID ANCE OF TAX IRRESPECTIVE OF LEGITIMACY OR GENUINENESS OF THE ACT; AN INFERENCE WHICH UNFORTUNATELY, IN OUR OPINION, THE TRIBUNAL APPARENTLY APPEARS TO HAV E DRAWN FROM THE ENUNCIATION MADE IN MCDOWELL'S CASE (SUPRA). RATIO OF ANY D ECISION HAS TO BE UNDERSTOOD IN THE CONTEXT IT HAS BEEN MADE. THE FACTS AND CIRC UMSTANCES WHICH LED TO MCDOWELL'S DECISION (SUPRA) LEAVES US IN NO DOUBT T HAT THE PRINCIPLE ENUNCIATED IN THE ABOVE CASE HAS NOT AFFECTED THE FREEDOM OF C ITIZEN TO ACT IN A MANNER ACCORDING TO HIS REQUIREMENTS, HIS WISHES IN THE MANNER OF DOING ANY TRADE, ACTIVITY OR PLANNING HIS AFFAIRS WITH CIRCUMSPECTIO N, WITHIN THE FRAME WORK OF LAW, UNLESS THE SAME FALL IN THE CATEGORY OF COLORA BLE DEVICE WHICH MAY PROPERLY BE CALLED A DEVICE OR A DUBIOUS METHOD OR A SUBTERF UGE CLOTHED WITH APPARENT DIGNITY. IT WAS WITH THIS CONSCIOUSNESS THAT THE COURT HAS U SED THESE EXPRESSIONS WHILE DEPRECIATING THE SCHEMES OF TAX AVOIDANCE IN THE NA ME OF TAX PLANNING. ALL THE EXPRESSIONS USED BY THEIR LORDSHIPS IN DEPRECIATING THE METHODOLOGY OF TAX AVOIDANCE THROUGH TAX PLANNING OF RESORTING TO 'COL ORABLE DEVICE', 'DUBIOUS METHODS OR SUBTERFUGE' HAVE SPECIAL SIGNIFICANCE IN LEGAL WORLD. IN THE CONTEXT OF THE PRESENT DISCUSSION, THE MEANI NG ASSIGNED TO 'COLORABLE' IN BROWN'S JUDICIAL DICTIONARY HAS BEEN DEFINED AS 'RE VERSE OF BONA FIDE'. BLACK'S LAW DICTIONARY EXPLAIN 'COLORABLE' TO MEAN 'THAT WHICH IS IN APPEARANCE ONLY, AND NOT IN REALITY, WHAT IT PURPO RTS TO BE, HENCE, COUNTERFEIT, FEIGNED HAVING THE APPEARANCE OF TRUTH'. SO ALSO A DEVICE. THE CONTEXT IN WHICH THE EXPRESSI ON DEVICE HAS BEEN USED IN ITS ORDINARY DICTIONARY MEANING AS PER SHORTER OXFORD D ICTIONARY MEANS 'INNEUITY, SOMETHING DEVICE, ARRANGEMENT, PLAN, CONTRIVANCE, A PLOT OR A TRICK. BLACK'S DICTIONARY REFERS TO DEVICE AS CONTRIVANCE, A SCHEM E, TRICK. SUBTERFUGE - ACCORDING TO ORDINARY MEANING AS PER THE SHORTER OX FORD ENGLISH DICTIONARY - MEANS THAT TO WHICH ONE REFERS FOR ESCAPE OR CONCEA LMENT. SUBTERFUGE ON HISTORICAL PRINCIPLES MEANS, AN ARTICLE OR DEVICE T O WHICH A PERSON REFERS IN ORDER TO ESCAPE THE FORCE OF AN ARGUMENT, AN EXCUS E WITH WHICH CONCEALS A CLUE. SO ALSO THE EXPRESSION DUBIOUS REFERS TO A DOUBTFUL OR OF QUESTIONABLE CHARACTER. THAT IS TO SAY WHAT HAS BEEN DEPRECATED AS TAX PLANNING FOR AVOIDANCE OF TAX ARE THOSE ACTS WHICH HAVE DOUBTFUL , OR QUESTIONABLE CHARACTER AS TO THEIR BONA FIDE AND RIGHTEOUSNESS. NOT ALL LE GITIMATE ACTS OF A TAXPAYER WHICH IN ORDINARY COURSE OF CONDUCTING HIS AFFAIRS A PERSON DOES AND ARE UNDER ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 13 - LAW HE IS ENTITLED TO DO, CAN BE BRANDED OF QUESTIO NABLE CHARACTER ON THE ANVIL OF MCDOWELL (SUPRA). WE ARE UNABLE TO READ IN THE AFORESAID DECISION THA T ANY ACT OF AN ASSESSEE WHICH RESULTS IN REDUCTION OF HIS TAX LIABILITY OR EXPECTATION OF TAX BENEFIT IN FUTURE AMOUNTS TO COLORABLE DEVICE, A DUBIOUS METH OD OR SUBTERFUGE TO AVOID TAX AND CAN BE IGNORED IF THE ACTS ARE UNAMBIGUOU S AND BONA FIDE, MERELY ON THE GROUND THAT TREATING THOSE AS DELIBERATE WOULD RESULT IN TAX LIABILITY IN FUTURE. WHILE THE PLANNING ADOPTED AS A DEVICE TO AVOID TAX HAD BEEN DEPRECATED, PRINCIPLE CANNOT BE READ AS LAYING DOWN THE LAW THA T A PERSON IS TO ARRANGE HIS AFFAIRS SO AS TO ATTRACT MAXIMUM TAX LIABILITY, A ND EVERY ACT WHICH RESULTS IN TAX REDUCTION, EXEMPTION OF TAX OR NOT ATTRACTING TAX A UTHORISED BY LAW IS TO BE TREATED AS DEVICE OF TAX AVOIDANCE. 8.4. HOWEVER, WE FURTHER NOTE THAT BEFORE APPLYIN G THE AFORESAID PRINCIPLES LAID DOWN BY THE HONBLE APEX COURT IN CASE OF MCDOWELL (SUPRA) TO THE CASE ON HAND CERTAIN FACTS NEEDS TO BE CONSIDERED FOR ARRIVING A T A FINDING WHETHER A PARTICULAR SERIES OF THE TRANSACTIONS IS A COLOURABLE DEVICE O R NOT. IN SUCH SITUATION THE ONUS IS ON THE AO TO FIND OUT: (I) WHETHER THE PARTIES TO THE TRANSACTIONS HAVE CONCEA LED OR HIDDEN ANY FACT AND/OR WHETHER WHAT IS SHOWN TO BE DONE COULD HAVE ACTUALLY HAPPENED IN DIFFERENT TIME OR AT DIFFERENT PLACE; ANS: REGARDING THE FACTS OF THE TRANSACTIONS, WE NO TE THAT ALL THE NECESSARY FACTS WERE DULY DISCLOSED BY THE ASSESSEE AND THE ASSESSMENT WAS ALSO FRAMED UNDER SECTION 153A/143(3 ) FOR THE YEAR IN WHICH THE LAND WAS PURCHASED. THUS, WE ARE OF THE V IEW NO FACTS WERE CONCEALED OR HIDDEN. (II) EVEN WHERE INDIVIDUAL TRANSACTIONS OF THE DEVICE AR E LEGAL OR LEGITIMATE, WHETHER COMBINATION OF THESE STEPS CREA TES AN EFFECT WHICH IS ABNORMAL IN THE BUSINESS WORLD AND COULD NOT HAV E BEEN OTHERWISE UNDERTAKEN IN NORMAL CIRCUMSTANCES; ANS. IN THE PRESENT CASE THERE WAS NO REFERENCE MAD E BY THE AUTHORITIES BELOW SUGGESTING THAT THE TRANSACTION I S CARRIED OUT ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 14 - ILLEGALLY, AS THE TRANSACTION IN THE INSTANT CASE W ERE WITHIN THE AMBIT OF THE LAW AS NOTHING BEING ILLEGAL/ILLEGITIMATE WAS B ROUGHT TO OUR NOTICE. (III) THESE INDIVIDUAL TRANSACTIONS CREATE AN EFFECT WHIC H IS CONTRARY TO HUMAN PROBABILITIES; ANS. THE TRANSACTIONS CARRIED OUT BY THE PARTIES WE RE VERY MUCH NORMAL TRANSACTION. (IV) WHETHER ACTIONS OF THE PARTIES FINALLY ARE AT VARIA NCE WITH THE TERMS OF THE AGREEMENT; ANS. THERE WAS NO VARIANCE IN THE IMPUGNED TRANSAC TION WITH REGARD TO THE TERMS OF THE AGREEMENT. 8.5. IN VIEW OF THE ABOVE WE HOLD THAT THE IMPUG NED TRANSACTION CANNOT BE REGARDED AS COLORABLE DEVICE MERELY ON THE REASONIN G THAT THERE IS NO TAX LIABILITY ARISING IN THE HANDS OF THE SELLER BEING THE WIFE O F THE ASSESSEE. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 9. THE 2 ND ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED C IT-A ERRED IN NOT GRANTING THE CREDIT FOR THE CASH SEIZED DURING THE SEARCH FOR 15 LAKHS BY TREATING THE SAME AS ADVANCE TAX. 10. DURING THE SEARCH, CERTAIN LOOSE PAPERS AND OTHER DOCUMENTS WERE SEIZED INCLUDING THE CASH OF RS. 15,00,000/- FOUND ON THE DAY OF THE SEARCH. HOWEVER, THE AO IN THE ASSESSMENT ORDER DATED 30-01-2013 FRAMED U/S 143(3) OF THE ACT, DID NOT TREAT THE SEIZED CASH AS ADVANCE TAX. ACCORDING LY, THE AO CHARGED INTEREST U/S 234B OF THE ACT WITHOUT ADJUSTING THE CASH SEIZED. ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 15 - AGGRIEVED ASSESSEE PREFERRED AN APPEAL TO THE LD. C IT (A). 11. THE ASSESSEE BEFORE THE LD.CIT (A) SUBMITTED THAT THE INTEREST CHARGED U/S 234B OF THE ACT IS COMPENSATORY IN NATURE. THEREFOR E HE SHOULD BE GIVEN CREDIT WITH EFFECT FROM THE DAY OF THE SEIZURE OF CASH. 11.1. HOWEVER, THE LD.CIT (A) DISREGARDED THE CO NTENTION OF THE ASSESSEE BY OBSERVING THAT THE CASH SEIZED AS A RESULT OF THE S EARCH CAN BE APPROPRIATED AGAINST THE EXISTING TAX LIABILITY OR THE AMOUNT OF TAX LIA BILITY DETERMINED ON THE COMPLETION OF THE ASSESSMENT AS PER THE PROVISIONS OF SECTION 132B OF THE ACT. AS THERE WAS NO TAX LIABILITY AS ON THE DAY OF THE SEARCH, THEREFOR E THE CASH SEIZED CANNOT BE TREATED AS AN ADVANCE TAX PAYMENT. BEING AGGRIEVED BY THE ORDER OF THE LD.CIT (A) ASSE SSEE IS IN APPEAL BEFORE US. 12. THE LD.AR, BEFORE US, REITERATED THE SUBMISS ION AS MADE BEFORE THE LD.CIT (A). 13. ON THE OTHER HAND THE LD. DR VEHEMENTLY SUPP ORTED THE ORDER OF AUTHORITIES BELOW. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE SEARCH AND SEIZURE OPER ATION WAS CARRIED OUT UNDER SECTION 132 OF THE ACT, AT THE PREMISES OF THE ASSE SSEE DATED 24-06-2010. DURING THE SEARCH, A SUM OF RS. 15,00,000/-WAS FOUND WHICH WAS SEIZED. THE 1 ST ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 16 - CONTROVERSY BEFORE US ARISES FOR OUR ADJUDICATION W HETHER THE CASH SEIZED DURING THE ASSESSMENT PROCEEDINGS CAN BE TREATED AS ADVANC E TAX PAID BY THE ASSESSEE. 14.1. THE PROVISIONS FOR THE ADJUSTMENT OF SEIZED CASH AGAINST THE TAX LIABILITY ARE CONTAINED UNDER THE PROVISIONS OF SECTION 132B OF T HE ACT. AS PER THE PROVISION, THE CASH SEIZED DURING THE SEARCH AND SEIZURE OPERA TION CAN BE ADJUSTED AGAINST THE EXISTING TAX LIABILITY, AND THE LIABILITY OF TAX DE TERMINED ON THE COMPLETION OF THE ASSESSMENT. NOW THE QUESTION ARISES FOR THE DETERMI NATION OF THE EXISTING LIABILITY. IN THE INSTANT CASE, THE ASSESSEE HAS DECLARED INCO ME OF RS. 1,22,16,750.00 IN THE RETURN FILED DATED 30-9-2011 AND THE ASSESSEE HAS A LSO REQUESTED TO TREAT THE SEIZED CASH AS ADVANCE TAX VIDE LETTER DATED 29-09-2011. A S A RESULT OF THE DISCLOSURE OF INCOME IN THE RETURN OF INCOME TRANSPIRES THAT THER E WAS A LIABILITY OF TAX ON THE ASSESSEE. THUS IN OUR CONSIDERED VIEW, THE SEIZED C ASH CAN BE TREATED AS AN ADVANCE TAX LIABILITY. IN THIS REGARD, WE ALSO FIND SUPPORT AND GUIDANCE FROM THE ORDER OF THIS TRIBUNAL IN THE CASE OF SHREEJI PRINTS PVT. LTD. IT A NO 359/AHD/2012 DATED 20-04- 2012 WHEREIN IT WAS HELD AS UNDER: IN OUR OPINION, IF THE ASSESSEE HAS DECLARED INCOM E, DURING THE YEAR UNDER CONSIDERATION IN THAT EVENTUALITY HE IS LIABLE TO PAY ADVANCE TAX AS PER LAW THEREFORE THE A.O. IS REQUIRED TO FIND OUT WHETHER SUCH LIABILITY WAS EXISTING ON THE DATE OF SEIZURE. IF SUCH LIABILITY IS EXISTING THEN HE IS EMPOWERED TO APPLY/ADJUST THE MONEY SEIZED IN DISCH ARGE OF THE EXISTING LIABILITY EVEN WITHOUT ANY WRITTEN REPRESENTATION FROM THE ASSESSEE. 14.2. THUS, FROM THE ABOVE, IT IS CLEAR THAT THE CASH SEIZED DURING THE SEARCH AND SEIZURE OPERATION CAN BE TREATED AS ADVANCE TAX LIA BILITY IN THE GIVEN FACTS AND CIRCUMSTANCES. ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 17 - 15. WE ALSO NOTE THAT THE JUDGMENT OF MADHYA PRAD ESH HIGH COURT RELIED ON BY THE LD. CIT (A) IN THE CASE OF RAMJILAL JAGANNATH V S. ACIT REPORTED IN 341 ITR 758 IS AGAINST THE ASSESSEE. BUT WE FIND THAT THE H ON'BLE CALCUTTA HIGH COURT IN SIMILAR FACTS AND CIRCUMSTANCES ALLOWED THE ISSUE I N FAVOR OF THE ASSESSEE AND AGAINST THE REVENUE IN THE CASE OF CIT V. M/S BLB SECURITIES (P) LTD. IN GA NO. 3245 OF 2012 DATED 09.01.2013, FOR THE SAKE OF CLARITY, RELEVAN T EXTRACT IS REPRODUCED BELOW:- THE COURT: THE LEARNED ITAT, BY IT ORDER DATED 25 TH JUNE 2012 UPHELD THE ORDER ALLOWING ADJUSTMENT OF THE SEIZED CASH AGAINST THE LIABILITY TO PAY TAX WHICH AROSE ON 30 TH SEPTEMBER, 2008. MRS. GHUTGHUTIA SUBMITTED THAT UNDER SECTION 132B(I ) OF THE INCOME TAX ACT, 1961, THE SEIZED CASH COULD BE ADJUSTED AGAINST AN EXISTING LIABILIT Y AND COULD NOT HAVE BEEN ADJUSTED AGAINST A LIABILITY WHICH AROSE SUBSEQUENT THERETO. WE ARE UNABLE TO ACCEPT THIS SUBMISSION. IF THE SEI ZED CASH CAN BE ADJUSTED AGAINST AN EXISTING LIABILITY, THERE IS NO REASON WHY THE SEIZED CASH C ANNOT BE ADJUSTED AGAINST A LIABILITY WHICH AROSE IN FUTURE BECAUSE IN THAT THE SEIZED CASH WOULD AM OUNT TO SOME SORT OF ADVANCE PAYMENT. WE ARE AS SUCH UNABLE TO FIND ANY MERIT IN THE CONTENTION OF MR. GHUTGHUTIA. MR. GHUTGHUTIA LASTLY SUBMITTED THAT IF SUCH ADJUST MENT IS PERMISSIBLE, THEN INTEREST WOULD BE PAYABLE BY THE ASSESSEE. BUT THAT QUESTION WAS NOT RAISED BEFORE THE LEARNED TRIBUNAL. THE LEARNED TRIBUNAL, THEREFORE, HAD NO OCCASION TO EXP RESS ANY OPTION WITH REGARD THERETO. IN THE FACTS OF THE CASE, IT IS NOT POSSIBLE FOR US TO SAY THAT THE IMPUGNED JUDGMENT AND ORDER OF THE LEARNED TRIBUNAL IS ERRONEOUS IN LAW. 15.1. IT IS SETTLED LAW IF THERE ARE DIFFERENT RU LINGS OF THE NON-JURISDICTIONAL HIGH COURT AND THERE IS NO JUDGMENT ON THE ISSUE BY THE HONBLE JURISDICTIONAL HIGH COURT, THEN THE VIEW FAVORING THE ASSESSEE WILL PRE VAIL. IN THIS REGARD, WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF THE HONB LE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD REPORTED IN 88 IT R 192 WHEREIN IT WAS HELD AS UNDER: IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVIS ION ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED. THIS IS A WELL-ACCEPTED RULE OF CONSTRUCTION RECOGNISED BY THIS COURT IN SEVERAL OF ITS DECISION S. HENCE, ALL THAT THE COURT HAS TO SEE IS, WHAT IS THE TRUE EFFECT OF THE LANGUAGE EMPLOYED IN SECTION 271(1)( A )( I ). IF COURT FINDS THAT LANGUAGE TO BE AMBIGUOUS OR CAPABLE OF MORE MEANING S THAN ONE, THEN THE COURT HAS TO ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 18 - ADOPT THAT INTERPRETATION WHICH FAVOURS THE ASSESSE E, MORE PARTICULARLY SO BECAUSE THE PROVISION RELATES TO IMPOSITION OF PENALTY. 15.2. WE ALSO NOTE THAT THERE WAS AN EXPLANATION ATTACHED WITH SECTION 132B WHICH READS AS UNDER: 73B [ EXPLANATION 2. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED T HAT THE 'EXISTING LIABILITY' DOES NOT INCLUDE ADVANCE TAX PAYABLE IN ACCORDANCE WITH THE PROVISIONS OF PART C OF CHAPTER XVII. 15.3. IT IS AN UNDISPUTED FACT THAT THE EXPLANATI ON WAS BROUGHT BY THE FINANCE ACT 2013 WITH EFFECT FROM 1 ST JUNE 2013. THUS THE SAME CANNOT BE APPLIED TO THE FACTS OF THE CASE ON HAND. THE HONBLE SUPREME COURT IN T HE CASE OF CIT VS. COSMOS BUILDERS & PROMOTERS LTD. REPORTED IN 76 TAXMANN.CO M 377 HAS HELD THAT SUCH AN AMENDMENT IS PROSPECTIVE IN NATURE. ACCORDINGLY, IT CANNOT BE APPLIED TO THE CASE PERTAINING TO THE YEAR UNDER CONSIDERATION. 15.4. IN VIEW OF THE ABOVE, WE ARE NOT INCLINED T O SUSTAIN THE ORDER OF THE LD.CIT (A). ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND DIRECT THE AO TO TREAT THE SEIZED CASH AS AN ADVANCE TAX WITH EFFECT FROM THE DATE OF SEIZURE OF CASH. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLO WED. 16. THE LAST ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT-A ERRED IN DIRECTING THE AO TO CHARGE INTEREST UNDER SECTION 2 34B OF THE ACT. 16.1. AT THE OUTSET WE NOTE THAT, WE HAVE DIRECTE D THE AO TO TREAT THE AMOUNT SEIZED DURING THE PROCEEDINGS AS ADVANCE TAX FROM T HE DATE OF SEIZURE OF THE SAME. ACCORDINGLY, WE DIRECT THE AO TO LEVY THE INTEREST UNDER SECTION 234B OF THE ACT ITA NO.08/RJT/2014 JAMANBHAI D.KALARIA VS.DCIT ASST.YEAR 2011-12 - 19 - AFTER GIVING THE CREDIT OF 15 LAKHS I.E. THE CASH SEIZED DURING THE SEARCH PROCEEDINGS. HENCE THE GROUND OF APPEAL OF THE ASSE SSEE IS ALLOWED. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 06/ 01 /2020 SD/- SD/- ( RAJPAL YADAV ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 06/ 01 /2020 .., .../ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! ' #! / CONCERNED CIT 4. ' #! ( ) / THE CIT(A)-IV, AHMEDABAD 5. '() ! , , /DR,ITAT, RAJKOT 6. )45 67 / GUARD FILE. / BY ORDER, '! ! //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !', / ITAT, RAJKOT 1. DATE OF DICTATION 23.12.2019 (WORD PROCESSED BY HONBLE AM IN HIS COMPUTER BY DR AGON) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 24.12.2019/7.1.2020 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.7.1.2020 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7.1.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER