Shri Mahendra R.Kothari, Ahmedabad V. The Income tax Officer,Ward-11(4), Ahmedabad

ITA 875/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76640 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-01-2014
• Assessment Year: 1986-1987
• Appeal Filed On: 23-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: A L THAKKAR
• Keywords: Rectification of order; Search and seizure; Reasonable cause
• Section: 143(3); 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 875 /AHD/2010 (ASSESSMENT YEAR: 1986-87) SHRI MAHENDRA R. KOTHARI 105, VANIJYA BHAVAN, KANKARIA V/S THE INCOME TAX OFFICER, WARD, 11(4), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ACAPK2629K APPELLANT BY : SHRI A.L. THAKKAR. A.R. RESPONDENT BY : SHRI O.P. BATHEJA, SR. D.R. ( )/ ORDER DATE OF HEARING : 13-01-2014 DATE OF PRONOUNCEMENT : 11 -04-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-XVI, AHMEDABAD DATED 08.01.2010 FOR A.Y. 1986-87. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL WHO WAS ENGAGED IN THE BUSINESS OF CARTING CONTRACT FOR COAL. ON 31.10.1985 SEARCH OPERATION U /S 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE AND RS 40,000/- CASH FOUND WAS SEIZED. ORDER U/S 132(5) WAS PASSED ON 27.2.1996 RE TAINING THE CASH SEIZED. SUBSEQUENTLY AN ORDER U/S 143(3) WAS PASSED ON 30.3 .1989 AND DEMAND OF ITA NO 875-A - 2010 . A.Y. 1986- 87 2 RS. 1,08,664/- WAS RAISED BUT THE CASH SEIZED AT TH E TIME OF SEARCH AND RETAINED U/S 132(5) OF THE ACT WAS NOT APPROPRIATED WHILE RAISING THE DEMAND. AGAINST THE QUANTUM ADDITION MADE, ASSESSEE PREFERR ED APPEAL BEFORE CIT(A). CIT(A) VIDE ORDER DATED 16.12.1991 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. IN THE ORDER GIVING THE APPEAL EFFECT (PU RSUANT TO THE ORDER OF CIT(A)), REFUND OF RS. 8,872/- WAS GRANTED TO ASSES SEE BUT THE CASH THAT WAS SEIZED AT THE TIME OF SEARCH WAS NOT REFUNDED NOR A NY CREDIT OF THE SAME WAS GRANTED TO THE ASSESSEE. THEREAFTER, AO VIDE ORDER DATED 8.9.1999 PASSED U/S 154 OF THE ACT GRANTED CREDIT OF RS 40,000/- SE IZED AND ALSO GRANTED INTEREST U/S 132(4) FROM 1.9.1986 TO 30.3.1989 (FOL LOWING THE EXPIRY OF 120 DAYS FROM THE DATE ON WHICH THE SEARCH U/S 132 WAS CARRIED OUT TO THE DATE OF COMPLETION OF ASSESSMENT). ASSESSEE HOWEVER DEMANDE D INTEREST FROM 1.4.1986 TO 28.9.1999 FOR WHICH IT FILED RECTIFICAT ION APPLICATION BEFORE AO. AO REJECTED THE REQUEST OF THE ASSESSEE BY HOLDING AS UNDER:- THE HON'BLE ITAT, AHMEDABAD VIDE ORDER DATED 09.06. 2009 IN APPEAL NO. ITA NO. 3082/AHD/2008 HAS DIRECTED TO CONSIDER A RECTIFICATION APPLICATION MA DE BY YOU ON 01.11.1999. IN THE ABOVE SAID APPLICATION YOU HAVE CLAIM THAT I NTEREST U/S 132B(4) SHOULD BE GRANTED FROM 01.09.1986 TO 28.09.1999., INSTEAD OF THE SAME HAS BEEN GRANTED FROM 01.04.1986 TO 30.03.1989. YOU HAVE ALSO CLAIMED INTEREST U/S 243 AS THE REFUN D HAVE NOT BEEN GRANTED WITHIN THREE MONTHS FROM THE END OF THE MONTH IN WHICH THE CLAIM FOR REFUND WAS MADE. IN RESPECT OF FIRST ISSUE REGARDING GRANTING OF REF UND U/S 132B(4), IT IS STATED THAT THE REFUND U/S 132B(4) IS ALLOWABLE FROM IMMEDIATELY FOLLOWING THE EXPIRY OF THE PERIOD OF ONE HUNDRED AND TWENTY DAYS FROM THE DATE ON WHICH THE SEARCH UNDER SECTIO N 132 WAS CARRIED .OUT TO THE DATE OF COMPLETION OF THE ASSESSMENT. IN YOUR CASE, SEARCH WAS COMPLETED ON 31.1(11985 AND THE ASSESSMENT ORDER PASSED ON 30.03.1989. THEREFORE, YOU ARE ENTITLE TO INTEREST U/S 132B(4) FROM 01.03.1986 TO 31.03.1989 I.E. 37 MONTHS INSTEAD OF SAME WAS GRANTED FOR 31 MONTHS AS PER RECTIFICATION ORDER DATED 08.09.1999. HENCE, YOU ARE ENTITLED FOR FURTHER INTEREST ON THE AMOUNT OF RS. 40,000/- FOR 6 MONTHS, I.E. RS. 3,600/- (@ 1.5% PER MONTH). THE MISTAKE BEING APPARENT ON RECO RD IS HEREBY RECTIFIED U/S 154 OF THE I. T. ACT 1961. IN RESPECT OF SECOND ISSUE REGARDING GRANTING OF IN TEREST U/S 243 IT IS STATED THAT AS PER PROVISION O F SECTION 243, THE REFUND IS TO BE ISSUE WITHIN THE T HREE MONTHS FROM THE END OF THE MONTH IN WHICH THE CLAIM OF REFUND IS MADE. IN YOUR CASE, THE CLAIM OF REFUND WAS MADE ON DATED NIL AS PER ORDER U/S 154 DATED 08.09. 1999. IN ABSENCE OF THE SPECIFIC DATE OF CLAIM, THE DATE OF CLAIM IS TREATED AS MADE ON 08.09.1999. SINCE THE REFUND OF RS. 55,000/- (RS. 4 0,000 + RS. 15,500 I.E. INTEREST ALLOWABLE U/S 132B(4) OF THE ACT) WAS GRANTED WITHIN THE STIPULAT ED PERIOD AS PROVIDED U/S 243 OF THE ACT., THE CLAI M OF GRANTING INTEREST U/S 243 CANNOT BE ACCEDED TO A ND HENCE YOUR CLAIM FOR GRANTING OF THE REFUND U/S 243 IS HEREBY REJECTED. THE TOTAL INCOME REMAINS UNCHANGED I.E. RS: 60,047/ - AS PER ORDER GIVING APPEAL EFFECT U/S 250 OF THE ACT DATED 10.02.1992. CALCULATE THE FURTHER INTEREST FOR 6 MONTHS AT RATE AS APPLICABLE ON AMOUNT OF RS.40,000/- AND ISSUE T HE DEMAND NOTICE AND REFUND ORDER ACCORDINGLY. ITA NO 875-A - 2010 . A.Y. 1986- 87 3 4. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED T HE MATTER BEFORE CIT(A). CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY HOLD ING AS UNDER:- THE MAIN CONTENTION OF THE APPELLANT IS THAT INTE REST U/S.132B(4) SHOULD HAVE BEEN GRANTED TO HIM FROM 1-9-86 TO 28-9-99 AND NOT FROM 1-4-86 TO 30-3- 89 & THAT INTEREST U/S. 243 SHOULD BE ALLOWED TO THE APPELLANT. CASH OF RS. 40,000/- WAS SEIZED FROM THE APPELLANT DURING THE COURSE OF SEARCH ON 31- 10-1985. ORDER U/S. 132(5) WAS PASSED ON 27-2-1996. ORDER U/S. 143(3) WAS PASSED ON 30-3-89 BY RAISING DEMAND OF RS. 1,08,664/-. THE APPELLANT FIL ED APPLICATION DATED 1-5-92 U/S. 132(8) BEFORE THE CIT, GUJ.LL, AHMEDABAD REQUESTING HIM TO RELEASE SE IZED CASH OF RS. 40,000/- WITH INTEREST AS THE SAME WAS NOT ADJUSTED BY THE ASSESSING OFFICER AGAINST T HE EXISTING LIABILITY. THE ASSESSING OFFICER PASSED ORDER U/S. 154 DATED 8-9-1999 GIVING CREDIT FOR THE AMOUNT OF RS. 40,000/-SEIZED ON 31-10-1985. IN THE SAID ORDER HE ALLOWED INTEREST U/S. 132B(4) FOR A P ERIOD FROM 1-9-86 TO 30-3-89 I.E. FROM THE END OF S IX MONTHS OF THE DATE OF PASSING ORDER U/S. 132(5) TO THE DATE OF PASSING ORDER OF REGULAR ASSESSMENT. ( THE APPELLANT FILED APPLICATION FOR INTEREST UPTO T HE DATE OF ISSUE IF REFUND ORDER). THIS ORDER OF ASSESSING OFFICER WAS CHALLENGED BEFORE THE CIT(A) WHO DISMISSED THE APPEAL FILED LATE WITHOUT REASONABLE CAUSE. THE ITAT RESTORED THE MATTER TO T HE ASSESSING OFFICER TO DISPOSE OFF THE APPLICATION FILED BY THE APPELLANT ON 1-11-1999. THE ASSESSING OFFICER THEN PASSED ORDER U/S. 154 ON 6-10-2009 REJECTING THE CLAIM OF THE APPELLANT. AGAINST THIS ORDER, THE APPELLANT IS IN APPEAL BEFORE ME. 2. AS REGARDS THE FIRST CLAIM OF THE APPELLANT, THE ASSESSING OFFICER HAS CORRECTLY GIVEN THE INTEREST FROM 1-9-1986 TO 30-03-1989 I.E. FROM THE END OF SI X MONTHS OF THE DATE OF PASSING ORDER U/S. 132(5) T O THE DATE OF PASSING THE REGULAR ASSESSMENT. THEREFO RE, NO FURTHER INTEREST U/S. 132B(4) CAN BE GRANTED TO THE APPELLANT. 3. AS REGARDS SECOND CONTENTION OF THE APPELLANT TH AT HE SHOULD BE ALLOWED INTEREST OF U/S. 243/244 OF THE ACT, IT MAY BE MENTIONED THAT THERE ARE DIVERGE NT VIEWS OF VARIOUS HIGH COURT ON THIS ISSUE. FOR EXAMPLE HON'BLE KERALA HIGH COURT IN THE CASE OF K A KANTHA & SONS 186 ITR 97 (KER) AND THE HON'BLE M P HIGH COURT IN 249 ITR 1 (MP) IN THE CAS E OF MANOHAR LAL VS CIT HAVE TAKEN ONE VIEW I.E. SECTION 243/244 DOES NOT HAVE ANY APPLICATION TO SEIZED ASSETS. WHEREAS OTHER HIGH COURTS INCLUDING ALLAHABAD HIGH COURT IN 282 ITR 189 (ALL) BHAGWA PRASAD AGARWAL HAVE TAKEN DIFFERENT VIEWS. SINCE THIS MATTER IS DEBATABLE, THE SAME CAN NOT BE RECTIFIED U/S. 154 OF THE ACT. THIS IS NOT A MISTAKE APPARENT FROM THE RECORDS. 4. IN THE RESULT, APPEAL OF THE APPELLANT IS DISMIS SED. 5. AGGRIEVED BY THE ORDER OF CIT(A). ASSESSEE IS NO W IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE A.O. IN GRANTING INTEREST U/S.!32B(4) OF THE ACT ON THE AMOUNT OF RS.40,0007- SEIZED DURING THE COURSE OF SEARCH ON 31.10.1985 FOR A PERIOD 01.09.1989 TO 30. 03.89 I.E. FROM THE END OF SIX MONTHS OF THE DATE O F PASSING .ORDER U/S.!32(5) TO THE DATE OF PASSING OR DER OF U/S.154 DTD.08.09.1999 EVEN THOUGH THE APPELLANT IS ENTITLED TO THE INTEREST UP TO THE DAT E OF ISSUE OF REFUND ORDER I.E.04.11.2004. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING A ACTION OF THE A.O. IN HOLDING THE DATE OF ORDER PASSED U/S.154 I.E.08.09. 1999 AS THE DATE OF CLAIM OF INTEREST U/S.243 OF THE ACT AND IN REJECTING THE CLAIM OF THE APPELLANT FOR FURTHER INTEREST ON THE AFORESAID AMOUNT UP TO THE DATE ON WHICH THE SAME MAY BE ISSUED AS PER SEC.243 OF THE INCOME TAX ACT, 1961. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT GRANTING OF INTEREST UP TO THE DATE OF REFUND ON THE AMOUNT OF CASH SEIZED IS NOT A MISTAKE APPARENT FROM RECORD AND AS THE MATTER IS DEBATABLE SAME CANNOT BE RECTIFIED U/S.15 4 OF THE I.T. ACT, 1961. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE APPELLANT IS AGAIN BEFORE HIM IN SECOND ROUND OF AP PEAL ON THE SAME ISSUE, AFTER A LAPSE OF PERIOD OF ABOUT 25 YEARS FROM THE DATE OF SEIZURE OF CASH OF RS.40,000/- HE HAS NOT RECEIVED JUSTICE IN THE MATT ER TO WHICH HE IS LEGALLY ENTITLED TO. ITA NO 875-A - 2010 . A.Y. 1986- 87 4 6. BEFORE US, THE LD A.R. POINTED TO THE CHRONOLOGY OF THE EVENTS PLACED AT PAGE 16 OF THE PAPER BOOK. HE SUBMITTED THAT THOUGH THE CASH OF RS 40,000 WAS SEIZED BY THE DEPARTMENT ON 31.10.1985, THE ASSESSE E WAS GRANTED INTEREST FROM 1.9.1986 TO 30.3.1989 (I.E. FROM THE END OF SI X MONTHS OF THE DATE OF PASSING ORDER U/S 132(5) TO THE DATE OF PASSING OF ORDER DATED 8.9.1999 U/S 154 OF THE ACT). THE LD. A.R SUBMITTED THAT THE ASS ESSEE IS ENTITLED TO INTEREST UPTO THE DATE OF ISSUE OF REFUND ORDER I.E. 4.11.20 04. HE FURTHER SUBMITTED THAT ASSESSEE IS ALSO ENTITLED TO INTEREST U/S 243 OF TH E ACT WHICH HAS BEEN WRONGLY DENIED TO THE ASSESSEE. HE THUS SUBMITTED T HAT THE AO BE DIRECTED TO GRANT THE INTEREST DUE TO THE ASSESSEE. LD D.R ON T HE OTHER HAND SUPPORTED THE ORDER OF AO AND CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. 8. IT IS AN UNDISPUTED FACT THAT CASH OF RS 40,000/ - WAS SEIZED ON 31.10.1985 FROM THE PREMISES OF ASSESSEE, IT IS ALSO A FACT T HAT THE CREDIT FOR SEIZED CASH WAS NOT GRANTED WHILE DETERMINING THE TAX PURSUANT TO THE ORDER PASSED U/S 143(3) ON 30.3.1989 BUT THE CREDIT WAS GRANTED ON 8 .9.1999. IT IS ALSO A FACT THAT ORDER U/S 132(5) WAS PASSED ON 27.2.1996 THAT ASSESSEE WAS GRANTED INTEREST U/S 132B(4) FROM 1.9.1989 TO 30.3.1989 (I. E FROM THE END OF SIX MONTHS OF THE DATE OF PASSING OF ORDER U/S 132(5) T O THE DATE OF PASSING OF ORDER U/S 154) THOUGH THE CREDIT WAS GRANTED SUBSEQ UENTLY. 9. IN THE CASE OF CHIRAUJILAL SHARMA HUF VS. UNION OF INDIA (CIVIL APPEAL NO. 10601 OF 2013 ORDER DATED 26.11.2013) THE HONBLE A PEX COURT HAS NOTED AS UNDER:- 5 A CLOSE LOOK AT THE ABOVE PROVISIONS AND, PARTIC ULARLY, CLAUSE (B) OF SECTION 132B(4) OF THE ACT CLEARLY SHOWS THAT WHERE THE AGGREGATE OF THE AMOUN TS RETAINED UNDER SECTION 132 OF THE ACT EXCEEDS THE AMOUNTS REQUIRED TO MEET THE LIABILITY UNDER SE CTION 132B(1)(I), THE DEPARTMENT IS LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF FIFTEEN PERCENT ON E XPIRY OF SIX MONTHS FROM THE DATE OF THE ORDER UNDE R SECTION 132(5) OF THE ACT TO THE DATE OF THE REGULA R ASSESSMENT OR RE-ASSESSMENT OR THE LAST OF SUCH ASSESSMENTS OR REASSESSMENTS, AS THE CASE MAY BE. I T IS TRUE THAT IN THE REGULAR ASSESSMENT DONE BY TH E ASSESSING OFFICER, THE TAX LIABILITY FOR THE RELEVA NT PERIOD WAS FOUND TO BE HIGHER AND, ACCORDINGLY, THE SEIZED CASH UNDER SECTION 132 OF THE ACT WAS APPROP RIATED AGAINST THE ASSESSEES TAX LIABILITY BUT THE FACT OF THE MATTER IS THAT THE ORDER OF THE ASSESSI NG OFFICER WAS OVER-TURNED BY THE TRIBUNAL FINALLY ON ITA NO 875-A - 2010 . A.Y. 1986- 87 5 20.02.2004. AS A MATTER OF FACT, THE INTEREST FOR THE POST ASSESSMENT PERIOD I.E. FROM 4.3.1994 UNTIL REFUND ON THE EXCESS AMOUNT HAS ALREADY BEEN PAID B Y THE DEPARTMENT TO THE ASSESSEE. THE DEPARTMENT DENIED THE PAYMENT OF INTEREST TO THE ASSESSEE U/S 132B(4)(B), ACCORDING TO MR. ARIJIT PRASAD, LD. COUNSEL FOR THE REVENUE ON THE GROUND THAT THE REFU ND OF EXCESS AMOUNT IS GOVERNED BY SECTION 240 OF THE ACT AND SECTION 132B(4)(B) OF THE ACT HAS NO AP PLICATION. BUT, IN OUR VIEW, SECTION 132B(4)(B) DEALS WITH PRE-ASSESSMENT PERIOD AND THERE IS NO CO NFLICT BETWEEN THIS PROVISION AND SECTION 240 OR FO R THAT MATTER 244(A). THE FORMER DEALS WITH PRE-ASSES SMENT PERIOD IN THE MATTER OF SEARCH AND SEIZURE AND THE LATTER DEALS WITH POST ASSESSMENT PERIOD AS PER THE ORDER IN APPEAL. IT THEREFORE HELD THAT T HE VIEW OF THE DEPARTMENT IS NOT RIGHT ON THE PLAIN RE ADING OF SECTION 132B(4)(B) OF THE ACT AS INDICATED ABOVE. 10. UNDER THE PECULIAR FACTS AND MORE PARTICULARLY IN THE LIGHT OF JUDGMENT OF THE HONBLE SUPREME COURT, WE ARE OF VIEW THAT THE ACTI ON OF THE AUTHORITIES BELOW IS NOT JUSTIFIED. WE THEREFORE, SET ASIDE THE ORDER OF A.O. AND CIT(A), THE ISSUE IS REMITTED BACK TO THE FILE OF A.O. TO D ECIDE THE ISSUE AFRESH WITH DIRECTION TO GRANT CREDIT OF THE SEIZED CASH, IN TH E LIGHT OF JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CHIRONJILAL SHAR MA HUF VS. UNION OF INDIA AND ORS. (SUPRA) TO RECALCULATE THE INTEREST PAYABL E, IF ANY, AFTER GRANTING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 11. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 11 - 04 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD