THE ACIT(CENTRAL)-1, Indore V. SHRI PANKAJ KALANI, Indore

ITSSA 285/IND/2015

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2228 (ITAT-INDORE)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHNEY
• Assessee Lawyers: SHRI; S N AGRAWAL
• Keywords: Rectification of order; Question of law
• Section: 143(3); 153A; 234B; 147; 6; 10; 139

Judgement Text

(SS)285 OF 2015 AND OTHERS PANKAJ KALANI AND DEEPAK KALANI 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER IT(SS)A NOS. 285 TO 288/IND/2015 A.YS. 2007-08 TO 2010-11 ACIT(CENTRAL-I), INDORE :: APPELLANT VS PANKAJ KALANI, INDORE PAN ADUPK 6103 B :: RESPONDENT IT(SS)A NOS. 280 TO 284/IND/2015 A.YS. 2007-08 TO 2011-12 ACIT(CENTRAL-I), INDORE :: APPELLANT VS DEEPAK KALANI, INDORE PAN ADUPK 6102 A :: RESPONDENT DEPARTMENT BY SHRI RAJEEV VARSHNEY RESPONDENT BY SHRI S.N. AGRAWAL AND SHRI PANKAJ MOGRA DATE OF HEARING 05.07.2016 DATE OF PRONOUNCEMENT 05.07.2016 O R D E R PER BENCH (SS)285 OF 2015 AND OTHERS PANKAJ KALANI AND DEEPAK KALANI 2 THE ABOVE APPEALS ARE FILED BY THE DEPARTMENT CHALL ENGING THE ORDERS DATED 22.9.2015/23.9.2015 PASSED BY LD. CIT( A)-III, INDORE FOR THE ABOVE ASSESSMENT YEARS ON THE FOLLOWING COMMON GROU ND OF APPEALS: THAT LEARNED CIT(A) HAS ERRED IN DELETING THE ENHA NCEMENT OF INTEREST U/S 234A IN VIEW OF THE PROVISIONS OF SUB- SECTION (1) R.W. EXPLANATION 3 AND INTEREST U/S 234B IN VIEW OF PROV ISIONS OF SUB- SECTION (1) R.W. EXPLANATION 2, WHEREIN IT IS CATEG ORICALLY STATED THAT THE PERIOD OF CHARGING OF INTEREST STARTS FROM 1 ST DAY OF APRIL NEXT FOLLOWING SUCH FINANCIAL YEARS. 2. AT THE OUTSET OF HEARING, BOTH THE PARTIES SUBMI TTED THAT IN ALL THESE APPEALS, THE ABOVE COMMON ISSUE IS INVOLVED AND THE CASE OF PANKAJ KALANI (A.Y. 2010-11) IS THE LEAD CASE, THEREFORE, THE SAME MAY BE TAKEN AT FIRST AND THE DECISION TAKEN IN THE CASE O F PANKAJ KALANI (A.Y. 2010-11) MAY BE APPLIED IN OTHER REMAINING APPEALS HAVING IDENTICAL FACTS. 3. SHORT FACTS OF THE CASE ARE THAT SEARCH WAS COND UCTED IN THE CASE OF THE ASSESSEE ON 03.11.2011. THE ASSESSEE HAD FIL ED HIS ORIGINAL RETURN OF TOTAL INCOME FOR THE ASST YEARS 2007-08 T O 2011-12 PRIOR TO SEARCH. DETAIL OF INCOME TAX RETURNS HAS BEEN FILED BY THE ASSESSEE. NOTICE U/S 153A OF THE ACT WAS ISSUED ON 24.1.013 F OR FILING OF THE INCOME TAX RETURN WITHIN EIGHT DAYS FROM THE DATE O F RECEIPT OF THE NOTICE AND THE SAID NOTICE WAS ACTUALLY SERVED UPON THE AS SESSEE ON (SS)285 OF 2015 AND OTHERS PANKAJ KALANI AND DEEPAK KALANI 3 14.2.2013. COPY OF THE NOTICE ISSUED U/S 153A OF T HE ACT HAS BEEN ENCLOSED. THE ASSESSEE REQUESTED TO EXTEND THE TIME FOR FILING OF THE RETURN OF INCOME AND THE SAID REQUEST WAS ACCEPTED BY THE ASSESSING OFFICER VIDE ORDER DATED 26.2.2013, WHEREIN IT WAS DIRECTED TO FILE RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S 153A OF THE ACT WITHIN THIRTY DAYS FROM THE DATE OF ISSUANCE OF THE NOTICE U/S 153A OF THE ACT. IN RESPONSE, THE ASSESSEE FILED HIS RETURN OF TOTAL INCOME WITHI N THE EXTENDED TIME AS ALLOWED VIDE ORDER DATED 26.02.2013. HOWEVER, THE A SSESSING OFFICER VIDE RECTIFICATION ORDER DATED 17.11.2014 ENHANCED THE AMOUNT OF INTEREST U/S 234A AND 234B OF THE INCOME TAX ACT AN D NOTED THAT THE ASSESSMENT ORDER U/S 153A/143(3) WAS PASSED ON 12.3 .2014. IT WAS SEEN THAT NO INTEREST U/S 234A AND 234B WAS CALCULA TED FROM THE DATE OF PROCESSING U/S 143(1) TO THE DATE OF ASSESSMENT ORD ER U/S 143(3) R.W.S 153A, WHEREAS THE SAME WAS TO BE CALCULATED FROM 1 ST APRIL OF ASSESSMENT YEAR TO THE DATE OF ASSESSMENT ORDER PAS SED U/S 143(3) R.W.S. 153A. THE ASSESSING OFFICER, THEREAFTER, NOT ED THAT IN THIS REGARD, A NOTICE U/S 154/155 WAS ISSUED TO THE ASSESSEE TO FILE HIS REPLY WITHIN 7 DAYS FROM THE DATE OF RECEIPT OF THE NOTICE. HOWEVE R, NO REPLY HAS BEEN FILED BY THE ASSESSEE TILL DATE. THUS, THE ASSESSIN G OFFICER ENHANCED THE AMOUNT OF INTEREST U/S 234A & 234B. 4. MATTER CARRIED TO LEARNED CIT(A), WHO, DISCUSSIN G THE DECISIONS OF KERALA HIGH COURT IN THE CASE OF CIT VS. B. LAKSHMI KANTHAN (198 (SS)285 OF 2015 AND OTHERS PANKAJ KALANI AND DEEPAK KALANI 4 TAXMANN 485) AND KARANATAKA HIGH COURT IN THE CASE OF VIJAY KUMAR SABOO HUF (12 TAXMANN.COM 322) ALLOWED THE APPEALS OF THE ASSESSEES. BEING AGGRIEVED, THE DEPARTMENT IS IN AP PEALS BEFORE US. 5. BEFORE US, LD. DR RELIED ON THE ORDER OF THE ASS ESSING OFFICER WHEREAS LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND FURTHER SUBMITTED AS UNDER: THE AMOUNT OF INTEREST AS CHARGED IN THE ORIGINAL ASSESSMENT ORDER AND ALSO IN THE 154 ORDER AS PASSED IS AS UNDER:- S.NO NATURE OF INTEREST IN ORIGINAL ORDER IN RECTIFICATION ORDER A.Y. 1 INTEREST U/S 234A 370 133753 2007-08 2 INTEREST U/S 234B NIL 1404414 2007-08 3 INTEREST U/S 234A NIL 472927 2008-09 4 INTEREST U/S 234B 1036592 4256755 2008-09 5 INTEREST U/S 234A NIL 1679273 2009-10 6 INTEREST U/S 234B 10075642 14393773 2009-10 7 INTEREST U/S 234A NIL 1110477 2010-11 8 INTEREST U/S 234B 5237037 7614703 2010-11 9 INTEREST U/S 234A NIL 48353 2011-12 10 INTEREST U/S 234B 147474 217589 2011-12 CHARGEABILITY OF INTEREST U/S 234A OF THE ACT. THE APPELLANT HAD FILED HIS RETURN OF TOTAL INCOME IN RESPONSE TO THE NOTICE AS ISSUED U/S 153A OF THE INCOME TAX ACT WIT HIN THE EXTENDED TIME ALLOWED U/S 153A OF THE ACT. THE ASSESSING OFF ICER HAD ISSUED (SS)285 OF 2015 AND OTHERS PANKAJ KALANI AND DEEPAK KALANI 5 NOTICE U/S 153A OF THE ACT ON 24.01.2013 AND THE SA ME WAS ACTUALLY SERVED UPON THE ASSESSEE ON 14-02-2013 WHEREIN TIME WAS ALLOWED TILL 22.0.2.2013 I.E. WITHIN EIGHT DAYS FROM THE DATE OF RECEIPT OF THE NOTICE. HOWEVER, THE ASSESSING OFFICER ON THE REQUEST OF TH E ASSESSEE EXTENDED TIME TILL 30 DAYS FROM THE DATE OF RECEIPT OF THE NOTICE I.E. TILL 14.03.2013 BUT THE APPELLANT HAD FILED HIS RETURN O F TOTAL INCOME ON 13- 03-2013 I.E. WITHIN THE TIME AS ALLOWED. THAT WHEN THE APPELLANT HAD FILED HIS RETURN OF TOTAL INCOME WITHIN THE TIME AS ALLOWED U/S 153A OF THE ACT. HENCE, NO INTEREST IS CHARGEABLE U/S 234A OF T HE INCOME TAX ACT. THAT AS PER SUB- SECTION [3] OF SECTION 234A OF THE INCOME TAX ACT, INTEREST UNDER THIS SECTION IS CHARGEABLE AFTER THE EXPIRY OF THE TIME ALLOWED UNDER SUCH NOTICE. HOWEVER, IN THIS CASE RE TURN WAS FILED WITHIN THE TIME ALLOWED UNDER THE NOTICE. HENCE, THE ASSE SSING OFFICER WAS NOT JUSTIFIED IN CHARGING OF INTEREST UNDER THIS SECTIO N THROUGH THE RECTIFICATION ORDER. THAT IN VIEW OF THE ABOVE, IT IS SUBMITTED THAT INTEREST AS CHARGED U/S 234A OF THE ACT IN THE RECTIFICATION ORDER WAS RIGHTLY DELETED BY THE LD CIT[A]. HENCE, ORDER OF THE LD C IT[A] REQUIRES TO BE MAINTAINED AS LEGAL AND PROPER. CHARGEABILITY OF INTEREST U/S 234B OF THE ACT IN THE ORIGINAL ASSESSMENT ORDER AS PASSED U/S 153A R.W.S 143[3] OF THE ACT, INTEREST U/S 234B WAS CHARGED FROM THE DATE OF PASSING OF THE INTIMATION TO TILL THE DATE OF PASSING OF THE ORDER U/S 153A R.W.S 143[3] OF THE ACT AND RIGHTLY SO. THAT IN THE RECTIFICATION O RDER THE AMOUNT OF INTEREST WAS CHARGED U/S 234B OF THE ACT FROM 1 ST DAY OF APRIL NEXT FOLLOWING SUC H FINANCIAL YEAR TO TILL THE DATE OF PASSING OF THE ASSESSMENT ORDER U/S 153A R.W.S 143[3] OF THE ACT A ND THE SAME WAS CHALLENGED BY THE ASSESSEE IN APPEAL BEFORE THE LD CIT[A]. THAT AS PER SUB- SECTION [3] OF SECTION 234B OF THE INCOME TAX ACT, THE AMOUNT OF INTEREST IS CHARGEABLE FROM THE DATE OF THE INTIMAT ION AS PASSED U/S 143[1] TO TILL THE DATE OF THE PASSING OF THE ASSES SMENT ORDER U/S 143[3] R.W.S 153A OF THE ACT. COPY OF LETTER AS FILED BY T HE ASSESSEE BEFORE THE ASSESSING OFFICER IS ENCLOSED. CHALLENGED THE CHARGEABILITY OF INTEREST U/S 234A & 234B IN THE RECTIFICATION ORDER AS PASSED U/S 154 O F THE ACT- DEBATABLE ISSUE THE ASSESSING OFFICER HAD REVISED THE AMOUNT OF INT EREST U/S 234B OF THE ACT IN THE RECTIFICATION PROCEEDING U/S 154 OF THE ACT. THE SCOPE IN THE RECTIFICATION ORDER WAS TO RECTIFY THE APPARENT MIS TAKE. THAT WHETHER INTEREST U/S 234B IS CHARGEABLE FROM THE DATE OF OR IGINAL RETURN OF TOTAL INCOME TO TILL THE DATE OF PASSING OF THE ASSESSMEN T ORDER U/S 143[3] R.W.S 153A OF THE ACT OR FROM THE DATE OF PASSING O F THE INTIMATION U/S 143[1] TO TILL THE DATE OF THE PASSING OF THE REGUL AR ASSESSMENT ORDER U/S (SS)285 OF 2015 AND OTHERS PANKAJ KALANI AND DEEPAK KALANI 6 153A R.W.S 143[3] OF THE ACT. THAT AS PER SUB- SEC TION [3] OF SECTION 234B OF THE ACT, INTEREST IS CHARGEABLE FROM THE DA TE OF PASSING OF THE INTIMATION TO TILL THE DATE OF PASSING OF THE REGUL AR ASSESSMENT ORDER U/S 143[3] R.W.S 153A OF THE ACT BUT THE ASSESSING OFFI CER IN THE RECTIFICATION ORDER CHARGED INTEREST U/S 234B FROM 1 ST APRIL, NEXT FOLLOWING THE FINANCIAL YEAR TO TILL THE DATE OF THE PASSING OF T HE REGULAR ASSESSMENT ORDER U/S 143[3] R.W.S 153A OF THE ACT WHICH IS NOT CORRECT AND THE SAME IS ALSO HIGHLY DEBATABLE ISSUE WHICH CANNOT BE RECT IFY IN THE RECTIFICATION PROCEEDING. FOR THIS PREPOSITION THE ASSESSEE RELY ON THE DIRECT DECISION OF THE HONBLE APEX COURT IN THE CASE OF DINOSAUR S TEELS LTD V/S JCIT AS REPORTED IN 25 TAXMANN.COM 554[SC]. THE CHARGEAB ILITY OF INTEREST U/S 234B OF THE ACT AS PER SUB- SECTION [1] OR AS P ER SUB- SECTION [3] OF THE ACT IS HIGHLY DEBATABLE ISSUE AND OUTSIDE THE S COPE OF PROVISION OF SECTION 154 OF THE ACT. THAT IN VIEW OF THE ABOVE, IT IS REQUESTED TO APPROVE THE ORDER AS PASSED BY THE LD CIT[A] IN DEL ETING THE CHARGEABILITY OF INTEREST U/S 234A AND 234B OF THE ACT IN THE RECTIFICATION ORDER. 6. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. LOOKING T O THE FACTS AND CIRCUMSTANCES, WE FIND THAT IN THIS CASE, IF WE GO THROUGH THE ORDER OF THE LEARNED CIT(A), THE LEARNED CIT(A) WAS OF THE VIEW THAT THE DECISIONS OF HONBLE KERALA HIGH COURT AND KARNATAKA HIGH COURT HAVE TAKEN DIFFERENT VIEW, WHICH MAKES THE ISSUE A DEBATABLE O NE, THUS, THE MATTER IS OUT OF THE PURVIEW OF RECTIFICATION PROCEEDINGS U/S 154 OF THE ACT. LD. CIT(A) ALSO RELIED ON THE DECISION OF HON'BLE SUPRE ME COURT IN THE CASE OF DINOSAUR STEEL PVT. LTD., 25 TAXMANN.COM 554 WHE REIN HON'BLE SUPREME COURT HAS HELD THAT WHERE THE ISSUE INVOLVE D A MOOT QUESTION OF LAW, SECTION 154 IS NOT APPLICABLE. THE LD. AR F OR THE ASSESSEE CITED DECISION OF HONBLE KERALA HIGH COURT IN THE CASE O F CIT VS. B. LAKSHMIKANTHAN, 198 TAXMANN 485, WHEREIN IDENTICAL ISSUE HAS BEEN (SS)285 OF 2015 AND OTHERS PANKAJ KALANI AND DEEPAK KALANI 7 DECIDED AND FURTHER SUBMITTED THAT ITAT, INDORE IN THE CASE OF HARISH MEHTA VS. CIT (ITA NOS. 149 TO 153/IND/2012) HAS CO NSIDERED THIS DECISION AND DECIDED THE PRESENT ISSUE IN FAVOUR OF THE ASSESSEE. FOR READY REFERENCE, WE ARE REPRODUCING THE RELEVANT PO RTION OF THE DECISION OF HONBLE KERALA HIGH COURT HEREUNDER: 6. AFTER HEARING BOTH SIDES, WE FEEL THERE IS NO SUBSTANCE IN THE CONTENTION RAISED BY THE REVENUE THAT IN A REASSESS MENT COMPLETED UNDER S. 153A INTEREST FOR NON-PAYMENT OR SHORT PAYMENT OF A DVANCE TAX IS PAYABLE UNDER S. 234B(3) MERELY BECAUSE THE SAID REASSESSME NT UNDER S. 153A IS COMPLETED BY ACCEPTING THE RETURN FILED UNDER S. 14 3(1) OF THE ACT. INTEREST FOR NON-PAYMENT OR SHORT PAYMENT OF ADVANCE TAX IS PAYA BLE UNDER S. 234B FOR DIFFERENT PERIODS UNDER SUB-SS. (1) AND (3) OF THE SAID SECTION. IN ALL CASES OF REGULAR ASSESSMENTS COMPLETED UNDER S. 143(1) INTER EST IS TO BE CHARGED FOR THE PERIODS PROVIDED UNDER S. 234B(1) OF THE ACT. F URTHER, IF THE FIRST ASSESSMENT ITSELF IS INCOME ESCAPING ASSESSMENT MAD E UNDER S. 147 OR UNDER S. 153A, THEN SUCH ASSESSMENT WILL BE TREATED AS REGULAR ASSESSMENT AND INTEREST FOR NON-PAYMENT OR SHORT PAYMENT OF AD VANCE TAX IN SUCH CASES WILL BE PAYABLE UNDER S. 234B(1) OF THE ACT. HOWEVE R WHEN AN ORIGINAL ASSESSMENT COMPLETED UNDER S. 143 IS REVISED EITHER UNDER S. 147 OR UNDER S. 153A, THEN INTEREST FOR NON-PAYMENT OR SHORT PAYMEN T OF ADVANCE TAX IS PAYABLE ONLY FOR THE PERIOD MENTIONED IN S. 234B(3) OF THE ACT, WHICH PROVIDES FOR INTEREST FROM THE DATE OF COMPLETION OF REGULAR ASSESSMENT UNDER S. 143(1) TILL THE DATE OF COMPLETION OF REASSESSMENT OR RE-C OMPUTATION UNDER S. 147 OR S. 153A OF THE ACT. IN OUR VIEW, FOR THE PURPOSE OF LEVY OF INTEREST UNDER S. 234B(3), IT IS IMMATERIAL WHETHER RE-COMPUTATION OR REASSESSMENT UNDER S. 147 OR UNDER S. 153A IS MADE BY ACCEPTING THE REVIS ED RETURN FILED AND BY PROCESSING THE SAME UNDER S. 143(1) OR WHETHER REAS SESSMENT IS MADE BY REJECTING SUCH RETURNS AND BY DETERMINING THE INCOM E. THE FACT THAT THE PROCEDURE FOR CALLING FOR RETURN AND ASSESSMENT AFT ER SEARCH OR REQUISITION UNDER S. 153A IS THE SAME AS PROVIDED UNDER S. 139 DOES NOT MEAN THAT A REASSESSMENT COMPLETED UNDER THE SAID PROVISION IS A REGULAR ASSESSMENT OR ORIGINAL ASSESSMENT. ON THE OTHER HAND, WHATEVER BE THE PROCEDURE ADOPTED FOR ASSESSING ESCAPED INCOME OR UNDISCLOSED INCOME PURSUANT TO SEARCH OR REQUISITION, SUCH ASSESSMENT WILL ALWAYS BE A RE-AS SESSMENT OR RE- COMPUTATION UNDER S. 153A, AND UNLESS IT IS A FIRST ASSESSMENT, THAT COULD BE TREATED AS THE REGULAR ASSESSMENT IN TERMS OF EXPLN . (2) TO S. 234B(1), THEN INTEREST CAN BE CHARGED ONLY UNDER S. 234B(3) OF TH E ACT. IN THIS CASE, THE ORIGINAL RETURNS WERE PROCESSED UNDER S. 143(1) OF THE ACT AND THE PROCEEDINGS SO COMPLETED WERE ISSUED TO THE ASSESSE E. IT IS ONLY THEREAFTER THE DEPARTMENT CONDUCTED SEARCH AND MADE REVISED AS SESSMENTS UNDER S. 153A OF THE ACT THOUGH BY ACCEPTING RETURNS OF UNDI SCLOSED INCOME FILED AND BY ISSUING PROCEEDINGS UNDER S. 143(1) R/W S. 153A OF THE ACT. WE, THEREFORE, HOLD THAT THE ASSESSMENTS UNDER S. 153A ARE REVISED ASSESSMENTS AND SO (SS)285 OF 2015 AND OTHERS PANKAJ KALANI AND DEEPAK KALANI 8 MUCH SO, INTEREST COULD BE DEMANDED FOR THE PERIOD MENTIONED IN S. 234(B)(3) OF THE ACT AS HELD BY THE TRIBUNAL. IN THIS VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE TRIBUNAL AND DISMISS THE DEPARTMENT AP PEALS FOR BOTH THE YEARS. BEFORE US, THE LD. DR COULD NOT CONTROVERT THE FIND ING RECORDED BY THE LD. CIT(A) BY BRINING ANY CONTRARY MATERIAL ON RECORD. ON CONSIDERATION OF ABOVE, WE, FOLLOWING THE ABOVE ORDER OF THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. B. LAKSHMIKANTHAN (SUPRA), HOLD THAT LD. CIT(A) HAS RIGHTLY DELETED THE ENHANCEMENT OF INTEREST. WE CON FIRM THE ORDERS OF THE LD. CIT(A). ACCORDINGLY, WE FIND NO MERIT IN THE AP PEALS OF THE DEPARTMENT. IN THE RESULT, ALL THE APPEALS FILED BY THE DEPARTM ENT STAND DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 05.7.2016 . SD/- SD/- (N.S. SAINI) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 05.7.2016 !VYS! COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR, INDORE