ACIT, New Delhi V. Sh. Ajay Kumar Jain, Delhi

ITSSA 5/DEL/2014

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 2882 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-01-2017
• Assessment Year: misc
• Appeal Filed On: 29-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Keywords: Block assessment
• Section: 234B; 154

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SH. KULDIP SINGH , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I T (SS) A NO . 5/DEL/2014 (ASSESSMENT YEAR: 1996 - 97 ) ACIT, CIRCLE - 39(1), NEW DELHI VS. AJAY KUMAR JAIN, 4561, DEPUTY GANJ, SADAR BAZAR, DELHI PAN:AAAPJ1986E (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY: SH RAVI JAIN, CIT DR DATE OF HEARING 12/01/ 2016 DATE OF PRONOUNCEMENT 16 / 01 / 2017 O R D E R PER PRASHANT MAHARISHI , A . M . 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - XII, NEW DELHI DATED 30.10.2013 FOR THE ASSESSMENT YEAR 1996 - 97 TO 2002 - 03. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE INTEREST WHICH WAS CHANGES U/S 234B ON THE BASIS OF THE ORDER F THE SETTLEMENT COMMISSION WHICH IS CONCLUSIVE AND BEYOND THE JURISDICTION OF THE CIT(A) AND THUS THE ORDER OF THE LD CIT(A) IS ULTRA - VIRES AND BAD IN LAW. 2. IN THE FACTS AND CIRC UMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELEING THE CHARGING OF INTEREST U/S 234B OF IT ACT, 1961 IGNORING THE FACT THAT THE HONBLE SETTLEMENT COMMISSION WHILE PASSING THE ORDER U/S 245D(4) HAD ORDERED THAT THE INTEREST CHARGEABLE U/S 234B BE CH ARGED UP TO THE DATE OF ORDER U/S 245D(1). 3. THE ONLY ISSUE INVOLVED IN THE APPEAL IS WHEN BLOCK ASSESSMENT ASSESSEE APPROACHED SETTLEMENT COMMISSION AND SETTLEMENT COMMISSION ORDERED TO LEVY INTEREST U/S 234B OF THE ACT UP TO THE DATE OF ORDER U/S 245D (1) WHICH WAS CHARGED BY THE ASSESSING OFFICER BY INVOKING PROVISIONS OF SECTION 154 OF THE ACT, WHERE NO INTEREST IS CHARGEABLE IN CASE OF BLOCK ASSESSMENT. THE ASSESSEE APPROACHED SETTLEMENT COMMISSION FOR THE BLOCK PERIOD 1996 - 97 TO 2002 - 03 WHO PASSED A N ORDER U/S 245D(4) ON 31.03.2011 AND DIRECTED THAT INTEREST CHARGEABLE U/S 234B WILL BE CHARGED UP TO DATE OF 245D(1). CONSEQUENTLY, THE LD ASSESSING OFFICER PASSED AN ORDER U/S 154 ON 24.01.2013 PAGE 2 OF 4 CHARGING INTEREST U/S 234B OF THE ACT OF RS. 1176751/ - . ON APPEAL BEFORE THE LD CIT(A) IT WAS DELETED RELYING ON THE CASE OF MR. AKHIL JAIN WHO WAS ALSO A ONE OF THE ASSESSEE BEFORE SETTLEMENT COMMISSION. AGAINST THIS ORDER REVENUE IS IN APPEAL BEFORE US. 4. LD CIT DR SUBMITTED THAT THE PROVISIONS OF SECTION 234B O F THE ACT ARE MANDATORY AND LD CIT(A) HAS ERRED IN DELETING IT. 5. DESPITE NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDER OF THE SETTLEMENT COMMISSION. THE LD CIT(A) HAS DELETED T HE INTEREST CHARGED U/S 234B OF THE ACT BASED ON HER OWN DECISION IN CASE OF MR. AKHIL JAIN. THE ORDER OF THE AKHIL JAIN TRAVELLED UP TO THE LEVEL OF TRIBUNAL WHO ADJUDICATED IN IT(SS)A NO.26/DEL./2013, BLOCK PERIOD : 1996 - 97 TO 2002 - 03 , DATED 12.06.2015 ON THE IDENTICAL ISSUE AS UNDER : - 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS FOLLOWS. FOR THE BLOCK PERIOD 1996 - 97 TO 05.02.2002, THE SETTLEMENT COMMISSION PASSED AN ORDER DATED 31.03.2011 U/S 245D (4). THE ASSESSING OFFICER PASSED AN ORDER U/S 158BC / 245D (4) ON 04.05.2011 DETERMINING INCOME AT RS.8,21,000/ - AND RAISED A DEMAND OF RS.60,548/ - . THE DEMAND RAISED WAS DULY PAID BY THE ASSESSEE. SUBSEQUENTLY, A NOTICE U/S 154 WAS ISSUED TO THE ASSESSEE PROPOSING TO CHARGE INTEREST U/S 234B OF THE ACT. I N RESPONSE TO THE NOTICE U/S 154, THE ASSESSEE FILED ITS REPLY DATED 09.01.2013. IT WAS SUBMITTED THAT THERE WAS NO MISTAKE APPARENT FROM THE RECORD WITHIN THE MEANING OF SECTION 154 OF THE ACT AND ALSO C ONTENDED THAT INTEREST U/S 234B IS NOT CHARGEABLE IN RESPECT OF INCOME DETERMINED IN THE BLOCK ASSESSMENT. THE ASSESSING OFFICER'S ATTENTION WAS SPECIFICALLY DRAWN TO THE PROVISIONS OF SECTION 158BF OF THE ACT. 4. THE ASSESSING OFFICER, HOWEVER, REJECTED THE CONTENTIONS RAISED BY THE ASSESSEE AND PASSED AN ORDER U/S 154/158BC/245D (4) OF THE ACT (ORDER DATED 24.02.2013) RAISING A DEMAND U/S 234B OF THE ACT AMOUNTING TO RS.7,88,252/ - . THE ASSESSING OFFICER H AD CHARGED THE INTEREST RELYING ON THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF CIT VS. HINDUSTAN BULK CARRIERS AND SECTION 234B (4) OF THE ACT. 5. AG GRIEVED, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT (A) HELD THAT INTEREST U/S 234B OF THE ACT CANNOT BE LEVIED IN BLOCK ASSESSMENT BY PLACING REFERENCE ON THE PROVISIONS OF SECTION 158BF OF THE ACT. THE RELEVANT FINDING OF THE CIT (A) READS AS FOLLOWS : '5.1. IT IS A FACT THAT THE ASSESSMENT IN THIS CASE WAS PASSED U/S 158BC, WHICH LAYS DOWN SPECIAL PROCEDURE FOR BLOCK ASSESSMENT OF SEARCH CASES IN CHAPTER XIVB OF THE INCOME - TAX ACT. SECTION 158BF , ALSO A PART OF CHAPTER XIVB, LAYS DOWN THAT 'NO INTEREST' UNDER THE PROVISIONS OF SECTION 234A , 234B OR 234C OR PENALTY U/S 271(1)(C), 271A, 271B, 'SHALL BE LEVIED OR IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED IN THE BLOCK PAGE 3 OF 4 ASSESSMENT'. THE LEVY OF INTEREST AND PENALTY IN CASES ASSESSED UNDER CHAPTER X IVB ARE STRICTLY GUIDED BY THE PROVISIONS OF SECTION 158BFA . UNDER THESE CIRCUMSTANCES THE AO COULD NOT HAVE IMPOSED INTEREST U/S 234B IN THE CASE AT HAND. 5.2. THE REFERENCE BY THE AO TO THE CASE OF HINDU STAN BULK CARRIERS (SUPRA) IS MISPLACED SINCE IN THAT CASE BLOCK ASSESSMENT WAS NOT INVOLVED. IN ANY CASE THIS DECISION WAS DISAPPROVED BY A FIVE MEMBER BENCH IN THE CASE OF BRIJ LAL V CIT 194 TAXMAN 566 (SC). IN BRIJ LAL (SUPRA) SECTION 234A , 234B AND 234C WERE HELD TO BE APPLICABLE TO PROCEEDING OF SETTLEMENT COMMISSION UPTO THE STAGE OF 245D(1) AND NOT B EYOND THAT. BUT IN THIS CASE ALSO THE MATTER DID NOT REFER TO BLOCK ASSESSMENT UNDER CHAPTER XIVB. 5.3. THE REFERENCE BY THE AO TO 234B(4) IN SUPPORT OF THE LEVY OF INTEREST U/S 234B IN THE INSTANT CASE, IS ALSO MISPLACED. THE PROVISIONS OF SECTION 234B(4) , HAVE TO BE READ HARMONIOUSLY WITH SECTION 158BF , SUCH THAT ORDERS OF THE SETTLEMENT COMMISSION U/S 245D(4) REFERRED IN SECTION 234B(4) WOULD NECESSARILY EXCLUDE ORDERS RELATING TO BLOCK ASSESSMENT FALLING UNDER CHAPTER XIVB OF THE INCOME TAX ACT. 5.4. IN VIEW OF THE DISCUSSION ABOVE THE GROUNDS 2, 3 AND 4 OF THE APPEAL ARE ALLOWED.' 6. THE REVENUE, BEIN G AGGRIEVED, IS IN APPEAL BEFORE US. 7. THE LD. DR SUBMITTED THAT THE SETTLEMENT COMMISSION HAS SPECIFICALLY DIRECTED TO LEVY INTEREST U/S 234B OF THE ACT UP TO THE DATE OF ORDER PASSED U/S 245D(1) OF THE ACT, THEREFORE, THE CIT (A) WAS NOT JUSTIFIED IN DE LETING THE LEVY OF INTEREST U/S 234B OF THE ACT. 8. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE INCOME - TAX AUTHORITIES AND RELIED ON THE FINDINGS OF THE CIT (A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE INSTANT CASE, THE ASSESSMENT WAS COMPLETED UNDER CHAPTER XIV - B OF THE ACT U/S 158BC/245D (4) OF THE ACT. BY VIRTUE OF THE SPECIAL PROVISIONS OF SECTION 158BF OF THE ACT, NO INTER EST U/S 234B OF THE ACT IS CHARGEABLE ON THE AMOUNT OF UNDISCLOSED INCOME. THE PROVISIONS OF SECTION 158BF FOR READY REFERENCE IS REPRODUCED BELOW : 'NO INTEREST UNDER THE PROVISIONS OF SECTION 234A , 234B OR 234C OR PENALTY UNDER THE PROVISIONS OF CLAUSE (C) OF SUB - SECTION (1) OF SECTION 271 OR SECTION 271A OR SECTION 271B SHALL BE LEVIED OR IMPOSED UPON THE ASSESSEE IN RESPECT OF THE UNDISCLOSED INCOME DETERMINED IN THE BLOCK ASSESSMENTS.' WHEN CHARGING OF INTEREST U/S 234B OF THE ACT IS NOT PERMISSIBLE IN THE CASES OF BLOCK ASSESSMENT UNDER CHAPTER XIV - B OF THE ACT, BY VIRTUE OF SECTION 158BF , THE ASSESSING OFFICER HAD WRONGLY CHARGED INTEREST U/S 234B OF THE ACT. THE NON - LEVY OF INTEREST U/S 234B OF THE ACT, IN THE ORIGINAL ORDER OF THE ASSESSING OFFICER DATED 04.05.2011, CANNOT BE STATED TO BE A MISTAKE APPARENT ON RECORD WARRANTING RECTIFICATION U/S 154 OF THE ACT. THEREFORE, THE CIT (A) IS JUSTIFIED IN QUASHING THE ORDER PASSED BY THE ASSESSING OFFICER U/S 154 OF THE ACT. IT IS ORDERED ACCORDINGLY. PAGE 4 OF 4 7. THEREFORE , RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH WE ALSO HOLD THAT IN VIEW OF THIS PROVISIONS OF SECTION 158BF NO INTEREST SHALL BE CH ARGEABLE IN CASE OF BLOCK ASSESSMENT. 8. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 / 01 / 2017 . - S D / - - S D / - ( KULDIP SINGH ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 / 01 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI