The ACIT, Cent, Circle-1(1), Ahmedabad V. Meghmani Industries Ltd., Ahmedabad

ITSSA 570/AHD/2011

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7726 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-02-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 20-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Keywords: Gift
• Section: 143(3); 153A; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER IT(SS)A NO.570/AHD/2011 ASSESSMENT YEAR: 2005-06 ACIT, CENTRAL CIRCLE-1(1), AHMEDABAD V/S . MEGHMANI INDUSTRIES LTD., 27, PHASE-I, GIDC, VATVA, AHMEDABAD PAN NO. AABCM0535G (APPELLANT) .. (RESPONDENT) /BY APPELLANT SHRI VINOD TANWANI, SR-DR /BY RESPONDENT SHRI P.M. MEHTA, AR /DATE OF HEARING 29-02-2012 /DATE OF PRONOUNCEMENT 23-03-2012 O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THIS PRESENT APPEAL BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF LD. DATED 26-08-2011 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, AHMEDABAD. 2. THE FACTS IN BRIEF ARE THAT A SEARCH OPERATION U /S 132(1) OF THE INCOME-TAX ACT, 1961 WAS CARRIED OUT IN THE CASE OF SANJAYA R SHAH & MEGHMANI GROUP. A NOTICE U/S.153A OF THE ACT WAS ISSUED TO THE ASSESSEE AND THE ASSESSMENT PROCEEDINGS WERE COMPLE TED VIDE ASSESSMENT ORDER DATED 31-12-2007. SUBSEQUENTLY, TH E ASSESSING IT(SS)A NO.570/AHD/2011 A.Y. 2005-06 ACIT CC-1(1)ABD V. MEGHMANI INDS. LTD. PAGE 2 OFFICER PASSED ORDER U/S. 154 OF THE ACT UPON THE A SSESSEE OBSERVING THAT ON VERIFICATION OF THE RECORDS, IT IS NOTICED THAT THE ASSESSEE HAD CLAIMED RS.39 LAKH WHICH WAS SEIZED FROM THE PREMIS ES OF ITS DIRECTORS, SHRI LALIT K PATEL AND SHRI KANTIBHAI M PATEL IN TH EIR RETURN OF INCOME FILED IN PURSUANCE OF NOTICE U/S 153A. THIS AMOUNT WAS INADVERTENTLY TREATED AS SELF-ASSESSMENT DURING THE COURSE OF PAS SING ORDER U/S. 143(1) DATED 14-03-2007 AND MISTAKE ALSO CREPT INTO WHILE PASSING ORDER U/S. 153A R.W.S. 143(3) DATED 31-12-2007 SINCE NONE APPEARED ON BEHALF OF THE ASSESSEE IT IS PRESUMED THAT THE ASSE SSEE HAS NOTHING TO SAY AND THUS THE IMPUGNED ORDER U/S.154 OF THE ACT WAS PASSED. THEREAFTER, THE ASSESSEE MADE AN APPLICATION TO THE DCIT, CENTRAL CIRCLE-1 AHMEDABAD AGAINST THE ORDER DATED 15-02-20 10, THIS APPLICATION WAS ALSO REJECTED. THE ASSESSEE FEELING AGGRIEVED B Y THE ACTION OF THE ASSESSING OFFICER PREFERRED AN APPEAL BEFORE LD. CI T(A). THE LD. CIT(A) AFTER PERUSING THE RECORD AND SUBMISSIONS MADE BY T HE LD. AR ON BEHALF OF THE ASSESSEE OBSERVED THAT THERE WAS NO JUSTIFIC ATION IN PASSING ORDER U/S.154 AND TO WITHDRAW SUCH CREDIT IN ORDER TO CHA RGE INTEREST U/S. 234 UP TO THE DATE OF THE ASSESSMENT ORDER. THIS WAS NO T A MISTAKE RECTIFIABLE U/S.154. 3. THE REVENUE FEELING AGGRIEVED BY THE ORDER OF LD . CIT(A) HAS RAISED THE FOLLOWING GROUNDS FOR DETERMINATION:- 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THERE WAS NO MISTAKE RECTIFIABLE U/S.154 OF THE ACT AND FURTHER DIRECTING THE AO TO CONSIDER CREDIT FOR CASH SEIZED FROM THE RESIDENCE OF THE DIRECTOR OF THE ASSESSEE WHILE CHA RGING INTEREST U/S.234B OF THE ACT FROM THE DATE OF FILING OF RETU RN BY THE ASSESSEE. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. IT(SS)A NO.570/AHD/2011 A.Y. 2005-06 ACIT CC-1(1)ABD V. MEGHMANI INDS. LTD. PAGE 3 4. SINCE BOTH THE GROUNDS ARE INTERCONNECTED ARE TA KEN UP TOGETHER FOR DISPOSAL. 5. LD. DR VEHEMENTLY ARGUED THAT THE ORDER PASSED B Y LD. CIT(A) IS ERRONEOUS AND STRONGLY SUPPORTED THE ORDER PASSED B Y THE ASSESSING OFFICER. LD. DR RELIED UPON THE JUDGMENT PASSED BY HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF RAMJILAL JAGANNATH & ORS. V. ACIT (2000) 241 ITR 758 (MP) AND ALSO RELIED ON THE ORDE R PASSED BY THE LD. ITAT DELHI BENCH IN THE CASE OF SHRI MAHAVIR PRASAD GUPTA V. DCIT IN ITA NO.1151/DEL/2008 ORDER DATED 14-10-2011. LD. DR ARGUED THAT THE CREDIT OF THE SEIZED CASH IS NOT AUTOMATIC AND THE ASSESSING OFFICER HAS NO POWER TO DEAL UNLESS A REPRESENTATION IS MADE BY THE ASSESSEE IN THIS RESPECT. HE FURTHER ARGUED THAT THE AFOREMENTIONED JUDGMENTS AS RELIED BY HIM SUPPORTS HIS CONTENTION. THEREFORE, THE CRED IT OF ADVANCE TAX FOR THE 22-09-2005 TO 30-05-2006 WOULD NOT AVAILABLE TO THE RESPONDENT/ASSESSEE 6. ON THE CONTRARY, LD. AR ARGUED THAT THE CASE LAW RELIED UPON BY THE LD. DR WAS ON THE PECULIARITY OF FACTS AND WOUL D NOT APPLY ON THE PRESENT CASE. LD. AR SUBMITTED THAT SUCH APPLICATIO N IS NOT REQUIRED WHEN MONEY IS ONLY SEIZED. THE LD. AR HAS RELIED UP ON THE ORDER PASSED BY THE CO-ORDINATE BENCH IN THE CASE OF SHRI RAM S SARDA V. DCIT IN ITA NO.1172/RJT/2010 ORDER DATED 02-11-2011 AND IN THE CASE OF SUDHAKAR M SHETTY V. ACIT IN ITA NO. 4238 & 4239/MUM/2007. HE HAS ALSO FILED WRITTEN SUBMISSIONS, SAME ARE PLACED ON RECORD. 7. WE HAVE PERUSED THE RECORD AND THE ORDER PASSED BY THE AUTHORITIES BELOW AND ALSO HEARD THE RIVAL SUBMISSI ONS MADE BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AS WELL AS THE DEPARTMENTAL IT(SS)A NO.570/AHD/2011 A.Y. 2005-06 ACIT CC-1(1)ABD V. MEGHMANI INDS. LTD. PAGE 4 REPRESENTATIVE. THE ISSUE REQUIRED TO BE DECIDED IN THIS CASE IS THAT WHETHER THE MONEY SEIZED DURING THE SEARCH OPERATIO N CAN BE TREATED AS ADVANCE TAX FROM THE DATE OF ITS SEIZURE. IT WOULD BE APPROPRIATE IF THE RELEVANT PROVISIONS OF LAW IS REPRODUCED HEREIN FOR THE SAKE OF CLARITY. 132B(1) THE ASSETS SEIZED UNDER SECTION 132 OR REQ UISITIONED UNDER SECTION 132A MAY BE DEALT WITH IN THE FOLLOWI NG MANNER, NAMELY:- (I) THE AMOUNT OF ANY EXISTING LIABILITY UNDER THIS ACT, THE WEALTH-TAX ACT, 1957 (27 OF 1957), THE EXPENDITURE-TAX ACT, 19 87 (35 OF 1987), THE GIFT-TAX ACT, 1958 (18 OF 1958) AND THE INTERES T-TAX ACT, 1974 (45 OF 1974), AND THE AMOUNT OF THE LIABILITY DETER MINED ON COMPLETION OF THE ASSESSMENT [UNDER SECTION 153A AN D THE ASSESSMENT OF THE YEAR RELEVANT TO THE PREVIOUS YEA R IN WHICH SEARCH IS INITIATED OR REQUISITION IS MADE, OR THE AMOUNT OF LIABILITY DETERMINED ON COMPLETION OF THE ASSESSMENT UNDER CH APTER XIV-B FOR THE BLOCK PERIOD, AS THE CASE MAY BE] (INCLUDIN G ANY PENALTY LEVIED OR INTEREST PAYABLE IN CONNECTION WITH SUCH ASSESSMENT) AND IN RESPECT OF WHICH SUCH PERSON IS INS DEFAULT OR I S DEEMED TO BE IN DEFAULT, MAY BE RECOVERED OUT OF SUCH ASSETS: [ PROVIDED THAT WHERE THE PERSON CONCERNED MAKES AN APPLICATI ON TO THE ASSESSING OFFICER WITHIN THIRTY DAYS FROM TH E END OF THE MONTH IN WHICH THE ASSET WAS SEIZED, FOR RELEASE OF ASSET AND THE NATURE AND SOURCE OF ACQUISITION OF ANY SUCH ASSET IS EXPLAINED] TO THE SATISFACTION OF THE ASSESSING OFFICER, THE AMOU NT OF ANY EXISTING LIABILITY REFERRED TO IN THIS CLAUSE MAY B E RECOVERED OUT OF SUCH ASSET AND THE REMAINING PORTION, IF ANY, OF TH E ASSET MAY BE RELEASED, WITH THE PRIOR APPROVAL OF THE CHIEF COMM ISSIONER OR COMMISSIONER, TO THE PERSON FROM WHOSE CUSTODY THE ASSTS WERE SEIZED: PROVIDED FURTHER THAT SUCH ASSET OR ANY PORTION THEREOF AS IS REFERRED TO IN THE FIRST PROVISO SHALL BE RELEASED WITHIN A PERIOD OF ONE HUNDRED AND TWENTY DAYS FROM THE DATE ON WHICH THE LAST OF THE AUTHORIZATIONS FOR SEARCH UNDER SECTION 132 OR FOR REQUISITION UNDER SECTION 132A, AS THE CASE MAY BE, WAS EXECUTE D; (II) IF THE ASSET CONSIST SOLELY OR MONEY, OR PARTL Y OF MONEY AND PARTLY OF OTHER ASSTS, THE ASSESSING OFFICER MAY AP PLY SUCH MONEY IN THE DISCHARGE OF THE LIABILITIES REFERRED TO IN CLAUSE (I) AND THE IT(SS)A NO.570/AHD/2011 A.Y. 2005-06 ACIT CC-1(1)ABD V. MEGHMANI INDS. LTD. PAGE 5 ASSESSEE SHALL BE DISCHARGED OF SUCH LIABILITY TO T HE EXTENT OF THE MONEY SO APPLIED. IT IS EVIDENT FROM A BARE READING OF THE AFORESAID PROVISIONS THAT THE EXISTING LIABILITY UNDER THE INCOME-TAX CAN BE DISC HARGED FROM THE ASSETS OR MONEY SEIZED. IN THE PRESENT CASE, THE SEARCH OP ERATION WAS CONDUCTED ON 22-09-2005 AND THE ASSESSEE FILED RETU RN ON 31-05-2006 DECLARING THE SEIZED MONEY AS INCOME. IN OUR OPINIO N, IF THE ASSESSEE HAS DECLARED INCOME DURING THE YEAR UNDER CONSIDERA TION IN THAT EVENTUALITY HE IS LIABLE TO PAY ADVANCE TAX AS PER LAW THEREFORE THE ASSESSING OFFICER IS REQUIRED TO FIND OUT WHETHER S UCH 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 F ROM THE ASSESSEE. NOW COMING TO THE FACT OF THE PRESENT CASE, IT IS NOT D ISPUTED THAT THE MONEY SEIZED FROM THE PREMISES OF SHRI LALIT PATEL AND SA ME WAS SUBSEQUENTLY DECLARED IN THE RETURN OF INCOME FILED ON 31-05-200 6. HENCE, IT CAN VERY WELL BE INFERRED FROM THE RETURN SO FILED THAT THE RESPONDENT/ASSESSEE WAS REQUIRED TO PAY ADVANCE TAX ON SUCH INCOME AS M ANDATED U/S 208 OF THE IT ACT. THEREFORE, IN VIEW OF THE FACT THAT THERE IS NO AMBIGUITY IN THE PROVISION SO FAR APPLICATION/ADJUSTMENT OF THE SEIZED MONEY IS CONCERNED. FURTHER, THE JUDGMENTS AS RELIED UPON BY THE LD. DR WOULD NOT APPLY ON THE FACTS AND CIRCUMSTANCES OF THE PRE SENT CASE SINCE THIS IS NOT A CASE WHERE APPLICATION U/S. 132(5) IS MADE . MOREOVER, SECTION 132(5) IS NO MORE ON STATUTE BOOK, EVEN OTHERWISE T HERE IS DIVERGENCE IN OPINION BETWEEN THE HONBLE HIGH COURT OF MADHYA PR ADESH AND HONBLE DELHI HIGH COURT AS FAIRLY POINTED BY THE LD. DR. T HE ORDER OF THE ITAT DELHI BENCH IN ITA NO.1151/DEL/2008 AS RELIED BY T HE LD. DR IS ON DIFFERENT SET OF FACTS THEREFORE, IS NOT APPLICABLE ON THE FACTS THE PRESENT IT(SS)A NO.570/AHD/2011 A.Y. 2005-06 ACIT CC-1(1)ABD V. MEGHMANI INDS. LTD. PAGE 6 CASE. THE ISSUE WHETHER THE SEIZED MONEY SHOULD BE APPLIED TOWARDS ADVANCE TAX LIABILITY OF ASSESSEE AND CREDIT SHOULD BE GIVEN CREDIT THERE FROM THE DATE OF SEIZURE OF MONEY HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT RAJKOT BENCH IN ITA NO.1172/ RJT/ 2010 IN THE CASE OF SHRI RAM S SARDA V. DCIT AND THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF SUDHAKAR M SHETTY V. ACIT IN ITA NO.4238 & 4239/MUM/2007 . RESPECTIVELY FOLLOWING THE RATIO LAID THEREIN WE DO NOT FIND ANY INFIRMITY INTO THE IMPUGNED ORDE R. THEREFORE, THE PRESENT APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 23/03 /2012 SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP - 23/03/2012 '() * +, +, +, +, --. --. --. --. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. )-1 + +2 / CONCERNED CIT 4. + +2- / CIT (A) 5. .56 ---1, + -1 , '() / DR, ITAT, AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER/ +, , /TRUE COPY/ =/ ' > + -1 , '() *