Shri Dhirejlal R.Sanghavi, Ahmedabad V. The Income tax Officer,Ward-10(1), Ahmedabad

ITSSA 654/AHD/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 3087 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-08-2012
• Assessment Year: misc
• Appeal Filed On: 09-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Assessee Lawyers: DIVYAKANT PARIKH
• Keywords: Rectification of order; Search and seizure; Block assessment
• Section: 244A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH BEFORE: SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARA T, JUDICIAL MEMBER SRI DHIRAJLAL R. SANGHAVI B-22, MALHAR FLATS, B/H TELEPHONE EXCHANGE, VASNA, AHMEDABAD (APPELLANT) PAN NO. ACEPS 6871 P VS. ITO WARD 10 (1) AHMEDABAD (RESPONDENT) REVENUE BY : SRI D.K.SINGH, SR. D.R. ASSESSEE BY : SRI DIVYAKANT PARIKH DATE OF HEARING : 09-08-2012 DATE OF PRONOUNCEMENT : 12-10-2012 / ORDER PER : KUL BHARAT, JUDICIAL MEMBER:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XVI, AHMEDABAD DATED 20 SEPTEMBER,2011. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CTT (A) HAS ERRED IN BOTH IN LAW AND ON FAC TS IN CONFIRMING THE ACTION OF THE LD AO ALLOWING INTEREST OF RS. 55 ,380/- ONLY AS AGAINST LEGITIMATE CLAIM OF INTEREST ALLOWABLE AT R S. 2,68,593/- . THE ID CIT(A) FAILED TO APPRECIATE THAT IN VIEW OF DECI SION OF THE APEX COURT IN SANDWIK ASIA LTD VS CIT 2801 ITR 643 AND D ECISION OF GUJARAT HIGH COURT IN CIT VS HYNOOP FOOD & OIL INDU STRIES LTD 320 ITR 365, AND OTHER CASE LAWS DIRECTLY ON THE POINT AT ISSUE, ASSESSEE I.T.(S.S.)A. NO 654/AHD/2011 A.Y. BLOCK PERIOD IT(SS)A NO. 654/AHD/2011 PAGE NO. DHIRAJLAL R. SANGHAVI VS ITO 2 OUGHT TO HAVE BEEN COMPENSATED FOR BEING DEPRIVED O F REFUND OF RS.2,80,000/- FOR THE PERIOD FROM 1-04-2001 TO 30/0 4/2009-INTEREST AS CLAIMED BE DIRECTED TO BE GRANTED NOW. 2. THE LD CIT(A) ERRED BOTH IN LAW AND ON FACTS IN OVE RLOOKING THE PROVISIONS OF S. 132B(3). IT IS MANDATORY TO REFUND THE ASSETS(MONEY) FORTHWITH AND SINCE THE SAID MONEY WAS ACTUALLY REF UNDED ON 13/04/2009 AND NOT ON 31/03/2001, THE ASSESSEE WAS ENTITLED TO INTEREST ON THE AMOUNT RETAINED BY THE DEPARTMENT. IT BE SO HELD NOW AND INTEREST BE ALLOWED AS CLAIMED FOR THE PERIOD 1-04-2001 TO 30-04- 2009 . 3. BOTH THE LOWER AUTHORITIES PATENTLY ERRED IN LAW AND ON FACTS IN HOLDING THAT NO INTEREST IS PAYABLE AFTER COMPLETION OF BLOCK ASSESSMENT ON 31/03/2001 WHICH IS AGAINST THE MANDA TE OF S, 132B AS WELL AS S. 244A(L)(B) AS INTEREST IS TO BE ALLOWED TILL THE DATE OF GRANTING OF REFUND. 4. WITHOUT PREJUDICE TO THE ABOVE, HE ID C1T(A) ALS O ERRED BOTH IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE REFUND WA S DUE AFTER ADJUSTMENT OF TAX LIABILITY OF THE ASSESSEE PURSUAN T TO BLOCK ASSESSMENT AND THEREFORE REFUND WAS DUE TO THE ASSE SSEE CONSEQUENT TO ASSESSMENT FOR WHICH ASSESSEE WAS ALSO ENTITLED TO INTEREST UNDER NORMAL PROVISIONS OF S. 244A AFTER INTEREST IS CALC ULATED UNDER S. 132B(4)(B) UP TO BLOCK ASSESSMENT AND THE AMOUNT WA S NOT REFUNDED THEREUPON ON 31-03-2001. 5. THE ID, CIT ALSO ERRED IN NOT DIRECTING TO GRANT IN TEREST ON INTEREST WHICH WAS ACTUALLY PAID AFTER LONG TIME FROM 31-03-2001 6. THE ID CIT(A) FAILED TO PROPERLY APPLY THE RATIO OF VARIOUS CASE LAWS `WHICH WERE APPLICABLE TO THE FACTS OF THE APPELLANTS CASE . 7. THE ID C1T(A) OUGHT TO HAVE ALLOWED THE APPEAL I N TO DO. 2. THE BRIEFLY STATED FACTS ARE THAT IN THIS CASE A SEARCH AND SEIZURE ACTION WAS CARRIED OUT, WHEREIN THE CASH AMOUNTING TO RS. 2,78,900/- WAS SEIZED. THE BLOCK ASSESSMENT PROCEEDINGS WERE FINALIZED ON 30-03-2001 AND THE CASH WAS RELEASED ON 13-04-2009. SUBSEQUENTLY, IN PURSUANCE TO THE APPLICATION U/S 154 OF THE INCOME TAX ACT,1961 (HER EINAFTER REFERRED TO AS THE ACT) DATED 20-04-2009 AN ORDER U/S 154 OF THE A CT WAS PASSED ON 31-08- 2009 THEREBY INTEREST U/S 132(B)(4) OF THE ACT WAS GRANTED. THE ASSESSEE IT(SS)A NO. 654/AHD/2011 PAGE NO. DHIRAJLAL R. SANGHAVI VS ITO 3 AFTER LAPSE OF NINE MONTHS FILED ANOTHER APPLICATIO N DATED 14-06-2010 U/S 154 OF THE ACT FOR RECTIFICATION OF MISTAKE. THE A SSESSEE SUBMITTED THEREIN THAT HE IS ENTITLED TO RECEIVE FURTHER INTEREST FOR 97 MONTHS I.E. FROM 01-04- 2001 TO 30-04-2009 AMOUNTING TO RS. 2,68,593/-. TH E SAID APPLICATION WAS REJECTED BY THE ASSESSING OFFICER VIDE ORDER DATED 13-12-2010. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSION DISMISSED THE APPEAL. UNDER THESE FACTS AND CIRCUMSTANCES THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THIS T RIBUNAL. 3. LD. COUNSEL FOR THE ASSESSEE APART FROM MAKING ORAL SUBMISSIONS MADE FOLLOWING WRITTEN SUBMISSIONS. AS STATED IN THE GROUND NO: 1 TO 4 , THE APPELLANT WAS NOT GRANTED INTEREST UNDER S. 244 A ON THE REFUND OF RS.2,76,900 WHICH BECAME DUE TO HIM AFTER COMPLETION OF ASSESSMENT ON 30.03.2001. (DETAILS ARE AS PER S 154 ORDER DATED 30.08 2009 ATTACHED ANNEXURE-B HERETO PAGE 2 TO 3) 1) IN FACT THE REFUND ITSELF WAS GRANTED AFTER A LAPSE OF NEARLY NINE LONG YEARS IN THE MONTH OF APRIL, 2009 AND THAT TOO, AFTER GRIEVANCE APPLICATION WAS FILED WITH INCOME TAX OMBUDSMAN AHMEDABAD . THE REFUND WAS GIVEN WITHOUT ANY INTEREST. 2) APPELLANT THEREFORE PREFERRED APPLICATION FOR GRANT INTEREST [COPY OF APPLICATION DATED 20.04,2009 IS ATTACHED HERETO ANN EXURE-C PAGA 4 ). 3) LD AO IN HIS ABOVE ORDER UNDER S 154 DATED 3L.08.2009 CALCULATED INTEREST MERELY UNDER S. 132B (4) FOR THE PERIOD OF ONLY 20 MONTHS IE FROM THE PERIOD AFTER 120 DAYS FROM DATE OF SEIZURE OF CASH TILL COMPLETION OF ASSESSMENT IE. UP TO 30.03 2001. HOWEVER, SINCE REF UND WAS NOT GIVEN AFTER COMPLETION OF ASSESSMENT ON 31 03.2001 BUT ACTUALLY RELEASED ONLY IN APRIL, 2009, INTEREST UNDER S . 244A BECAME PAYABLE TO THE APPELLANT AS THE HUGE SUM WAS RETAINED BY THE DEPARTMENT FOR 97 MONTHS. T HIS FACT WAS BROUGHT AGAIN TO THE NOTICE OF ID AO BY APPLICA TION DATED 14.06.2010 ( COPY ATTACHED HERETO ANNEXURE- D PAGE 5 TO 6) WHO I N HIS ORDER MERELY REITERATED THAT INTEREST WAS RIGHTLY CALCULATED UND ER S. 132B(4) AND REJECTED CLAIM OF APPELLANT. 4) AN APPEAL WAS THEREFORE PREFERRED BEFORE ID C1TIA) AND IN THE FIRST GOUND BEFORE HIM, (COPY OF FORM NO: 35 WITH GROUNDS ATTACHED ANNEXURE-E PAGE 7 TO 9) APPELLANT HAS TAKEN GRIEVANCE THAT INTEREST ON REFUND UNDER S. 244A WAS NOT PAID FOR 97 RNONTHS 5) LD CIT(A) WITHOUT GOING IN TO OR COMMENTING ON THE GROUND ABOUT PAYMENT OF INTEREST UNDER S. 244A, DISMISSED THE APPEAL BY STATING THAT INTEREST UNDER S. 132B (4) WAS RIGHTLY ALLOWED. THE ID CIT[A) FAILED TO IT(SS)A NO. 654/AHD/2011 PAGE NO. DHIRAJLAL R. SANGHAVI VS ITO 4 APPRECIATE THE PROVISIONS OF S. 132B(3) WHICH REQUIRED THE ID AO TO RETURN AND REFUND THE AMOUNT FORTHWITH WAS FOLLOWED BY ID AO AND AFTER LAPSE OF 97 MONTHS ,, THAT TOO ON DIRECTION OF OMBUDSMAN REFUND WAS GIVEN IN APRIL 2 009. 6) APPELLANT SUBMITS THAT WHEN REFUND IS DUE AFTER COMPLETION OF ASSESSMENT AND TAX PAYABLE WAS ADJUSTED FROM SEIZED CASH, INTEREST IN TERMS OF S 244A(L)(B) IS TO THE APPELLANT. THE AUT HORITIES BELOW ERRED IN NOT GRANTING INTEREST. 7) THE CBDT CIRCULAR NO: 2/2007 DATED 28.03.2007 (COPY IS ATTACHED ANNEXURE- F PAGE 10 HERETO) HAS VERY CATEGORICALLY INSTRUCTED FOLLOWING SUPREME COURT JUDGMENT IN SANDVIK ASIA LTD 280 ITR 643 (SC) AND GUJARAT HIGH COURT JUDGMENT IN D.J. WORKS VS DCIT 195 ITR 227 THAT ASSESSEE NEEDED TO BE COMPENSATED FOR THE DELAYED PAYMENT OF EVEN INTEREST ON INTEREST. 8) THE APPELLANT'S CASE IS SQUARELY COVERED BY THE FOLLOWING HIGH COURT JUDGMENTS IN WHICH IT IS HELD THAT OVER AND ABOVE INTEREST UNDER S. 132B(4) F WHERE THE REFUND OF CASH SEIZED IS NOT IMMEDIATELY GIVEN, INTEREST UNDER S. 244A (1)(B) IS ALLOWABLE TO THE ASSESSEE : I) SITARAM THROUGH IRS VS CIT (2012) 248 CTR (BOM) 180 ( II) CIT VS ISLAMIC ACADEMY EDUCATION (20 11) 52 DTR(KAR) 69. COPIES OF ABOVE JUDGMENTS ATTACHED HERETO ANNEXURE- G PAGE 11 TO 16, IN VIEW OF ABOVE JUDGMENTS AND THE LEGAL POSITION, INTEREST UNDER S. 244A (1) BE HELD TO BE ALLOWABLE TO THE APPELLANT AND AO BE DIRECTED TO GRANT INTEREST FROM 01-O4-2001 TO 30.04.2009 AS CLAIMED 9) GROUND NO: 5. AS THE FACTS ARE ON RECORD, EVEN INTEREST OF RS. 55,380 WAS NOT GIVEN ON 30. 03.2001 BUT WAS GIVEN ON 31.08 2009 IN ABOVE ORDER UNDER S. 154. IN VIEW OF CBDT CIRCULAR NO. 2/ 2007 ATTACHED AS ABOVE AND DECISION OF THE SUPREME COURT IN CIT VS H.E.G LTD COPY ATTACHED ANNEXURE- H PAGE 17, INTEREST AMOUNT PARTAKES THE CHARACTER OF 'AMOUNT DUE ' UNDER S. 244A AND INTEREST ON SUCH IN TEREST AMOUNT IS ALSO PAYABLE TO THE APPELLANT DIRECTION BE GIVEN TO ID A O TO GIVE INTEREST ON SUCH INTEREST AMOUNT FROM 01.04.2001 TO 31.08.2009 IN VIEW OF APEX COURT DECISION AND CBDT CIRCULAR STATED ABOVE. 4. ON THE CONTRARY SR. D.R. SUBMITTED THAT THE ORDE RS OF THE AUTHORITIES BELOW ARE PERFECTLY IN ORDER. HE SUBMITTED THAT IT HAS BEEN RIGHTLY HELD THAT THERE IS NO MISTAKE OF FACT OR LAW IN THE ORDER DAT ED 13-12-2010 PASSED U/S 154 OF THE ACT. HE ALSO POINTED THAT THE GROUNDS T AKEN IN THE PRESENT APPEAL WERE NOT TAKEN BEFORE LD. CIT(A) AND THE JUDGMENTS RELIED WERE ALSO NOT PLACED BEFORE THE LD. CIT(A). IT(SS)A NO. 654/AHD/2011 PAGE NO. DHIRAJLAL R. SANGHAVI VS ITO 5 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, IT IS NOTICED FROM THE R ECORD THAT THE APPELLANT- ASSESSEE HAD RAISED FOLLOWING GROUNDS OF APPEAL BEF ORE THE LD. CIT(A). 1. AS THE AMOUNT SEIZED BY THE DEPARTMENT ON 17-03 -1999 WAS NOT RELEASED ON FINALIZATION OF THE ASSESSMENT AND RELE ASED ONLY ON 30-04- 2009, BY AN ORDER DATED 13/04/2009 I.E. AFTER 97 MO NTHS AFTER PERSISTENT FOLLOW UP BY THE A.O. INTEREST UNDER SEC TION 244A SHALL BE PAYABLE TO THE ASSESSEE. 6. FROM THE RECORDS IT IS TRANSPIRED THAT BEFORE LD . CIT(A), THE ASSESSEE HAS TAKEN ONLY TWO GROUNDS OF APPEAL HOWEVER EFFEC TIVELY ONE GROUND. BEFORE THIS TRIBUNAL, THE ASSESSEE HAS TAKEN 8 GROU NDS OF APPEALS. MOREOVER, THE JUDGMENTS AS RELIED BEFORE THIS TRIBU NAL WERE NOT BROUGHT TO THE NOTICE OF LD. CIT(A). IN THIS VIEW OF THE MATT ER, IT WOULD BE IN THE INTEREST OF JUSTICE IF ALL THE GROUNDS AS RAISED BE FORE US ARE REMITTED BACK TO THE FILE OF LD. CIT(A). HE SHALL DECIDE THE SAME A FTER GIVING SUFFICIENT OPPORTUNITY OF HEARING TO THE CONCERNED PARTIES. H ENCE, THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K. GARODIA) (KUL BHARAT) ACCOUNTANT MEMBER JU DICIAL MEMBER AHMEDABAD : DATED 12 /10/2012 AK IT(SS)A NO. 654/AHD/2011 PAGE NO. DHIRAJLAL R. SANGHAVI VS ITO 6 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A)-III, BARODA 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# *