DCIT, Bhubaneswar V. Times Tracon Private Ltd, Kolkata

ITSSA 67/CTK/2012

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 8761 (ITAT-CUTTACK)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-02-2013
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 30-01-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2012
• Court: TRIBUNAL
• Department Lawyers: M K SAHUA RAO ARS
• Assessee Lawyers: PARAMITA TRIPATHY
• Keywords: Search and seizure
• Section: 234B; 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T (SS) A.NO S . 67,68,69 AND 70 OF 2012 / ASSESSMENT YEAR 2009 - 10 DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 2(2), BHUBANESWAR. - - - VERSUS - 1. TIMES TRACON PRIVATE L IMITED , TODI CHAMBERS,2, LAL BAZAR STREET, 1 ST FLOOR, KOLKATA 700001 PAN: AABCT 0266 B 2. KRUPALU TRADE LINK PRIVATE LTD. , 2271, CUTTACK ROAD, BHUBANESWAR PAN: AACCK 4257 E 3. ARREMO BANIJYA PRIVATE LIMITED , 3 RD FLOOR,BISWAL COMMERCIAL COMPLEX, 2271, CUTTACK R OAD, BHUBANESWAR. PAN: AAFCA 8007M 4. AMAL SALES PRIVATE LTD. , 171A, M.G.ROAD, KOLKATA 700007 PAN: AAGCA 1399 D ( /APPELLANT ) ( / RESPONDENT S ) / FOR THE APPELLANT : / SHRI M.K.SAHU/A.RAO, ARS / FOR THE RESPONDENT: / S MT. PARAMITA TRIPATHY, CIT - DR / DATE OF HEARING: 30.01.2013 / DATE OF PRONOUNCEMENT: 14.02.2013 / ORDER P E R B E N C H : THESE APPEALS BY THE REVENUE FOR FOUR SEPARATE ASSESSEES FOR THE ASSESSMENT YEAR 2009 - 10 ARE ON SOLITARY ISSUE CONSIDERED BY THE LEARNED CIT(A), INTER ALIA WHEN PART SUSTENANCE OF THE PAGE 2 OF 7 I.T(SS)A.NOS. 67,68,69 AND 70 OF 2012 MERIT AD DITIONS HAVE BEEN APPEALED AGAINST BY THE ASSESSEE APPELLANT BY WAY OF SEPARATE APPEALS FOR THE IMPUGNED ASSESSMENT YEAR WHICH WE PROPOSE TO TAKE UP SEPARATELY FOR DISPOSAL BY WAY OF SEPARATE ORDER S . A SIMILAR ISSUE COMMON TO THESE FOUR ASSESSEES RAISED BY THE REVENUE IN THESE APPEALS IS WITH RESPECT TO THE LEARNED CIT(A) HOLDING THAT APPEAL AGAINST CHARGING OF INTEREST U/SS.234A, 234B AND 234C OF THE I.T.ACT IS MAINTAINABLE AND FURTHER MORE THE DIRECTION OF THE LEARNED CIT(A) TO REDUCE THE INTEREST CHARGED U/SS.234A, 234B AND 234C BY DIRECTING THE ASSESSING OFFICER TO TREAT THE CASH SEIZED IN THE COURSE OF SEARCH AS ADVANCE TAX PAID BY THE ASSESSEES WHICH THE REVENUE CLAIMS IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT. 2. THE LEARNED CIT - DR INITI ATING HER ARGUMENTS SUBMITTED THAT THESE FOUR ASSESSEE COMPANIES WERE SUBJECTED TO SEARCH AND SEIZURE OPERATION IN THE CASE OF SUDHADEVI GROUP ON 26.3.2009 WHEN CASH WAS SEIZED AMOUNTING TO ABOUT RS.40 CRORES. THE SAID CASH WAS CONSIDERED FOR INITIATING PR OCEEDINGS IN THE CASES OF THESE COMPANIES U/S.153B(B) PURSUANCE TO WHICH THE ASSESSEES FILED RETURNS OF INCOME DECLARING THE SAID CASH AVAILABLE TO THEM WHEN THE AMOUNT RETURNED BY THE ASSESSEES WAS MORE THAN THE AMOUNT OF CASH SEIZED. CONSEQUENT REFUND WA S GRANTED BY THE ASSESSING OFFICER WHICH INDICATES THAT THE UNDISPUTED TAX AS PER THE RETURNS FILED HAD BEEN ADJUSTED IN PURSUANCE TO NOTICE U/S.153B. SHE SUBMITTED THAT THE ASSESSING OFFICER PASSED ORDERS CREATING DEMAND INCLUDING CHARGING OF INTEREST U/S S.234A, 234B AND 234C WHEN ON THE MERIT ADDITIONS THE ASSESSEES APPEALED BEFORE THE FIRST APPELLATE AUTHORITY INTERALIA A GROUND WAS RAISED BEFORE THE APPELLATE AUTHORITY THAT ON THE BASIS OF FACTS BROUGHT ON RECORD THE CHARGING OF INTEREST U/SS.234A, 234B AND 234C WAS ERRONEOUS. THE LEARNED CIT(A) ACCEPTED THE GROUND FOR ADJUDICATION AND FOLLOWING THE PAGE 3 OF 7 I.T(SS)A.NOS. 67,68,69 AND 70 OF 2012 DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF SUDHAKAR M.SETHI V. ACIT (10 DTR (MUM) (TRI.) 173 HELD THAT THE SEIZED CASH WAS TO BE DEPOSITED AGAINST THE ADV ANCE TAX LIABILITY FROM THE DATE OF SEIZURE. RELYING ON OTHER DECISIONS ALSO AS BROUGHT ON RECORD BY THE ASSESSEE APPELLANT BEFORE HIM, THE LEARNED CIT(A) HELD AS FOLLOWS. 8.16. THE INTEREST CONTEMPLATED U/S.234A, 234B AND 234C OF THE ACT ARE CO MPENSATORY IN NATURE. IN THE FISCAL STATUTE, THE WORD COMPENSATORY WOULD MEAN TO MAKE GOOD THE LOSS SUFFERED BY THE REVENUE ON ACCOUNT OF FACTS OF COMMISSION AND OMISSION ATTRIBUTABLE TO THE ASSESSEE. IN THE CASE OF THE APPELLANT THE CASH WAS SEIZED ON 27TH MARCH, 2009. AS PER THE PROVISO TO SEC.211 OF THE ACT, ANY AMOUNT PAID ON OR BEFORE 31ST MARCH SHALL BE TREATED AS ADVANCE TAX DURING THE FINANCIAL YEAR ENDING ON 3JST MARCH. AS SUBMITTED BY THE APPELLANT THE ENTIRE BANK ACCOUNT OF THE APPELLANT WAS SEIZED AND T HE DEPARTMENT OBTAINED CASH FROM THE BANK. THE DEPARTMENT HAVING RETAINED THE SEIZED CASH NEEDS TO ADJUST THE ADVANCE TAX LIABILITY OUT OF THE SEIZED CASH FROM THE DATE OF SEIZURE AS HELD BY THE PLETHORA OF DECISIONS CITED ABOVE. 8.17. THE CASH SEIZED DUR ING THE COURSE OF SEARCH IS REQUIRED TO BE ADJUSTED AGAINST ADVANCE TAX FROM THE DATE OF SEIZURE ITSELF FOR THE PURPOSE OF COMPUTATION OF INTEREST U/S.234A, 234B AND 234C IN ACCORDANCE WITH THE CASES CITED ABOVE. ACCORDINGLY, THE AO IS DIRECTED TO TREAT TH E SEIZED CASH AS ADVANCE TAX FROM THE DATE OF SEIZURE ITSELF, IN ACCORDANCE WITH THE CASES CITED ABOVE, FOR THE PURPOSE OF COMPUTATION OF INTEREST ULS.234A, 234B AND 234C AND RECOMPUTED THE INTEREST, IF ANY, ACCORDINGLY. GROUND NO.5 OF THE APPEAL IS, THERE FORE, ALLOWED . S HE SUBMITTED THAT ADVANCE TAX IS ON THE BASIS OF INCOME HAVING ACCRUED AND EARNED BY THE ASSESSEE DURING THE COURSE OF THE YEAR WHEN THE ADVANCE TAX IS TO BE PAID INSOFAR AS ON NON - PAYMENT OF INTEREST HAS TO BE CHARGED U/SS.234A, 234B AND 234C. THE FACTS WERE GLARING WHICH THE LEARNED CIT(A) OUGHT NOT TO HAVE BRUSHED ASIDE INSOFAR AS THE ASSESSMENTS HAVE BEEN MADE U/S.153B(B). SHE SUBMITTED THAT IN THE CASE OF THE ASSESSEE THE ADVANCE TAX INTEREST U/S.234B THEREFORE BECOME PENAL IN NATURE AND NOT BECAUSE THE AMOUNT WAS TO BE ADJUSTED AGAINST THE CASH SEIZED AND LYING WITH THE DEPARTMENT. SHE PRAYED THAT THE DIRECTION OF THE LEARNED CIT(A) BE REVERSED PAGE 4 OF 7 I.T(SS)A.NOS. 67,68,69 AND 70 OF 2012 AND THE CHARGING OF INTEREST IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT MAY KINDLY B E ALLOWED. 3. THE LEARNED COUNSEL OF THE ASSESSEE SUPPORTED THE ORDERS OF THE LEARNED CIT(A) ON THIS . HE SUBMITTED THE DETAILS INSOFAR AS THE REFUND WHICH WAS GIVEN TO THE ASSESSEE COMPANIES WERE AFTER ADJUSTMENT OF THE INTEREST CHARGED U/SS.234A, 234B AN D 234C AS CAN BE PERUSED IN THE ORDERS OF THE ASSESSING OFFICER, AS UNDER : NAME OF COMPANY AMT. SEIZED DISCLOSURE RETURNED INCOME ASSESSED TAX AMOUNT SEIZED TOTAL REFUND ARREMO VANIJYA P LTD 35,224,593.00 38,190,000.00 26,451,100.00 17 ,157,877.00 35,224,593.00 10,349,812.00 - TIMES TRACON P LTD 100,000,000.00 136,266,000.00 128,067,217.00 49,014,732.00 100,000,000.00 45,269,257.00 - AMAL S ALES P LTD 20,940,129.00 20,994,000.00 33,092,720.00 11,593,625.00 20,940,129.00 9,121,891.00 - KRIPALU TRADE LINK P LTD 160,775,954.00 162,824,000.00 182,207,763.00 62,439,292.00 160,775,954.00 96,586,795.00 TOTAL 316,940,676.00 358,274,000.00 369,818,800.00 140,205,526.00 316,940,676.00 161,327,755.00 HE SUBMITTED THAT IT WAS NOT UNILATERAL INSOFAR AS THE ASSESSEES WERE NOT TAKING ADVANTAGE OF FILING THE RETURNS U/S.153B INSOFAR AS THE ASSESSEES HAD INCLUDED THE AMOUNT IN THEIR BOOKS OF ACCOUNT FOR TAXATION AND THEREFORE PENALTY PROCEEDINGS, IF ANY, U/S.271AAA WERE NEVER INITIATED OR DROPPED. IN OTHER WORDS, THE LEARNED COUNSEL OF THE ASSESSEE SUGGESTED THAT THE LEARNED CIT - DR HAS NOT BEEN ABLE TO APPRECIATE THE FINDING OF FACT BY THE LEARNED CIT(A) INSOFAR AS THE ASSESSING OFFICER HAD TO GIVE THE ADJUSTMENT OF THE CASH SEIZED NOT O N THE BASIS OF WHIMS AND FANCIES BUT ON THE BASIS OF THE DATE OF SEIZURE WHICH SEIZURE WAS IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT TO BE ADJUSTED AGAINST THE ADVANCE TAX LIABILITY OF THE ASSESSEES. ONCE THE ADJUSTMENT IS MADE THE INTEREST CONSEQUENTLY COULD NOT BE CHARGED AND NOT BECAUSE THE ASSESSING OFFICER SOUGHT T O PASS THE ADJUSTMENT BY WAY OF CHALLANS AFTER A GAP OF TWO YEARS OR AT THE TIME OF PASSING OF THE ORDERS. HE SUBMITTED THAT THE LAW IS CLEAR THAT INTEREST HAS TO BE PAID ON THE REFUND PAGE 5 OF 7 I.T(SS)A.NOS. 67,68,69 AND 70 OF 2012 WHEN EXCESS TAX HAS BEEN OBTAINED IN WHATEVER FORM WHETHER PAID AS ADVA NCE TAX OR SELF ASSESSMENT TAX. THE CASE LAWS CITED BY THE LEARNED CIT(A) THEREFORE SQUARELY DEAL WITH THESE FACTS INSOFAR AS THE ORDER OF THE LEARNED CIT(A) MAY KINDLY BE PERUSED WHICH ONLY ESTABLISHES THE FACT THAT THE ASSESSEES COULD NOT BE BURDENED WI TH INTEREST ON THE ACCOUNT OF ADVANCE TAX U/SS.234A, 234B AND 234C JUST BECAUSE THE MONEY LYING WITH THE ASSESSING AUTHORITIES REMAINS NOT ADJUSTED DUE TO THEIR PROCEDURAL DELAY AND FORMALITIES ETC. THE ASSESSEES HAD ALREADY INDICATED THAT THE SEIZED CASH WAS PART AND PARCEL OF THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR AND THEREFORE WAS RENDERED AS INCOME WAS TO BE ADJUSTED AGAINST TAX, IF ANY, TO BE COLLECTED FROM THE ASSESSEES WHICH WAS ACKNOWLEDGED BY THE ASSESSING OFFICER BY ISSUING THE REFUND BU T WITHOUT GIVING A PERIOD LAPSE BETWEEN THE ADJUSTMENT CARRIED OUT BY THE DEPARTMENT AND THE DATE OF SEIZURE TOOK PLACE. HE FULLY SUPPORTED THE ORDERS OF THE LEARNED CIT(A) FOR HIS PART OF SUBMISSIONS. 4. WE HAVE HEARD THE RIVAL PARTIE S AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON OUR CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF CASE AS BROUGHT ON RECORD BY THE AUTHORITIES BELOW, WE ARE INCLINED TO FIND FAVOUR IN THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE INSOF AR AS THE LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED A COMPILATION OF CASE LAWS RELIED UPON BY THE LEARNED CIT(A) INSOFAR AS IN THE CASE OF SUDHAKAR M.SETHI V. ACIT (SUPRA) WHICH HAS BEEN BROUGHT ON RECORD AS PER THE AMENDED PROVISIONS OF LAW THERE IS NO REQUIREMENT TO SEEK ANY REQUEST FROM THE ASSESSEE FOR ADJUSTMENT WHICH THEREFORE CLEARLY INDICATED THAT IT WAS A PROCEDURAL DELAY INSOFAR AS IN THE CASE OF RAM S.SARADA V. DCIT DECIDED BY THE ITAT (11 - TMI - 208155 - ITAT,RAJKOT), IT WAS HELD THAT THE LIAB ILITY TO PAY THE ADVANCE TAX CONSTITUTE ARE PART OF EXISTING LIABILITY AS PER SECTION PAGE 6 OF 7 I.T(SS)A.NOS. 67,68,69 AND 70 OF 2012 132B(1)(I). AS PER SECTION 132B THE SEIZED ASSETS TO BE APPLIED TO THE DISCHARGE OF EXISTING LIABILITIES WHICH THE ASSESSING OFFICER DID NOT INSOFAR AS HAVING CREATED A DEMAND INCLUDING THE INTEREST COMPUTED BY HIM U/SS.234A, 234B AND 234C STOOD ADJUSTED WHEN THE REFUND WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT, AS ALSO BEEN CONSIDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF VISHWANATH KHANNA V. UNI ON OF INDIA (335 ITR 548). IN OTHER WORDS , THE REVENUES STAND TO CHARGE INTEREST TWICE ONE ON THE BASIS OF SEIZURE AND AFTER THE LAPSE OF PERIOD BY COMPUTING THE PERIOD WHICH LAPS IS NOT ON ACCOUNT OF THE ASSESSEES HAS AGAIN BEEN BURDENED BY THE REVENUE A FTER CHARGING OF INTEREST WHICH SHOULD RATHER LEAN IN FAVOUR OF THE ASSESSEES FOR ADJUSTMENT. THE LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT THE SEIZED CASH WAS ON ACCOUNT OF CAPITAL GAINS WAS TO BE PAID IN THE LAST QUARTER ONLY AND THEREFORE THE L IABILITY OF ADVANCE TAX WAS PAID FOR BY THE ASSESSEES OR SEIZED BY THE DEPARTMENT IS AN UNDISPUTED FACT WHICH THE ASSESSING OFFICER NOTE D ON THE BASIS OF HIS ASSESSMENT ORDERS WHICH COPIES ARE ON RECORD. WE ARE THEREFORE INCLINE D TO UPHOLD THE ORDERS OF TH E LEARNED CIT(A) INSOFAR AS HE HAS PLACED RELIANCE ON VARIOUS JUDICIAL PRONOUNCEMENT AS BROUGHT ON RECORD AGAINST WHICH NO CONTROVERSY HAS BEEN SUBMITTED BY THE LEARNED CIT - DR AS OF NOW. 5. IN THE RESULT, THE APPEALS OF THE REVENUE IN CASE OF THE RESPECTI VE ASSESSEES ARE DISMISSED. S D/ - S D/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 14.02.2013 ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. PAGE 7 OF 7 I.T(SS)A.NOS. 67,68,69 AND 70 OF 2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : 2 / THE RESPONDENT: 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 31.01.2013 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S 14.02.2013 . 6. DATE ON WHICH THE FILE GOES TO T HE BENCH CLERK 14.02.2013 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER ..