M/s. P Ramabhai Mohandas Ni Co, Ahmedabad V. The ACIT.,Cent.Circle-1(4), Ahmedabad

ITSSA 794/AHD/2010

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0667 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-04-2015
• Assessment Year: misc
• Appeal Filed On: 19-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 234B

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER IT(SS) A NO. 794/AHD/2010 / ASSESSMENT YEAR: 2008-09 M/S. P RAMABHAI MOHANDAS NI CO., 9, DEEP COMPLEX, LINBUPOLE, RATANPOLE, MANEKCHOWK, AHMEDABAD PAN : AAKFM 4751 C ACIT, CENTRAL CIRCLE 1 (4), AHMEDABAD / // / (APPELLANT) / // / (RESPONDENT) ASSESSEE(S) BY : SMT URVASHI SHODHAN, AR REVENUE BY : SHRI SUBHASH BAINS, CIT-DR !' # $%& !' # $%& !' # $%& !' # $%& / DATE OF HEARING : 16/04/2015 '( # $%& / // / DATE OF PRONOUNCEMENT: 24/04/2015 )* )* )* )*/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRE CTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-III, AHMEDABAD DATED 06.09.2010, FOR THE ASSESSMENT YEAR 2008-09. 2. IN THIS APPEAL BY THE ASSESSEE, FOLLOWING GROUND S WERE RAISED; HOWEVER, AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE PRESSED ONLY GROUND NOS. 1 & 2 OF THE ASSESSEES AP PEAL, I.E. WITH REGARD TO CHARGING OF INTEREST U/S 234B AND 234C OF THE INCOM E-TAX ACT. 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) ERRED IN HAVING CONFIRMED THE CHARGING OF INTEREST OF RS.3,81,169/- U/S 234B OF THE IT ACT, 1961. IT(SS)A NO.794/AHD/2010 M/S P RAMABHAI MOHANDAS NI CO VS. ACIT AY: 1.4.07 TO 31.03.08 2 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) ERRED IN HAVING CONFIRMED THE CHARGING OF INTEREST OF RS.67,155/- U/S 234C OF THE IT ACT, 1961. 3. THAT THE AO IN THE ASSESSMENT ORDER HAS NOT MENTION ED SPECIFICALLY FOR CHARGING INTEREST. IN SPITE OF THAT IN THE DEMAND N OTE RAISED INTEREST WAS CHARGED. THE LD. CIT(A) COMMITTED A MISTAKE BY CONF IRMING THE ACTION OF THE AO. MORE SO BY NOT DISCUSSING THIS ISSUE IN ITS CIT(A)S ORDER. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. AO AND THE LEARNED CIT(A) ACTED ARBITRARILY IN ADJUSTING THE A DVANCE TAX FROM THE SEIZED AMOUNT OF RS.61,50,000/-. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, IT IS PRAYED THAT THE HONORABLE ITAT MAY GRANT APPROPRIATE RELIEF APART F ROM SPECIFICALLY PRAYED FOR BY THE APPELLANT. 3. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LD. COUNSEL THAT CASH OF RS.61,50,000/- WAS SEIZED BY THE POLIC E AUTHORITIES OF INDORE ON 10.06.2007 FROM TWO EMPLOYEES OF THE APPELLANT NAME LY SHRI NARESH D. KOLAWALA - RS. 33,50,000/- AND SHRI BHARATKUMAR NAT WARLAL PATEL - RS.28,00,000/-. THAT THE ASSESSEE VIDE LETTER DATE D 15.06.2007 HAS GIVEN THE DEPARTMENT TWO OPTIONS AS UNDER:- WE, THEREFORE, SUGGEST THE FOLLOWING MODALITY FO R COLLECTION OF FULL AMOUNT OF ADVANCE TAX (1) RS.19,00,350/- BEING FULL AMOUNT OF ADVANCE TAX FOR A.Y. 2007-2008 MAY KINDLY BE DIRECTLY TAKEN INT O POSSESSION BY THE I.T.O. WARD 2(2), AHMEDABAD FROM THE ABOVE SAID POL ICE AUTHORITY OR (2) A DEMAND DRAFT OF RS.19,00,350/- BEING THE FULL AMOUN T OF ADVANCE TAX FOR A.Y. 2007-2008 DRAWN IN FAVOUR OF THE INCOME TAX DEPARTM ENT BE COLLECTED FROM THE FIRM NOW AND SIMULTANEOUSLY IT MAY BE ENSURE TH AT THE CASH OF RS.61,50,000/- LYING WITH THERE SAID POLICE AUTHORI TY IS NOT REQUISITIONED. HOWEVER, THE REVENUE DID NOT ACT UPON EITHER OF TH E OPTIONS SUGGESTED BY THE ASSESSEE AND SUBSEQUENTLY TOOK POS SESSION OF ENTIRE IT(SS)A NO.794/AHD/2010 M/S P RAMABHAI MOHANDAS NI CO VS. ACIT AY: 1.4.07 TO 31.03.08 3 RS.61,50,000/-. THUS, THE SUM OF RS.61,50,000/- RE MAINED EITHER WITH THE POLICE OR WITH THE INCOME-TAX AND WAS NEVER ADJUSTE D AGAINST THE ADVANCE TAX PAYABLE BY THE ASSESSEE. THAT THE TOTAL TAX DET ERMINED AGAINST THE ASSESSEE IS ONLY RS.18,15,091/-, WHILE THE ASSESSEE HAD ALREADY REQUESTED TO ADJUST THE SUM OF RS.19,00,350/- OUT OF ABOVE SEIZE D AMOUNT AS ADVANCE TAX. THE ASSESSEE HAD ALSO REQUESTED THAT IF THE REVENUE AGREE, THE ASSESSEE WILL MAKE THE PAYMENT OF RS.19,00,350/- AS ADVANCE TAX A ND IN THAT CASE THE REVENUE SHOULD NOT TAKE THE POSSESSION OF CASH OF R S.61,50,000/- FROM THE POLICE AUTHORITIES. THUS, NON-PAYMENT OF ADVANCE TA X BY THE ASSESSEE IS ON ACCOUNT OF INACTION ON THE PART OF THE REVENUE. SH E FURTHER SUBMITTED THAT DURING THE ENTIRE PERIOD CASH ULTIMATELY REMAINED W ITH THE GOVERNMENT - EITHER WITH THE POLICE AUTHORITIES OR WITH THE INCO ME-TAX AUTHORITIES. SHE, THEREFORE, SUBMITTED THAT CHARGING OF INTEREST U/S 234B AND 234C WAS NOT JUSTIFIED. IN SUPPORT OF HER CONTENTION, SHE RELIE D UPON THE FOLLOWING DECISIONS:- I) CIT VS ASHOK KUMAR, 334 ITR 355 (P&H) II) CIT VS. K.K. MARKETING, (2005) 278 ITR 596 (DELHI) 4. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, STATED THAT THE ASSESSEE FILED A CONSENT LETTER WITH THE COMMIS SIONER OF INCOME-TAX AND NOT WITH THE ASSESSING OFFICER. ADJUSTMENT OF SEIZ ED CASH AGAINST THE ADVANCE TAX IF AT ALL CAN BE DONE BY THE ASSESSING OFFICER AND NOT BY THE COMMISSIONER OF INCOME-TAX. IN SUPPORT OF THIS CON TENTION, HE REFERRED TO PROVISO TO SECTION 132B OF THE INCOME-TAX ACT. HE A LSO RELIED UPON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CAS E OF HEMANT KUMAR SINDHI V. CIT, REPORTED IN [2014] 45 TAXMANN.COM 10 3 (ALLAHABAD) AND STATED THAT THE SEIZED CASH CAN BE ADJUSTED ONLY AF TER THE ASSESSMENT IS COMPLETED AND DEMAND IS CRYSTALLIZED AND NOT EARLIE R. HE, THEREFORE, IT(SS)A NO.794/AHD/2010 M/S P RAMABHAI MOHANDAS NI CO VS. ACIT AY: 1.4.07 TO 31.03.08 4 SUBMITTED THAT THE ORDERS OF THE LOWER AUTHORITIES WERE QUITE JUSTIFIED AND THE SAME SHOULD BE SUSTAINED. 5. IN THE REJOINDER, IT WAS POINTED OUT BY THE LD. COUNSEL THAT THE LETTER DATED 15.06.2007 WAS FILED WITH THE COMMISSIONER OF INCOME-TAX AS WELL AS WITH THE ASSESSING OFFICER. SHE ALSO DISTINGUISHED THE DECISION RELIED UPON BY THE LD. DEPARTMENTAL REPRESENTATIVE AND POINTED OUT THAT THE FACTS IN THE SAID CASE WERE ALTOGETHER DIFFERENT, BECAUSE IN THA T CASE THERE WAS A SEIZURE OF GOLD BARS AND NOT CASH IN HAND. 6. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. IN THE CASE OF ASHOK KUMAR (SUPRA), THE HONBLE PUNJAB & HARYANA HIGH COURT HAS HELD AS UNDER:- HELD, DISMISSING THE APPEAL, THAT THE ASSESSEE HAD MADE REQUEST FOR ADJUSTMENT OF THE ADVANCE TAX LIABILITY OF RS.3,14, 312/- AGAINST THE SEIZED AMOUNT OF RS.5,90,000/- ON AUGUST 28, 1989. SINCE T HE FIRST INSTALMENT OF ADVANCE TAX WAS PAYABLE ON SEPTEMBER 15, 1989 AND T HE REQUEST FOR ADJUSTMENT WAS MADE ON AUGUST 28, 1989 AND REMINDER ON SEPTEMBER 12, 1989, NO INTEREST WAS EXIGIBLE UNDER SECTIONS 234A AND 234B OF THE ACT. THE TRIBUNAL HAD RIGHTLY HELD THAT THE ASSESSEE WAS ENT ITLED TO ADJUSTMENT OF THIS AMOUNT AND NO INTEREST COULD BE CHARGED ON THAT BAS IS. IN THE CASE OF K.K. MARKETING (SUPRA), THE HONBLE DELHI HIGH COURT HAS HELD AS UNDER:- HELD, THAT THERE WAS NO DISPUTE THAT THE OFFER FOR ADJUSTMENT OF THE SEIZED CASH WAS MADE BY THE ASSESSEES BEFORE THE ADVANCE T AX LIABILITY BECAME DUE. IN SO FAR AS THE ADJUSTMENT OF THE CASH SEIZED AGAI NST THE LIABILITY OF THE FIRM IS CONCERNED, THE TRIBUNAL RIGHTLY HELD THAT THERE IS NO DIFFERENCE BETWEEN A FIRM AND ITS PARTNERS. THE PARTNERS CONSTITUTE THE FIRM AND THEY ARE LIABLE TO MAKE GOOD ANY DEMAND OF TAXES ON BEHALF OF THE FIRM . THE PARTNERS OF THE IT(SS)A NO.794/AHD/2010 M/S P RAMABHAI MOHANDAS NI CO VS. ACIT AY: 1.4.07 TO 31.03.08 5 CONCERNED ASSESSEE HAD CATEGORICALLY PRAYED THAT TH E CASH SEIZED FROM THEIR PREMISES, WHICH ALSO HAPPENED TO BE THE PREMISES OF THE FIRM, SHOULD BE ADJUSTED AGAINST THE ADVANCE TAX LIABILITY OF THE F IRM/ASSESSEE. SUCH A REQUEST COULD HAVE BEEN MADE BY THE PARTNERS TO BIND THE AS SESSEE AND THERE COULD NOT HAVE BEEN ANY GROUND FOR REJECTING SUCH A REQUEST. THE REVENUE ACCEPTED THE RETURN FILED BY THE ASSESSEES AND IN FACT IT WAS FO UND THAT THEY WERE ENTITLED TO A REFUND, WHICH WAS MORE THAN THE AMOUNT OF CASH THAT WAS SEIZED. THE TRIBUNAL ALSO NOTED THAT SINCE THE QUESTION OF CHAR GING INTEREST UNDER SECTIONS 234B AND 234C OF THE ACT WAS HIGHLY DEBATA BLE, IT WOULD BE APPROPRIATE NOT TO CHARGE INTEREST FROM THE ASSESSE E. THE TRIBUNAL WAS RIGHT AND NO SUBSTANTIAL QUESTION OF LAW AROSE FROM THE O RDER. THAT THE RATIO OF BOTH THE ABOVE DECISIONS WOULD B E SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE, BEC AUSE IN THE CASE OF THE ASSESSEE THERE WAS A SEIZURE OF CASH AND THE ASSESS EE HAD MADE A REQUEST WELL IN ADVANCE FOR THE ADJUSTMENT OF CASH SEIZED A GAINST THE LIABILITY OF ADVANCE TAX. IT WAS CONTENDED BY THE LD. DR THAT TH E APPLICATION SHOULD HAVE BEEN MADE BY THE ASSESSEE TO THE ASSESSING OFF ICER AND NOT TO THE COMMISSIONER OF INCOME-TAX. THE LD. COUNSEL FOR THE ASSESSEE HAS POINTED OUT THAT THE APPLICATION WAS MADE TO BOTH. IN OUR O PINION, EVEN IF THE APPLICATION WAS MADE TO THE COMMISSIONER OF INCOME- TAX, IT WAS THE DUTY OF THE COMMISSIONER OF INCOME-TAX TO FORWARD THE APPLI CATION TO THE ASSESSING OFFICER FOR DOING THE NEEDFUL. THE ASSESSEE, AS A L AYMAN, HAD MADE APPLICATION TO THE REVENUE; AND IF THE APPLICATION IS MADE TO THE SENIOR AUTHORITY, HE MUST HAVE DIRECTED HIS SUBORDINATE TO ACT UPON IT IN ACCORDANCE WITH LAW. HOWEVER, THE REVENUE DID NOT ACT UPON THE ASSESSEES LETTER DATED 15.06.2007. IN THE SAID LETTER, THE A SSESSEE MADE AN ALTERNATIVE CLAIM AND HE ALSO REQUESTED THAT IF THE REVENUE WAN TS THE ASSESSEE WOULD MAKE THE ENTIRE PAYMENT OF RS.19,00,350/- AS ADVANC E TAX BUT IN THAT CASE THE REVENUE SHOULD NOT COLLECT THE CASH FROM THE PO LICE AUTHORITIES. HOWEVER, THE REVENUE DID NOT RESPOND TO THE ASSESSE ES APPLICATION AND IT(SS)A NO.794/AHD/2010 M/S P RAMABHAI MOHANDAS NI CO VS. ACIT AY: 1.4.07 TO 31.03.08 6 AFTER A SUFFICIENT LAPSE OF TIME, COLLECTED THE CAS H FROM THE POLICE AUTHORITIES. THEREFORE, IT IS A CLEAR CASE WHERE THE ASSESSEE IS BEING CHARGED WITH THE INTEREST FOR COMPLETE INACTION ON THE PART OF THE R EVENUE AUTHORITIES. ON THESE FACTS, IN OUR OPINION, THE DECISIONS OF HONB LE PUNJAB & HARYANA HIGH COURT AS WELL AS HONBLE DELHI HIGH COURT RELIED UP ON BY THE LD. COUNSEL WOULD BE SQUARELY APPLICABLE. THE FACTS IN THE CAS E OF HEMANT KUMAR SINDHI (SUPRA), RELIED UPON BY THE LD. DR, WERE ALT OGETHER DIFFERENT. IN THAT CASE GOLD BARS WERE SEIZED FROM THE LOCKER OF THE A SSESSEE AND THE ASSESSEE FILED APPLICATION FOR SALE OF GOLD BARS AND ADJUSTM ENT OF PROCEEDS AGAINST THE TAX LIABILITY. ON THESE FACTS, IT WAS HELD BY THE H ONBLE ALLAHABAD HIGH COURT THAT IT IS ONLY OF WHEN THE ASSESSMENT IS COM PLETED AND THE DEMAND IS CRYSTALLIZED THEN RECOVERY CAN BE INITIATED BY SALE OF SEIZED ARTICLES. IN THE CASE UNDER APPEAL BEFORE US, THERE WAS NO QUESTION OF SALE OF ANY ARTICLE, CASH WAS SEIZED FROM THE EMPLOYEES OF THE ASSESSEE AND THE ASSESSEES REQUEST WAS ONLY ADJUSTMENT OF PART OF THE CASH AGA INST THE ADVANCE TAX. ON THESE FACTS, THE DECISION OF HONBLE PUNJAB & HARYA NA HIGH COURT IN THE CASE OF ASHOK KUMAR (SUPRA) AND DECISION OF DELHI H IGH COURT IN THE CASE OF K.K. MARKETING (SUPRA) WOULD BE SQUARELY APPLICA BLE. RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT LEVY OF INTEREST U /S 234B AND 234C UPON THE ASSESSEE WAS NOT JUSTIFIED. ACCORDINGLY, GROUND S NOS. 1 & 2 OF THE ASSESSEES APPEAL ARE ALLOWED. 7. NO OTHER GROUND WAS PRESSED AT THE TIME OF HEARI NG. THE ASSESSEE HAD ALSO FILED AN APPLICATION FOR ADMISSION OF ADDITION AL GROUNDS; HOWEVER, AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE DOES NOT WISH TO PURSUE THE ADMISSION OF A DDITIONAL GROUNDS. THEREFORE, THE SAME IS NOT CONSIDERED FOR ADMISSION AND ADJUDICATION. IN IT(SS)A NO.794/AHD/2010 M/S P RAMABHAI MOHANDAS NI CO VS. ACIT AY: 1.4.07 TO 31.03.08 7 VIEW OF THE ABOVE, GROUNDS NOS. 1 & 2 OF THE ASSESS EES APPEAL ARE ALLOWED AND OTHER GROUNDS ARE REJECTED AS NOT PRESSED. 8. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE COURT ON 24 TH APRIL, 2015 AT AHMEDABAD. SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 24/04/2015 BIJU T., PS )* # $+ ,)+$ )* # $+ ,)+$ )* # $+ ,)+$ )* # $+ ,)+$/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. -- $ !. / CONCERNED CIT 4. !. ( ) / THE CIT(A) 5. +12 $ , , / DR, ITAT, AHMEDABAD 6. 23 4' / GUARD FILE . )*! )*! )*! )*! / BY ORDER, TRUE COPY 5 55 5/ // / -6 -6 -6 -6 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD