Deputy Commissioner of Income-tax, Circle - 1, Nashik V. M/s. Happy Home Developers, Nashik

MA 38/PUN/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9806 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 02-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAWLI
• Keywords: Search and seizure; Period of limitation
• Section: 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKAR A RAO, AM . / MA NO.38/PUN/2018 (ARISING OUT OF ITA NO.1392/PUN/2015) / ASSESSMENT YEAR : 2010-11 DCIT, CIRCLE - 1, NASHIK . / APPLICANT V/S M/S. HAPPY HOMES DEVELOPERS, 4, SHREE PRAKASH COMPLEX, SHARANPUR ROAD, BEHIND KULKARNI GARDEN, NASHIK 422 002 PAN : AADFH4970R . / RESPONDENT / APPLICANT BY : SHRI RAJESH GAWLI / RESPONDENT BY : S SHRI SANKET JOSHI / ORDER PER KARUNAKARA RAO, AM : THE CAPTIONED MISCELLANEOUS APPLICATION FILED BY TH E REVENUE ARISES FROM THE ORDER OF TRIBUNAL VIDE ITA NO.1392/PUN/2015 DATED 2 9-09-2017 INVOLVING THE A.Y. 2010-11. 2. BRIEF BACKGROUND FACTS OF M.A. INCLUDE THAT THER E WAS SEARCH AND SEIZURE ACTION ON THE ASSESSEE U/S.132 OF THE ACT ON 06-01- 2010. THE SAME RESULTED IN SEIZURE OF CASH. ASSESSEE REQUESTED IN WRITING WEL L BEFORE THE DUE DATE FOR FINAL INSTALMENT OF ADVANCE TAX ON 15-03-2010 FOR ADJUSTM ENT OF THE SAID CASH AGAINST THE ADVANCE TAX LIABILITY. DESPITE THE SAME, THE AO FA ILED TO ADJUST THE SAME AND INFACT, ADJUSTMENT AGAINST THE REGULAR TAX ON COMPLETION OF THE ASSESSMENT. ON MAKING THE RECTIFICATION APPLICATION BY THE ASSESSEE, THE AO REJECTED THE SAME TOO. / DATE OF HEARING :07.09.2018 / DATE OF PRONOUNCEMENT:25.09.2018 2 THEREFORE, THE REQUEST OF ASSESSEE TO ADJUST THE SE IZED CASH AGAINST THE ADVANCE TAX LIABILITY WAS DENIED. IN THE PROCESS, THE AO INVOKED THE CONTENTS OF EXPLANATION 2 TO SECTION 132 OF THE ACT AND HELD TH AT ADVANCE TAX LIABILITY IS OUTSIDE THE SCOPE OF EXPRESSION EXISTING LIABILITY . THE PROVISIONS OF THE IST PROVISO OF SECTION 132 OF THE ACT DEALS WITH THE EXISTING LIABILITIES. 3. COMING TO THE INTERPRETATION OF THE SAID EXPRESS IONS/PROVISIONS, WE FIND THAT THE SAID EXPLANATION 2 IS BROUGHT INTO STATUTE BY T HE FINANCE ACT, 2013 W.E.F. 01-06- 2013. THE SAID AMENDMENT WAS INTERPRETED TO BE EFF ECTIVE PROSPECTIVELY ONLY. THE JUDGMENT IN THE CASE OF SPAZE TOWERS PVT. LTD. (ITA NO.40/2015, DATED 17-11-2016) IS RELEVANT. HOWEVER, THE AO/CIT(A) TRIED TO APPLY TO THE A.Y. 2010-11 UNDER CONSIDERATION. INFACT, CBDT ALSO ISSUED A CIRCULAR NO.20/2017, DATED 12-06-2017 DIRECTING THE AO TO WITHDRAW THE APPEALS ON THE ISS UE UNDER CONSIDERATION PRIOR TO THE ASSESSMENT YEAR AND PRIOR TO THE SAID AMENDMENT . AO IGNORED THE SAID CIRCULAR TOO. 4. ON THE ABOVE FACTS OF THE CASE AND RELYING ON TH E RATIO OF THE SAID JUDGMENT IN THE CASE OF SPAZE TOWERS PVT. LTD. (SUPRA) R.W.S. CBDT CIRCULAR DATED 12-06-2017, WE ALLOWED THE APPEAL OF THE ASSESSEE. 5. HOWEVER, AGGRIEVED WITH THE ORDER OF THE TRIBUNA L IN FAVOUR OF THE ASSESSEE, AO FILED THE PRESENT MISCELLANEOUS APPLICATION AND RAISED THE FOLLOWING OBJECTIONS, NAMELY : 03. IN THE INSTANT CASE, SEARCH ACTION WAS COMPLET ED IN THE MONTH OF JANUARY ITSELF, I.E. THE DATE OF SEARCH WAS 06-01-2010. TH E PERIOD OF LIMITATION AS PROVIDED IN THE SECTION HAD ALREADY EXPIRED BEFORE THE ASSESSEE FILED HIS APPLICATION ON 11-03- 2010 FOR ADJUSTMENT TOWARDS ADVANCE TAX AND HENCE T HE ASSESSEE HAD NOT FILED THE APPLICATION WITHIN THE TIME LIMIT SPECIFIED FOR THI S PURPOSE. SINCE, THE APPLICATION ITSELF WAS FILED BEYOND THE TIME PERMITTED, THE ASS ESSEES CLAIM WAS NOT TENABLE. 04. THE PROVISIONS OF EXPLANATION-2 OF SECTION 132B OF THE ACT AND THE CIRCULAR OF THE CBDT CITED ABOVE ARE SQUARELY APPLICABLE IN THI S CASE. IN VIEW OF THE ABOVE FACTS THAT THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISO TO SECTION 132B REGARDING FILING OF REQUEST FOR SUCH ADJUSTMENT TO THE AO WITHIN 30 DAYS FROM THE END OF THE MONTH 3 IN WHICH THE ASSET WAS SEIZED, THE ASSESSEES REQUE ST FOR ADJUSTMENT WAS NOT VALID AND TENABLE. 05. IT IS THEREFORE PRAYED THAT THE ABOVE ORDER KIN DLY BE RECALLED AND THE ISSUE BE DECIDED ON MERITS. FROM THE ABOVE, IT IS EVIDENT THAT THE REVENUE ARGU ES THAT THERE IS A REQUIREMENT FOR THE ASSESSEE TO FILE A REQUEST FOR SUCH ADJUSTMENTS TOWARDS EXISTING LIABILITIES WITHIN 30 DAYS FROM THE END OF THE MONT H IN WHICH THE ASSET WAS SEIZED. THE SAID REQUIREMENT IS BORNE OUT OF THE PROVISIONS OF THE IST PROVISO OF SECTION 132B OF THE ACT. LD. DR ARGUES THAT IN THE EVENT OF SAI D FAILURE OF ASSESSEE TO REQUEST THE AO WITHIN 30 DAYS, THE AO IS JUSTIFIED IN NOT ADJUS TING AGAINST THE EXISTING TAX LIABILITY. THEREFORE, AS PER LD. DR, LEVY OF PENAL TY IS JUSTIFIED. 6. PER CONTRA, LD. AR FOR THE ASSESSEE RELIED HEAVI LY ON THE ORDER OF THE TRIBUNAL AND SUBMITTED THAT THE MISCELLANEOUS APPLICATION UN DER CONSIDERATION AMOUNTS TO REQUEST FOR REVIEW OF THE ORDER OF THE TRIBUNAL. L D. AR SUBMITTED THAT THE 30 DAYS LINKED ARGUMENT WAS NEVER RAISED BEFORE THE TRIBUNA L. FURTHER, REFERRING TO THE LANGUAGE USED IN THE SAID IST PROVISO, I.E. ..THE ASSET WAS SEIZED, FOR RELEASE OF ASSET AND THE NATURE AND SOURCE OF ACQUISITION OF A NY SUCH ASSET IS EXPLAINED TO THE SATISFACTION OF THE ASSESSING OFFICER, THE AMOUNT O F ANY EXISTING LIABILITY REFERRED TO IN THIS CLAUSE MAY BE RECOVERED OUT OF SUCH ASSET AND THE REMAINING PORTION, IF ANY, OF THE ASSET MAY BE RELEASED.. , LD. AR SUBMITTED, ON MERITS, SUCH REQUEST OF 30 DAYS LIMITATION IS RELEVANT FOR SEIZED ASSETS AND NOT FOR THE CASH SEIZURES. LD. AR REASONED THAT THE DEPARTMENT CANNOT CONTINUE TO KEE P THE CASH OF THE ASSESSEE ON ONE SIDE, AND ALSO LEVYING THE STATUTORY INTEREST U /S.234B AND 234C OF THE ACT ON THE OTHER. FURTHER, LD. AR SUBMITTED THAT DRS CANNOT M AKE THEIR ARGUMENT IN INSTALMENTS, I.E. FIRST IN THE REGULAR HEARING TIME AND LATER IN MA PROCEEDINGS U/S.254(1) OF THE ACT. FURTHER, LD. DR MENTIONED T HAT THE CASH CONSTITUTES AN ASSET OR NOT SUFFERS FROM THE DEBATE. LD. AR REQUESTED F OR DISMISSING THE MISCELLANEOUS APPLICATION BY THE REVENUE. 4 7. WE HEARD BOTH THE PARTIES ON THE ISSUE OF TIME L IMITATION PROVIDED IN THE FIRST PROVISO TO SECTION 132B OF THE I.T. ACT. OTHERWISE , THE REVENUE HAS NO OBJECTION ON THE APPLICABILITY OF THE JUDGMENT OF PUNJAB & HARYA NA HIGH COURT IN THE CASE OF SPAZE TOWERS PVT. LTD. VS. DCIT (SUPRA). THE AMEND ED PROVISIONS OF SAID EXPLANATION 2 BY THE FINANCE ACT, 2013 APPLY PROSPE CTIVELY ONLY. 7.1 COMING TO THE LIMITATION ISSUE RAISED IN THIS M .A. PROCEEDINGS, WE FIND THIS ARGUMENT WAS NOT RAISED BY THE REVENUE DURING THE R EGULAR HEARING PROCEEDINGS BEFORE US. REVENUE ATTEMPTS TO PUT FORWARD THE SAI D ARGUMENT FOR THE FIRST TIME THROUGH THE PROCEEDINGS U/S.254(2) OF THE ACT. IN OUR CONSIDERED VIEW, THE ATTEMPT OF THE REVENUE IS UNSUSTAINABLE. THESE ATTEMPTS CA N ALSO CONSTITUTE REQUESTING THE TRIBUNAL TO REVIEW OUR OWN ORDER. THUS, WE ARE OF THE OPINION THAT THE SAID ARGUMENT OF THE REVENUE FALLS WITHIN THE SCOPE OF R EVIEW. THUS, ORDER OF THE TRIBUNAL DOES NOT REQUIRE ANY RECTIFICATION. WE HAVE ALSO CONSIDERED THE OTHER ARGUMENTS OF THE LD. AR FOR THE ASSESSEE, I.E. DEBATABILITY, MAKING ARGUMENTS IN INSTALMENTS, MISUSE OF PROVISIONS OF SECTION 254(2) OF THE ACT, ETC. AND FIND THE ADJUDICATION O F THESE ARGUMENTS BECOMES AN ACADEMIC AS THE MA IS DISMISSED ON OTHER GROUND MEN TIONED ABOVE. ACCORDINGLY, THE ISSUES RAISED BY THE REVENUE IN THIS M.A. ARE D ISMISSED. 8. IN THE RESULT, MISCELLANEOUS APPLICATION FILED B Y THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 25 TH DAY OF SEPTEMBER, 2018. SD/- SD/- (SUSHMA CHOWLA) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 25 TH SEPTEMBER, 2018 5 / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. CIT(A)-I2, PUNE CIT CENTRAL, NAGPUR % , , BENCH PUNE; 6. / GUARD FILE.