Spaze Towers Pvt. Ltd. V. Deputy Commissioner of Income Tax, Central Circle-II, Faridabad

ITA/40/2015

AI Insights

The case involves Spaze Towers Pvt. Ltd. appealing against the order of the Income Tax Appellate Tribunal, which had reversed the decision of the CIT (Appeals) regarding the assessment year 2008-2009. The core legal issue was whether the Tribunal's order, which allowed the department to charge interest on the adjustment of seized cash against self-assessment tax, was sustainable under the specific provisions of Section 132B of the Income Tax Act, 1961. The appellant contended that the Explanation 2 to Section 132B, inserted by the Finance Act, 2013, is prospective and thus not applicable to their case. The High Court, referencing previous judgments, particularly the CIT vs. Sh. Sandeep Jain & others and CIT (Central) Ludhiana vs. Cosmos Builders & Promoters Ltd., found in favor of the appellant, confirming that the Explanation 2 is indeed prospective and applicable only from June 1, 2013, onwards.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 671121 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 17-11-2016
• Assessment Year: misc
• Other Referred Cases: CIT vs. Sh. Sandeep Jain & others, CIT (Central) Ludhiana vs. Cosmos Builders & Promoters Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RAJESH SETHI; ARUN BIRIWAL
• Assessee Lawyers: PANKAJ JAIN; GIRISH AGNIHOTRI; SACHIN BHARDWAJ; ISHAAN BHARDWAJ
• Keywords: Assessment year 2008-2009; Income Tax; Substantial questions of law; Prospective Nature of Law
• Section: 132B

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-40-2015 (O&M) Date of decision:- 17.11.2016 Spaze Towers Pvt. Ltd. ...Appellant Versus Deputy Commissioner of Income Tax, Central Circle-II, Faridabad. ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE HON’BLE MR. JUSTICE A.B. CHAUDHARI Present:- Mr. Pankaj Jain, Senior Advocate, Mr. Girish Agnihotri, Senior Advocate, with Mr. Sachin Bhardwaj, Advocate, and Mr. Ishaan Bhardwaj, Advocate, for the appellant. Mr. Rajesh Sethi, Senior Standing Counsel, and Mr. Arun Biriwal, Advocate, for the respondent. * * * * S.J. VAZIFDAR, C.J. (ORAL) This is an appeal against the order of the Tribunal allowing the department/respondent’s appeal against the order of the CIT (Appeals) in respect of the assessment year 2008-2009. 2. By a Civil Miscellaneous Application No. 15326-CII of 2015, the appellant/assessee raised the following questions contending that the same are substantial questions of law:- “I. Whether under the facts & circumstances of the case, the Tribunal order is unsustainable, as no interest could be charged in the event of department not responding to the assessee’s request for adjustment of cash seized against self assessment tax constituting Amodh Sharma 2016.11.18 14:18 I attest to the accuracy and authenticity of this document chandigarh ITA-40-2015 (O&M) 2 the existing liability as per specific provisions u/s 132B of the Income Tax Act, 1961? II. Whether under the facts & circumstances of the case, the Tribunal order is unsustainable, as Explanation 2 to Section 132B of the Income Tax Act, 1961 inserted by the Finance Act, 2013 w.e.f. 01.06.2013 is ‘prospective’ in nature? III. Whether under the facts & circumstances of the case, Explanation 2 to Section 132B of the Income Tax Act, 1961, though inserted by the Finance Act, 2013 is ‘prospective’ in nature, pursuant to the judgement of this Hon’ble Court in the case of CIT vs. Sh. Sandeep Jain & others in ITA 261 of 2014, CIT (Central) Ludhiana vs. Cosmos Builders & Promoters Ltd., in ITA No. 425 of 2014?” 3. The appeal is pressed only in respect of these questions of law and not in respect of the questions of law raised in the original appeal. 4. The appeal is admitted on the above questions of law. The judgement of a Division Bench of this Court dated 29.09.2014 in ITA-261-2014 titled as Commissioner of Income Tax (Central), Ludhiana Vs Sh. Sandeep Jain and others covers the case in favour of the assessee. It was held that Explanation 2 to Section 132B of the Income Tax Act, 1961 is prospective in nature w.e.f. 01.06.2013. The present appeal is in respect of the assessment year 2008-2009. In view of the said judgement, Explanation 2 would not be applicable to the assessee’s case. This judgement was followed by another judgement of a Division Bench of this Court dated 14.07.2015 to which one of us (S.J. Vazifdar, CJ) was a party titled as Amodh Sharma 2016.11.18 14:18 I attest to the accuracy and authenticity of this document chandigarh ITA-40-2015 (O&M) 3 Commissioner of Income Tax (Central), Ludhiana Vs M/s Cosmos Builders and Promoters Ltd. By an order dated 06.05.2016, the Petition for Special Leave to Appeal against that judgement filed by the department was dismissed by the Supreme Court. 5. We are bound by the above judgements. In fact, in M/s Cosmos Builders and Promoters Ltd. case, the judgement in Sh. Sandeep Jain and others was followed. We follow the same in this appeal also. As we are bound by that judgement, we have not considered Mr. Sethi’s argument on behalf of the respondent that the judgement does not lay down the correct law. He also relied upon the memorandum explaining the Finance Bill to contend that Explanation 2 to Section 132B is retrospective. 6. In these circumstances, the questions of law are answered in favour of the appellant/assessee. It is admitted that the order of the Tribunal is liable to be set aside and is accordingly set aside. (S.J. VAZIFDAR) CHIEF JUSTICE (A.B. CHAUDHARI) JUDGE 17.11.2016 Amodh Whether speaking/reasoned Yes/No Whether reportable Yes/No Amodh Sharma 2016.11.18 14:18 I attest to the accuracy and authenticity of this document chandigarh "