2016 (11) TMI 1401 - HC - Income Tax

Interest charged - department not responding to the assessee s request for adjustment of cash seized against self assessment tax constituting the existing liability as per specific provisions u/s 132B - Held that - The judgement of a Division Bench of this Court in Commissioner of Income Tax (Central), Ludhiana Vs Sh. Sandeep Jain and others 2014 (10) TMI 585 - PUNJAB & HARYANA HIGH COURT 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. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against Tribunal's order for the assessment year 2008-2009.
2. Questions of law raised by the appellant regarding interest charges and prospective nature of Explanation 2 to Section 132B of the Income Tax Act, 1961.

Analysis:
1. The appellant challenged the Tribunal's order for the assessment year 2008-2009. The appellant raised specific questions of law regarding the sustainability of the Tribunal's order. The questions included whether interest could be charged if the department did not respond to the assessee's request for adjustment of cash seized against self-assessment tax as per Section 132B of the Income Tax Act, 1961. Additionally, the appellant questioned the prospective nature of Explanation 2 to Section 132B inserted by the Finance Act, 2013.

2. The Division Bench of the High Court referred to previous judgments to address the questions raised by the appellant. The Court cited a judgment dated 29.09.2014 in a case titled Commissioner of Income Tax (Central), Ludhiana Vs Sh. Sandeep Jain and others, which held that Explanation 2 to Section 132B is prospective from 01.06.2013. Another judgment dated 14.07.2015 in a case titled Commissioner of Income Tax (Central), Ludhiana Vs M/s Cosmos Builders and Promoters Ltd. further supported this view. The Supreme Court also dismissed a Special Leave Petition against the latter judgment on 06.05.2016.

3. The High Court, bound by the above judgments, ruled in favor of the appellant/assessee. The Court emphasized that the judgments established the prospective nature of Explanation 2 to Section 132B, making it inapplicable to the appellant's case for the assessment year 2008-2009. Despite arguments from the respondent and reliance on the Finance Bill's memorandum, the Court upheld the judgments and set aside the Tribunal's order. The questions of law were answered in favor of the appellant, leading to the setting aside of the Tribunal's order.