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2021 (9) TMI 100 - AT - Income TaxInterest levied by Revenue u/s 234A and 234B - Assessee contended that no interest is chargeable taking into consideration the cash seized during search and seizure proceedings - adjustment of cash seized with the tax-liability determined on assessment - HELD THAT - Assessee is not entitled for complete relief on the interest payable u/s 234B as first of all the assessee was disputing the search conducted by Revenue u/s 132(1) of the 1961 Act against it and secondly, as per material before us, there is no material to suggest that any estimate of income was filed by the assessee before the competent authorities immediately after search operations, even including the high denomination currency notes of ₹ 1000/- each aggregating to ₹ 50,33,000/- as its undisclosed income, rather, Shri Suresh Chandra Purwar was justifying even the aforesaid high currency notes as not been taxable, in letter dated 06.04.2011 wherein it was claimed that the said sum was received over a period of years under various heads and on a number of occasions. Assessee shall be liable to pay interest u/s 234B on tax so computed on the income so declared in return of income filed on 17.09.2013, till the date of filing of return of income on 17.09.2013. AO is directed to compute liability of interest u/s 234B to this effect. Assessee while filing application with Settlement Commission offered additional income and the assessee has claimed that it discharged its entire tax and interest liability, by making payments towards tax and interest on 18.03.2014. The assessee has claimed that it was not given appropriate credit for payment of taxes, and form no 26AS/challans are produced before tribunal, the AO shall verify and give credit of payment of appropriate taxes claimed to be so paid by assessee on 18.03.2014, after due verification. Then, obviously if taxes stood paid on this date viz. 18.03.2014 as claimed by assessee even on additional income offered in SOF filed with Settlement Commission, no further liability u/s 234B can be fastened beyond this point of time viz. 18.03.2014 to the extent the taxes stood paid(which is subject to verification by AO) - assessee shall be liable to pay interest u/s 234B on tax so computed on the additional income so declared in SOF filed with Settlement Commission on 19/20.03.2014, till the date of payment of tax on 18.03.2014. Reference is drawn to provisions of Section 234B(2A)(a) of the 1961 Act .The AO is directed to compute liability of interest u/s 234B to this effect. Untrue declaration of income filed by assessee before Settlement Commission - Settlement Commission passed an order u/s 245D(4), dated 23.09.2015 bringing to tax additional income, as declaration made by assessee of its income before Settlement Commission,was found by Settlement Commission to be not correct and additional income was brought to tax by Settlement Commission, and since this liability was fastened in September 2015, the assessee will be liable to pay interest u/s 234B till the order was passed by Settlement Commission in September 2015 bringing to tax additional income, owing to untrue declaration of income filed by assessee before Settlement Commission. Reference is drawn to provisions of Section 234B(2A)(b) - AO is directed to compute liability of interest u/s 234B to this effect .we are concerned with ay 2011-12 and search and seizure operations were conducted by Revenue u/s 132(1) of the 1961 Act, on 25.02.2011. This contention of Revenue to hold Explanation 2 to Section 132B of the Act, which was inserted by Finance Act, 2013 w.e.f. 01.06.2013, to be retrospective is rejected and we hold that said amendment is prospective. Chargeability to interest u/s 234A - The assessee has not filed return of income in time rather the assessee was disputing the search carried on by the Revenue itself, the onus is on the assessee to keep and maintain its record of income as it is the assessee who is in know of its own affairs and the assessee cannot blame Revenue for its own faults in not keeping proper and true record of its own income. The onus and burden is on the assessee to file its return of income in time, which the assessee cannot shift to Revenue merely because an intervening event by way of search and seizure operations have taken place u/s 132(1) of the 1961 Act. Thus, we are not inclined to interfere with the orders passed by lower authorities so far as chargeability of interest u/s 234A is concerned, which we uphold. Thus, the appeal of the assessee is partly allowed
Issues Involved:
1. Legality of demand raised under section 143(3) read with section 245D(4). 2. Erroneous computation of interest under sections 234A and 234B without giving full credit to taxes paid. 3. Adjustment of seized cash against tax liability. 4. Applicability of Explanation (2) below section 132B. 5. Principles of natural justice. Issue-wise Detailed Analysis: 1. Legality of Demand Raised Under Section 143(3) Read with Section 245D(4): The assessee challenged the demand raised by the Assistant Commissioner of Income Tax (ACIT) under section 143(3) read with section 245D(4). The appeal arose from the order passed by the Settlement Commission and the subsequent consequential order by the Assessing Officer (AO). The Tribunal noted that the demand was based on the Settlement Commission's order, which settled the income of the assessee at ?3,51,45,385 for AY 2011-12. 2. Erroneous Computation of Interest Under Sections 234A and 234B: The assessee contested the computation of interest, arguing that it did not receive full credit for taxes paid, affecting the interest under sections 234A and 234B. The AO levied interest of ?57,12,930 under section 234B and ?1,05,785 under section 234A. The Tribunal found that the assessee did not file the return of income on time despite multiple notices and did not provide a true declaration of income initially. Therefore, the assessee was liable for interest under section 234A but was entitled to partial relief under section 234B for the period after filing the return on 17.09.2013 and after paying taxes on 18.03.2014. 3. Adjustment of Seized Cash Against Tax Liability: The assessee argued that the seized cash should be adjusted against the tax liability, claiming that no interest should be levied under section 234B. The Tribunal noted that the assessee offered the adjustment of seized cash in letters dated 06.04.2011 and 17.09.2013. However, the Tribunal held that the assessee was not entitled to complete relief under section 234B, as the assessee initially disputed the search and did not declare true income promptly. The Tribunal directed the AO to compute interest liability under section 234B up to the date of filing the return on 17.09.2013 and the date of tax payment on 18.03.2014, subject to verification. 4. Applicability of Explanation (2) Below Section 132B: The CIT(A) held that Explanation (2) below section 132B, inserted by the Finance Act 2013, was applicable, preventing the adjustment of seized cash against advance tax liability. The Tribunal rejected this view, holding that the amendment was prospective and not applicable to cases prior to 01.06.2013. The Tribunal referred to the dismissal of the SLP by the Supreme Court and CBDT Circular No. 20/2017, which accepted the prospective nature of the amendment. 5. Principles of Natural Justice: The assessee claimed that the order was contrary to the principles of natural justice. The Tribunal observed that the assessee did not receive seized documents and statements promptly, leading to delays in filing returns. However, the Tribunal held that the onus was on the assessee to maintain records and file returns on time. The Tribunal upheld the chargeability of interest under section 234A, as the delay was attributable to the assessee. Conclusion: The appeal was partly allowed. The Tribunal directed the AO to compute the interest liability under section 234B up to the date of filing the return and tax payment, subject to verification. The Tribunal upheld the chargeability of interest under section 234A and rejected the retrospective applicability of Explanation (2) below section 132B.
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