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TMI Blog2014 (10) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... f seized cash before the levy of interest u/s 234A of IT Act without seeking comments from the Assessing Officer as required by Rule 46A of the IT Rules." The Additional Grounds of the Revenue 3. The Revenue department has also submitted following additional ground in this appeal: "(iii) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was right in admitting the additional evidences in the form of the letters dated 30.06.2008 and 18.08.2008 without recording reasons and without giving any opportunity to the AO under rule 46A. (iv) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was right in allowing the appeal of the assessee on the basis of two letters dated 30.06.2008 and 18.08.2008 which are not written by the assessee. (v) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was right in allowing the appeal of the assessee on the basis of 2 (two) letters dated 30.06.2008 and 18.08.2008 which are written by some other assessee in individual capacity for release of seized jewellery and ornaments and not for adjustment of seized cash against the advance tax liability of the assessee." 4. We have heard bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 132B can only be applied in the following manner: (a) towards the existing liability under the (i) Income Tax Act: (ii) Wealth Tax Act: (iii) Expenditure Tax Act: (iv) Gift Tax Act; (v) Interest Tax Act; (b) towards liability created (i) on completion of assessment u/s 153A; (ii) on completion of assessment of the year in which search took place; (iii) On completion of assessment under chapter XIVB; (iv) for penalty/interest payable qua assessment framed in I.T. Act referred above. 2.2.5 Kindly appreciate that the phrase 'existing liability' is used in reference to all Acts (i.e. Income Tax Act, Gift Tax Act, Expenditure Tax Act, Wealth Tax Act & Interest Tax Act) which means that interepretation has to be the same under all these Acts. That is, it cannot hold different meanings under different Acts. Under Gift Tax Act, Wealth Tax Act etc. The concept of advance tax'is not applicable which means that existing liability'cannot mean advance tax under the Income Tax Act. 2.2.6 Even otherwise, under the Income Tax Act, 1961, as clarified in ITO v. Ch. Atchaiah {218 ITR 239 SC} income is required to be assessed in the correct assessment year that too und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correct approach on the part of the assessee is to lodge claim for payment of interest after the expiry of 120 days instead of claiming that money seized be appropriated towards advance tax. Consequently interest u/s 234B or 234C is leviable on the quantum of money seized for the reason that such a claim for application is not allowable as per the express provisions of section 132B. Thus, to the extent required the Legislature has framed provisions based upon the principles of equity. To invoke further equity will not be justifiable at all. 2.3.1 Before the CIT(A), the assessee has placed reliance on its 3 letters (i) dated 30.06.2008 (ii) 18.08.2008 and (iii) undated letter. In so far as undated letter is concerned the CIT(A) has very rightly ignored it which adjudication has not been challenged by the Assessee either by filing appeal or by way of specific ground in the CO. Without prejudice to what is submitted above whereby it is viewed that seized cash cannot in law be appropriated towards advance tax, it is submitted that while undated letter found to be signed by one Aman Sharma, Director of Spaze Group ( and not the assessee) the other two letters are found signed by on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar (334 ITR 351) and CIT v. Ashok Kumar (334 ITR 355). In this regard it is submitted that the CIT(A) has ignored the settled principle of interpretation of a court judgment which, as also held by the Supreme Court in Ashwani Kumar Singh iv. UPSC (2003) 11 SCC 584,588-589 (paras 10 &12), is that; "the Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. " On this basis alone the order of the CIT(A) needs to be set aside. Further, the CIT(A) had ignored that ill these two cases letters were for adjustment of cash seized whereas in the appeal under consideration request is (that too by non-actor signatory) only for release of assets. 2.4.1.1 That apart, it is submitted that the CIT(A) erred in drawing support from Punjab & Haryana High Court judgment in CIT v. Ashok Ku mar ( 334 ITR 355) because this judgment was even on facts distinguishable, because unlike the case in hand of the assessee, there (in Ashok Kumar case) the assessee had specifically written letters requesting that the advance tax payable be adjusted out of cash seized and that he may not be held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgments were decisions sub silentio apart from being per incuriam and hence for this reason also the judgments lose the sanctity of binding precedent. 2.5. Notwithstanding what is submitted herein above, it is requested to kindly appreciate that in this ease search took place on 29-04*-2008 relevant to AY 9-10 whereas the assessment under consideration is AY 8-9. This means, there cannot be any question of adjustment of cash seized against the advance tax for AY 8-9 at all because advance tax is payable only during the currency of the assessment year and not for the closed assessment years. Thus, the attempt of the assessee to seek refuge on certain disputed letters written is nothing short of putting blinkers on the eyes of the Revenue to gain some thing against the express provisions of law. It needs to be appreciated that the question of adjustment of cash (even if presumed to be so) towards the advance tax liability would have been possible only for AY 2009-10 and not for earlier years. 8. The ld. counsel for the assessee replied that a search and seizure operation u/s 132(1) of the Act was initiated against the assessee on 29.04.2008 when the books of account for assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n response to notice vide dated 31.08.2009 issued to the assessee u/s 153A of the Act. The assessee filed a return of income on 18.05.2010 disclosing an income of Rs. 27,69,01,087/- including an income which had been disclosed u/s 132(4) of the Act. The ld. counsel for the assessee further contended that the assessment was framed u/s 153A/143(3) of the Act on 24.12.2010 at an income of Rs. 27,90,92,922/- as against the income declared by the assessee. 8.6 The ld. counsel for the assessee vehemently contended that an outstanding demand of Rs. 7,13,79,239/- was thus raised, after giving credits of taxes already paid Rs. 4.50 crore and also by granting adjustment of refund relating to A.Y. 2009-10 against the total tax payable of Rs. 12,33,36,483/-. The ld. counsel for the assessee further contended that the aforesaid demand was raised and was prior to the adjustment made by seized cash of Rs. 4,43,36,500/- which have been prayed to be adjusted on the date of search i.e. 29.04.2008 and on subsequent occasions by furnishing letters on 30.06.2008 and 18.8.2008. 9. The ld. Counsel for the assessee submitted that the AO denied prayer of the assessee that the adjustment of seized cash sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. 15. The ld. counsel for the assessee further drawn our attention towards provision of section 234B(2) of the Act and submitted that this provision of the Act specifically provides that whereby on the date of determination of total income or completion of regular assessment, if tax was paid by the assessee u/s 140A of the Act or otherwise, the total interest u/s 234B of the Act shall be calculated after reduction of interest on tax already paid, and no interest u/s 234B (2) could be levied without giving adjustment of the amount seized on 29.4.2008 which was to be prayed by the assessee to be adjusted by the assessee towards the tax on that date i.e. 29.04.2008 and not on 23.2.2011. 16. The ld. counsel for the assessee finally contended that in this situation the interest levied from 31.3.2008 to 23.2.2011 is not sustainable without giving credit of the amount of cash seized on 29.4.2008. The ld. counsel for the assessee has placed his reliance on various decisions including decision of Hon'ble High Court of Delhi in the case of Dr. Prannoy Roy vs CIT 254 ITR 755 (at page 769) and Hon'ble Jharkhand High Court vide dated 2.11.2012 in the case of Shri Mahesh Choud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 132 or requisitioned under section 132A may be dealt with in the following manner, namely:-- (i) the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the Gift-tax Act, 1958 (18 of 1958) and the Interest-tax Act, 1974 (45 of 1974), and the amount of the liability determined on completion of the assessment [under section 153A and the assessment of the year relevant to the previous year in which search is initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XIV-B for the block period, as the case may be] (including any penalty levied or interest payable in connection with such assessment) and in respect of which such person is in default or is deemed to be in default, may be recovered out of such assets: [Provided that where the person concerned makes an application to the Assessing Officer within thirty days from the end of the month in which the asset was seized, for release of asset and the nature and source of acquisition of any such asset is explained] to the satisfaction of the Assessing Officer, the amount of any existing liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assets sold towards the discharge of the existing liability referred to in clause (i) of sub-section (1), exceeds the aggregate of the amount required to meet the liabilities referred to in clause (i) of sub-section (1) of this section. (b) Such interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment [under section 153A or] under Chapter XIV-B. [Explanation 1].--In this section,-- (i) "block period" shall have the meaning assigned to it in clause (a) of section 158B; (ii) "execution of an authorisation for search or requisition" shall have the same meaning as assigned to it in Explanation 2 to section 158BE.] [Explanation 2.--For the removal of doubts, it is hereby declared that the "existing liability" does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII.] 20. From careful study of the above relevant provision of the Act, we also observe that prior to insertion of section 132B of the Act, w.e.f. 01.06.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable in accordance with the provisions of chapter XVII-C and if the word "Advance Tax "is given a literal meaning, the same apart from being used only for the purpose of Chapter XVII-C may be held to be paid in advance before its due date i.e. tax paid before its due date. Ld. DR replied that this decision is clearly distinguishable from the present case because as per Explanation 2 of the Act ''existing liability" does not include Advanced Tax. 24. On careful consideration and perusal of the decision of Hon'ble High Court of Delhi in the case of Dr. Prannoy Roy (supra) we respectfully hold that the benefit of the ratio of this decision is not available for the assessee as this case is related to the applicability of provisions of section 234A of the Act where "Advance tax" had not been deposited prior to the date of filing of return but in the extant case, the main issue is related to the adjustment of seized cash towards "existing liability" and as it is clear from Explanation 2 to section132B of the Act that existing liability" does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII of the Act. 25. As per provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept the contention of the ld. DR that the Explanation 2 attached to section 132B of the Act, is a clarificatory provision which is of retrospective effect, even if, the same was stated to be applicable from a particular date. We also hold that Explanation 2 to section 132B of the Ac t is retrospectively effective from the date of insertion of provision of section 132B of the Act w.e.f. 1.6.2002. 31. On the basis of foregoing discussion, we reach to a legal conclusion that the assets or cash seized u/s 132 of the Act is adjustable against the amount of any "existing liability" under the Act which does not include "advance tax" payable in accordance with the provisions of Part 'C' of Chapter XVII of the Act. At the same time, we take cognisance of the provisions of section 208 which stipulates the conditions of liability to pay "advance tax". Section 208 of the Act reads thus: "Conditions of liability to pay advance tax. 208. Advance tax shall be payable during a financial year in every case where the amount of such tax payable by the assessee during that year, as computed in accordance with the provisions of this Chapter, is [ten thousand] rupees or more.]" 32. In the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 39-40) we observe that there is no specific request for adjustment of cash seized and however in these letters the assessee has mentioned this fact that the assessee has infact discharged his tax liability due by more than 60% and 75% respectively on the date of filing of these letters compassing the adjustment of cash seized as well as the payment of installment of tax. 37. From operative paragraph of impugned order we observe that the ld. CIT(A) has granted relief for the assessee following decisions of Hon'ble Punjab & Haryana High Court in the cases of CIT vs. Arun Kapoor (Supra) and CIT vs. Ashok Kumar (Supra) and the CIT(A) allowed ground nos. 1 to 5 of the assessee with following conclusions and direction to the AO. ".....However the letter dated 30.06. 2008 would have to be given credence as the same was received by the department on 01.07.2008. This was received by the department with in a fortnight of the first instalment of advance tax. It is also clear that on 20.08.2008 about 75% of the advance tax was paid. However when was the balance 25% paid is not clear from the submission made. So for purpose of determining the date the same is taken as 01.07.2008." 38. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reach to fortified and logical conclusion that the AO was wrongly granted adjustment of seized cash from 23.2.2011 and the ld. CIT(A) was also grossly erred in holding that the assessee was entitled to adjustment of seized cash from 01.07.2008. Hence, ground no. 1 of the assessee is adjudicated with the direction to the AO that the adjustment of cash seized be given for the assessee from the date of completion of assessment proceedings u/s 153A /143(3) of the Act i.e. from 24.12.2010 as per provisions of Explanation 2 to section 132B of the Act. Ground No. 2 of the Revenue 43. Apropos ground no. 2, the ld. Departmental Representative (DR) submitted that CIT(A) was not right in admitting additional ground regarding non-credit of the seized cash before the levy of interest u/s 234A of the Act without seeking comments from the AO as required by Rule 46A of the IT Rules 1962. 44. The ld. Councel for the assessee replied that the CIT(A) has not granted any relief for the assessee in respect to levy of interest u/s 234A and 234B of the Act. The CIT(A) has left these issues open for the AO for taking into consideration the decisions of Punjab and Haryana High Court in the case of Asho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been adjusted towards the tax for A.Y. 2008-09, for the purpose of levy of interest charged u/s 234B of the Income Tax Act, whereas he has merely held that, the same was required to be adjusted from 01.07.2008, against the income offered on 29.4.2008, as advance tax. 2. That the findings of the learned Commissioner of Income Tax (Appeals) are partially erroneous, both on facts and in law in so far as the interest levied under section 234B of the Act. The learned CIT(A) ought to have held that, no interest u/s 234B of the Act was leviable from 29.04.2008, when the amount was seized and was prayed to be adjusted against the income declared and accepted as the income for the assessment year 2008-09. 49. We have heard arguments of both the sides and carefully perused the relevant material placed on record. The ld. Counsel for the assessee submitted that the CIT(A) has erred on facts and in law in granting only part relief and not holding that the amount seized on 29.4.2008 ought to have been adjusted towards the tax for A.Y. 2008-09 for the purpose of levy of interest charged u/s 234B of the Act, whereas the CIT(A) has merely held that the same was required to be adjusted from 01. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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