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TMI Blog2018 (1) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... tax liability was upon the assessee only, then, in our opinion, such cash seized/ offered to settle the cash liability, should have been accepted and assessee should be deemed to have made the payment specified in the demand notice within the period of limitation as provided u/s 220(1); and cannot be treated in default for not making the payment and thereby shift the adjustment of seized cash after expiry of more than 10 years from the date of demand created by the Assessing Officer. Thus, we hold that the interest u/s 220(2) under the given facts and circumstances of the case cannot be imposed from the date of original demand notice - Decided in favour of assessee. - I.T. ( SS ) A No.7/DEL/2012 - - - Dated:- 30-11-2017 - Shri Amit Shukla, Judicial Member And Shri O. P. Kant, Accountant Member Appellant by : Shri V. K. Bindal, Advocate Respondent by : Smt. Aparna Karan, CIT (DR) ORDER Per Amit Shukla, J. M. The aforesaid appeal has been filed by the assessee against the impugned order dated 12/12/2011 passed by the DCIT, Central Circle-23, New Delhi (Assessing Officer) under section 158BC(c)/254 of the Income Tax Act, 1961 for the Block Period 1/4/1986 to 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven for proper adjustment of the seized money w.e.f the date of filing the returns of income and adjustment claims by the companies also. 2. Without prejudice to the above, the assessing officer erred in law and on facts in not giving effect to the ITAT order dated 17/3/2006 passed in the first round of assessment in the case of assessee and group companies where the assessment made in the case of group companies was held as void-ab-initio. This has resulted into levy of interest u/s 220(2) of the Act. Thus necessary directions should be issued to give appeal effect to the said order. 4. In the case of the assessee, there is a chequered history of various rounds of litigations and assessment orders and also in the case of various companies wherein similar additions were made in their hands. In order to appreciate the facts qua the levy of interest under section 220(2), following chronology of events has been submitted by the ld. counsel for the assessee before us: Date Particulars/ Background 28/11/97 Assessment (First Round): Anil Sanghi - Assessment Order u/s 158BC of the Act (after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies -Matters were decided on merits by the Tribunal with the directions to exclude the income offered by Mr. Anil Sanghi in his return of income so that there is no double taxation of the same amount. Assessment (Second round) 28/12/07 Anil Sanghi - Addition made to the returned income in first round was reduced and total income was assessed at ₹ 27.79 Crores Companies - The additions for the amounts received by the companies from Mr. Anil Sanghi were deleted and the total income of the companies was assessed at ₹ 4.46 Crores. (It has been contended that, the revenue accepted its error made earlier in the year 1997 to tax the same amount twice resulting into impugned excessive levy of interest). ITAT order (Second Round) 06/01/11 Anil Sanghi - The issue of levy of interest u/s 220(2) of the Act was remanded back to AO Companies - In case of some companies, all other additions have been deleted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand arising out of the block assessment order. In the case of group companies (as aforesaid) also, whose bank accounts were searched, they have filed returns of income declaring Nil income and categorically stated that they have received the entire funds from the assessee and also wrote separate authorization letters of even date, 24/11/1997 to the Assessing Officer along with copy to the CIT, Central Circle 1, New Delhi, that the entire amount of cash seized or refunds due to them should be appropriated against the income tax liability of the assessee. Thus, the entire cash seized was offered for tax in the hands of the assessee not only by the assessee, who owned up the entire undisclosed income, but also various companies from whose possession these cash seized was recovered and was categorically stated that the money deposited in their accounts actually belonged to the assessee. As against the tax liability of ₹ 16,58,96,202/- determined as per original block assessment order in the case of the assessee, seized cash amount of ₹ 22.53 crores was offered to be adjusted against the said tax liability by the assessee who had owned up the entire cash and simultaneou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation letters dated 24-11-1997 to Assessing Officer along with copy of CIT Central -I, New Delhi requesting that the refunds due to them, be appropriated against the income- tax liability of the assessee. 11. As stated above, all these companies filed their returns of income declaring Nil undisclosed income and ₹ 22,52,83,598/- seized from them belonged to the assessee only. Due to this reason, on 24-11-1997 these companies irrevocable authorized the IT Department to adjust their seized money towards the tax liability of Anil Sanghi. This step was taken by the assessee and by these companies to cooperate with the IT Department so as to ensure that tax due on the undisclosed income of the assessee stands recovered. 12. On overall perusal of the above facts, it would be seen that the tax liability of the assessee was ₹ 16,58,96,202/- and which was much lower than ₹ 22,52,83,598/- seized from the companies. Further in view of the authorization letters filed by these companies, if the above seized amount would have been adjusted against the tax liability of the assessee, then no demand would have remained outstanding as on the date of the assessment order i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omposite order dated 17-03- 2006 already placed on record. The department has not filed any appeal before the Hon'ble high Court against the set aside of the said assessment order which proves that the setting aside by the ITAT has become final. Furthermore, fresh assessment order was passed in the second round u/s 158BC / 254 on 28-12-2007 by the Assessing Officer as per directions of the Hon'ble ITAT. 25. Thus the conditions laid out in para 2(1) of the circular stands fulfilled and therefore the interest u/s 220(2) can be charged only after the expiry of thirty days from the date of service of demand notice pursuant to such fresh assessment order in the second round and no interest could be charged u/s 220(2) till said date. In case of the assessee, the fresh assessment order was passed on 28-12-2008 and which was served on the assessee on 01-01-2008 and therefore the due date for payment of income tax is on 31-01-2008. Thus interest u/s 220(2) can be charged w.e.f. 01-02-2008 and no interest can be charged prior to the said date as has been charged. 7. However, the Assessing Officer rejected the entire contentions raised by the assessee on the ground that:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis it was held that the money seized and offered to tax as undisclosed income by the assessee to be added in the hands of the assessee. Finally after various rounds of litigation, it has now been settled in the cases of the companies that this money does not belong to them, albeit same needs to be taxed in the hands of the assessee. Once the money found from the bank account of these companies have been rebutted by these companies that the money belongs to the assessee and assessee on the other hand accepts that it is his undisclosed income, then ostensibly there could be no presumption which can be drawn against the companies in terms of section 132(4A) that money belongs to them, because that presumption stands categorically rebutted. 9. The contention/objection raised by the Assessing Officer in the impugned order that the said amount could not have been adjusted against assessee s tax liability, cannot be upheld in wake of the facts and circumstances of the case as discussed above. If the Department on its own volition has made the addition, both in the hands of the assessee as well as in the hands of the companies for the same amount and chooses to adjust cash seized ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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