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TMI Blog2020 (3) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the same as advance tax - HELD THAT:- The provisions for the adjustment of seized cash against the tax liability are contained under the provisions of section 132B of the Act. As per the provision, the cash seized during the search and seizure operation can be adjusted against the existing tax liability, and the liability of tax determined on the completion of the assessment. Now the question arises for the determination of the existing liability. In the instant case, the assessee has declared income of 1,22,16,750.00 in the return filed dated 30-9-2011 and the assessee has also requested to treat the seized cash as advance tax vide letter dated 29-09-2011. As a result of the disclosure of income in the return of income transpires that there was a liability of tax on the assessee. Thus in our considered view, the seized cash can be treated as an advance tax liability. See SHREEJI PRINTS PVT. LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME TAX [ 2013 (7) TMI 19 - ITAT AHMEDABAD] - cash seized during the search and seizure operation can be treated as advance tax liability in the given facts and circumstances. Explanation was brought by the Finance Act 2013 with effect from 1st Jun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n F.Y. 2009-10 which was duly disclosed in the books has come to be accepted by the Department as part of assessment for A.Y. 2010-11 vide order u/s. 153A of the Act and hence the same could not have been altered by the Assessing Officer in the year of sale of the impugned land by the appellant. 5. The learned Commissioner of Income-tax (Appeals) - IV, Ahmedabad erred in not granting credit for cash of ₹ 15,00,000/- seized on 24-06-2010 as and by way of advance tax payment for the assessment year 2011-12. 6. The learned Commissioner of Income-tax (Appeals) - IV, Ahmedabad erred in directing Assessing Officer to charge interest u/s. 234B of the Act. The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal. 2. The first interconnected issue raised by the assessee in ground No. 1 to 4 is that the learned CIT (A) erred in confirming the order of the Assessing Officer by sustaining the addition of ₹26,83,137/- being 33% of the total addition on account of short-term capital gain. 3. The facts in the present case are that the assessee is an individual and engaged in the business of dealing in shares & s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he has sold the impugned land at an average rate of ₹2000 per square meters despite the Jantri Value is at ₹ 800 square meters which was offered to tax as short-term capital gain. 3.4. The assessee also claimed that he has also purchased the impugned land from the non-related party being the wife of his friend Smt. Kavita H Goswami holding major share in the impugned land i.e. 67%. As such, there was no reason for the assessee to purchase the impugned land at a higher value from the unrelated party. 3.5. The assessee also submitted that there is no provision under the Act under which the cost of the acquisition for the impugned land can be disturbed. 3.6. The assessee also justified the purchase price of the impugned land by comparing the cost of acquisition the similar/comparable cases and accordingly submitted that the adjacent land was sold at ₹1,634 per square meter whereas the Jantri Value is of ₹ 400.00 per square meter. 3.7. The assessee also contended that he has sold the impugned land after plotting at an average price of ₹ 2,000.00 per square meter whereas the Janri value stands at ₹800 only. Accordingly he requested to treat the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee should have referred the matter to the DVO for the determination of the prevailing market rate at the time of acquisition of the impugned land. But the AO has not done so. 4.4. The assessee also claimed that the amount of loan taken from the husband of Smt. Kavita H Goswami cannot be compared with the purchase of the land as both are different transaction and cannot be compared. 4.5. The learned CIT(A) after considering the submission of the assessee deleted the addition made by the AO in part by observing as under: "(x) The contention of the appellant appears to be correct partly as the wife of the appellant is only 33% owner of the relevant land in question, the remaining 67% is owned by Smt. Kavita H. Goswami wife of appellant's friend Shri Hiteshgiri Goswami who has given unsecured loand of ₹ 2,01,00,000/- to the appellant. In order to check the sources of income of Smt. Kavita H. Goswami & Shri Hiteshgiri Goswami, details of their bank account, statement of income and balance sheet were called. It is seen that Shri Hiteshgiri Goswami is assessed to tax and has filed return of income for AY 2011-12 declaring income of ₹ 33,16,134/-. Shri Hiteshgiri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction is within four corners of law, because law itself treated the sale as exempt income - there is nothing to show the transaction as sham or bogus [326 ITR 0001 - SC]. Wife had minority share in land. The funds received by assessee from husband of joint-seller are refunded in later years on which even interest was paid in one of the years. CIT(A) has given a finding that he had enough capital to advance. Assessee bought impugned land at higher than stamp duty value. But he bought adjoining land one year later also at higher than Jantri value. Even his sale of impugned land is at higher than Jantri value." 6. On the other hand, the learned DR before us vehemently supported the order of the Authorities below. 7. We have heard the rival contentions of both the parties and perused the materials available on record. The assessee in the present case has purchased a piece of land in the immediate preceding assessment year dated 20th February 2010. The purchase price of such land was very high than the Jantri Value. Accordingly the AO was of the view that the assessee knowingly has purchased the impugned land from the seller being his wife and his friend's wife at the higher pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus in the absence of such necessary details, we are not impressed with the finding of the authorities below. 8. The main allegation/finding of the AO, which was later confirmed by the ld. CIT(A), that assessee has used this transaction as a colorable device to reduce its tax liability by diverting the income. Regarding this we note that Honorable Supreme court in case of McDowell & Co. Ltd vs. Commercial tax officer (154 ITR 148) dated 17-4-1985 observed that tax planning within the law is permitted, but colorable devices cannot be part of tax planning. 8.1. In the case of McDowell & Co, the assessee was not collecting the sales tax liability on the excise duty even after the amendment in the distillery rules 76 & 79 w.e.f. 4-8-1981. As such before the amendment in the rules, i.e., distillery rules 76 & 79 w.e.f. 4-8-1981, the buyers were liable to deposit the excise duty directly to the state government. Therefore the assessee did not collect the sales tax on such excise duty. It is pertinent to note that the Hon'ble SC before the amendment in the rules 76 & 79 decided the issue in favor of the assessee reported in 1 SCR 914 dated 25-10-1976. But when the assessee defaulted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax and it is not a transaction in reality of receiving less price than the one on which it was marketing. The Court no where said, that every action or inaction on the part of the taxpayer which results in reduction of tax liability to which he may be subjected in future, is to be viewed with suspicion and be treated as a device for avoidance of tax irrespective of legitimacy or genuineness of the act; an inference which unfortunately, in our opinion, the Tribunal apparently appears to have drawn from the enunciation made in McDowell's case (supra). Ratio of any decision has to be understood in the context it has been made. The facts and circumstances which led to McDowell's decision (supra) leaves us in no doubt that the principle enunciated in the above case has not affected the freedom of citizen to act in a manner according to his requirements, his wishes in the manner of doing any trade, activity or planning his affairs with circumspection, within the frame work of law, unless the same fall in the category of colorable device which may properly be called a device or a dubious method or a subterfuge clothed with apparent dignity. It was with this consciousness that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is affairs so as to attract maximum tax liability, and every act which results in tax reduction, exemption of tax or not attracting tax authorised by law is to be treated as device of tax avoidance." 8.4. However, we further note that before applying the aforesaid principles laid down by the Hon'ble Apex court in case of McDowell (supra) to the case on hand certain facts needs to be considered for arriving at a finding whether a particular series of the transactions is a colourable device or not. In such situation the onus is on the AO to find out: (i) whether the parties to the transactions have concealed or hidden any fact and/or whether what is shown to be done could have actually happened in different time or at different place; Ans: Regarding the facts of the transactions, we note that all the necessary facts were duly disclosed by the assessee and the assessment was also framed under section 153A/143(3) for the year in which the land was purchased. Thus, we are of the view no facts were concealed or hidden. (ii) Even where individual transactions of the device are legal or legitimate, whether combination of these steps creates an effect which is abnormal in the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e us, reiterated the submission as made before the Ld.CIT (A). 13. On the other hand the Ld. DR vehemently supported the order of authorities below. 14. We have heard the rival contentions and perused the materials available on record. In the instant case search and seizure operation was carried out under section 132 of the Act, at the premises of the assessee dated 24-06-2010. During the search, a sum of ₹ 15,00,000/-was found which was seized. The 1st controversy before us arises for our adjudication whether the cash seized during the assessment proceedings can be treated as advance tax paid by the assessee. 14.1. The provisions for the adjustment of seized cash against the tax liability are contained under the provisions of section 132B of the Act. As per the provision, the cash seized during the search and seizure operation can be adjusted against the existing tax liability, and the liability of tax determined on the completion of the assessment. Now the question arises for the determination of the existing liability. In the instant case, the assessee has declared income of ₹ 1,22,16,750.00 in the return filed dated 30-9-2011 and the assessee has also requested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that if such adjustment is permissible, then interest would be payable by the assessee. But that question was not raised before the learned Tribunal. The learned Tribunal, therefore, had no occasion to express any option with regard thereto. In the facts of the case, it is not possible for us to say that the impugned judgment and order of the learned Tribunal is erroneous in law." 15.1. It is settled law if there are different rulings of the non-jurisdictional High Court and there is no judgment on the issue by the Hon'ble jurisdictional High Court, then the view favoring the assessee will prevail. In this regard, we find support and guidance from the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Vegetable products Ltd reported in 88 ITR 192 wherein it was held as under: "if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. This is a well-accepted rule of construction recognised by this Court in several of its decisions. Hence, all that the court has to see is, what is the true effect of the language employed in section 271(1)(a)( i). If court finds that language to be ambigu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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