TaxTMI 
TaxTMI 
2011 (6) TMI 146
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....ained and not released. Subsequently, vide another order under Section 132(5) dated 19.06.2005, various disputed additions were made and tax and penalty @200% were raised. Therefore, entire silver seized valuing Rs.4,44,66,395/- was retained and not released. We may mention at this state that the Income Tax Department disputed the status of M/s Foto Traders, as according to it, it was an unregistered partnership firm. Therefore, the Department intended to tax income in the hands of this firm. The concerned Assessing Officer (AO) passed the assessment order under Section 143(3) in the name of M/s Foto Traders after making huge additions of Rs.10,49,53,527/- on protective basis. In the appeal filed against the said order, additions of Rs.6,32,84,274/- were deleted and rest additions were confirmed. We may also mention at this stage that in the meantime and before the aforesaid protective assessment orders were passed in the case of M/s Foto Traders, the petitioner had approached the Department to allow him to sell the seized silver after deposing the amount of equal value. As no heed was paid to this request, the petitioner filed Writ Petition (Civil) No.4767/1998 in this Court. Whil....
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....tment was much more than the tax liability and therefore, he had been making request for refund of the same and till it is refunded, to keep the same in the fixed deposit bearing interest. This was not done. The petitioner was supposed to file the income tax return for the successive years, i.e., Assessment Years 1999-2000, 2000-01, 2001-02, 2002-03 and 2003-04. He filed these returns. He was also required to pay the advance tax due and payable in respect of these income tax returns. According to the petitioner, since he was facing cash flow problems in his business and there was sufficient surplus money lying with the Department which belonged to the petitioner, he made request vide various letters for adjusting the advance tax payable out of the aforesaid amount lying with the Department. Separate letters and reminders were written in respect of each of the aforesaid assessment year. These requests of the petitioner also remained unattended. On the contrary, the AO while passing the assessment order imposed levied interest under Section 234B, Section 234C and Section 220 of the Act for making deposit of advance tax. A total demand raised was as under: Assessment Year 19....
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....8,220 Total 11,62,429 5,85,583 6,45,391 6,48,292 38,391 30,80,086 INTEREST UNDER SECTION 220(2) TOTAL Interest under section 220 (2) 3,33,960 4,64,886 3,70,798 5,31,927 57,220 30,105 15,310 TOTAL 7,98,846 3,70,798 5,31,927 87,325 15,310 18,04,206 8. Secondly, while calculating interest payable to the petitioner, the Department has admitted that an amount of Rs.4,39,91,00/- against the amount of Rs.4,70,36,500/-. However, the alleged draft of Rs.30.50 lacs dated 05.04.2000 to have been paid finds no mention in the Public Deposit account of M/s. Foto Traders. No original record is available in this regard with the Department. We are not concerned with this, as it is fairly stated that in this regard, litigation between the parties is pending in this Court. 9. Insofar as interest payable to the petitioner on the aforesaid deposit is concerned, the Department has calculated the same with effect from the date when the amount was transferred into the account of AO from P.D. Account. The petitioner claims that he is....
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....clear from the above that this petition basically raises two issues, viz., (i) Whether interest under Sections 234A, 234B, 234C and 220 (2) of the Act could be charged when according to the petitioner, sufficient amount of the petitioner was lying deposited with the Department wherever advance tax could be adjusted? (ii) From which date the petitioner is entitled to interest on the amount which became refundable after giving effect to the orders passed by the Income Tax Settlement Commission? ISSUE NO.(1): 11. Submissions made by the learned counsel for the petitioner on the basis of which he has argued that no interest could be charged for non-payment of advance tax was that there was sufficient amount was already lying with the Department. The Department, however, contends that it was not permissible for the petitioner to seek adjustment from the amount lying with the Department, which in fact belonged to M/s. Foto Traders and the same was assessed as unregistered partnership and not as the sole proprietorship of the petitioner. To support this plea, the Department has relied upon the statement of the petitioner himself at the time of searc....
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.... 14. However, to our mind, this plea taken by the respondent is totally misconceived. No doubt, M/s Foto Traders was assessed as unregistered partnership. However, the petitioner was clamouring that it was his sole proprietorship concern and had submitted proofs in respect thereof. If the plea of the petitioner was not accepted erroneously by the Department, it cannot take advantage of its own wrong. Ultimately, the petitioner was vindicated when the Settlement Commission accepted that he was the sole proprietor of M/s Foto Traders. There is an ample discussion in this behalf in the order of the Settlement Commission. The arguments of the learned counsel for the respondent that it is only on 07.07.2003 when the Settlement Commission passed the orders under Section 245D(4) of the Act that the amount became available to the petitioner, is without any substance. As stated above, the petitioner was questioning the assessment of M/s Foto Traders as unregistered partnership firm. He has been proved correct. Merely because order to this effect passed by the Settlement Commission on 07.07.2003 would not mean that it is on this date the amount became available at the hands of the petitio....