TaxTMI 
TaxTMI 
2015 (8) TMI 876
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....he order of the Bench shall be identically applicable in the case of M/s. Janki Textile & Industries Ltd in ITA No.1877/Kol/2010 for the assessment year 2008-09. 3. The ld.DR was permitted to argue the appeal in the case of M/s. Umang Vincom Pvt. Ltd in ITA No.1878/Kol/2010 for the assessment year 2008-09. The revised grounds of appeal filed by the revenue are re-produced herein below:- 4. Revised Grounds of appeal in ITA No. 1878/Kol/2010 A.Y 2008-09 (by the revenue) "1. That on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in holding that by virtue of main source of income of the assessee being "Income from other sources". Explanation to section 73 of the Act was not applicable to the case of the assessee without appreciating that the AO had established with facts and figures that the main source of income of the assessee company was share trading and not income from other sources. 2. That on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in holding that Explanation to section 73 of the act was not applicable by considering the income declared u/s. 132(4) of the Act as "Income from other sources' and wi....
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....e of hearing of the case." 5. Ground nos. 1 to 3 & 8 are with regard to issue of Explanation to section 73 of the Act. 6. Brief facts of the case are that a search u/s. 132 of the I.T Act was carried out in the premises of asessee on 28-03-2008. Certain documents relating to the assessee were seized during the search. Thereafter the assessee filed the return of income on 29-9-08 declaring a total income of Rs. 29,64,19,690. The AO stated that in a disclosure petition before DIT wing the assessee disclosed an income of Rs. 30 crores for the FY 2007-08 to buy peace and to avoid long drawn litigation. The AO stated that the assessee had further requested in the said petition that the amount of Rs. 17,50,99,994 lying in the bank account of a group concern M/s. Shoparna Brothers P.Ltd and subsequently seized by the department may be adjusted against tax liability of the assessee arising from such disclosure. The AO also stated that the assessee has shown a share trading loss of Rs. 42,21,015, income from money lending business of Rs. 4,43,482, short term capital gain of Rs. 1,92,224 and disclosed income u/s. 132(4) of the I.T Act at Rs. 30 crores. AO relied upon the decision of Hon'b....
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.... the ld. Counsel for the assessee has relied upon the written submission made before the ld.CIT(A) and the order of the ld. CIT(A). 9. We have heard the rival submissions and perused the facts of the case. We agree with the views of the ld.CIT(A). We find that in the case of Godavari Capital Ltd Vs. DCIT (2004( 91 ITD 274 (Hyd) as relied upon by the assessee, it was held that the provisions of section 73 are invoked only if there is a requirement of setting off the speculative business profit against speculative business loss. If there is no speculative business profit as envisaged u/s. 43(5) of the I.T Act the provision of section 73 cannot be invoked and if section 73 cannot come in operation, the Explanation cannot be applied to determine the nature of income without applicability of section. In the case of Aman Portfolio (P) Ltd Vs. DCIT (2005) 92 ITD 324 (Delhi) (SMC)-I), relied upon by the assessee, wherein it was held that the Explanation to Section 73 cannot be invoked if no device was adopted in indulging in such share transactions with object of reducing taxable income. The Hon'ble Jurisdictional Calcutta High Court have analyzed the Circular No.204 dated 24-07-1976 of C....
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....n the form of seized documents as per the assessment order, to correlate such income with any business transactions. This income is not declared against any undisclosed assets such as cash, jewellery etc. as per the assessment order so that it could be deemed as an income u/s. 69 etc of the Act. It has been held that the income declared u/s. 132(4) is required to be taxed under the head "Income from other sources". If the income declared u/s. 132(4) is considered to be "Income from other sources", then the main income of assessee would be income from other sources and assessee company would be covered under the first exception to explanation below section 73 and by virtue of main income assessee being the "income from other sources", then explanation to Section 73 is not applicable. Accordingly, in the facts and circumstances of the case, we find no infirmity in the impugned order of the ld.CIT(A)/ We uphold the same. The ground nos. 1 to 3 & of the revenue's appeal are dismissed. 10. As regard ground no.7 the brief facts of the case are that the AO has issued a notice of demand u/s. 156 of the I.T Act on 30-12-09 along with the assessment order as per following calculation of tax....
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....that assessee should not be penalized by charging of interest u/s.234B under such circumstances. The assessee referred to the provisions of section 132B(1)(i) and submitted that as referred it includes the liability with regard to the assessment for the year, in which search was initiated or requisition was made. The asessee, therefore, submitted that the tax liability for the year in which the search was conducted may be adjusted from the seized cash. The ld. Counsel for the assessee has referred to the following decisions in support of his contentions in the cases of ITAT Kolkata in the case of DCIT, CC V, Kol Vs. Shri Sitaram Agarwal (HUF), Kolkata in ITA No.101/Kol/2007, in the case of ACIT,CC XXX, Kol Vs. Puranmal Agarwal in IT(SS) A No.114/Kol/08 and in the case of DCIT, CC-XXIV, Kol Vs. Sri Amit Seksaria in ITA No. 253/Kol/09, ITAT Mumbai in the case of Satpaul D. Agarwal (HUF) Vs. ACIT (1999) 105 Taxman 71 and in the case of Nitin M. Jadia Vs. ACIT (1999) 107 Taxman 203. In the case of ACIT Vs. Shailesh Natubhai Desaid (2000) reported in 109 Taxman 330(Ahd.), "wherein it has been held that if unexplained cash seized during search operation at the business premises of the f....
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.... 29,64,19,690/- after setting off the recorded share trading loss against the income disclosed u/s. 132(4) of Rs. 30 crore. On this total income appellant calculated the tax liability of Rs. 10,06,13,004/- which is more or less same as what appellant had submitted in the letter dated 28.05.2008. However, appellant did not calculate undisputed liability of interest u/s. 234C and the liability of interest u/s. 234B in the return of income filed on 29.09.2008. It appears that Assessing Officer adjusted the seized cash of Rs. 10,06,13,004/- on 13.04.2009 as per the request of appellant vide letter dated 28-05-2008 or as per the tax liability admitted by appellant in Return of Income before the completion of assessment. Therefore the fact that the adjustment of seized cash could be carried out even before determination of tax liability on completion of assessment, is evident from Assessing officer's own action. 4.2 The provisions of section 132B of IT Act describe the manner in which the seized assets are required to be applied by the Assessing Officer. The provisions of section 132(5) were omitted from 01-06-2002 and from the same date two provisos to clause (i) of sub section (1) of....
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.... admitted u/.s 140A by the appellant. Appellant had categorically admitted before the Assessing Officer the liability of Rs. 10,06,00,000 u/s. 140A of the I.T Act vide letter dated 28-05-2008. Therefore, Assessing Officer could have adjusted the seized cash of Rs. 10,06,00,000/- against the admitted liability of appellant u/s. 140A of the I.T Act for Assessment Year 2008-09 any time after 28-05-2008. The next question is, whether Assessing Officer is bound to adjust such liability against the seized cash or the Assessing Officer has discretion in this regard. Some courts have interpreted that as per the amended provisions of section 132B, the existing tax liabilities include the demand of the Assessment Year in respect of which cash has been seized and assessment of which is pending and the Assessing Officer cannot post pone the adjustment of cash against such liabilities beyond the date of seizure and charge higher interest u/s. 234B for no fault of the assessee. Appellant has referred to the decision of H'ble ITAT Kolkata in the case of DCIT, Cent. Circle-V, Kol, Vs. Shri Sitaram Agarwal (HUF), Kolkata in ITA No.101/Kol/2007, supporting this view. However, in the present case, th....
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....sed the cash seized from the custody of M/s. Shoparna Brothers Pvt. Ltd and should have applied it towards payment of tax liabilities of Rs. 10,06,00,000/- of appellant on or before 06-08-2008. However, it appears that the Assessing Officer did act upon such requests, but after a delay of a few months on 13- 04-2009. If Assessing Officer does not act upon such application or does not reject the application of M/s. Shoparna Brothers Pvt. Ltd by a speaking order, then it is presumed that the Assessing Office has no objection to the proposal of M/s. Shoparna Brothers Pvt. Ltd. Therefore, in present case, the amount of Rs. 10,06,00,000/- seized and prayed by M/s. Shoparna Brothers Pvt. Ltd and the appellant on 28-05-2008 for release and application towards the tax liability of Assessment Year 2008-09 of appellant, is presumed to be accepted by the Assessing Officer. What the Assessing Officer did later should have been done before 6th August 2008 and therefore it is presumed that the release and application of seized cash towards payment of tax liability dates back to 06- 08-2008, when the time allowed to Assessing officer by the statute to take such decision expires. Therefore, I hold....