TaxTMI 
TaxTMI 
2018 (1) TMI 840
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....rom the various company assessees of the assessee's group (who had irrevocably authorised the department to adjust their seized amounts / funds against the demand due from the assessee before completion of the assessment) alongwith Rs. 72,56,848/- being amount seized from / refunds due to the assessee were lying with the Department for adjustment against tax liability of the assessee. Thus no interest u/s 220(2) is chargeable from the assessee and therefore levy of interest u/s 220(2) should be deleted. 2. Without prejudice to the above ground of appeal, the learned assessing officer erred in charging interest of Rs. 32,58,48,452/- u/s 220(2) of the Act w.e.f 1/1/98 (i.e. the due date of payment of tax in the case of original assessment order dated 28/11/97) ignoring that the original assessment order has been set aside by the Hon'ble ITAT and therefore the case of the assessee is covered under clause 2(1) of Circular no. 334 [F.No. 400/3/81-ITCC] dated 3/4/1982 "and therefore, the interest u/s 220(2) can be charged w.e.f 1/2/08 (i.e. the due date for payment of tax in case of fresh/ second assessment order dated 28/12/2007 passed in pursuance to directions of the Hon'ble ....
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....ted u/s 158BC of the Act. 17/03/06 ITAT Order (First round) a) Anil Sanghi - Matter restored back to the AO with direction to verify the peak amount. b) PCSL (Company) - Since most of the money had come from Mr. Anil Sanghi, therefore, the matter was remanded back with a direction that no addition can be made for the amount received from Mr. Anil Sanghi as same income cannot be taxed twice. c) Other Companies - Assessment Orders held invalid since no search warrants could be produced by the revenue for verification. 31/10/07 In case of the companies matter was remanded back by the Hon'ble High Court to ITAT as search warrants were produced in the High Court by the Revenue. (It has been contented that the delay was on part of the department as the revenue took almost 9 years to produce the search warrants before the High Court for which the Revenue was penalized also by imposing a cost of Rs 1,00,000/- by the High Court which the Revenue had paid). ITAT (Second innings) Only for other companies 30/04/....
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.... of various entities/companies, which was net of withdrawals. As against this, assessment was completed vide order dated 28/11/1997, whereby undisclosed income was assessed at Rs. 29,45,82,089/-. Simultaneously, similar addition on account of bank deposits in the hands of various companies/entities was also made, i.e., (i) M/s Prahlad Finance & Capital; (ii) M/s Patliputra Credit & Securities Ltd.; (iii) Independent Couriers Pvt. Ltd.; (iv) Shri G.K. Gupta; (v) M/s Patliputra International Trading Ltd.; (vi) Kandla Petro Chemicals Corp. Ltd.; (vii) Harmony Psychitary Centre Pvt. Ltd.; (viii) Uikam Investment & Finance Pvt. Ltd.; (ix) Vaidahi Lease & finance Pvt. Ltd.; (x) Annie Investment & Finance Co. P. Ltd.; (xi) Shilpi Securities Pvt. Ltd.; and (xii) Professional Leasing & Capital Services Ltd. In case of one of the companies i.e. in the case of M/s Patliputra Credit & Securities Ltd., the Assessing Officer held that addition in the hands of the company should be made on protective basis and in the case of Shri Anil Sanghi, i.e., the assessee; it should be made on substantive basis. One very important fact to be noted here is that, before the completion of block assessment proc....
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....equested to be adjusted against the said tax liability. When the levy of interest was challenged by the assessee, the Assessing Officer was finally directed by the Tribunal, vide dated 6.1.2011, to correctly compute interest under section 220(2). In pursuance thereof, the Assessing Officer issued notice to the assessee as why interest under section 220(2) should not be levied from the date of first demand notice given alongwith the original block assessment order. In response, assessee's submissions before the Assessing Officer was as under:- "6. The assessee filed return of income declaring an undisclosed income of Rs. 27,64,93,670/-. The assessee invested the undisclosed income in his group companies which were also covered under search action u/s 132 and from whom huge amounts were seized. 8. On 24-09-1997 the assessee requested the IT Department that the tax due on his undisclosed income be recovered from the borrowers / PCSL whose money has been seized by the IT Department as can be seen from the return of undisclosed income already placed on record. 9. The group companies whose bank account were searched/ seized and who were also issued notices u/s ....
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.... dated 03-04- 1982 on section 220(2). A copy of the said circular is enclosed. The circular clarifies the position regarding levy of interest u/s 220(2) of the Act. It provides that where an assessment order is cancelled under section 146 or cancelled / set aside by an appellate / revisional authority and the cancellation /setting aside becomes final (i.e. it is not varied as a result of further appeals / revisions ) no interest under section 220 (2) can be charged pursuant to the original demand notice. The necessary corollary of the position will be that even when the assessment is reframed, interest can be charged only after the expiry of thirty five days from the date of service of demand notice pursuant to such fresh assessment order. However, if the original assessment order is either varied or even set aside but no further appeal' the original order is restored either in part or wholly, then the interest payable u/s 220 (2) will be computed with reference to the due date reckoned from the original demand notice and with reference to the tax finally determined. The fact that during an intervening period there was no tax payable by the asses see under any operative order w....
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....addition was reduced as per the direction of the Tribunal. Thus, assessee cannot take shelter of clause (i) of the CBDT Circular No.334; and Lastly, he distinguished various judgments as relied upon by the assessee as per discussion appearing in para 2.6 of his order. 8. We have heard the rival submissions and also perused the relevant material placed on record. As discussed by us in the foregoing paragraphs, it is an undisputed fact that in the block assessment order it was categorically held by the Assessing Officer in the case of the assessee that, assessee had given money to several companies, out of which an amount of Rs. 22.55 crores was seized from the accounts of various companies during the course of search. Not only the assessee had owned up the said money in the accounts of the companies, but also, these companies have submitted and given a letter to the Assessing Officer as well as to the concerned Commissioner of Income Tax that this money belongs to the assessee and not to them. In the wake of this background, assessee had offered this income as undisclosed income in the return of income filed for the Block Period and requested the departmental authorities....