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2019 (11) TMI 361
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....e CIT(A) be setaside. Without Prejudice: 4. Because the CIT(A) has erred on facts and in law in dismissing the appeal filed against the order passed under section 154 of the Act, 1961 in limine holding that the "admitted tax" in terms of section 249(4) has not been deposited, the appeal being not maintainable, the order passed by CIT (A) is contrary to facts, bad in law and be quashed. 5. Because the entire "admitted tax" having been deposited as per the provisions of law in terms of section 249 and the details, having been furnished, the CIT(A) has, misinterpreted the provisions and has arbitrarily held, that the "admitted tax" has not been deposited the order passed by the CIT(A) be quashed. 6. Because the CIT(A) has failed to appreciate that the present appeal is against the orders passed u/s 154 of the Act, 1961 and not against 143(3), the provisions of the section 249 as such would prima fade not be applicable, the dismissal of appeal in limine is totally unwarranted. 7. Because had the "admitted tax not been deposited or deemed to have deposited, the AO would not have dropped the penalty proceedings initiated u/s 140A/221 of the Ac....
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....garwal' Group, consisting of ten appeals, being ITA Nos.679 to 687/LKW/2017, whose appeals were disposed of by the Lucknow Bench of the Tribunal, vide order dated 8/8/2017, deciding the issue in favour of the assessees, therefore, the same view be taken in the case of the assessee also. Relying on the submissions made by the assessee, the order of the Tribunal dated 4/5/2017 in ITA No.127/LKW/2017 was recalled and accordingly the appeal is fixed for hearing on 22/10/2019. 3. The assessee has moved an application dated 2/5/2018, stating therein that ground Nos.1 to 8 and 11 are not pressed. Accordingly ground Nos.1 to 8 and 11 are rejected as not pressed. 4. The assessee further states that ground No.12 is general in nature, for which no adjudication is required. 5. Now we are left with ground Nos. 9 & 10, relating to charging of interest under section 234B and 234C of the Act. 6. The brief facts of the case are that there was a search and seizure operation at the business-cum-residential premises of the assessee and its partners on 31/3/2011, resultant to which, a sum of Rs. 72,80,000/- was seized from the business premises of the assessee firm and Rs. 5,50,000/- ....
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....ssee before us was that the assessee had surrendered Rs. 8 crores at the time of search and cash amounting to Rs. 4,70,80,000/- was seized; that at the time of search, three postdated cheques, aggregating to Rs. 2.25 crores were procured from the assessee towards payment/adjustment of tax on the amount surrendered at the time of search, therefore, there was no reason for the authorities below to hold that the "admitted tax" had not been deposited; that the assessee had filed letters, dated 7/4/2011 (APB:14A), dated 7/11/2012 (APB:13) and dated 14/4/2013 (APB:12), to the Asstt. Director of Income Tax (Inv.), Unit-I, Kanpur requesting for adjustment of the amount seized towards payment of tax liability in terms of section 132 of the Act; and that therefore, the Assessing Officer was not justified to charge interest under sections 234B and 234C of the Act. The ld. A.R. of the assessee further submitted that the Lucknow Bench of the Tribunal, in the group cases, in ITA No.679 to 687/LKW/2017, vide order dated 8/8/2017, dealt with this issue of charging of interest under section 234B and 234C of the Act, and directed the Assessing Officer to recomputed the interest under section 234B of....
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....computation of interest u/s 234B. The main plea of the assessee is that since the assessee has requested for the adjustment of the cash seized vide his letter dated 07/04/2011 therefore, the Revenue is bound to give the credit of the cash seized towards the advance tax liability as on 07/04/2011. For the inaction of the Revenue, the assessee should not be penalized. We noted from the copy of the letter, which is available at page No. 14 of the paper book, that it is not a fact that the assessee has requested the Department for the adjustment of the cash seized towards the payment of the tax but we noted that the Revenue has not taken any action and the assessee has not been given correct particulars of the tax paid against the advance tax payable by the assessee. We noted that the Revenue has allowed the credit to the assessee as claimed in each of the hand only after the completion of the assessment i.e. vide order dated 20/06/2014 and accordingly levied the interest u/s 234B till the date of payment that the Revenue has taken to be the date when they made the adjustment. We noted that this issue is duly covered by the decision of Delhi Tribunal in the case of Mahabir Prasad Gupta....
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.... cannot deal with such money until a proper tax demand is created against the assessee. He also emphasized that until and unless such liability is crystallized, the cash seized by the department cannot be adjusted. In our opinion, when advance tax is to be payable by an assessee by virtue of the operation of Income-tax Act, 1961 and the department is already possessing money belonging to the assessee and assessee made a prayer for adjusting such amount against the advance tax payment or any tax required to be paid by the assessee then credit ought to be given because the department has deprived the assessee of his money by seizing the cash otherwise assessee would have paid the tax on 12.4.2006 and 12.09.2006. The ITAT in the case of Nikka Mal Babu Ram (supra), has made a lucid enunciation of law and facts on this issue, and it is worth to take note of the discussion made by the ITAT which reads as under: "9. It is well understood that as per section 4 of the Act, an assessee is chargeable to income-tax in respect of his total income. Sub-section (2) of section 4 prescribes that the income-tax so chargeable shall be deducted at source or paid in advance, where it ....
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....ssing Officer to make an enquiry and thereafter make an order to deal with the seized assets. Section 132(5) of the Act authorizes the Assessing Officer to retain in his custody such assets as in his opinion were sufficient to satisfy the aggregate amounts referred to in clauses (//), (//a) and (/'//) of section 132(5) and obligated him to release the remaining seized assets. In this background, the Hon'ble High Court, on the facts of the case before it, held that unless an order under section 132(5) of the Act is passed, the Assessing Officer could not direct that the assets seized be adjusted towards advance tax liability. The Hon'ble High Court specifically noted that it is only after an order under section 132(5) is passed that the assessee can make a request that the seized amount which is sought to be released in his favour be adjusted or appropriated towards the liability to pay advance tax. Though, in the context of the present assessment year before us, the provisions of section 132(5) are not applicable and therefore, strictly speaking, the ratio of the judgment of the Hon'ble Madhya Pradesh High Court does not apply, so however it is pertinent to observe ....
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....efore completion of the assessment. They have specifically took the view that section 132B(1) never prohibits the utilization of amount seized during the course or search towards the advance tax liability. In view of this fact, we set aside the order of CIT(A) and direct the Assessing Officer to compute the interest u/s 234B in accordance with the law, if at all, it is leviable only till the date when the assessee made an application to the Department for the adjustment of the cash seized towards the income tax liability. To that extent we find there is a mistake apparent on record in the order of the Assessing Officer while computing the interest u/s 234B of the Act. We accordingly allow ground No. 8 of the appeal." 13. Thus, whether interest under sections 234B and 234C of the Act is to be charged, or not, has been considered by the Tribunal in the case of the 'Radha Mohan Purshottam Das Agarwal' Group, consisting of nine appeals, on facts exactly similar, mutatis mutandis, to those present in the case of the assessee presently under appeal and the Tribunal has decided the issue in favour of the assessees, vide order dated 8/8/2017. Following this view taken by the 'A' Bench o....