Kharati Lal Sachdeva, New Delhi v. ACIT, New Delhi

ITA 3286/DEL/2009 | 2005-2006
Pronouncement Date: 15-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 328620114 RSA 2009
Bench Delhi
Appeal Number ITA 3286/DEL/2009
Duration Of Justice 5 month(s) 25 day(s)
Appellant Kharati Lal Sachdeva, New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 15-01-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 15-01-2010
Date Of Final Hearing 07-01-2010
Next Hearing Date 07-01-2010
Assessment Year 2005-2006
Appeal Filed On 21-07-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI I.P. BANSAL AND SHRI A.K GARODIA I.T.A. NO.3286/DEL./2009 (ASSESSMENT YEAR: 2005-06) KHARATI LAL SACHDEVA VS. ACIT CIRCLE 32(1) SHOP NO.120 INA MARKET NEW DELHI. NEW DELHI-110023. (PAN/GIR NO.AOHPS1926A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MOHIT SACHDEVA ADV. REVENUE BY : SHRI N.K. CHAND SR.DR ORDER PER A.K. GARODIA AM : THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF THE CIT(A)-XXVI NEW DELHI DATED 22.5.2009 FOR AY 2005-06. THE GROUNDS R AISED BY THE ASSESSEE READ AS UNDER: 1. THAT THE ORDER OF LD CIT(A) IS BAD IN LAW AND IN FACTS. 2. THAT THE LD CIT(A) ERRED ON FACTS AND IN LAW IN PASSING THE ORDER WITHOUT PROPER APPLICATION OF MIND AND WITHOUT INTERPRETING THE LA W IN CORRECT PERSPECTIVE. 3. THAT THE LD CIT(A) ERRED ON FACTS AND IN LAW IN HOLDING THE APPEAL AS INFRUCTUOUS WITHOUT GOING INTO THE MERITS OF THE APPEAL. 4. THAT THE CIT(A) ERRED IN HOLDING THAT NO EVIDENC E REGARDING ADJUSTMENT OF CASH AMOUNTING TO RS.6 50 000/- HAS BEEN FILED. THE APPE LLANT FILED COPY OF PETITION MADE BEFORE THE LD CCIT DELHI-XI NEW DELHI FOR WA IVER OF INTEREST WHEREIN APPELLANT STATED INTER ALIA THAT APPELLANT FILED IT S RETURN FOR THE ASSESSMENT YEAR 2005-06 REQUESTING THE ASSESSING OFFICER TO TREAT C ASH SEIZED AS ADVANCE TAX. THE APPELLANT FILED THE COPY OF RETURN OF INCOME BEFOR E CCIT DELHI-XI NEW DELHI BUT WAS NOT FILED WITH CIT(A) AS THE CONTENTS OF TH E SAME HAD BEEN MENTIONED IN THE APPEAL HOWEVER NO FURTHER EVIDENCE WERE ASKED F OR BY THE CIT(A). 5. THAT THE LD CIT(A) ERRED ON FACTS AND IN LAW IN NOT ACCEPTING THE CONTENTION OF THE APPELLANT THAT THE CASH SEIZED OF RS.6 50 000/- U/S 132 OF THE INCOME TAX ACT 1961 BE TREATED AS ADVANCE TAX AND CONSEQUENTLY INT EREST U/S 234B AND U/S 234C AMOUNTING TO RS.64 400/- AND RS.14 894/- SHOULD HAV E NOT BEEN CHARGED. I.T.A. NO.3286/DEL./2009 (A.Y. : 2005-06) 2 6. THAT THE LD CIT(A) ERRED ON FACTS AND IN LAW IN NOT ACCEPTING THAT THE APPELLANT CASH SEIZED AND RETAINED BY THE INCOME TAX DEPARTME NT IF ADJUSTED TOWARDS THE ADVANCE TAX LIABILITY FOR THE ASSESSMENT YEAR 2005 -06 THEN NO INTEREST U/S 234B AND 234 MIGHT HAVE BEEN CHARGED. 2. BRIEF FACTS ARE THAT IT IS NOTED BY THE AO THAT IN THIS CASE A SURVEY WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE ON 4.2.2005 AND IN COURSE OF SURVEY THE ASSESSEE SURRENDERED AN AMOUNT OF RS.1180140/- ON ACCOUNT OF CASH OF RS.6.50 LAKHS AND ON ACCOUNT OF JEWELRY FOUND OF RS.530140/-. IT IS ALS O NOTED BY THE AO THAT PURSUANT TO SURVEY THE ASSESSEE FILED RETURN OF INCOME DECLARI NG TOTAL INCOME OF RS.1282489 AND THE ASSESSMENT ORDER WAS PASSED BY THE AO U/S 143(3) AT THE RETURNED INCOME AND A DEMAND WAS RAISED OF RS.402513 ON ACCOUNT OF INCOME-TAX SU RCHARGE AND CESS. THEREAFTER THE AO HAS CHARGED INTEREST U/S 234A OF RS.12075/- U/S 234B OF RS.64 400 AND U/S 234C OF RS.14 894/-. AGAINST THIS INTEREST CHARGED BY THE AO U/S 234B AND 234C THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) ON 2.7.2008. ALT HOUGH THE APPEAL WAS LATE THE SAME WAS ADMITTED BY THE CIT(A) AND HE HAS PASSED THE AP PELLATE ORDER ON 22.5.2009. IT WAS THE CLAIM OF THE ASSESSEE BEFORE THE CIT(A) THAT TH E AO WAS NOT JUSTIFIED IN NOT TREATING THE SEIZED CASH OF RS.6.50 LAKHS AS ADVANCE TAX AND HENCE HE WAS WRONG IN CHARGING INTEREST U/S 234B AND 234C. THE CIT(A) HAS DISMISS ED THIS APPEAL OF THE ASSESSEE ON THE BASIS THAT SINCE CCIT DELHI-XI NEW DELHI HAS REJE CTED THE PETITION OF THE ASSESSEE FOR WAIVER OF INTEREST CHARGED U/S 234A 234B & 234C VI DE ORDER DATED 13.6.2008 AND THE APPEAL WAS FILED BY THE ASSESSEE BEFORE HIM CONSEQU ENT TO THAT ORDER OF CCIT AND HENCE THE PRESENT APPEAL OF THE ASSESSEE BEFORE HIM DOES NOT LIE AND HE HAS DISMISSED THIS APPEAL AS INFRUCTUTOUS. NOW THE ASSESSEE IS IN FU RTHER APPEAL BEFORE US. 3. IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE TH AT THE APPEAL WAS FILED BY THE ASSESSEE BEFORE THE CIT(A) AGAINST THE ASSESSMENT O RDER PASSED BY THE AO ON 30.8.2006 AND ON PAGE 2 OF HIS ORDER IT IS OBSERVED BY THE C IT(A) THAT THE APPEAL IS FILED BY THE ASSESSEE AFTER A DELAY OF 22 MONTHS AND HE HAD ADMI TTED THE APPEAL OF THE ASSESSEE AFTER CONDONING THE DELAY AND HENCE IT IS NOT PROPER FOR HIM TO SAY THAT THE APPEAL HAS BEEN FILED BY THE ASSESSEE BEFORE HIM IN PURSUANCE TO TH E ORDER OF CCIT DATED 3.6.2008. ON MERIT RELIANCE WAS PLACED ON THE FOLLOWING JUDGMEN TS. 1. H.H. SETU PARVATIBAI VS. CWT 69 ITR 864 2. KESHORAM INDUSTRIES & COTTON MILLS LTD. VS. CWT 59 ITR 767 3. CIT VS. K.K. MARKETING (DEL.) 278 ITR 596. I.T.A. NO.3286/DEL./2009 (A.Y. : 2005-06) 3 4. THESE JUDGMENTS WERE RELIED UPON IN SUPPORT OF T HIS CONTENTION THAT THE CASH SEIZED WAS SUPPOSED TO BE CONSIDERED BY THE AO AS A DVANCE TAX ON THE DATE OF SEIZURE ITSELF. IT WAS HIS SUBMISSION THAT AS PER SECTION 132B THE AO SHOULD HAVE ADJUSTED THE SEIZED CASH AS ADVANCE TAX AND IN THAT EVENTUALITY NO INTEREST WOULD HAVE BEEN PAYABLE BY THE ASSESSEE. 5. AS AGAINST THIS IT WAS SUBMITTED BY THE LD.DR OF THE REVENUE THAT AS PER THE PROVISIONS OF SECTION 132B SEIZED CASH CAN BE ADJU STED AGAINST EXISTING LIABILITY UNDER INCOME-TAX ACT OR WEALTH-TAX ACT ETC. AND IN THE PR ESENT CASE THE ADVANCE TAX PAYABLE BY THE ASSESSEE WAS NOT AN EXISTING LIABILITY TILL THE ASSESSMENT IS FINALIZED AND VALID DEMAND IS RAISED WHICH HAS HAPPENED ON 30.8.2006. REGARDING THE PROVISO TO SECTION 132B(1) IT WAS SUBMITTED THAT FOR CLAIMING REFUND OF THE SEIZED CASH AN APPLICATION IS REQURIED FROM THE ASSESSEE AND IN THAT SITUATION T HE AO HAS TO REFUND THE SEIZED CASH AFTER ADJUSTING ANY EXISTING LIABILITY AND SINCE IN THE P RESENT CASE NO SUCH APPLICATION FOR REFUND OR ADJUSTMENT WAS MADE BY THE ASSESSEE THE CLAIM OF THE ASSESSEE IS NOT VALID. RELIANCE WAS PLACED BY HIM ON THE TRIBUNALS DECISI ON RENDERED IN THE CASE OF GIAN CHAND GUPTA VS. DCIT 80 ITD 548 AND ALSO ON THE JU DGMENT OF HONBLE MADHYA PRADESH HIGH COURT RENDERED IN THE CASE REPORTED I N 241 ITR 758. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGAR DING THE FIRST JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF H.H. SET U PARVATIBAI VS. CWT (SUPRA) WE FIND THAT THIS JUDGMENT IS WITH REGARD TO THE WEALT H TAX LIABILITY ON VALUATION DATE AND IT WAS HELD IN THIS CASE THAT WEALTH-TAX LIABILITY ON VALUATION DATE IS A DEBT OWED. IN THE PRESENT CASE THE ISSUE IS DIFFERENT AND HENCE THIS JUDGMENT IS NOT RELEVANT. SIMILARLY THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF KESHORAM INDUSTRIES & COTTON MILLS LTD. VS. CWT (SUPRA) IS ALSO NOT APPLICABLE I N THE PRESENT CASE BECAUSE IN THIS CASE ALSO THE ISSUE INVOLVED WAS WHETHER THE LIABILITY OF THE ASSESSEE TO PAY INCOME-TAX AND WEALTH-TAX ETC. ON THE VALUATION DATE WOULD BE CONS IDERED AS DEBT OWED ON THE VALUATION DATE. 7. NOW WE CONSIDER THE JUDGMENT OF HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS. K.K. MARKETING (SUPRA). THE FACTS OF THIS CASE ARE THAT IN THIS CASE A SEARCH WAS I.T.A. NO.3286/DEL./2009 (A.Y. : 2005-06) 4 CARRIED OUT IN THE PREMISES OF THE ASSESSEE IN AUGU ST 1993 AND DURING THE SEARCH A LARGE AMOUNT OF CASH WAS RECOVERED. WHEN PAYMENT OF ADVA NCE TAX WAS BECOMING DUE IN SEPTEMBER 1993 THE ASSESSEE WROTE TO THE DEPARTME NT THAT THE CASH SEIZED MAY BE ADJUSTED TOWARDS ADVANCE TAX. THIS REQUEST WAS REI TERATED IN DECEMBER 1993. WHILE PASSING THE ASSESSMENT ORDER U/S 143(1)(A) IT WAS HELD THAT THE ASSESSEE WAS ENTITLED TO A REFUND OF RS.48.78 LAKH AS AGAINST THE ADVANCE TAX LIABILITY OF RS.48.55 LAKH. THE AO CHARGED INTEREST FORM THE ASSESSEE U/S 234B & 234C OF THE ACT. UNDER THESE FACTS IT WAS HELD BY THE HONBLE DELHI HIGH COURT THAT THERE WAS NO DISPUTE THAT EFFORTS FOR ADJUSTMENT OF THE SEIZED CASH WAS MADE BY THE ASSES SEE BEFORE THE ADVANCE TAX LIABILITY BECAME DUE. UNDER THESE FACTS CHARGING OF INTERES T CHARGED BY THE AO U/S 234B & 234C WAS DELETED BY THE TRIBUNAL AND THIS TRIBUNAL ORDER WAS CONFIRMED BY THE HONBLE DELHI HIGH COURT. IN THE PRESENT CASE IT IS AN ADMITTED POSITION THAT NO REQUEST WAS MADE BY THE ASSESSEE FOR ADJUSTMENT OF SEIZED CASH AGAINST ADVANCE TAX LIABILITY. ONLY IN THE COMPUTATION OF TAXABLE INCOME FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME IT WAS REQUESTED BY THE ASSESSEE TO ADJUST THE SEIZED CASH OF RS.6.50 LAKH AGAINST THE TAX LIABILITY OF RS.402513/- AND A REFUND OF RS.247487/ - WAS CLAIMED. THE INTIMATION PASSED BY THE AO U/S 143(1)(A) IS DATED 28.7.2006. IN THE SAID INTIMATION NO SUCH CREDIT IS GIVEN ON ACCOUNT OF SEIZED CASH AND THE DEMAND WAS RAISED FOR THE FULL AMOUNT OF TAX ALONG WITH INTEREST U/S 234A 234B & 234C TOTALING TO RS. 498882/-. SINCE NO REQUEST WAS MADE BY THE ASSESSEE FOR ADJUSTMENT OF SEIZED CASH AGAINST ADVANCE TAX LIABILITY THIS JUDGMENT OF HONBLE DELHI HIGH COURT IS ALSO NOT AP PLICABLE IN THE PRESENT CASE. 8. NOW WE CONSIDER THE JUDGMENT CITED BY THE LD.DR OF THE REVENUE. FIRST WE CONSIDER THE TRIBUNAL DECISION RENDERED IN THE CASE OF GIAN CHAND GUPTA VS. DCIT 80 ITD 548. IN THIS DECISION THE TRIBUNAL HAS DULY C ONSIDERED THE TWO JUDGMENTS OF HONBLE APEX COURT CITED BY THE LD.AR OF THE ASSESS EE I.E. THE JUDGMENT IN THE CASE OF H.H. SETU PARVATIBAI VS. CWT (SUPRA) AND KESHORAM I NDUSTRIES & COTTON MILLS LTD.(SUPRA). IT WAS HELD BY THE TRIBUNAL THAT AS P ER THESE JUDGMENTS OF THE HONBLE APEX COURT IT CAN BE HELD THAT THE ADVANCE TAX LIABILIT Y ON THE LAST DATE OF THE ACCOUNTING YEAR MAY BE TREATED AS EXISTING LIABILITY BUT THIS LEGA L POSITION BY ITSELF DOES NOT HELP THE ASSESSEE BECAUSE THE AMOUNT OF SEIZED CASH COULD NO T BE APPLIED BY THE AO IN A MANNER OTHER THAN THE MANNER PROVIDED IN SECTION 132B OF T HE ACT. REGARDING THE JUDGMENT OF I.T.A. NO.3286/DEL./2009 (A.Y. : 2005-06) 5 HONBLE DELHI HIGH COURT CITED BY THE LD.AR OF THE ASSESSEE BEING RENDERED IN THE CASE OF CIT VS. K.K. MARKETING (SUPRA) WE FIND THAT THI S JUDGMENT WAS NOT AVAILABLE BEFORE THE TRIBUNAL IN THE CASE OF GIAN CHAND GUPTA(SUPRA) BUT TWO SIMILAR TRIBUNAL DECISIONS WERE DULY CONSIDERED BY THE TRIBUNAL IN THIS CASE W HEREIN SPECIFIC REQUEST WAS MADE BY THE ASSESSEE FOR ADJUSTMENT OF SEIZED CASH TOWARDS ADVANCE TAX BEFORE THE DUE DATE OF ADVANCE TAX LIABILITY AND IT WAS HELD BY THE TRIBUN AL IN THOSE CASES THAT AFTER THE DATE OF SUCH REQUEST IT HAS TO BE ACCEPTED THAT ADVANCE TA X WAS PAID BY THE ASSESSEE TO THE EXTENT OF SEIZED CASH. IN THE CASE OF GIAN CHAND GUPTA(SU PRA) IT WAS NOTED BY THE TRIBUNAL THAT IN THAT CASE NO SUCH REQUEST WAS MADE BY THE ASSES SEE AND HENCE IT WAS HELD THAT THESE TWO TRIBUNALS DECISIONS ARE NOT APPLICABLE BECAUSE THE FACTS ARE DIFFERENT. ON THIS BASIS IN THE PRESENT CASE ALSO THIS JUDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF K.K. MARKETING (SUPRA) IS NOT APPLICABLE BECAUSE THE FACTS ARE DIFFERENT AND IN THE PRESENT CASE NO SUCH REQUEST WAS MADE BY THE ASSESS EE FOR ADJUSTMENT OF SEIZED CASH TOWARDS ADVANCE TAX LIABILITY. THE REQUEST IN THE PRESENT CASE WAS MADE BY THE ASSESSEE IN THE COMPUTATION OF TAXABLE INCOME WHICH WAS FILE D WITH THE RETURN OF INCOME AND HENCE SUCH A REQUEST CAN BE ACCEPTED ONLY ON THE DA TE OF FILING OF THE RETURN OF INCOME I.E. ON 30.10.2005. ON THIS DATE ALSO IT HAS TO BE SEE N AS TO WHETHER SEIZED CASH WAS AVAILABLE FOR ADJUSTMENT TOWARDS THE TAX LIABILITY OF THE ASSESSEE FOR THE PRESENT YEAR BECAUSE WE FIND THAT AS PER THE ASSESSMENT ORDER T HERE WAS SURVEY ONLY AND NO SEARCH. IN THE COMPUTATION OF TAXABLE INCOME ALSO THE ASSESSE E SAYS THAT CASH AND JEWELRY WERE SURRENDERED ON 4.2.2005 AND IT HAS ALSO BEEN SUBMIT TED IN THIS COMPUTATION THAT CASH WAS SEIZED ON 4.2.2005 (RECEIPT ATTACHED). BEFORE US NO SUCH RECEIPT REGARDING CASH SEIZURE HAS BEEN FURNISHED. IT IS ALSO INTERESTING THAT TH E AO HAS NOT ALLOWED THE ASSESSEE SUCH ADJUSTMENT OF SEIZED CASH IN THE INTIMATION ISSUED BY HIM ON 28.7.2006 AND ALSO IN THE ITNS-150 ISSUED ALONG WITH THE ASSESSMENT ORDER PAS SED BY HIM U/S 143(3) AND THERE IS NO GROUND RAISED BY THE ASSESSEE BEFORE US OR BEFOR E THE CIT(A) REGARDING THE NON- ADJUSTMENT OF SEIZED CASH AGAINST THE TAX LIABILITY FINALLY DETERMINED BY THE AO IN THE INTIMATION OR IN THE ASSESSMENT ORDER U/S 143(3) AN D ONLY CLAIM OF THE ASSESSEE BEFORE US AND BEFORE CIT(A) IS REGARDING NON-ADJUSTMENT OF SE IZED CASH TOWARDS ADVANCE TAX LIABILITY AND THEREFORE WRONG CHARGING OF INTERES T U/S 234B & 234C OF THE ACT. UNDER THESE CIRCUMSTANCES WE FEEL THAT THIS ASPECT OF TH E MATTER SHOULD BE EXAMINED BY THE AO I.T.A. NO.3286/DEL./2009 (A.Y. : 2005-06) 6 AS TO WHETHER ON THE DATE OF FILING OF RETURN OF IN COME BY THE ASSESSEE ON 30.10.2005 ANY SEIZED CASH WAS AVAILABLE WITH THE DEPARTMENT FOR A DJUSTMENT AGAINST THE TAX LIABILITY OF THE ASSESSEE FOR THIS ASSESSMENT YEAR AND IF THAT B E SO THEN ADJUSTMENT SHOULD HAVE BEEN ALLOWED OF THE SEIZED CASH AGAINST THE TAX LIABILIT Y OF THE ASSESSEE FOR THIS ASSESSMENT YEAR AND INTEREST SHOULD NOT HAVE BEEN CHARGED U/S 234B FROM THAT DATE ONWARDS I.E. 30.10.2005 ONWARDS. BUT IF IT IS FOUND THAT THERE WAS NO CASH SEIZED OR THAT THE SEIZED CASH WAS ADJUSTED AGAINST ANY OTHER EXISTING TAX LI ABILITY OF THE ASSESSEE THEN THE ASSESSEE DOES NOT GET ANY RELIEF FROM INTEREST CHARGED BY TH E AO U/S 234B OF THE ACT. IN ANY CASE THE ASSESSEE DOES NOT GET ANY RELIEF FROM THE INTER EST CHARGED BY THE AO U/S 234C BECAUSE THE REQUEST OF THE ASSESSEE FOR ADJUSTMENT OF SEIZE D CASH WAS MADE IN THE RETURN OF INCOME AND LIABILITY U/S 234C IS FOR DEFERMENT OF T AX UP TO THE END OF THE RELEVANT PREVIOUS YEAR. WITH THESE OBSERVATIONS WE SET ASI DE THE ORDER OF THE CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER BACK TO THE FILE OF THE AO FOR A FRESH DECISION AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THE ASSESSEE WILL GET PART RELIEF ON ACCOUNT OF INTERES T U/S 234B FROM THE DATE OF FILING OF INCOME-TAX RETURN BY THE ASSESSEE FROM 30.10.2005 I F THE ASSESSEE CAN ESTABLISH THAT SEIZED CASH WAS AVAILABLE WITH THE DEPARTMENT ON TH E DATE OF FILING OF RETURN BY THE ASSESSEE FOR ADJUSTMENT AGAINST THE TAX LIABILITY O F THE ASSESSEE FOR THIS ASSESSMENT YEAR WHICH HAS BEEN ADMITTED BY THE ASSESSEE BY FILING T HE RETURN OF INCOME ON 30.10.2005 WITHOUT MAKING ANY PAYMENT AS ADVANCE TAX OR AS SEL F-ASSESSMENT TAX. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. ORDER PRONOUNCED IN OPEN COURT ON 15.01.2010. SD/- SD/- (I.P.BANSAL) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SKB DATED JANUARY 15 2010. COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVI NEW DELHI. I.T.A. NO.3286/DEL./2009 (A.Y. : 2005-06) 7 5.CIT(ITAT) NEW DELHI. AR/ITAT