SUMMIT JEWELLERY, MUMBAI v. ACIT CEN CIR 21, MUMBAI

ITA 6054/MUM/2009 | 2006-2007
Pronouncement Date: 22-07-2011 | Result: Dismissed

Appeal Details

RSA Number 605419914 RSA 2009
Assessee PAN AAGFS6991Q
Bench Mumbai
Appeal Number ITA 6054/MUM/2009
Duration Of Justice 1 year(s) 8 month(s) 6 day(s)
Appellant SUMMIT JEWELLERY, MUMBAI
Respondent ACIT CEN CIR 21, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 22-07-2011
Date Of Final Hearing 09-01-2013
Next Hearing Date 09-01-2013
Assessment Year 2006-2007
Appeal Filed On 16-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI P.M. JAGTAP A.M. AND SHRI V. DURGA RAO J.M. ITA NO. 6054/MUM/2009 ASSESSMENT YEAR: 2006-07 SUMMIT JEWELLERY APPELLANT 604 SUKH SAGAR CHS MUMBAI. (PAN AAGFS6991Q) VS. ASSTT. COMMISSIONER OF INCOME-TAX RESPONDENT CENTRAL CIRCLE 21 4 TH FLOOR AAYAKAR BHAVAN MUMBAI 400 020. APPELLANT BY : MR. REEPAL G. TRALSHAWALA RESPONDENT BY : MR. B. JAYA KUMAR . ORDER PER V. DURGA RAO J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT(A)- CENTRAL IV MUMBAI PASSED ON 28/08/2009 FOR THE ASSESSMENT YEAR 2006-07 WHEREIN THE ASSESSEE HAS RA ISED THE FOLLOWING GROUND OF APPEAL:- THE LEARNED CIT(A) ERRED IN NOT ALLOWING THE ADJUST MENT OF SEIZED ASSETS TOWARDS ADVANCE TAX LIABILITY AND THE REBY NOT DELETING/REDUCING THE LEVY OF INTEREST U/S 234B & 2 34C OF THE ACT AND HENCE THE INTEREST LEVIED U/S 234B & 234C OF T HE ACT WITHOUT TREATING THE SEIZED ASSETS AS PAYMENT OF AD VANCE TAX IS WITHOUT ANY JUSTIFICATION AND LIABLE TO BE DELETED. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN THE BUSINESS OF IMPORT AND EXPORT AND MANUFACTURING OF DIAMONDS. SEARCH & SEIZURE OPE RATION U/S 132 OF THE ACT 1961 WAS CARRIED OUT AT THE BUSINESS AN D OTHER PREMISES OF M/S TANVIRKUMAR DIAMONDS LTD. GROUP ON 08/12/2005. THE ASSESSEE ITA NO. 6054/M/2009 SUMMIT JEWELLERY 2 IS ALSO A PART OF THE SAID GROUP WHICH WAS COVERED UNDER THE ABOVE OPERATION. SUBSEQUENT TO SEARCH NOTICE U/S 153A OF THE ACT WAS ISSUED ON 27/02/06 AGAINST WHICH THE ASSESSEE FIL ED ITS RETURN OF INCOME ON 31/10/06 DECLARING TOTAL INCOME OF RS. 1 87 63 740/-. THE AO COMPLETED THE ASSESSMENT U/S 143(3) RWS 153A ON 31/12/07 DETERMINING THE TOTAL INCOME AT RS. 1 87 63 740/- A ND THE AO ALSO CHARGED INTEREST U/S 234B AND 234C OF THE ACT. AGGR IEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). THE CIT(A) CONFIRMED THE ACTION OF THE AO BY OBSERVING AS UNDE R:- 6..I AM NOT INCLINED TO ACCEPT THE APPELLANTS CONTENTIONS. THE APPELLANTS GRIEVANCE IS THAT THE AO SHOULD HAV E ADJUSTED THE SEIZED ASSETS FOR ADVANCE TAX LIABILITY SO THAT THE LIABILITY U/S 234B AND 234C IS AVOIDED. SECTION 132B OF THE ACT D EALS WITH THE ISSUE OF HOW THE SEIZED ASSETS WILL BE DEALT WI TH. AS PER SECTION 132B(1)(I) THE SEIZED ASSETS CAN BE ADJUST ED ONLY AFTER THE FINAL ASSESSMENT. FOR READY REFERENCE SECTION 132B(1)(I) IS EXTRACTED BELOW:- 132B. (1) THE ASSETS SEIZED UNDER SECTION 132 OR REQUISITIONED UNDER SECTION 132A MAY BE DEALT WITH IN THE FOLLOWING MANNER NAMELY: ( I ) THE AMOUNT OF ANY EXISTING LIABILITY UNDER THIS ACT THE WEALTH-TAX ACT 1957 (27 OF 1957) THE EXPENDITURE-TAX ACT 19 87 (35 OF 1987) THE GIFT-TAX ACT 1958 (18 OF 1958) AND THE INTEREST-TA X ACT 1974 (45 OF 1974) AND THE AMOUNT OF THE LIABILITY DETERMINED O N COMPLETION OF THE ASSESSMENT 1 [UNDER SECTION 153A AND THE ASSESSMENT OF THE YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS INITIATED O R REQUISITION IS MADE OR THE AMOUNT OF LIABILITY DETERMINED ON COMPLETION OF THE ASSESSMENT UNDER CHAPTER XIV-B FOR THE BLOCK PERIOD AS THE CASE MAY BE] (INCLUDING ANY PENALTY LEVIED OR INTEREST PAYABLE IN CONNECTION WI TH SUCH ASSESSMENT) AND IN RESPECT OF WHICH SUCH PERSON IS IN DEFAULT OR IS DEEMED TO BE IN DEFAULT MAY BE RECOVERED OUT OF SUCH ASSETS IN VIEW OF THIS THE AO WAS NOT IN A POSITION TO AD JUST THE SEIZED ASSETS TOWARDS THE ADVANCE TAX. FURTHER IT IS SETT LED LAW THAT THE CHARGING OF INTEREST U/S 234B AND 234C ARE MAND ATORY. HENCE THE AO HAS CHARGED THE INTEREST U/S 234B AND 234C ACCORDING TO LAW. THE AOS ACTION IN CHARGING INTER EST U/S 234B AND 234C IS UPHELD. 3. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE I S IN APPEAL BEFORE THE ITAT. ITA NO. 6054/M/2009 SUMMIT JEWELLERY 3 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT A SEARCH ACTION WAS TAKEN PLACE ON 08/05/2005 AND SUBSEQUENT LY A LETTER WAS WRITTEN TO THE ADDL. DIRECTOR OF INCOME TAX(INV.) D TD. 23/03/2006 TO ADJUST THE SEIZED ASSETS AGAINST PAYMENT OF ADVANCE TAX AND WITHOUT ADJUSTING THE VALUE OF THE SEIZED JEWELLERY FOR THE PURPOSE OF ADVANCE TAX PAYMENT CHARGING INTEREST U/S 234B & 234C IS C ONTRARY TO LAW. IN THIS CONNECTION THE LEARNED COUNSEL INVITED OUR AT TENTION TO PAPER BOOK PAGES 8 TO 10 WHERE THE DETAILS OF ASSETS ALRE ADY SEIZED BY THE DEPARTMENT AND THE VALUE ALSO SUBMITTED THERE TO T HEREFORE HE CONTENDED THAT NO INTEREST CAN BE CHARGED. IT IS SU BMITTED THAT AS PER SECTION 132B(1)(II) THE JEWELLERY IS ALSO MONEY. T HE PROVISIONS OF SECTION 132B(1) READ AS UNDER:- 132B. (1) THE ASSETS SEIZED UNDER SECTION 132 OR REQUISITIONED UNDER SECTION 132A MAY BE DEALT WITH IN THE FOLLOWING MANNER NAMELY: (I).. ( II ) IF THE ASSETS CONSIST SOLELY OF MONEY OR PARTLY OF MONEY AND PARTLY OF OTHER ASSETS THE ASSESSING OFFICER MAY APPLY SUCH MONEY IN THE DISCHARGE OF THE LIABILITIES REFERRED TO IN CLAUSE ( I ) AND THE ASSESSEE SHALL BE DISCHARGED OF SUCH LIABILITY TO THE EXTENT OF THE MONEY SO APPLIED; 5. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE FOLLOWING CASE LAWS:- 1. S.M. WAHI VS. ACIT (INTERNATIONAL TAXATION) [201 0] 134 TTJ(DEL) 457 WHEREIN IT WAS HELD THAT ONCE ASSESSEES BANK ACCOU NT WAS PUT UNDER ATTACHMENT THE AMOUNT THEREIN IS TO BE CONSIDERED TO BE LYING WITH THE DEPARTMENT WHICH WOULD INDICATE CONSTRUCTIVE PAYMEN T OF ADVANCE AND THEREFORE INTEREST U/S 234B IS NOT CHARGEABLE. 2. ANAND SHANKAR MITTAL VS. DCIT [2010] 34 DTR (JP )(TRIB) 589 WHEREIN IT WAS HELD THAT AO IS DIRECTED TO ADJUST THE ADVAN CE TAX AND SELF ASSESSMENT TAX LIABILITY OF THE ASSESSEE AGAINST TH E AMOUNT SEIZED AND LYING IN PD ACCOUNT AS PRAYED BY THE ASSESSEE VIDE HIS LETTERS WRITTEN BEFORE THE DUE DATE OF EACH INSTALMENT OF ADVANCE T AX AND THEN CHARGE INTEREST U/S 234B AND 234C IF ANY. ITA NO. 6054/M/2009 SUMMIT JEWELLERY 4 3. NIKKA MAL BABU RAM VS. ACIT [2010] 41 SOT 407 ( CHD.) WHEREIN IT WAS HELD THAT AMOUNT OF CASH SEIZED FROM ASSESSEE I N SEARCH PROCEEDINGS U/S 132 CAN BE ADJUSTED AGAINST HIS ADVANCE TAX LIA BILITY. 6. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT THE DURING THE COURSE OF SEARCH JEWELLERY WAS SEIZED WHICH IS BEING STOCK-IN-TRADE OF THE ASSESSEE IT CANNOT BE SHOWN AS PER SECTION 32(1)(I II) OF THE ACT. 7. THE LEARNED DR ON THE OTHER HAND SUBMITTED THA T THE MONEY SEIZED ONLY TO BE ADJUSTED FOR THE PURPOSE OF ADVANCE TAX PAYMENT AND NOT THE JEWELLERY. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAWS CITED. THE ONLY ISSUE FO R OUR CONSIDERATION BEFORE US IS THAT WHETHER THE VALUE OF SEIZED JEWEL LERY CAN BE ADJUSTED FOR THE PURPOSE OF PAYMENT OF ADVANCE TAX OR NOT. T HE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE SEIZED JE WELLERY CAN BE ADJUSTED AGAINST THE ADVANCE TAX PAYMENT CANNOT BE ACCEPTED AS THE MONEY ONLY CAN BE ADJUSTED AGAINST THE ADVANCE TAX PAYMENT WHICH IS SEIZED IN THE SEARCH PROCEEDINGS AND NOT JEWELLE RY. THE CASE LAWS RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE ON FACTS TO THE CASE OF THE ASSESSEE THEREFORE THEY ARE NOT OF ANY TO HEL P TO THE ASSESSEES CASE. THE CASE OF THE ASSESSEE IS THAT EVEN SEIZED JEWELLERYS VALUE CAN BE ADJUSTED FOR THE PURPOSE OF PAYMENT OF ADVANCE TAX. HOWEVER THE CIT(A) BY REFERRING SECTION 132B(1)(I) HAS RIGHTLY HELD THAT THE ASSET SEIZED WAS JEWELLERY AND THEREFORE IT CANNOT BE A DJUSTED TOWARDS PAYMENT OF ADVANCE TAX. CHARGING OF INTEREST U/S 23 4B & 234C ARE MANDATORY IN NATURE THEREFORE WE FIND NO INFIRMIT Y IN THE ORDER PASSED BY THE CIT(A) IN CONFIRMING THE AOS ACTION IN CHARGING INTEREST U/S 234B AND 234C OF THE ACT. ACCORDINGLY WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS RAISED BY THE ASSESSEE ON THIS COUNT. ITA NO. 6054/M/2009 SUMMIT JEWELLERY 5 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JULY 2011. SD/- SD/- (P.M. JAGTAP) (V. DURG A RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 22 ND JULY 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE E BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI.