Mr. Anil Sanghi, Noida v. DCIT, New Delhi

ITSSA 7/DEL/2012 | misc
Pronouncement Date: 30-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 720116 RSA 2012
Assessee PAN ABJPS5202L
Bench Delhi
Appeal Number ITSSA 7/DEL/2012
Duration Of Justice 5 year(s) 10 month(s) 16 day(s)
Appellant Mr. Anil Sanghi, Noida
Respondent DCIT, New Delhi
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 30-11-2017
Date Of Final Hearing 04-07-2017
Next Hearing Date 04-07-2017
First Hearing Date 04-07-2017
Assessment Year misc
Appeal Filed On 13-01-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI AMIT SHUKLA JUDICIAL MEMBER & SHRI O.P. KANT ACCOUNTANT MEMBER I.T.(SS)A NO.7/DEL/2012 BLOCK PERIOD : 1/4/1986 TO 1/11/1996 ANIL SANGHI E-10 SECTOR 15 NOIDA V. DCIT CENTRAL CIRCLE 23 NEW DELHI TAN/PAN:ABJPS5202L (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI V. K. BINDAL ADVOCATE RESPONDENT BY: SMT. APARNA KARAN CIT (DR) DATE OF HEARING: 03 10 2017 DATE OF PRONOUNCEMENT: 30 11 2017 O R D E R PER AMIT SHUKLA J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 12/12/2011 PASSED BY THE DCIT CENTRAL CIRCLE-23 NEW DELHI (ASSESSING OFFICE R) UNDER SECTION 158BC(C)/254 OF THE INCOME TAX ACT 1961 FOR THE BLOCK PERIOD 1/4/1986 TO 1/11/1996. 2. THE ASSESSEE IN THE GROUNDS OF APPEAL HAS MAINLY CHALLENGED THE CHARGING OF INTEREST OF RS.32 58 48 452 /- UNDER SECTION 220(2) ON THE TAX LIABILITY OF RS.16 66 74 000 /-. TO CONTEST THIS ISSUE THE ASSESSEE HAS RAISED THE FOLLOWIN G GROUNDS:- I.T.(SS)A. NO.7/DEL/2012 2 1. THE LEARNED ASSESSING OFFICER ERRED IN CHARGING INTEREST OF RS.32 58 48 452/- U/S 220(2) OF THE ACT ON THE TAX LIABILITY OF RS.16 66 74 400/- IGNORING THAT FUNDS TO THE EXTENT OF RS.22 52 83 598/- WERE SEIZED DURING THE COURSE OF SEARCH FROM THE VARIOUS COMPANY ASSESSEES OF THE ASSESSEE S GROUP (WHO HAD IRREVOCABLY AUTHORISED THE DEPARTMENT TO A DJUST THEIR SEIZED AMOUNTS / FUNDS AGAINST THE DEMAND DUE FROM THE ASSESSEE BEFORE COMPLETION OF THE ASSESSMENT) A LONGWITH RS.72 56 848/- BEING AMOUNT SEIZED FROM / REFUNDS D UE TO THE ASSESSEE WERE LYING WITH THE DEPARTMENT FOR ADJ USTMENT AGAINST TAX LIABILITY OF THE ASSESSEE. THUS NO INTE REST U/S 220(2) IS CHARGEABLE FROM THE ASSESSEE AND THEREFOR E 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 INTERES T OF RS.32 58 48 452/- U/S 220(2) OF THE ACT W.E.F 1/1/9 8 (I.E. THE DUE DATE OF PAYMENT OF TAX IN THE CASE OF ORIGI NAL ASSESSMENT ORDER DATED 28/11/97) IGNORING THAT THE ORIGINAL ASSESSMENT ORDER HAS BEEN SET ASIDE BY THE HONBLE ITAT AND THEREFORE THE CASE OF THE ASSESSEE IS COVERED U NDER CLAUSE 2(1) OF CIRCULAR NO. 334 [F.NO. 400/3/81-ITC C] DATED 3/4/1982 'AND THEREFORE THE INTEREST U/S 220(2) CA N 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 HONBLE IT AT). NECESSARY DIRECTIONS IN THIS REGARD SHOULD BE ISSUE D. 3. BESIDES THIS ASSESSEE HAS ALSO RAISED SEPARATE ADDITIONAL GROUNDS VIDE PETITION DATED 27/9/2013 WHIC H READS AS UNDER:- 1. THE LEARNED ASSESSING OFFICER ERRED IN LAW AND ON F ACTS IN CREATING INFRUCTUOUS DEMAND INITIALLY IN THE CASE O F VARIOUS I.T.(SS)A. NO.7/DEL/2012 3 COMPANIES OF THE ASSESSEE GROUP AND THEN MAKING IMP ROPER ADJUSTMENTS OF MONEY SEIZED FROM THEM RESULTING INT O CREATION OF HUGE DEMAND OF RS. 49.25 CRORES INCLUDI NG INTEREST U/S 220(2) IN THE CASE OF THE ASSESSEE THO UGH THE MONEY BELONGING TO THE ASSESSEE WAS LYING WITH THE DEPARTMENT SINCE THE DATE OF SEARCH. THUS NECESSARY DIRECTIONS SHOULD BE GIVEN FOR PROPER ADJUSTMENT OF THE SEIZED MONEY W.E.F THE DATE OF FILING THE RETURNS O F INCOME AND ADJUSTMENT CLAIMS BY THE COMPANIES ALSO. 2. WITHOUT PREJUDICE TO THE ABOVE THE ASSESSING OFFIC ER ERRED IN LAW AND ON FACTS IN NOT GIVING EFFECT TO THE ITA T ORDER DATED 17/3/2006 PASSED IN THE FIRST ROUND OF ASSESS MENT IN THE CASE OF ASSESSEE AND GROUP COMPANIES WHERE THE ASSESSMENT MADE IN THE CASE OF GROUP COMPANIES WAS HELD AS VOID-AB-INITIO. THIS HAS RESULTED INTO LEVY OF I NTEREST U/S 220(2) OF THE ACT. THUS NECESSARY DIRECTIONS SHOULD BE ISSUED TO GIVE APPEAL EFFECT TO THE SAID ORDER. 4. IN THE CASE OF THE ASSESSEE THERE IS A CHEQUERED HISTO RY OF VARIOUS ROUNDS OF LITIGATIONS AND ASSESSMENT ORDE RS AND ALSO IN THE CASE OF VARIOUS COMPANIES WHEREIN SIMILAR ADD ITIONS WERE MADE IN THEIR HANDS. IN ORDER TO APPRECIATE THE FACTS QUA THE LEVY OF INTEREST UNDER SECTION 220(2) FOLLOWING CHRONOLOGY OF EVENTS HAS BEEN SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US: DATE PARTICULARS/ BACKGROUND 28/11/97 ASSESSMENT (FIRST ROUND): ANIL SANGHI - ASSESSMENT ORDER U/S 158BC OF THE ACT (AFTER SEARCH ON 01/11/1996) WAS PASSED BY MAKING CERTAIN ADDITIONS TO HIS RETURNED INCOME OF RS 27.65 CRORES WHICH INCLUDED INVESTMENTS MADE IN ALL HIS COMPANIES AND WAS ASSESSED AT RS 29.46 I.T.(SS)A. NO.7/DEL/2012 4 IN CASE OF COMPANIES ADDITIONS WERE MADE FOR THE AMOUNTS RECEIVED FROM MR. ANIL SANGHI BESIDES SOME OTHER ADDITIONS. [ASSESSED AT 30.44 CRORES AS AGAINST NIL RETURNED INCOME]. THIS ALSO INCLUDED THE AMOUNT RECEIVED FROM MR. SANGHI WHICH HAD ALREADY BEEN OFFERED BY HIM AS HIS INCOME IN THE RETURN SUBMITTED 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 HONBLE 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 30/04/08 COMPANIES - THE ASSESSMENT ORDERS WERE HELD INVALID DUE TO THE DEFICIENCIES IN SEARCH WARRANTS I.T.(SS)A. NO.7/DEL/2012 5 HIGH COURT (FIRST ROUND) (SECOND INNINGS) ONLY FOR OTHER COMPANIES 30/09/09 IN CASE OF COMPANIES THE MATTER WAS REMANDED BACK TO THE ITAT TO DECIDE ON MERITS. ITAT (FIRST ROUND) (THIRD INNINGS) ONLY FOR OTHER COMPANIES 23/07/10 COMPANIES -MATTERS WERE DECIDED ON MERITS BY THE TRIBUNAL WITH THE DIRECTIONS TO EXCLUDE THE INCOME OFFERED BY MR. ANIL SANGHI IN HIS RETURN OF INCOME S O THAT THERE IS NO DOUBLE TAXATION OF THE SAME AMOUNT. ASSESSMENT (SECOND ROUND) 28/12/07 ANIL SANGHI - ADDITION MADE TO THE RETURNED INCOME IN FIRST ROUND WAS REDUCED AND TOTAL INCOME WAS ASSESSED AT RS. 27.79 CRORES COMPANIES - THE ADDITIONS FOR THE AMOUNTS RECEIVED BY THE COMPANIES FROM MR. ANIL SANGHI WERE DELETED AND THE TOTAL INCOME OF THE COMPANIES WAS ASSESSED AT RS. 4.46 CRORES. (IT HAS BEEN CONTENDED THAT THE REVENUE ACCEPTED ITS ERROR MADE EARLIER IN THE YEAR 1997 TO TAX THE SAME AMOUNT TWICE RESULTING INTO IMPUGNED EXCESSIVE LEVY OF INTEREST). ITAT ORDER (SECOND ROUND) 06/01/11 ANIL SANGHI - THE ISSUE OF LEVY OF INTEREST U/S 220(2) OF THE ACT WAS REMANDED BACK TO AO COMPANIES - IN CASE OF SOME COMPANIES ALL OTHER ADDITIONS HAVE BEEN DELETED WHEREAS IN CASE OF SOME SUBSTANTIAL OTHER ADDITIONS HAVE BEEN DELETED AND SOME ARE PENDING BEFORE ITAT. I.T.(SS)A. NO.7/DEL/2012 6 ASSTT. ORDER (THIRD ROUND) ANIL SANGHI - INTEREST U/S 220(2) OF THE ACT HAS BEEN LEVIED SINCE THE DATE OF FIRST ASSESSMENT ORDER ITAT ORDER (THIRD ROUND) ANIL SANGHI - THE APPEAL IS UNDER CONSIDERATION 5. FROM THE ABOVE CHRONOLOGY OF EVENTS AND ON A PERUSAL OF THE IMPUGNED ORDERS AS WELL AS THE MATERIAL PLACED B EFORE US ON RECORD IT IS SEEN THAT A SEARCH AND SEIZURE ACTION WA S CONDUCTED UNDER SECTION 132(1) IN THE CASE OF THE ASSESSEE ON 1/ 11/1996. IN RESPONSE TO NOTICE UNDER SECTION 158BC ASSESSEE H AD DECLARED UNDISCLOSED INCOME OF RS.27 64 93 610/- WH ICH WAS ON ACCOUNT OF CASH DEPOSITS MADE IN VARIOUS BANK ACCOUNTS IN THE NAME 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 SIMIL AR ADDITION ON ACCOUNT OF BANK DEPOSITS IN THE HANDS OF VARIOUS COMPANIES/ENTITIES WAS ALSO MADE I.E. (I) M/S PRAHL AD 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 & FI NANCE 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 OF FICER I.T.(SS)A. NO.7/DEL/2012 7 HELD THAT ADDITION IN THE HANDS OF THE COMPANY SHOULD BE MADE ON PROTECTIVE BASIS AND IN THE CASE OF SHRI ANIL SANGH I I.E. THE ASSESSEE; IT SHOULD BE MADE ON SUBSTANTIVE BASIS. ONE VERY IMPORTANT FACT TO BE NOTED HERE IS THAT BEFORE THE COMPLE TION OF BLOCK ASSESSMENT PROCEEDINGS THAT IS ON 24/9/1997 A SSESSEE WROTE A LETTER TO THE INCOME TAX DEPARTMENT THAT THE CASH SE IZED DURING THE COURSE OF SEARCH AMOUNTING TO RS.22.55 CR ORES SHOULD BE ADJUSTED AGAINST THE UNDISCLOSED INCOME OF THE ASSES SEE AND FROM THE DEMAND ARISING OUT OF THE BLOCK ASSESSMENT ORD ER. IN THE CASE OF GROUP COMPANIES (AS AFORESAID) ALSO WHO SE BANK ACCOUNTS WERE SEARCHED THEY HAVE FILED RETURNS OF INC OME DECLARING NIL INCOME AND CATEGORICALLY STATED THAT THEY HAVE RECEIVED THE ENTIRE FUNDS FROM THE ASSESSEE AND ALSO W ROTE SEPARATE AUTHORIZATION LETTERS OF EVEN DATE 24/11/1997 TO THE ASSESSING OFFICER ALONG WITH COPY TO THE CIT CENTRAL CIRCLE 1 NEW DELHI THAT THE ENTIRE AMOUNT OF CASH SEIZED OR REF UNDS DUE TO THEM SHOULD BE APPROPRIATED AGAINST THE INCOME TAX LI ABILITY OF THE ASSESSEE. THUS THE ENTIRE CASH SEIZED WAS OFFERED FOR TAX IN THE HANDS OF THE ASSESSEE NOT ONLY BY THE ASSESSEE WHO OWNED UP THE ENTIRE UNDISCLOSED INCOME BUT ALSO VARIOUS COM PANIES FROM WHOSE POSSESSION THESE CASH SEIZED WAS RECOVERE D AND WAS CATEGORICALLY STATED THAT THE MONEY DEPOSITED IN THEIR ACC OUNTS ACTUALLY BELONGED TO THE ASSESSEE. AS AGAINST THE TAX LIA BILITY OF RS.16 58 96 202/- DETERMINED AS PER ORIGINAL BLOCK ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE SEIZED CASH AMOUNT OF RS. 22.53 CRORES WAS OFFERED TO BE ADJUSTED AGAINST THE SA ID TAX LIABILITY BY THE ASSESSEE WHO HAD OWNED UP THE ENTIRE CASH AND SIMULTANEOUSLY THESE COMPANIES HAVE ALSO STATED THAT THES E CASH BELONG TO THE ASSESSEE. I.T.(SS)A. NO.7/DEL/2012 8 6. LATER ON AFTER VARIOUS ROUNDS OF LITIGATION AS STATED IN THE CHART OF EVENTS ABOVE FROM THE STAGE OF THE TRIBUNA L IN THE CASE OF THE SAID COMPANIES ADDITION ON THIS ACCOUNT S TOOD DELETED AND IT WAS SPECIFICALLY HELD THAT THIS ADDITION HAS RIGHTLY BEEN MADE ON SUBSTANTIVE BASIS IN THE CASE OF THE ASSE SSEE. THUS FINALLY IN THE CASE OF ALL THE COMPANIES THE DE PARTMENT ACCEPTED OR RATHER THE ISSUE GOT SETTLED FROM THE APPELLA TE FORUMS THAT TAX FROM THE SAID UNDISCLOSED INCOME WAS TO BE PAID BY THE ASSESSEE. NOW POST ASSESSMENT ORDER GIVING EFFECT OF ITAT ORDERS A HUGE INTEREST UNDER SECTION 220(2) HAS BEEN CHARGED BY THE ASSESSING OFFICER FROM THE DATE OF DEMAND NOTICE OF O RIGINAL ASSESSMENT ORDER DATED 28/11/1997 WITHOUT EVEN ACKNOWLEDGING THAT PRIOR TO THE DATE OF ASSESSMENT ONLY THE ENTIRE AMOUNT WAS OFFERED IN THE HANDS OF THE ASSESSEE AND ALSO CASH SEIZED WAS REQUESTED TO BE ADJUSTED AGAINST THE SA ID TAX LIABILITY. WHEN THE LEVY OF INTEREST WAS CHALLENGED BY THE ASSESSEE THE ASSESSING OFFICER WAS FINALLY DIRECTE D BY THE TRIBUNAL VIDE DATED 6.1.2011 TO CORRECTLY COMPUTE IN TEREST UNDER SECTION 220(2). IN PURSUANCE THEREOF THE ASSESS ING OFFICER ISSUED NOTICE TO THE ASSESSEE AS WHY INTEREST UNDER SECTI ON 220(2) SHOULD NOT BE LEVIED FROM THE DATE OF FIRST DEMA ND NOTICE GIVEN ALONGWITH THE ORIGINAL BLOCK ASSESSMENT ORDER. IN RESPONSE ASSESSEES SUBMISSIONS BEFORE THE ASSESSING OFFICER WAS AS UNDER:- 6. THE ASSESSEE FILED RETURN OF INCOME DECLARING A N UNDISCLOSED INCOME OF RS. 27 64 93 670/-. THE ASSES SEE INVESTED THE UNDISCLOSED INCOME IN HIS GROUP COMPAN IES WHICH WERE ALSO COVERED UNDER SEARCH ACTION U/S 132 AND FROM WHOM HUGE AMOUNTS WERE SEIZED. I.T.(SS)A. NO.7/DEL/2012 9 8. ON 24-09-1997 THE ASSESSEE REQUESTED THE IT DEPARTMENT THAT THE TAX DUE ON HIS UNDISCLOSED INCO ME 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 158BC FILED THEIR RETURN OF INCOME DECLARING NIL UNDISCLOSED INCOME FOR THE BLOCK ASSESSMENT PERIOD. SINCE THESE COMPANIES RECEIVED THEIR ENTIRE FUNDS FROM ANIL SAN GHI AND DID NOT HAVE ANY INCOME TAX LIABILITY THESE COMPAN IES FILED AUTHORIZATION LETTERS DATED 24-11-1997 TO ASSESSING OFFICER ALONG WITH COPY OF CIT CENTRAL -I NEW DELHI REQUES TING THAT THE REFUNDS DUE TO THEM BE APPROPRIATED AGAINST TH E INCOME- TAX LIABILITY OF THE ASSESSEE. 11. AS STATED ABOVE ALL THESE COMPANIES FILED THEI R RETURNS OF INCOME DECLARING NIL UNDISCLOSED INCOME AND RS. 22 52 83 598/- SEIZED FROM THEM BELONGED TO THE ASS ESSEE ONLY. DUE TO THIS REASON ON 24-11-1997 THESE COMPA NIES IRREVOCABLE AUTHORIZED THE IT DEPARTMENT TO ADJUST THEIR SEIZED MONEY TOWARDS THE TAX LIABILITY OF ANIL SANG HI. THIS STEP WAS TAKEN BY THE ASSESSEE AND BY THESE COMPANI ES TO COOPERATE WITH THE IT DEPARTMENT SO AS TO ENSURE TH AT TAX DUE ON THE UNDISCLOSED INCOME OF THE ASSESSEE STAND S RECOVERED. 12. ON OVERALL PERUSAL OF THE ABOVE FACTS IT WOULD BE SEEN THAT THE TAX LIABILITY OF THE ASSESSEE WAS RS. 16 5 8 96 202/- AND WHICH WAS MUCH LOWER THAN RS. 22 52 83 598/- SE IZED FROM THE COMPANIES. FURTHER IN VIEW OF THE AUTHORIZ ATION LETTERS FILED BY THESE COMPANIES IF THE ABOVE SEIZ ED AMOUNT WOULD HAVE BEEN ADJUSTED AGAINST THE TAX LIABILITY OF THE ASSESSEE THEN NO DEMAND WOULD HAVE REMAINED I.T.(SS)A. NO.7/DEL/2012 10 OUTSTANDING AS ON THE DATE OF THE ASSESSMENT ORDER I.E. 28-1- 1997. 20. AS STATED ON 24-09-1997 THE ASSESSEE REQUESTED THE IT DEPARTMENT TO ADJUST THE AMOUNT SEIZED FROM HIS BOR ROWERS AGAINST HIS TAX LIABILITY WHICH WAS RATIFIED BY THE SE COMPANIES BY FILING THEIR LETTERS DATED 24-11-1997. THUS THE MONEY SEIZED ON 20-09-1996 WAS LYING WITH THE DEPAR TMENT AS ON 28-11- 1997BEING THE DATE OF ORDER PASSED IN THE CASE OF THE ASSESSEE. HOWEVER THE ASSESSING OFFICER ADJ USTED THE SEIZED FUNDS AGAINST THE DEMAND OF THE COMPANIES WH ICH WAS CREATED ON SURMISES AND CONJECTURES. IF THE SAI D SEIZED AMOUNT WOULD HAVE BEEN ADJUSTED AGAINST THE TAX LIA BILITY OF THE ASSESSEE THEN NO INTEREST U/S 220(2) WOULD HAVE BEEN CHARGEABLE FROM THE ASSESSEE. 21. AS STATED IN PARA 10 ABOVE THE DEMANDS CREATED IN THESE COMPANIES HAVE BEEN REDUCED TO NIL AS THE I T AT ALLOWED THE APPEALS FILED BY THESE COMPANIES BY HOL DING THE ASSESSMENT MADE AS VOID AB INITIO. 22. THE CBDT HAS ISSUED A CIRCULAR NO. 334 DATED 03 -04- 1982 ON SECTION 220(2). A COPY OF THE SAID CIRCULAR IS ENCLOSED. THE CIRCULAR CLARIFIES THE POSITION REGAR DING LEVY OF INTEREST U/S 220(2) OF THE ACT. IT PROVIDES THAT WH ERE 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 INT EREST UNDER SECTION 220 (2) CAN BE CHARGED PURSUANT TO THE ORIG INAL DEMAND NOTICE. THE NECESSARY COROLLARY OF THE POSIT ION WILL BE THAT EVEN WHEN THE ASSESSMENT IS REFRAMED INTER EST CAN BE CHARGED ONLY AFTER THE EXPIRY OF THIRTY FIVE DAY S FROM THE DATE OF SERVICE OF DEMAND NOTICE PURSUANT TO SUCH F RESH ASSESSMENT ORDER. HOWEVER IF THE ORIGINAL ASSESSME NT ORDER I.T.(SS)A. NO.7/DEL/2012 11 IS EITHER VARIED OR EVEN SET ASIDE BUT NO FURTHER A PPEAL' 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 N OTICE AND WITH REFERENCE TO THE TAX FINALLY DETERMINED. T HE FACT THAT DURING AN INTERVENING PERIOD THERE WAS NO TAX PAYABLE BY THE ASSES SEE UNDER ANY OPERATIVE ORDER WOULD MA KE NO DIFFERENCE TO THE POSITION. 24. IN CASE OF ASSESSEE THE FIRST ASSESSMENT ORDE R PASSED U/S 158BC (C) WAS ON 28-11-1997 AND WHICH WAS SET A SIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONS IDERATION BY THE HON'BLE ITAT VIDE COMPOSITE ORDER DATED 17-03- 2006 ALREADY PLACED ON RECORD. THE DEPARTMENT HAS NOT FI LED ANY APPEAL BEFORE THE HON'BLE HIGH COURT AGAINST THE SE T ASIDE OF THE SAID ASSESSMENT ORDER WHICH PROVES THAT THE SET TING ASIDE BY THE ITAT HAS BECOME FINAL. FURTHERMORE FR ESH ASSESSMENT ORDER WAS PASSED IN THE SECOND ROUND U/S 158BC / 254 ON 28-12-2007 BY THE ASSESSING OFFICER AS PER DIRECTIONS OF THE HON'BLE ITAT. 25. THUS THE CONDITIONS LAID OUT IN PARA 2(1) OF T HE CIRCULAR STANDS FULFILLED AND THEREFORE THE INTEREST U/S 220 (2) CAN BE CHARGED ONLY AFTER THE EXPIRY OF THIRTY DAYS FROM T HE DATE OF SERVICE OF DEMAND NOTICE PURSUANT TO SUCH FRESH ASS ESSMENT ORDER IN THE SECOND ROUND AND NO INTEREST COULD BE CHARGED U/S 220(2) TILL SAID DATE. IN CASE OF THE ASSESSEE THE FRESH ASSESSMENT ORDER WAS PASSED ON 28-12-2008 AND WHICH WAS SERVED ON THE ASSESSEE ON 01-01-2008 AND THEREF ORE THE DUE DATE FOR PAYMENT OF INCOME TAX IS ON 31-01-2008 . THUS INTEREST U/S 220(2) CAN BE CHARGED W.E.F. 01-02-200 8 AND NO INTEREST CAN BE CHARGED PRIOR TO THE SAID DATE AS H AS BEEN CHARGED.' I.T.(SS)A. NO.7/DEL/2012 12 7. HOWEVER THE ASSESSING OFFICER REJECTED THE ENTIRE CONTENTIONS RAISED BY THE ASSESSEE ON THE GROUND THAT:- FIRSTLY THE AMOUNT WAS SEIZED FROM THE BANK ACCOUNTS OF VARIOUS COMPANIES AND THEREFORE IN TERMS OF PROVISIONS OF SECTION 132(4) PRESUMPTION IS THAT IT BELONGS TO THESE COMPANIES AND THE SAME IS TO BE ADJUSTED AGAINST THE OUTSTANDING DEMAND IF AT ALL IN THE HANDS OF THE COMPANIES AND IF ANY AMOUNT IS LEFT OUT AFTER SUCH ADJUSTMENT THE SAME CAN BE ADJUSTED AGAINST THE OUTSTANDING DEMAND OF THE ASSESSEE. THE ASSESSING OFFICER HAD RIGHTLY ADJUSTED THE SEIZED AMOUNT AGAINST TAX DEMAND OF THE COMPANIES BEFORE ADJUSTING THE SAME AGAINST THE TAX LIABILITY OF THE ASSESSEE. SECONDLY RELIANCE PLACED ON CBDT CIRCULAR NO.334 DATED 3/4/1982 BY THE ASSESSEE ON CLAUSE (I) WOULD NOT BE APPLICABLE BECAUSE HERE IN THIS CASE NEITHER THE ASSESSMENT ORDER WAS CANCELLED OR SET ASIDE BY THE APPELLATE/REVISIONAL AUTHORITY. HERE CLAUSE (II) W ILL APPLY BECAUSE THE MATTER WAS RESTORED TO THE ASSESSING OFFICER WHEREBY PART OF THE 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. I.T.(SS)A. NO.7/DEL/2012 13 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 TH E BLOCK ASSESSMENT ORDER IT WAS CATEGORICALLY HELD BY THE ASSES SING 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 COMPAN IES 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 ASSE SSING 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 IN COME AS UNDISCLOSED INCOME IN THE RETURN OF INCOME FILED FOR THE BLOCK PERIOD AND REQUESTED THE DEPARTMENTAL AUTHORITIES TO AD JUST THE AMOUNT SO SEIZED FROM THESE COMPANIES ACCOUNT AGAINST THE TAX LIABILITY FOR WHICH IRREVOCABLE LETTERS WERE ALSO FU RNISHED BY THESE COMPANIES. IN SOME OF THE CASES ADDITION IN THE HAND S OF THE COMPANIES WERE MADE ON PROTECTIVE BASIS AND ON SUBSTAN TIVE BASIS IT WAS HELD THAT THE MONEY SEIZED AND OFFERED TO TA X AS UNDISCLOSED INCOME BY THE ASSESSEE TO BE ADDED IN THE HANDS OF THE ASSESSEE. FINALLY AFTER VARIOUS ROUNDS OF LITIGATIO N IT HAS NOW BEEN SETTLED IN THE CASES OF THE COMPANIES THAT THIS MONE Y DOES NOT BELONG TO THEM ALBEIT SAME NEEDS TO BE TAXED IN THE HANDS OF THE ASSESSEE. ONCE THE MONEY FOUND FROM THE BANK ACCOU NT OF THESE COMPANIES HAVE BEEN REBUTTED BY THESE COMPANIES THAT THE MONEY BELONGS TO THE ASSESSEE AND ASSESSEE ON THE OTHE R HAND ACCEPTS THAT IT IS HIS UNDISCLOSED INCOME THEN OSTENSIBL Y THERE COULD BE NO PRESUMPTION WHICH CAN BE DRAWN AGAINST TH E I.T.(SS)A. NO.7/DEL/2012 14 COMPANIES IN TERMS OF SECTION 132(4A) THAT MONEY BELONG S TO THEM BECAUSE THAT PRESUMPTION STANDS CATEGORICALLY REBUTTE D. 9. THE CONTENTION/OBJECTION RAISED BY THE ASSESSING OFFICE R IN THE IMPUGNED ORDER THAT THE SAID AMOUNT COULD NOT HA VE BEEN ADJUSTED AGAINST ASSESSEES TAX LIABILITY CANNOT BE U PHELD IN WAKE OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISC USSED ABOVE. IF THE DEPARTMENT ON ITS OWN VOLITION HAS MADE TH E ADDITION BOTH IN THE HANDS OF THE ASSESSEE AS WELL A S IN THE HANDS OF THE COMPANIES FOR THE SAME AMOUNT AND CHOOSES TO ADJUST CASH SEIZED OUT OF THE DEMAND OF THE COMPANIES WHICH WAS DENIED BY THE COMPANIES IN THEIR HANDS; AND ULTIM ATELY HAS BEEN FOUND TO BE NOT SUSTAINABLE IN THEIR ASSESSMENTS TH EN CHARGING OF INTEREST UNDER SECTION 220(2) FROM THE ASSE SSEE FOR SUCH A HUGE DELAY OF PAYMENT OF DEMAND CANNOT BE ATTRIB UTED TO THE ASSESSEE ESPECIALLY WHEN FINALLY REVENUE IN THE WAKE OF APPELLATE ORDERS HAD ACCEPTED THAT THE AMOUNT SEIZED FR OM THE COMPANIES BELONG TO THE ASSESSEE AND INSTEAD OF REFUN DING THE SAME TO THE SAID COMPANIES SHOULD HAVE ADJUSTED THE CA SH IN THE HANDS OF THE ASSESSEE THAT VERY TIME UNDER THE GIVEN FAC TS AND CIRCUMSTANCES OF THE CASE. WHENCE THE REVENUE CHOSE TO PROCRASTINATE THE PROCEEDINGS AND SIT FOR MORE THAN 10 Y EARS DESPITE ASSESSEES REQUEST AND ALSO BY THE COMPANIES THEN HOW SUCH A HUGE AMOUNT OF INTEREST UNDER SECTION 220(2) FOR THE ENTIRE PERIOD OF DELAY CAN BE FASTENED UPON THE ASSES SEE WHICH OSTENSIBLY ATTRIBUTED TO THE DEPARTMENT. IF SOME INFRUCTU OUS EXERCISE OF MAKING ADDITION IS MADE IN THE HANDS OF TH E COMPANIES WHICH ULTIMATELY HAS BEEN FOUND TO BE UNTENA BLE /UNSUSTAINABLE BECAUSE ALREADY SUBSTANTIVE ADDITION H AS BEEN ACCEPTED IN THE BLOCK ASSESSMENT ORDER OF THE ASSESSEE THEN FOR I.T.(SS)A. NO.7/DEL/2012 15 SUCH INSOUCIANT ATTITUDE OF THE DEPARTMENT ONE CANNOT FA STENED THE ASSESSEE WITH SUCH HUGE LIABILITY OF INTEREST UNDER SECTION 220(2). NOW FINALLY WHEN REVENUE HAS ADMITTED THAT THE AMOUNT SEIZED BELONG TO THE ASSESSEE AND TAX LIABILITY WAS U PON THE ASSESSEE ONLY THEN IN OUR OPINION SUCH CASH SEIZ ED/ OFFERED TO SETTLE THE CASH LIABILITY SHOULD HAVE BEEN ACCEPTED A ND ASSESSEE SHOULD BE DEEMED TO HAVE MADE THE PAYMENT SPECIFIED IN THE DEMAND NOTICE WITHIN THE PERIOD OF LIMITATION AS PROV IDED U/S 220(1); AND CANNOT BE TREATED IN DEFAULT FOR NOT MAKING THE PAYMENT AND THEREBY SHIFT THE ADJUSTMENT OF SEIZED CASH A FTER EXPIRY OF MORE THAN 10 YEARS FROM THE DATE OF DEMAND CREATED BY THE ASSESSING OFFICER. THUS WE HOLD THAT THE INTEREST U /S 220(2) UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE CAN NOT BE IMPOSED FROM THE DATE OF ORIGINAL DEMAND NOTICE AND R ESULTANTLY GROUND NO.1 AS RAISED BY THE ASSESSEE IS ALLOWED. 10. IN VIEW OF THE ABOVE FINDING GIVEN ABOVE OTHER ISSUE RAISED VIDE GROUND NO.2 HAS BECOME PURELY ACADEMIC IN NATURE AND THE SAME IS DISMISSED AS INFRUCTUOUS. 11. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER 2017. SD/- SD/- [O. P. KANT] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:30 TH NOVEMBER 2017 JJ:1411 I.T.(SS)A. NO.7/DEL/2012 16 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR DATE 1. DRAFT DICTATED ON 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE COMES BACK TO PS/SR. PS 8. UPLOADED ON 9. FILE SENT TO THE BENCH CLERK 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER.