TMI Blog2017 (6) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... against the advance tax liability and as per ld. Authorised Representative submission the credit for it be given from the date of its request made to CIT(C) for adjustment of cash. We thus direct accordingly. In the result, the grounds of Assessee are allowed. - ITA No.1039/PUN/2015 - - - Dated:- 31-5-2017 - SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM For The Appellant : Shri Nikhil Pathak/P.D.Kudwa For The Respondent : Shri Sudhanshu Shekhar ORDER PER ANIL CHATURVEDI, AM : The appeal of the assessee is emanating out of the order Commissioner of Income Tax (Appeals)-XI, Pune dated 27/02/2015 for the AY 2011-12. 2. The facts as culled out from the material on record are as under: 2.1 Assessee is an individual. A search action u/s 132 of the Act was conducted on 06/08/2010 at residences of Shri Jivaram Magaji Chaudhary (the assessee) and his brother Shri Voraram Chaudhary) and simultaneously a survey action u/s 133A of the Act was also carried out at the office premises of Aaijee Developers. During the course of search, cash of ₹ 2,57,10,000/- was found from the residence of the assessee and out of this cash, ₹ 2,55,00,000/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and also resultant levy of additional interest u/s 234B 234C by the Assessing Officer, these grounds are consolidated and adjudicated hereinafter. The core issue giving rise to the present appeal is the denial of credit by the AO for advance tax payment of ₹ 1,69,26,860/- on 28/09/2010 by way of adjustment out of cash of ₹ 2,55,00,000/- seized in search action u/s 132 of I T Act, 1961 from the appellant s residential premises on 06/09/2010. The grievance of the appellant in this regard is that seized cash to the extent of ₹ 1,69,26,860/- was shown as paid on 27.03.2012 in the assessment u/s 143(3) instead of 28.09.2010 as per appellant s request made in the letter filed before the CIT for adjustment of seized cash towards advance tax for the year, which according to the appellant, resulted in excess levy of interest u/s 234B and sec. 234C. The contentions of the appellant are not legally well founded. Under sec.132B,seized assets including cash may be adjusted against any existing liability under the Income Tax Act, Wealth tax Act, the Expendituretax Act, the Gift-tax Act and the Interest tax Act and the amount of liability determined on completion of assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Apex Court in the case of CIT VS. Podar Cement (P.) Ltd. 226 ITR 625, wherein it was held that if a statue is curative or merely declaratory of the previous law, retrospective operation is generally intended. Thus, in my considered view, insertion of Explanation-2 in sec. 132B by the Finance Act, 2013 is declaratory in nature and, therefore, has to be treated as retrospective. Reverting to the facts of the present case, apparently there was no existing liability as on the date of passing the assessment order for the year under consideration. In such circumstances, the cash seized under sec. 132 can be adjusted only against the demand raised on completion of assessment under se. 143(3) and not towards advance tax for the year. 4.3.3 Adverting to the decisions relied upon by the appellant; these cases including the decision of Bombay HC in the case of Shri Jyotindra B. Mody in ITA No.3741/2010 dated 21.09.2011 were decided prior to the insertion of declaratory Explanation-2 in section 132B of the I.T. Act and in my humble opinion, the view taken in these authorities is no longer good law after the insertion of the said Explanation. Therefore, the said decisions do not render ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having offered to tax undisclosed income including the amount seized during the search on 06.09.2010, the liability to pay advance tax in respect thereof arose before completion of assessment and was an existing liability u/s 132B of the IT Act when the assessee requested for appropriation of tax out of seized cash in writing on 28.09.2010. 3. The Hon. CIT(A) erred in holding that insertion of Explanation 2 in Section 132B by the Finance Act 2013 is declaratory in nature and has to be treated as retrospective when the amendment was explicitly to take effect from 1st June 2013. 4. The Hon. CIT(A) erred in holding that the decision of the Bombay High Court in the case of Jyothindra B. Mody in ITA No.3741/2010 dated 21.09.2011 and the ITAT Ahmedabad decision in the case of Kanishka Prints Pvt. Ltd. vs ACIT (34 Taxman.Com 307) were no longer good law after the insertion of Explanation 2 in Section 132B. The CIT (A) failed to appreciate that these squarely applied in the facts of the appellants case. 5. The Hon. CIT(A) erred in holding that the assessee s request to compute correct tax demand and interest u/s 234B and 234C with reference to tax adjustments on 28.09.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Promoters Limited (ITA 425/2014 (O M) order dated 14/07/2015) iii) Spaze Towres Private Limited Vs. DCIT (ITA No.40/2015 (O M) order dated 17/11/2016.) 7. He also placed reliance on the decisions of Pune Tribunal in the case of Deputy Commissioner of Income Tax Vs. Nitin Valjibhai Takkar in ITA No.193/PN/2014 order dated 25/05/2016 and Pushpendra Subash Chandra Vs. Assistant Commissioner of Income Tax in ITA No.1077/PN/2012 order dated 26/08/2013. He, therefore, submitted that the credit of the seized cash be given to the assessee. He further, submitted that Assessee would have no objection if the credit for seized cash is given from 28/09/2010, (being the date of letter of request for adjusting of cash) submitted to CIT (A). On the issue of the finding of CIT(A) with reference to the issue cannot be a subject matter of rectification u/s 154 as the issue being a debatable one, he submitted, that as on the date of passing of order by AO CIT(A), the decision of Hon'ble Bombay High Court in the case of Jyotindra Mody (supra), being of jurisdictional high court, was binding on those two authorities and that not following the decision of jurisdictional high court was an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33 lacs be treated towards payment of advance tax in case of family members/group companies. It is also a fact that vide aforesaid letter, the Assessee had requested that cash of ₹ 8 lacs be considered as advance tax in the case of Shreeji Prints P. Ltd. The coordinate Bench of Tribunal in the case of Shreeji Prints (ITA No 359/Ahd/2012 order dated 20.4.2012) decided in favour of Assessee by holding as under: It is evident from a bare reading of the aforesaid provisions that the existing liability under the Income-tax can be discharged from the assets or money seized. In the present case, the search operation was conducted on 22-9-2005 and the assessee filed return on 31-5-2006 declaring the seized money as income. In our opinion, if the assessee has declared income, during the year under consideration in that eventuality he is liable to pay advance tax as per law therefore the A.O. is required to find out whether such liability was existing on the date of seizure. If such liability is existing then he is empowered to apply/adjust the money seized in discharge of the existing liability even without any written representation from the assessee. Now coming to the fact o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability does not include advance tax payable in accordance with the provisions of Par C of Chapter XVII. The explanatory memorandum to the Finance Bill reads as under:- The existing provisions contained in section 132B of the Income-tax Act, inter alia, provide that seized assets may be adjusted against any existing liability under the Income Tax Act. Wealth tax Act, the Expenditure-tax Act, the Gift-tax Act and the Interest tax Act and the amount of liability determined on completion of assessments pursuant to search, including penalty levied or interest payable and in respect of which such person is in default or deemed to be in default. Various courts have taken a view that the term existing liability includes advance tax liability of the assessee, which is not in consonance with the intention of the legislature. The legislative intent behind this provision is to ensure the recovery of outstanding tax/interest/penalty and also to provide for recovery of taxes/ interest /penalty, which may arise subsequent to the assessment pursuant to search. Accordingly, it is proposed to amend the aforesaid section so as to clarify that the existing liability does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Court in the case of CIT vs Sh. Sandeep Jain others in ITA 261 of 2014, CIT (Central) Ludhiana vs. Cosmos Builders Promoters Ltd., in ITA No.425 of 2014? 3. The appeal is pressed only in respect of these questions of law and not in respect of the questions of law raised in the original appeal. 4. The appeal is admitted on the above questions of law. The judgement of a Divison Bench of this Court dated 29.09.2014 in ITA-261- 2014 titled as Commissioner of Income Tax (Central), Ludhiana Vs Sh. Sandeep Jain and others covers the case in favour of the assessee. It was held that Explanation 2 to Section 132B of the Income Tax Act, 1961 is prospective in nature w.e.f. 01.06.2013. The present appeal is in respect of the assessment year 2008-2009. In view of the said judgment, Explanation 2 would not be applicable to the assessee s case. This judgment was followed by another judgment of a Divison Bench of this Court dated 14.07.2015 to which one of us (S.J. Vazifdar, CJ) was a party titled as Commissioner of Income Tax (Central), Ludhiana Vs M/s Cosmos Builders and Promoter Ltd. By an order dated 06.05.2016, the Petition for Special Leave to Appeal against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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