TMI Blog2003 (9) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on 12th March, 1999, he issued notice under s. 158BC of the Act to both the assessees, which were served. Each of the assessee filed return and Suresh Chand Verma declared undisclosed income at 25,30,947 and Shri Satish Chand Verma, declaring undisclosed income at Rs. 17,54,236. It is also on record that each of the assessee could not file tax payable under s. 140A on the undisclosed income returned. However, each of the assessee requested the CIT, Kanpur, by application dt. 16th Aug., 1999, to appropriate the seized cash and silver/silver ornaments against the admitted tax liability of Rs. 15,18,568 in the case of Suresh Chand Verma and Rs. 10,52,542 being the admitted tax liability out of seized cash and gold/silver ornaments. The AO adjusted the cash seized from each of the assessee and proceeded under s. 221(1) r/w s. 140A of the Act separately against each of the assessee and levied penalties of Rs. 15,000 in the case of Suresh Chand Verma and of like amount in the case of Satish Chand Verma, which ultimately were deleted by the CIT(A) vide order dt. 25th Sept., 2000. However, the assessment for block period was completed at an income of Rs. 48,45,872 in the case of Suresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal filed by each of the assessee and assessee being aggrieved have preferred these two appeals. 4. The learned counsel for the assessee submitted that facts are identical in both the cases and he submitted that as soon as the assessee was called upon to file the return of income and each of the assessee declared undisclosed income, a petition was moved on 16th Aug., 1999. before the CIT(A), Kanpur, in which it was prayed that he may be allowed to dispose of gold/silver ornaments lying in the possession of the Department to the extent of liability arising on account of block assessment period. The copy of this letter is appearing at pp. 5 6 of the paper book in the case of Suresh Chand Verma. Further, the learned counsel for the assessee submitted that the assessee again moved application before the Asstt. CIT, Circle 2(3), Kanpur, who was seized with the assessment of the assessee for permission to dispose of the seized assets so that due liability of tax can be satisfied. Copy of this letter dt. 10th July, 2000, is appearing at pp. 12 13 of the paper book. Again, a letter was submitted before the Asstt. CIT, Circle 2(3), Kanpur, with the same request and copy thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok and in that case, the CIT(A) had deleted the penalty by observing as under: "4. I have carefully heard Shri Anil Jaiswal, the learned counsel of the appellant and I find that the seizure outweights the total tax liability under s. 140A. Since the Department has already in its possession, liquid assets which are more than adequate for making the payment under s. 140A, step taken by the AO is harsh, penalty is quashed." 7. The contention of the assessee is that the learned CIT(A) while deleting the penalty had noted that the assets recovered in the possession of the assessee were more than the amount of tax liability and there was no justification for treating the assessee as the assessee-in-default and no penalty was leviable. It again shows that the Departmental authorities had considered the reasonable cause in favour of the assessee for not complying with the requirement as non payment of admitted tax liability was not on account of any lapse on the part of the assessee, but due to non-action on the part of the Departmental authorities. 8. The learned counsel submitted that in identical case, Tribunal Mumbai Bench in the case of Divine Holidays (P) Ltd. vs. Dy. CIT (2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent" or "reassessment" in s. 132B shall be construed as references to "block assessment". 12. Provisions of s. 132B, which were appearing at that time are also as under: "132B. Application of retained assets. (1) The assets retained under sub-s. (5) of s. 132 may be dealt with in the following manner, namely: (i) The amount of the existing liability referred to in cl. (iii) of the said sub-section and the amount of the liability determined on completion of the regular assessment or reassessment for all the assessment years relevant to the previous years to which the income referred to in cl. (i) of that sub-section relates (including any penalty levied or interest payable in connection with such assessment or reassessment) and in respect of which he is in default or is deemed to be in default may be recovered out of such assets. (ii) If the assets consist solely of money, or partly of money and partly of other assets, the AO may apply such money in the discharge of the liabilities referred to in cl. (i) and the assessee shall be discharged of such liability to the extent of the money so applied. (iii) The assets other than money may also be applied for the discharge of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the same request, but the Department has not brought anything on record as to what action had been taken by any of them on the reasonable and genuine request of the assessee. It is not on record that the assessee was having any other source of income or any other assets out of which he could have paid the huge amount of admitted tax liability as whatever cash, golden/silver ornaments was found at the time of search was seized except small amount of silver ornaments. The amount of seized silver ornaments was much more than the tax liability on the returned income. Once these are the facts and the Department had not applied the provisions of s. 132B of the Act and the learned CIT(A) had also deleted the penalty imposed by the AO under s. 221(1) r/w s. 140A of the Act by holding that the assessee was having reasonable cause not to pay the amount of advance tax, then the assessee has to be treated as impliedly complied with the requirement of s. 249(4) of the Act. The amount of seized assets, which could not be disposed of due to non-action on the part of the Departmental authorities is admittedly more than the amount of admitted tax liability. The position would have been differe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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