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2015 (9) TMI 1167 - ITAT NAGPUR

2015 (9) TMI 1167 - ITAT NAGPUR - TMI - Adjustment of seized cash towards advance tax liability - Held that:- Judicial view on Revenue Department's liability towards amount received by it from the tax payer. Revenue cannot keep the assessee's money with itself and claim that it has no liability or less liability towards the assessee by way of an Explanation inserted to negate the effect of judicial decisions without removing the statutory basis of the decisions.

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nue. - IT APPEAL NO. 380 (NAG.) OF 2012 - Dated:- 30-6-2015 - MUKUL K. SHRAWAT AND SHAMIM YAHYA, JJ. For The Appellant : Amitava Bhattacharya ORDER Shamim Yahya, Accountant Member - This appeal by the Revenue is directed against the order of learned CIT(Appeals)- I, Nagpur dated 21-08-2012 and pertains to assessment year 2009-10. The ground raised in ground no. 1 is as below: "On the facts and circumstances of the case and in law, the learned CIT(A) erred in directing the Assessing Officer .....

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holding as under: 'I have carefully considered the issue before me. In the appellant's case the request for adjusting seized cash towards tax has been made on 08-09-2009 itself. However there has been no response from the department regarding this request of the assessee. It is seen that a sum of ₹ 69,53,300/- was seized and was available with the department. In the various judicial decisions relied upon by the appellant have considering similar contentions held that levy of intere .....

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the course of search can be dealt with for discharging the existing liability under the Acts set out therein, in the present case, the tax liability relating to the assessment year in question would get crystallised only after the assessment is completed and therefore, the request of the assessee for adjustment of the amounts in question towards the advance tax liability could not be entertained. We see no merit in the above contention, because, once the assessee offers to tax the undisclosed in .....

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by his letter dated 14th March, 2007 requested the assessing officer to adjust the amounts towards the existing advance tax liability. Since the advance tax liability is to be computed and paid in accordance with the provisions of the Act even before the completion of the assessment, no fault can be found with the decision of the ITAT in holding that in the facts of the present case, the amounts in question were liable to be adjusted towards the existing advance tax liability." Respectfull .....

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inion, the matter may be adjudicated by hearing the learned D.R. The Revenue in this regard is aggrieved that the CIT(Appeals) erred in applying the decision of Hon'ble jurisdictional High Court which is contrary to the extant provisions of section 132B(1) of the Act. The learned D.R. has further contended that Finance Act, 2013 has inserted an Explanation to section 132B with effect from 01-06-2013 and submitted the following proposition : "The existing provisions of section 132B, inte .....

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t or is deemed to be in default. A new Explanation in section 132B shall be inserted so as to provide that for the removal of doubts, it is hereby declared that the 'existing liability' does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII." The learned D.R. further submitted that assessee's request to the Assessing Officer under section 154 has rightly been not entertained by the Assessing Officer as the issue is debatable. Hence the l .....

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ble Gujarat High Court in the case of Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2003] 262 ITR 146 has held that not following a jurisdictional High Court decision which may not have even been cited can give rise to a mistake apparent from record in the order by any inferior Court or Tribunal. Thus there was no reason why the Assessing Officer should not have considered the issue raised by the assessee under section 154 of the I.T. Act. 7. Now we deal with the issue of amendment in sect .....

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987 (35 of 1987), the Gift-tax Act, 1958 (18 of 1958) and the Interest-tax Act, 1974 (45 of 1974). and the amount of the liability determined on completion of the assessment [under section 153A and the assessment of the year relevant to the previous year in which search is initiated or 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 connect .....

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this clause may be recovered out of such asset and the remaining portion, if any, of the asset may be released, with the prior approval of the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, to the person from whose custody the assets were seized: Provided further that such asset or any portion thereof as is referred to in the first proviso shall be released within a period of one hundred and twenty days from the date on which the last of the aut .....

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ferred to in clause (i) as remains undischarged and for this purpose such assets shall be deemed to be under distraint as if such distraint was effected by the Assessing Officer or, as the case may be, the Tax Recovery Officer under authorisation from the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or[ Commissioner under sub-section (5) of section 226 and the Assessing Officer or, as the case may be, the Tax Recovery Officer may recover the amount of such liab .....

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Central Government shall pay simple interest at the rate of [one-half per cent for every month or part of a month] on the amount by which the aggregate amount of money seized under section 132 or requisitioned under section 132A, as reduced by the amount of money, if any, released under the first proviso to clause (i) of sub-section (1). and of the proceeds, if any, of the assets sold towards the discharge of the existing liability referred to in clause (i) of sub-section (1). exceeds the aggreg .....

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ck period" shall have the meaning assigned to it in clause (a) of section 158B; (ii) "execution of an authorisation for search or requisition" shall have the same meaning as assigned to it in Explanation 2 to section 158BE.] [Explanation 2. - For the removal of doubts, it is hereby declared that the "existing liability" does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII.]' Considering the extant provisions of section 132B .....

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te, is not correcty. 8. Now we find that the Explanation inserted to section 132B as referred by the, learned D.R. aims to negate the effect of above said jurisdictional High Court ruling. 9. Now we have to examine whether the said Explanation can be said to be bringing upon a substantive change/amendment or not. 10. In this regard we may gainfully refer to exposition from Hon'ble Apex Court as under: (a) In the case of Virtual Soft Systems Ltd. v. CIT [2007] 289 ITR 83 Hon'ble Apex Cour .....

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ory, that is not the end of the matter. The court will not regard itself as being bound by the said statement made in the statute but will proceed to analyse the matter of amendment and then conclude whether it is in reality a clarificatory or declaratory provision or whether it is an amendment which is intended to change the law and which applies to further periods." (b) In the case of National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India [2003] 260 ITR 54 .....

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nd not expressive or harsh, otherwise it runs the risk of being struck down as unconstitutional. The third is where the legislation is introduced to overcome a judicial decision; here the power cannot be used to subvert the decision without removing the statutory basis of the decision." From the above exposition from the Hon'ble Apex Court, it is clear that the Courts can analyse the matter of amendment as to whether it is in reality a clarificatory or declaratory provision or whether i .....

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essment is completed and, therefore, the request of the assessee for adjustment of amounts in question towards the advance tax could not be entertained. Now to overcome this decision the Explanation to section 132B had been inserted to provide that "for removal of doubt it is hereby declared that the existing liability does not include advance tax payable in accordance with the provisions of Part C of Chapter 17." Admittedly this Explanation aims at subverting the above decision withou .....

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CIT v. Shelly Products [2003] 261 ITR 367, for the following observation of the Hon'ble Apex Court: "In a case where an assessee chooses to deposit by way of abundant caution advance tax or self-assessment-tax which is in excess of his liability on the basis of the return furnished or there is any arithmetical error or inaccuracy, it is open to him to claim refund of the excess tax paid in the course of the assessment proceedings. He can certainly make such a claim also before the conc .....

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