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A.C.I.T., Central Circle-XXIV, Kolkata Versus Narendra N. Thacker

2015 (11) TMI 62 - ITAT KOLKATA

Adjustment of seized cash against self assessment tax liability - determination of tax liability - Held that:- This issue has reached the corridors of various courts as to the legality of the adjustment of seized cash and that itself makes the issue highly debatable and hence in any case cannot be the subject matter of rectification u/s 154 of the Act. It is well settled that an issue which is highly debatable cannot be rectified u/s 154 of the Act.

The action of the Learned AO in adj .....

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ned AO from the date of seizure of cash to the date of completion of assessment in respect of seized cash of ₹ 20,00,000/-. - IT(SS)A No.01/Kol/2012 - Dated:- 28-9-2015 - Shri Mahavir Singh, JM & Shri M.Balaganesh, AM For The Appellant : Shri S.Srivastava, CIT(DR) For The Respondent : Shri A.K.Tibrewal, FCA ORDER Per Shri M.Balaganesh, AM 1. This appeal of the revenue arises out of the order of the Learned CIT(A) in Appeal No.01/CC-XXIV/CIT(A)/C-III/10-11 dated 21.10.2011 for the Asst .....

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he Act does not provide for adjustment of seized cash before determination of tax liability. 4. The brief facts of this issue is that the search and seizure operation was conducted on Thacker Group on 27.7.2006 and it was seen that the four brothers Sri Dinesh N Thacker, Sri Vinod N Thacker, Sri Narendra N Thacker and Sri Mahendra N Thacker were doing separate business. The activities relating to the family unit of Sri Narendra N Thacker are mainly investment related activities which are carried .....

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ment was completed u/s 153A of the Act on 1.7.2008 determining taxable income at ₹ 60,12,240/- raising a demand of ₹ 24,02,249/-. Originally the Learned AO gave credit for seized cash of ₹ 20,00,000/- towards self assessment tax which was later rectified u/s 154 of the Act by the Learned AO on 2.3.2010 by revoking the credit for seized cash of ₹ 20,00,000/- as according to the Learned AO, there was no existing liability, and consequentially charged interest u/s 234B and 2 .....

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of appeal and/or adduce additional evidence at the time of hearing of the case. 5. The Learned DR argued that there is no provision in the Income Tax Act to adjust the seized cash towards the self assessment tax payable by the assessee and accordingly supported the order of the Learned AO. In response to this, the Learned AR argued that pursuant to the search operations, cash of ₹ 20,00,000/- was seized on 31.8.2006 and kept in PD account of the department and the same was adjusted from P .....

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oking the said adjustment of seized cash is illegal. 6. We have heard the rival submissions and perused the materials available on record. We find that the action of the Learned AO in adjusting the seized cash towards the tax liability determined to be payable pursuant to section 153A assessment framed by the Learned AO is in order in terms of section 132B of the Act. For the sake of convenience, the provisions of section 132B of the Act is reproduced here in below:- 132B. (1) The assets seized .....

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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 connection with such assessment) and in respect of which such person is in default or is 35deemed to be in default, or the amount of liability arising on an application made before the Settlement Commission under sub-section (1) of section 245C, may be recovered out of such assets .....

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36[Principal Chief Commissioner or] Chief Commissioner or 36[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 authorisations for search under section 132 or for requisition under section 132A, as the case may be, was executed; (ii) if the assets consis .....

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was effected by the Assessing Officer or, as the case may be, the Tax Recovery Officer under authorisation from the 36a[Principal Chief Commissioner or] Chief Commissioner or 36a[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 liabilities by the sale of such assets and such sale shall be effected in the manner laid down in the Third Schedule. (2) Nothing contain .....

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ch 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 aggregate of the amount required to meet the liabilities referred to in clause (i) of sub-section (1) of this section. (b) Such interest shal .....

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h 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.] 7. We find that the subsequent action of Learned AO in revoking the credit given for seized cash towards existing tax liability under proceedings u/s 154 of the Act is illegal. The provisions of section .....

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action of the assessee in seeking to adjust the seized cash with self assessment tax payable along with the return of income is in order and in accordance with section 132B of the Act as admittedly self assessment tax payable becomes existing liability on the part of the assessee to settle. Similarly we hold that the action of the Learned AO in adjusting the seized cash towards the tax liability determined pursuant to completion of section 153A assessment also is in order and is in accordance w .....

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d Sons reported in 210 ITR 886 (SC) , wherein it was held that :- Substantive law is concerned with the ends which the administration of justice seeks ; procedural law deals with the means and instruments by which those ends are to be attained. The latter regulates the conduct and relations of courts and litigants in respect of the litigation itself; the former determines their conduct and relations in respect of the matters litigated. What facts constitute a wrong is determined by the substanti .....

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67 ITR 466 (SC), wherein their Lordships while deciding the issue of applicability of levy of surcharge u/s 113 of the Act brought in the statute with effect from 1.6.2002 is not to be construed as retrospective in operation, had held as follows:- We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a c .....

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statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here. In such cases, retrospectively is attach .....

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tal rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary and distinct implication. Dogmatically framed, the rule is no more than a presumption, and thus could be displaced by out weighing factors. We find that the decision of the principle laid down by the larger bench of the apex court in the case of CIT vs Vatika Township P Ltd in 367 ITR 466 (SC) would squarely apply to t .....

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