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Sh. H.S. Chadha Versus The A.C.I.T., Central Circle-II, Chandigarh

2017 (7) TMI 573 - ITAT CHANDIGARH

Rectification application - not giving benefit of seized cash for the tax dues and on account of charging of interest under section 234B and 234C - Held that:- It is not in dispute that the search was conducted on the assessee on 30.6.2010 and cash amounting to ₹ 1 crore was seized on that date. It is also not disputed that the assessee had made a request, vide letter dated 23.8.2010 and reminder dated 4.7.2011, for adjustment out of the seized amount towards advance tax liability in respe .....

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g the application in that regard. - Explanation-2 to section 132B of the Act is prospective in nature applicable w.e.f. 1.6.2013 and is not applicable in the present case, since search was conducted on 30.6.2010. - What emerges from the above is that as per the above decisions of the Jurisdictional High Courts, the cash seized is to be adjusted against the advance tax liability of the assessee from the date of making of application. In view of the decisions of the Jurisdictional High Cou .....

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e paid under section 234B and 234C of the Act. - Decided in favour of assessee. - ITA No.920/Chd/2016 - Dated:- 22-11-2016 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER For The Appellant : Shri Vineet Krishan For The Respondent : Shri Sushil Kumar, CIT DR ORDER PER ANNAPURNA GUPTA, A.M. : This appeal has been filed by the assessee against the order of learned Commissioner of Income Tax (Appeals)-3, Gurgaon dated 25.7.2016 for assessment year 2011-12, passed un .....

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assessee thereafter vide letters dated 23.8.2010 and 4.7.2011 requested that the advance tax payable in respect of assessment year under consideration be adjusted out of the cash seized. The assessee filed his return on 28.7.2011 declaring an income of ₹ 1,51,51,170/- and calculated the tax payable on the same at ₹ 45,31,332/-. The TDS amounting to ₹ 3,87,131/- was adjusted against the tax due and against the balance amount of tax payable amounting to ₹ 41,44,201/-, the .....

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ieved, the assessee filed a rectification application on 04.01.2013 addressed to the ACIT, Central Circle-II, seeking rectification of the intimation on account of not giving benefit of seized cash for the tax dues and on account of charging of interest under section 234B and 234C of the Act. Another application was filed by the assessee on 27-01-15. The Assessing Officer after considering the same rejected the application of the assessee by stating that as per the provisions of section 132B of .....

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e carried the matter before the Ld. CIT (Appeals) where the assessee contended that the issue of adjustment of seized cash against advance tax liability has been settled in favour of the assessee by the Jurisdictional High Court in the case of CIT Vs. Ashok Kumar reported in 334 ITR 355 & CIT Vs. Arun Kapoor, 334 ITR 351, which has been followed by the I.T.A.T., Chandigarh Bench in the case of ACIT, Central Circle-III, Ludhiana Vs. Shri Hans Raj Gandhi in ITA No.739/Chd/2014,dt 18-11-14 and .....

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stated that the advance tax liability could not be treated as existing liability for the purpose of section 132B and which was brought on the Statute w.e.f. 1.6.2013 and held to be retrospective in nature by the I.T.A.T., Delhi in the case of DCIT Vs. Spaze Tower Pvt. Ltd., in ITA No.2557/Del/2012, dt.17-10-14,the issue becomes a debatable issue and thus not a mistake apparent from the record. The Ld. CIT (Appeals), therefore, dismissed the assessee s appeal. 5. Aggrieved by the same, the asses .....

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batable issue and there is no mistake apparent from records. 3. That in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) gravely erred in not following the jurisdictional High Court orders passed in the case of CIT vs. Ashok Kumar reported in 334 ITR 355 by which the appellant s case is squarely covered. 4. That in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) gravely erred in adjudicating the appeal without giving any .....

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lthough the appellant had during search itself and post search also requested for treating the cash seized as advance tax. 6. That in the light of the judgment of jurisdictional High Court and jurisdictional IT AT, the issue involved under Section 154 is binding on CIT(Appeals) as well as Id. Assessing Officer and is not debatable and the mistake apparent from the records is a rectifiable mistake under Section 154 of the Income Tax Act, 1961. 7. That in the facts and circumstances of the case, t .....

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sue of adjustment of seized cash against the advance tax liability of the assessee was not a debatable issue having been settled in favour of the assessee by the Jurisdictional High Court in a series of decisions i.e. CIT Vs. Ashok Kumar(supra) and CIT Vs. Arun Kapoor (supra). Moreover, the Ld. counsel of the assessee pointed out that even the issue of applicability of Explanation-2 to section 132B has been held to be prospective by the Jurisdictional High Court in the case of CIT (Central), Lud .....

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ility as not being an existing liability, since this Explanation was applicable only w.e.f. 1.6.2013, while in the present case the search had been conducted and cash seized on 30.6.2010. 7. The learned D.R., on the other hand, countered by stating that as per the provisions of section 132B of the Act, only existing liabilities could be adjusted against the cash seized and clearly advance tax could not be said to be an existing liability. In any case, the learned D.R. pointed out that this issue .....

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of both the parties, perused the findings of the authorities below and considered the material available on record. It is not in dispute that the search was conducted on the assessee on 30.6.2010 and cash amounting to ₹ 1 crore was seized on that date. It is also not disputed that the assessee had made a request, vide letter dated 23.8.2010 and reminder dated 4.7.2011, for adjustment out of the seized amount towards advance tax liability in respect of assessment year under consideration. W .....

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Kumar (supra) at para 5 is reproduced hereunder : 5. In CIT vs. Arun Kapoor, IT Appeal No. 149 of 2003 decided on 27th July, 2010, this Court had occasion to consider similar issue where it has been held that the assessee is entitled to adjustment of seized amount towards advance tax liability from the date of making the application in that regard. In the present case, the assessee had made request for adjustment of the advance tax of ₹ 3,14,312 against the seized amount of ₹ 5,90,00 .....

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e, the assessee had made request for adjustment of the advance tax liability against the seized amount of ₹ 1 crore on 23.8.2010. Since the first installment of the advance tax was payable on 15.9.2010 and the request for adjustment having been made on 23.8.2010 and reminder on 4.7.2011, no interest was exigible under section 234B and 234C of the Act. Further, we find that Explanation-2 to section 132B of the Act which states that the existing liability for the purpose of section 132B woul .....

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ve heard counsel for the appellant, perused the impugned orders and considered argument advanced by counsel for the revenue. The Tribunal has answered the question of chargeability of interest, against the revenue by relying upon a judgment of this Court in Income Tax Appeal No.36 of 2004 (Commissioner of Income Tax v. Ashok Kumar) (supra). The argument by counsel for the revenue, based upon explanation (2) to Section 132B of the Act disregards the fact that the explanation came into force on 01 .....

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