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2019 (11) TMI 361

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..... made on that very day, therefore, it is not a case of deferment of the income, as the liability to pay the advance tax in the case of the assessee arose only at the moment the income was surrendered by the assessee, i.e., as on 31st March, and not prior to that. Since the liability to pay the advance tax has arisen on 31st March therefore, it cannot be regarded to be a case of deferment of income tax. Therefore, the interest u/s 234C cannot be levied and there has been a mistake apparent on record in the order of the Assessing Officer while levying the interest u/s 234C of the Act. Appeal of the assessee is partly allowed. - ITA No.127/LKW/2017 - Dated:- 5-11-2019 - Shri. A. D. Jain, Vice President And Shri T. S. Kapoor, Accountant Member For the Appellant : Shri Rakesh Garg, Advocate For the Respondent : Shri A. K. Bar, CIT (DR) ORDER PER A. D. JAIN, V.P.: This is assessee s appeal against the order of the ld. CIT(A)- IV, Kanpur, dated 7/12/2016 for assessment year 2011-12, taking the following grounds: 1. Because the CIT(A), has erred on facts and in law in dismissing the appeal ex parte without giving adequate opportunity, which order is bad in law and be quashed. 2. Because th .....

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..... 07.04.2011, 07.11.2012 and 17.04.2013 requesting for adjustment of the amount seized towards payment of tax liability in terms of section 132, the amount seized was bought to be adjusted against the tax liability, arising at, the time of filing of return on the income surrendered, the CIT(A) has erred in holding otherwise, the 'appeal order passed' by the CITA) be quashed. 10. Because the authorities below have erred on facts and in law in charging interest under section 2348 and 234C of the Act without adjusting the amount of cash seized at the time of search, from the date when the request was made which if done, there would be no liability to pay interest, the interest charged be deleted. 11. Because without being prejudice to the above, the CIT(A) has erred in law in not giving any finding, on the merits of the case, which is contrary to the principles of judicial discipline. 2. This is a recalled matter. The appeal in ITA No.127/LKW/2017, first time, was disposed of by the Lucknow Bench of the Tribunal, vide order dated 4/5/2018, setting aside the order of the ld. CIT(A) and restoring the matter back to his file with a direction to adjudicate the issue afresh after pro .....

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..... 00/- to be taxed in the hands of his family members. On the disclosed amount of ₹ 7,00,00,000/-, the D.I. Wing had taken three cheques of ₹ 75 lakhs each from Shri Kailash Nath Agarwal, towards the estimated tax liability. 7. The assessee filed its return of income declaring an income of ₹ 5,17,63,360/-, including the proportionate undisclosed income of ₹ 3,50,00,000/- (50%). The Assessing Officer completed the assessment on a total income of ₹ 5,18,61,380/-, after adding a sum of ₹ 98,000/- as disallowance out of expenses. Accordingly a tax liability of ₹ 1,24,91,886/- was created, as per details given below: S. No. Particulars As per Notice of Demand As per return of Income 1 Assessed Income 5,18,61,380/- 5,18,61,380/- 2. Tax Payable 1,60,25,166/- 1,60,25,166/- 3. Prepaid Taxes 68,39,956/- 1,66,19,956/- 4. Interest u/s 234B 33,06,376/- 3,58,750/- 5. Total Tax Payable 1,24,91,886/-2,36,040/- 8. While filing the return, the assessee claimed a sum of ₹ 1,66,19,956/- as prepaid taxes, which included advance tax. However, the Assessing Officer did not give credit for the prepaid taxes and also not adjusted the amount seized at the time o .....

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..... /03/2011 i.e. at the last day of the financial year relating to assessment year therefore, the liability to pay the advance tax does not arise prior to the accrual of the income. The income has accrued as per the provisions of section 4 of the Act on 31/03/2011 when the assessee surrendered the said income. Therefore, no question of levy of the interest u/s 234C arise. 5. Learned D. R., on the other hand, relied on the order of the Assessing Officer 6. After going through the facts of the case, especially the fact that in this case search had taken place on 31/03/2011 and the surrender of the income has been made on that very day. We do agree with learned A.R. that it is not a case of deferment of the income as the liability to pay the advance tax in the case of the assessee arise only at the moment the income was surrendered by the assessee i.e. as on 31st March and not prior to that. Since the liability to pay the advance tax has arisen on 31st March therefore, it cannot be regarded to be a case of deferment of income tax. Therefore, we do agree that the interest u/s 234C cannot be levied and there has been a mistake apparent on record in the order of the Assessing Officer while .....

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..... sessment under sec. 153A and the assessment of the year relevant to the previous year in which search as initiated or requisition is made, or the amount of liability determined on completion of the assessment under Chapter XTV-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 deemed to be in default, may be recovered out of such assets". 7. A bare perusal of this clause would reveal that it refers to the mechanism for adjusting the assets seized under sec. 132 of the Act. Such assets can be adjusted, (a) against the amount of any existing liability under this Act; (b) against the amount of liability determined on completion of assessment under sec. 153A; (c) against the amount of liability determined on completion of assessment under Chapter XTV B for the block period; (d) against any penalty levied or interest payable in connection with such assessment. Thus, section 132(l)(i) of the Act authorized the Assessing Officer to recover the liability prescribed under the Act out of the assets seized under sec. 132 of the Act. Learned Commissioner in .....

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..... sted the Department to adjust a part of such cash receipts against the liability of advance tax which arose on account of the income surrendered during the search operation. The Department does not deny possession of the cash since the time of search. Thus, we find no justification for the Revenue to interpret the expression 'existing liability' in section 132B(1)(i) as not referring to liability of advance tax. Under the Income-tax Act, liability towards advance tax is a part of the scheme of recovery of taxes and such liability definitely falls in the expression 'existing liability' used in section 132B(1)(i) in the facts and circumstances of the case. The reliance pleaded by the CIT (Appeals) on the judgment of the Hon'ble Madhya Pradesh High Court in the case of Ramjilal Jagannath v. Asstt. CIT [2000] 241 ITR 758 is quite misplaced. As per the Revenue, in terms of the said judgment, the seized cash cannot be adjusted towards advance tax liability. We have carefully perused the said judgment and find that the same does not prohibit adjustment of seized assets towards liability to pay advance tax. In any case, we find that judgment of the Hon'ble Madhya Pr .....

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..... s Punjabhai Patel HUF vs. ACIT, I.T.A. No.2085/Ahd/2012 and 2086/Ahd/2012, order dated 25/10/2013 (iii) DCIT vs. Bombay Beads Centre, I.T.A. No.3458/Mum/2011, order dated 02/03/2012 (iv) CIT vs. Shri Murlidhar Agarwa, I.T.A. No.777/Lkw/2014, order dated 04/09/2015 (v) Satya Prakash Sharma vs. ACIT, I.T.A. No.1735/Del/2008, order dated 13/02/2009. 6.2 We also noted that the similar view has been taken by the Hon'ble jurisdictional High Court in I.T. Appeal No. 182 of 2014 in the case of CIT vs. Sunil Chandra Gupta in which Hon'ble High Court vide order dated 11/03/2015 took the view, following the decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs. Ashok Kumar 334 ITR 355 (P&H), that the assessee was entitled to adjustment of the seized cash against the advance tax liability and therefore, no interest could be charged u/s 234A, 234B and 234C especially when the Department had not responded to the assessee s request for the adjustment of the cash seized against the advance tax liability. We noted that similar view has been taken in the case of CIT vs. Kesar Kimam Karyalaya as reported in 278 ITR 596. We also noted that Hon'ble Bombay High Co .....

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