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2019 (11) TMI 361

..... unal in the case of the ‘Radha Mohan Purshottam Das Agarwal’ Group, consisting of nine appeals, on facts exactly similar, mutatis mutandis, to those present in the case of the assessee presently under appeal and the Tribunal has decided the issue in favour of the assessees Following this view taken we set aside the order of the ld. CIT(A), and direct the Assessing Officer to compute the interest u/s 234B in accordance with the law, if at all it is leviable, only till the date when the assessee made an application to the Department for the adjustment of the cash seized towards the income tax liability. To that extent, we find there is a mistake apparent on record in the order of the Assessing Officer while computing the interest u/s 234B of the Act. Charging of interest under section 234C - search had taken place on 31/03/2011 and the surrender of the income has been 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 .....

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..... ed the penalty proceedings initiated u/s 140A/221 of the Act, 1961, this itself proves that the "admitted tax" stood deposited, the order passed is bad in law and be quashed. 8. Because the CIT(A) has failed to appreciate that it is a case of search u/s 132 dated 31.03.2011 wherein the assessee had surrendered ₹ 8 crores at the time of search and cash amounting to ₹ 4,70,80,000/- was seized; three postdated cheques aggregating to ₹ 2.25 crores were procured from the assessee towards payment/adjustment of tax on the amount surrendered at the time of search itself, there was no reason for the CIT(A) to infer, that the "admitted tax" had not been deposited, the order passed by the CIT(A) is bad in law and be quashed. 9. Because the CIT(A) has failed to appreciate that the assessee had moved three letters of three different dates i.e., 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 othe .....

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..... of the assessee firm and ₹ 5,50,000/- from the residential premises of the partners. At the same, a search had also taken place at the business-cum-residential premises of M/s Radha Mohan Purshottam Das Jewels Pvt. Ltd., related to the assessee firm, and cash amounting to ₹ 2,00,00,000/- and ₹ 1,92,50,000/- were seized from the business premises at Birhana Road, Kanpur and Kuchi Mahajan, New Delhi. At the time of search, the statement of Shri Kailash Nath, partner of the firm, Radha Mohan Purshottam Das Agarwal and Shri Amar Nath Agarwal, Director of the concern, Radha Mohan Purshottam Das Jewels Pvt. Ltd. was recorded, and Shri Kailash Nath Agarwal, partner of the assessee firm had surrendered ₹ 7,00,00,000/- as undisclosed income to be taxed, in the hands of the family members, and Shri Amar Nath Agarwal had disclosed a sum of ₹ 8,00,00,000/- 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 ₹ 5,17,63,3 .....

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..... nterest under section 234B of the Act. Thus, following the same view, the issue relating to levy of interest in the case of the assessee may be decided. 11. The ld. D.R., on the other hand, has placed reliance on the order of the ld. CIT(A). 12. Heard. We find that this issue is squarely covered by the order of the Lucknow Bench of the Tribunal, vide order dated 8/8/2017, wherein the Tribunal, in the case of the Radha Mohan Purshottam Das Agarwal Group, consisting of nine appeals, has dealt with the issue relating to charging of interest under section 234B and 234C of the Act, holding as under: 4. Now the next issue arising in ground No. 8 relates to the charging of interest u/s 234B and 234C of the I.T. Act. So far the interest u/s 234C is concerned, learned A.R. before us vehemently contended that since in the impugned case the assessee surrendered the amount as on 31/03/2011 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 .....

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..... 08, order dated 14/10/2011 in which this Tribunal on the issue of levy of interest u/s 234B held as under: 6. We have duly considered the rival contentions and gone through the record carefully. In order to appreciate the controversy more logically, it is imperative upon us to have a look on section 132B(i) which prescribes the mode of application of seized assets or requisitioned assets. The portion relevant for the purposes of present appeal reads as under: "132B. (1) The assets seized under sec. 132 or requisitioned under sec. 32A may be dealt with in the following manner, namely: (i) the amount of any existing liability under this Act, the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1987 (35 of 1987), the Gifttax 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 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 payabl .....

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..... vance tax liability is governed by sections 208 to 210 of the Act. Similarly, section 140A provides for payment of self-assessment tax on the basis of any return of income required to be filed by the assessee. The relevant provisions also prescribe the dates and the amount of tax required to be paid by an assessee. Therefore, the expression 'existing liability in section 132B(1)(/) cannot be read to exclude a particular tax liability, if it can be shown to have existed on a particular date. If the liability to pay advance tax had arisen, it would certainly constitute a part of the 'existing liability1 used in section 132B(1)(/) of the Act. 10. In our considered opinion, the doctrine of purposive construction has to prevail in this situation. In the present situation, it is evident that cash was seized from the assessee during search operation and, assessee requested 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 ex .....

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..... ssets against liability for payment of advance tax. Therefore, there is no justification for the CIT (Appeals) to rely upon the order of the Madhya Pradesh High Court in the case of Ramjilal Jagannath (supra) and deny the claim of the assessee". 8. We do not find any disparity on facts, therefore, respectfully following the order of the Co-ordinate Bench and in view of the above discussion, we allow the appeal of the assessee and direct the department to give credit of ₹ 60,40,000 to the assessee from the date, when assessee made application for treating the cash as payment of advance tax/fare while computing the interest chargeable under sec. 234B and 234C of the Income-tax Act, 1961. Similar view has been taken by various Benches of this Tribunal in the following cases: (i) Ram S. Sarda vs. DCIT, I.T.A. No.1172/Rjt/2010, order dated 21/12/2011 (ii) Dwarkadas 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 .....

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..... ce with the law, if at all it is leviable, only till the date when the assessee made an application to the Department for the adjustment of the cash seized towards the income tax liability. To that extent, we find there is a mistake apparent on record in the order of the Assessing Officer while computing the interest u/s 234B of the Act. With regard to charging of interest under section 234C of the Act, we find that the search had taken place on 31/03/2011 and the surrender of the income has been 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. We accordingly allow ground Nos. 9 & 10 of the appeal. 14. In the result, the appeal of the assessee is p .....

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