TMI Blog2002 (1) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... ue on returned income. 4. That the ld. CIT(A), Amritsar has failed to appreciate that a refund of more than Rs. 15 lacs was due to M/s. Jaswant Singh Co., Amritsar (a group firm of assessee) from the department since May, 1999 and that the same was not adjusted despite assessee's requests against assessee's demand: 3. Briefly stated, the facts of the case are that the assessee is an Individual and block period was 1-4-1987 to 9-10-1997. The Assessing Officer completed the assessment on 25-10-1999 under section 158BC of the Income-tax Act, 1961. The Income-tax Department conducted a search on 9-10-1997 under section 132 of the Act at the residential premises of the assessee and other residential/business premises of Narula Group. During the course of search, certain incriminating documents, cash, FDRs, etc. were found and seized. The Narula Group is running a business network consisting Crushers, Hot Mix Plants, Transport Company, Petrol Pumps and individual transport vehicles, which are used in the business. The Crushers are engaged in procuring boulder stones from the river bed and by mechanically crush it into small pieces. This small pieces of stone grit sold to the Hot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal on merits. It was further submitted that the tax due on the returned income was not paid upto the date of filing the return. However, it was paid before the appeal was finally taken up for hearing by the learned CIT(A). He also submitted that an amount of Rs. 30,000 has been paid on 7-7-1998 and Rs. 25,000 has been paid on 4-4-2000 towards the due tax. It was also brought to our notice that the balance tax of Rs. 2,39,220 has also been paid by way of adjustment out of the FDRs. seized during the search. The assessee also moved an application before the CIT(A) under section 249(4) read with section 249(3) seeking condonation of delay. In the said application, it has been stated that the substantial refunds and other assets of assessee's group were lying in the possession of the Department for the adjustment towards the taxes due against the assessee. The assessee also filed the details in this regard. It was also one of the contentions of the assessee before the CIT(A) that he was facing extreme financial stringency due to fall in business and seizure of substantial assets and withholding of substantial refunds, Shri Padam Behl, CA., the learned counsel for the assessee, al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets seized and refunds of the assessee had to be adjusted against the block assessment demands in view of the unambiguous provisions of section 158BC(d) read with section 132B of the Act. 4.1 Without prejudice to the above, as an alternative submission, it was contended by the learned counsel for the assessee that the assessee may be deemed to have filed the appeal on the last day of the payment of tax i.e. on 4-4-2000 and the delay in filing the appeal till that date may be condoned under section 249(3) of the Act. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of CIT v. Filmistan Ltd [1961] 42 ITR 163. Further reliance was also placed on the decision of the Hon'ble Supreme Court in the case of Collector, Land Acquisition v. Katiji [1987] 167 ITR 471. 4.2 In view of the above referred to Supreme Court decisions and the fact that the entire taxes had been paid by the assessee at the time of final hearing of the appeal, it was submitted by the learned counsel for the assessee that the appeal may kindly be deemed to have been filed on the last date of the payment of the tax. According to him, there was sufficient cause within the meaning of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --------------- S. No. Particulars Amount Adjusted as under Amount ----------------------------------------------------------------------------------- 1. Refund of Jaswant Narinder Singh 302399 Singh Co. A/Y Narula Crushing 1997-98 572250 Co. 24049 Narula Filling Station. 48156 Daljit Singh Bros. (PTK). 100000 Daljit Singh 97646 ----------- 572250 ----------- 2. FDR's of Family 1509810 Narula Crushing Co. 453809 lying seized since D.S. Stone Crushing. 9-10-1997 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was holding the F.D.Rs. of the assessee-group since 1997 and refunds since May, 1999 and at the same time, the assessee also made the request before the Department for adjustment of refunds. In other words, the assessee had tried his level best to adjust the taxes due since May, 1999 because the moneys always remained with the Department and the adjustment could not have been made due to inaction of the Department. 5.1 In Gopal Chand Khandelwal's case, the facts of the case were that the assessee had filed the return on 23-11-1992 declaring an income of Rs. 8,03,980. The Assessing Officer completed the assessment at Rs. 17,71,520 vide his order dated 30-3-1993. Against the said order, the assessee preferred an appeal before the CIT(A). The CIT(A) observed that the assessee has not paid the tax due on the income returned and, therefore, the appeal cannot be admitted as per provisions of section 249(4) of the Act. Therefore, he dismissed the assessee's appeal in limine. When the matter came up for consideration before the Tribunal, the Delhi Bench 'E' of the Income-tax Appellate Tribunal held that when the assessee himself requested for treating the cash seized as the tax paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the default within the meaning of section 249(4). Accordingly, we set-aside the order passed by the CIT(A) and restore the matter back to his file for disposal of appeal afresh on merits." From the above observations of the Tribunal, it is clear that in that case also, the assessee had applied soon after the search for adjusting the seized cash, against his tax liability, the Tribunal held that it could not be said that the tax was not paid on the income returned so as to debar the assessee from filing the appeal as per section 249(4) of the Act. 5.2 At this juncture, we may also refer to the provisions of section 158BC(d) of the Act, which read as under:- "158BC. Where any search has been conducted under section 132 or books of account, other documents or assets are requisitioned under section 132A, in the case of any person, then............. (a) to (c) (d) the assets seized under section 132 or requisitioned under section 132A shall be retained to the extent necessary and the provisions of section 132B shall apply subject to such modifications as may be necessary and the references to "regular assessment" or "reassessment" in section 132B shall be construed as ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view, is not warranted." In our view, there is merit in this contention of the learned counsel for the assessee that in view of the decision of the Madras High Court in the case of K.T. Kunjumon, the Department was under legal obligation to carry out the adjustment as requested by the assessee and non-execution of the request of the assessee cannot be attributed as a default against the assessee under section 249(4) of the Act. In other words, in block proceedings, the assets seized and refunds of the assessee had to be adjusted against the block assessment demands in view of unambiguous provisions of section 158BC(d) read with section 132B of the Income-tax Act, 1961. Thus, in view of the decision of the Delhi Bench 'E' of the Income-tax Appellate Tribunal and the judgment of the Hon'ble Madras High Court in the case of K.T. Kunjumon, the Department ought to have adjusted the assets seized and refunds of the assessee against the block assessment demand. 5.3 In the case of Filmistan Ltd., the Hon'ble Supreme Court held that the memorandum of appeal filed within the prescribed time but tax paid after expiry of limitation the appeal will be a proper appeal, it will be within time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been filed on the day when the tax is paid even though the memorandum of appeal was presented earlier and within the period of limitation. The Hon'ble Supreme Court further observed that the question will then have to be decided whether there was sufficient cause for condonation of delay. In the instant case, admittedly, the assessee has paid the entire due tax before the disposal of the appeal by the CIT(A). At the same time, the CIT(A) has also rejected the application of the assessee filed under section 249(3) of the Act for condonation of delay. As we have already held hereinabove that the Department ought to have adjusted the assets seized/refunds against the block assessment demands. It has also been observed above that the assessee had filed the applications before the Assessing Officer and the CIT(A) requesting therein for making the adjustments. However, the Departmental Authorities did not make any adjustment as requested for by the assessee. It is worth-noticing that a sum of nearly Rs. 30 lacs was lying with the Department as on November, 1999 when the appeal was filed. In the case of Kalipada Ghosh, the Hon'ble Orissa High Court held that the Tribunal was just ..... X X X X Extracts X X X X X X X X Extracts X X X X
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