9911796707
TMI Blog2002 (1) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax due 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 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 sec ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 572250 ----------- 2. FDR's of Family 1509810 Narula Crushing Co. 453809 lying seized since D.S. Stone Crushing. 9-10-1997 Co &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; --------- 1509810 --------- 3. Mutual Fund Units 260000 Lovely Stone &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 646824 ----------- ----------------- 2988884 2988884 ----------- ----------------- --------------------------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed was Rs. 4,25,241 while the cash seized from the assessee and ultimately adjusted against his tax liability was Rs. 5,50,000. Therefore on these facts, it cannot be held that the tax was not paid on the income returned so as to debar the assessee from filing of appeal as per section 249(4). If there was delay by the revenue in adjusting the seized amount as 'tax paid' by the assessee, the assessee cannot be blamed for such delay. The assessee had applied soon after the search for adjusting the seized cash against his tax liability. If it was not so adjusted, the assessee cannot be held responsible. 5.1 The ld. DR. has submitted that the cash seized can be adjusted only as per provision of section 132B read with Rule 112C. He submitted that these provisions laid down certain procedures and the tax can be adjusted only when the case of the assessee falls within such parameters. 5.2 We have gone through the provisions of section 132B and Rule 112C. Such provisions empower the revenue to apply the assets seized and retained against the tax liability of the assessee unilaterally. But when the assessee himself requested for treating the cash seized as the "tax paid" by him, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n shall be accompanies by proof of payment of such tax and interest). From the above provisions of section 140A(1), it would be clear that the moment the assessee files a return declaring an income under section 158BC, he becomes liable to pay the tax due thereon and in case of non-payment, he shall be treated as an assessee in default. In the context of sections 158BC(d) and 132B of the Income-tax Act, 1961 the Hon'ble Madras High Court in the case of K.T. Kunjumon has held as under:- "The block assessment, as already held by me, is a special provision which overrides all other provisions of the Act. The intention of Parliament is that block assessment under Chapter XIV-B should proceed in a different channel and once it proceeds in a different track, the liability arising out of the said Chapter has first to be determined and adjusted against the seized assets under section 132B of the Act. No doubt, the Assessing Officer is empowered to recover existing liability from the assets seized, but however, the Assessing Officer would be empowered to adjust existing tax liability against the seized assets only if there is any surplus amount remaining after adjustment of block assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of section 46 unless the tax has been paid.' The controversy between the parties revolves round the words "no appeal shall lie". The contention which was raised before us was that these words mean that there is no right of appeal till the tax is paid, and, therefore, if the tax has not been paid the memorandum of appeal cannot be filed and if filed it is merely a waste paper. In our opinion the meaning of the words "no appeal shall lie" in the proviso is not that no memorandum of appeal can be presented. All that it means is that the appeal will not be held to be properly filed until the tax has been paid. If, for instance the memorandum of appeal is filed on the 20th day, i.e. 10 days before the period of limitation expires and the tax is paid within the rest of the 10 days appeal will be a proper appeal, it will be within time and no question of limitation will arise but if the tax is paid after the period of limitation has expired it will be taken 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 question will then have to be decided whether there was sufficient cause for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, it is an admitted fact that the provisions relating to the block assessment are new one and not well-known to all concerned and in that view of the matter also, the CIT(A) should have admitted the appeal for taking decision on merits. 5.4 In our view, there is merit in the alternative contention of the learned counsel for the assessee that the learned CIT(A) should have condoned the delay in filing the appeal under section 249(3) of the Act. The assessee submitted that from the day one the assessee had requested the Departmental Authorities that whatever tax was due may be realised out of the assets seized and the refunds due to him. As we have already noted above that ultimately the Department made the adjustments in the month of April, 2000. It is clear that the due taxes had already been paid by the assessee before 27-4-2000 on which date the appeal of the assessee was dismissed by the CIT(A) in limine. In our view, there is a merit in the contention of the learned counsel for the assessee that the CIT(A) ought to have condoned the delay in filing the appeal, particularly keeping in view the facts and the circumstances of the present case as well as the ratio laid down by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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