Madhya Pradesh High Court
Ramesh Prasad Dhahayat vs Commissioner Of Income Tax & Anr. ... on 26 March, 2014
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W.P. No.28906/2003
26/3/2014 :
Shri H. S. Shrivastava, Senior Counsel with Shri S.
K. Jain, for the petitioner.
Shri Sanjay Lal, learned counsel for the
respondents.
Challenge in this petition under Article 226 and 227 of the Constitution is made by the Assessee to orders dated 11.6.2000 and 19.9.2003 passed by the Assessing Officer, the Revisional Authority and under Section 154 of the Income Tax Act.
Late Vishram Dhahayat, maternal grand father of the petitioner was engaged in the business of advancing of loan and pawn of ornaments. A search was conducted by the department in the premises of Late Vishram Dhahayat on 25 th and 26 th of October 1998. In the seizure pawned ornaments with regard to investment an advances amounting to Rs.15,55,150/- were seized along with registers and certain other material. Statements were recorded under Section 132(4) of Shri Vishram Dhahayat and thereafter the said person filed his return of income offering to pay tax of the entire amount of Rs.15,55,150/- after deleting a sum of Rs.1 Lac which was claimed to be an amount available as an earlier capital. With regard to this amount it was explained that earlier capital and investment in the name of his daughter Pushpa Dahayat was included in the seized ornaments and the pawned registers.
-:2:-Assessment proceedings were held and after due assessment, the Assessing Officer disallowed the exemption of capital of Rs.1 Lacs, thereafter added a sum of Rs.2,73,224/- towards accrued interest on unexplained investment and Rs.1,21,824/- towards accrued interest on re-pawned articles and further directed for release of interest as per rule. The copy of the order of assessment is Annexure P/4. Petitioner preferred a revision against the aforesaid and the Revisional Authority considered and decided the revision petition by his order Annexure P/6 on 14.6.2000. The Revisional Authority refused to delete the addition of Rs. 1 Lac and did not accept the contention that it is the initial capital. The Revisional Authority also refused to delete accrued interest on re-pawned articles of Rs.1,28,824/- but allowed the entire claim with regard to deletion of Rs.3,73,224/- being the accrued interest on unexplained investment. However, the Revisional Authority also found that interest has been charged under Section 234B and 234C and no interference into the same is called for. An application under Section 154 was filed, this was also dismissed vide order Annexure P/8 dated 19.9.2003 and therefore, now this petition. It was argued by learned counsel for the petitioner that the assessment of accrued interest on the re-pawned ornaments is an arbitrary and unjustified addition. It is said that the department having accepted that there is no interest on the pawned business on accrual basis, the same is unsustainable. It is further stated that the
-2 -:3:- addition of Rs.1 Lacs towards the capital investment in the name of daughter Pushpa Dahayat has also been disallowed in an illegal manner. Further contending that no interest under Section 234B and 234C could be imposed, the arguments were advanced. In support of the contention various Circulars of the department and judgment of the Supreme Court in the case of Chironjilal Sharma (Huf) Vs. Union of India and others - (2013) 263 CTR (SC) 625 and the judgment of Himachal Pradesh High Court in the case of Commissioner of Income Tax Vs. Ruchira Papers Ltd. - (2013)259 CTR (HP) 153 cited. Shri H. S. Shrivastava, learned Senior Counsel took us through the documents and material available on record and tried to argue that the Revisional Authority has committed various irregularities in the matter of disallowing the claim of the petitioner and adding interest which is unsustainable.
Learned counsel appearing for the Revenue Shri Sanjay Lal supported the submissions and argued that justification given by the Revisional Authority in the order is proper and the same does not call for any interference.
We have heard learned counsel for the parties and perused the record.
As far as addition of Rs.1 Lacs by disallowing the claim for including it in the working initial capital is concerned, it is found by the Revisional Authority that
-3 -:4:- the Assessing Officer has assessed the same based on the investment available and in the absence of any material to show that this was included in the initial capital, deduction was disallowed. This is a reasonable finding based on due appreciation of material and evidence available on record and we see no reason to interfere into the same.
As far as accrued interest on the re-pawned articles are concerned, the claim has been rejected on the ground that re-pawning was done with various money lenders, total 9 in numbers and with regard to one of the money lender Shri Jagdish Prasad Sahu, his premises was also raided and amount recovered from him. Based on the same accrued interest for re-pawning with this money lender has been allowed and for the remaining amount the explanation has not been accepted on the ground that with regard to re-pawned articles there is nothing to show that the same was re- invested by the Assessee. This has also been done based on the material available on record and we see no reason to interfere. As far as imposition of interest under Section 234 B and 234 C is concerned, learned counsel tried to indicate that in the assessment order it is only indicated that interest as per rules be charged. It is said that in the absence of any specific direction for payment of interest, the interest cannot be levyed and in support thereof, the judgment of Himachal Pradesh High Court was proposed into service. In the order passed by
-4 -:5:- the Assessing Officer on 31.3.94 it is indicated that penalty proposing are indicated separately and interest be charged as per rules. The Himachal Pradesh High Court considered the question of charging of interest in a proceeding held on a reference made to it and the question of law formulated for consideration by the Himachal Pradesh High Court reads as under :-
"Whether interest under Section 234B of the Act could be charged in the notice of demand issued under s.156 in the absence of any specific order demanding interest in the assessment or rectification orders?"
This question has been answered by the High Court in para 17 and it is held by the Himachal Pradesh High Court after following certain judgments rendered by the Uttarakhand and Allahabad High Court that payment of interest under Section 234 A, 234B and 234C is a mandatory, the assessing authority while passing the original assessment order or while reassessment or rectification order has to pass orders on payment of interest. It is held that even if in the order it is indicated that interest be paid in accordance with law, without specifying any particular provision, the benefit has to be given to the Revenue and since payment of interest is mandatory, the interest can be recovered. It is held that if the Assessment order is silent about payment of interest and nothing in this regard is indicated, the Revenue cannot claim interest under Section 234A,
-5 -:6:- 234B and 234C. If the case in hand is evaluated in the backdrop of the aforesaid judgment, it is clear that in the assessment order it is clearly held that interest be charged as per rules. That being so, the requirement of law as laid down in the aforesaid judgment having been made, we find no error.
In view of the aforesaid, we are of the considered view that reasonable approach adopted by the Revisional Authority in the matter of dealing with the case does not call for any interference now in this proceedings under Article 226 and 227 of the Consitution.
This petition is therefore, dismissed.
( Rajendra Menon) ( A. K. Sharma )
Judge Judge
mrs.mishra
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