Income Tax Appellate Tribunal - Kolkata
Shyam Sunder Beriwala, Howrah vs Dcit, Cc-Vii, Kolkata, Kolkata on 9 November, 2016
1
ITA Nos. 151-152/Kol/2014
Shyam Sundar Beriwala., AY 2004-05 & 2005-06
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH: KOLKATA
[Before Shri Waseem Ahmed, AM & Shri K. Narasimha Chary, JM]
I.T.A Nos. 151 & 152/Kol/2014
Assessment Years: 2004-05 & 2005-06
Shyam Sunder Beriwala Vs. Deputy Commissioner of Income-tax,
(PAN: AEGPB4245Q) Central Circle-VII, Kolkata.
(Appellant) (Respondent)
Date of hearing: 25.10.2016
Date of pronouncement: 09.11.2016
For the Appellant: Shri Amit Kumar, AR
For the Respondent: Shri Niraj Kumar, CIT, DR
ORDER
Per Shri K. Narasimha Chary, JM:
Both these appeals by assessee are arising out of separate orders of CIT(A)-1, Kolkata vide appeal No. 177/CC-VII/CIT(A)C-1/13-14 and 74/CC-VII/CIT(A)C-1/11-12 both dated 22.11.2013. Assessments were framed by DCIT, Central Circle-VII, Kolkata u/s. 153/143(3) of the Income-tax Act, 1961 (hereinafter referred as the "Act") for AYs 2004-05 and 2005-06 vide his separate orders both dated 29.12.2006. Since facts are common and grounds are mostly identical, we dispose of both these appeals by this consolidated order for the sake of convenience.
2. Brief facts of the case are that on 27.1.2004, there were search and seizure operations conducted against the assessee by the Income tax department. In such search and seizure operations, an amount of Rs.25,30,000/- was seized from various premises. Assessment orders u/s 153A/143(3) of the Act were passed for the Assessment Years 2004-05 was passed on 29.12.2006 determining the tax income of Rs.71,40,350/- inter alia not allowing credit of seized cash of Rs.8,30,000/- requested by the assessee to be adjusted against his tax liability under section 140A of the Act by way of letters dated 23.03.2005 and 30.3.2005. Order was rectified on 29.7.2008 u/s 154 of the Act showing refund of Rs.6,93,142/- after allowing the credit of seized cash to a tune of Rs. 18,56,759/- w.e.f 3.4.2007. Since the adjustment of cash was done w.e.f 3.4.2007 and not from the date of seizure, there arose interest liability to a tune of Rs. 8,08,566/- under section 234B. Request for rectification was rejected.
2ITA Nos. 151-152/Kol/2014 Shyam Sundar Beriwala., AY 2004-05 & 2005-06
3. So also for the Assessment Year 2005-06, in the return of income filed on 25.7.2006 with the letter of request dated 17.7.2006 assessee made request for adjustment of the seized amount against the advance tax, but without giving credit to the seized amount, assessment was complete on 29.12.2006. However, Assessment Officer adjusted the seized cash for the Assessment Year 2004-05 to an extent of Rs.18,56,750/- and Rs.3,58,264/- for the Assessment Year 2005-06 as against the demand of the assessee to adjust Rs.8,30,000/- for the Assessment Year 2004-05 and Rs.17,00,000/- for the Assessment Year 2005-06.
4. In this factual situation the AO added interest u/s. 234B and 220(2) of the Act for both the years. Challenging the action of the AO in adding the interest u/s. 234B and 220(2) of the Act without giving proper credit of the seized cash, the assessee preferred appeals before the Ld. CIT(A). Ld. CIT(A) by way of impugned order turned down the contention of the assessee on the ground that in view of the amendment in Section 132B of the Act, which according to him applies to all the pending proceedings also, upheld the order of the AO and dismissed the appeals of the assessee. Challenging the same, the assessee came in appeals before us on the following grounds, which are reproduced from the appeal for AY 2004-05:
"1. That the Ld. CIT(A) was wrong in confirming interest charged u/s. 234B of the Income Tax Act, 1961 without adjusting the seized cash with the tax liability of the assessee on his returned income. Such charging of interest by the AO & confirmed by the Ld. CIT(A) is wrong & need to be deleted.
2. That the Ld. CIT(A) was wrong in confirming the interest charged u/s. 220(2) of the Income Tax Act, 1961. The interest liability arose due to non-adjustment of seized cash by the Department. Hence, charging interest u/s. 220(2) of the Act, without adjusting the seized cash with the tax liability of the assessee on his returned income, is wrong and need be deleted."
5. At the time of hearing, Ld. AR argued that when the seized amount is very much available in the hands of the department and when the assessee filed letters before the AO at the earliest possible time after filing of the return, the AO is not justified in ignoring the request of the assessee and to adjust the tax payable out of the cash seized only from 3.4.2007 and not from the date of seizure and to make additions. He vehemently disputed the addition u/s. 234B and 220(2) of the Act. He prayed to quash the orders of the authorities below in this regard. He placed reliance on the decision of Hon'ble jurisdictional High court in CIT Vs. M/s. BLB Securities Pvt. Ltd. ITAT No. 274 of 2012 in GA No. 3245 of 2012 dated 09.01.2013, CIT Vs. Amit Sersaria, ITA 360 of 2009 dated 23.02.2015 and a 3 ITA Nos. 151-152/Kol/2014 Shyam Sundar Beriwala., AY 2004-05 & 2005-06 decision of Coordinate benchs of Tribunal in IT(SS)A No.01/Kol/2012, ACIT Vs. Narendra N. Thacker dated 28.09.2015, ITA No 2698(AHD) of 2011 ACIT vs M/s Kanishka Printers (P) Ltd dated 21.6.2013, ITA 936/Chd/2013 ACIT Vs. Sanjeev Kumar Goyal dated 27.3.2015, ITA 4238 & 4239/Mum/2007, CIT Vs. Ashok Kumar (2012) 20 taxman.com 432 (Punj & Har), DCIT Vs. Sitaram Agarwal (HUF), ITA No. 101/Kol/2007 dated 20.11.2007, ACIT Vs. Puran Mal Agarwal, ITA No. 114/Kol/2008 dated 29.09.2008, CIT Vs. Kesr Kiman Karyalaya, ITA No. 11 of 2003 (2005) 278 ITR 596 (Del), ACIT Vs. Satya Prakash Sharma, ITA No. 1735/Del/2008 dated 13.02.2009 and DCIT Vs. Kali Commodities Pvt. Ltd., ITA No. 131/Kol/2014 dated 23.09.2016.
6. On the other hand, Ld. DR vehemently opposed these appeals on the ground that under the Explanation u/s. 132B of the Act existing liability does not include any future liability at all, as such, the authorities below are justified in not considering the request of the assessee for adjustment of seized amount against adjustment of tax liability of the assessee.
7. Basing on the above factual matrix and contentions of the rival parties, the issue that arises for our consideration is whether the authorities below are justified in disallowing the adjustment of seized cash against the self assessment tax liability?
Issue
8. Facts are admitted. A total cash of Rs.25,30,000/- was seized on 27.1.2004. Such cash was very much available in the hands of the department as on the date of passing the assessment orders in respect of the AYs 2004-05 and 2005-06. There is no denial of the contention that the assessee filed letters requesting the AO to adjust the seized cash against the tax liability of the assessee for AYs 2004-05 and 2005-06. However, such request to consider the seized cash against the tax liability of the assessee from the date of seizure was not considered by the Assessing Officer, and the Assessing Officer considered the same with effect from 3.4.2007, whereby interest liability to a tune of Rs.18,56,759/- was resulted as against Rs.8,30,000/- sought to be adjusted by assessee. This has further cascaded into the Assessment Year 2005-06 inasmuch the Assessing Officer adjusted only Rs.3,58,264/- as against Rs.17,00,000/- sought to be adjusted by the assessee. Ld. CIT(A) referred to 4 ITA Nos. 151-152/Kol/2014 Shyam Sundar Beriwala., AY 2004-05 & 2005-06 Explanation (2) inserted in section 132B of the Act by the Finance Act, 2013 which says "for removal of doubt, it is hereby declared that the 'existing liability' does not include advance tax payable in accordance with the provisions of Part-C of the Chapter-XVII" and held that as per such explanation, the seized cash lying with the department cannot be adjusted against the advance tax. On this premise, the Ld. CIT(A) proceeded to hold that the amendment in section 132B of the Act is clarificatory in nature and, therefore, applicable to all the pending proceedings and confirmed the order of the AO.
9. Now the question is the applicability of section 132B of the Act in the facts and circumstances of the case on hand to sustain the addition of interest u/s. 234B and 220(2) of the Act. In the case of M/s. BLB Securities Pvt. Ltd., supra the Hon'ble jurisdictional High Court has held as under:
"Mrs. Ghutghutia submitted that under section 132B(i) of the Income Tax Act, 1961, the seized cash could be adjusted against an existing liability and could not have been adjusted against a liability which arose subsequent thereto.
We are unable to accept this submission. If the seized cash can be adjusted against an existing liability, there is no reason why the seized cash cannot be adjusted against a liability which arose in future because in that case the seized cash would amount to some sort of advance payment. We are as such unable to find any merit in the contention of Mrs. Ghutgutia."
10. In the case of CIT Vs. Amit Sersaria, supra, the question arose was whether the ITAT was erred in law as well as in fact in upholding the order of CIT(A) deleting the interest amount charged u/s. 234B of the Act? The Hon'ble High Court looked into the Notification bearing F. No. 400/234/95-(IT(B), dated 23.05.1996 and answered the question in the negative and in favour of the assessee.
11. In the case of Narendra N. Thacker, supra for AY 2006-07 the Coordinate Bench of this Tribunal while comprehensively dealing with this matter, vide para no. 7 has observed as under:
"..... The provisions of section 132B of the Act makes it clear that the terms 'existing liability' does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII. But this amendment was brought in the statute by Finance Act 2013 with effect from 1.6.2013 only. Hence it can be safely concluded that what is precluded in the statute is adjustment of seized cash towards advance tax liability only and not self assessment tax or regular tax and that too only with effect from 1.6.2013. We hold that the action of the assessee in seeking to adjust the seized cash with self assessment tax payable along with the return of income is in order and in accordance with section 132B of the Act as admittedly self assessment tax payable becomes 'existing liability' on the part of the assessee to settle........"5
ITA Nos. 151-152/Kol/2014 Shyam Sundar Beriwala., AY 2004-05 & 2005-06 On the aspect of the operability of the amendment brought in section 132B of the Act, whether retrospective or prospective, the observations of the Tribunal in the above case are as under:
"We find that this is a substantive law and not procedural law and is a substantive levy on the part of the government on the assessee and hence could be held to be prospective in operation only. Reliance is placed on the decision of the apex court in the case of CWT vs Sharvan Kumar Swarup and Sons reported in 210 1TR 886 (SC), wherein it was held that :-
"Substantive law is concerned with the ends which the administration of justice seeks; procedural law deals with the means and instruments by which those ends are to be attained. The latter regulates the conduct and relations of courts and litigants in respect of the litigation itself; the former determines their conduct and relations in respect of the matters litigated.
What facts constitute a wrong is determined by the substantive law; what facts constitute proof of a wrong is a question of procedure.
So far as the administration of justice is concerned with the application of remedies to violated rights, we may say that the substantive law defines the remedy and the right, while the law of procedure defines the modes and conditions of the application of the one to the other. "
It is also pertinent to look into the larger bench decision of the apex court rendered in the case of CIT vs Vatika Township P Ltd reported in 367 ITR 466 (SC), wherein their Lordships while deciding the issue of applicability of levy of surcharge u/s 113 of the Act brought in the statute with effect from 1.6.2002 is not to be construed as retrospective in operation, had held as follows:-
"We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India v. Indian Tobacco Association, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective ill nature, was applied in the case of Vijay v. State of Maharashtra. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here.
In such cases, retrospectively is attached to benefit the person in contradistinction to the provision imposing some burden or liability where the 'presumption attaches towards prospectivity. In the instant case, the proviso added to section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which is onerous to the assessee. Therefore, in a case like this, we have to proceed with the normal rule of presumption against retrospective operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary and distinct implication. Dogmatically framed, the rule is no more than a presumption, and thus could be displaced by out weighing factors. "6
ITA Nos. 151-152/Kol/2014 Shyam Sundar Beriwala., AY 2004-05 & 2005-06 We find that the decision of the principle laid down by the larger bench of the apex court in the case of CIT vs Vatika Township P Ltd in 367 ITR 466 (SC) would squarely apply to the applicability of the amendment brought in section 132B with effect from 1.6.2013 and accordingly we hold that the amendment brought in section 132B would be construed prospective only as it is a provision which is onerous to the assessee."
14. Amendment of section 132B of the Act affects rights, liabilities and disabilities of the assessees because of substantive levy on the part of the government and hence, they cannot be stated to be the procedural law in essence it is substantive in nature. In view of the judgment of the Hon'ble Apex Court in the case of CIT Vs. Vatika Township P. Ltd. reported in 367 ITR 466 (SC), we are inclined to hold that the amendment brought in section 132B of the Act w.e.f. 01.06.2013 is only prospective in nature and it cannot be applied to the assessment years earlier thereto.
15. It is the argument of the Ld. AR that the binding decisions of the jurisdictional High Court in M/s. BLB Securities Pvt. Ltd., supra and Amit Sersaria, supra, the amendment brought in section 132B of the Act w.e.f. 01.06.2013 may be held to be prospective in nature and it cannot be applied to the assessment years earlier thereto. We find strength in the argument of the Ld. Counsel and are inclined to follow the decisions of, the decision of Hon'ble jurisdictional High court wherein Their Lordship held that if the seized cash can be adjusted against the existing liability the same can be adjusted against the liability which arose in future also because in that case the seized cash would amount to some sort of advance payment.
16. Decisions of Hon'ble jurisdictional High Court in M/s. BLB Securities Pvt. Ltd. and Amit Sersaria and the decisions of the Tribunal in the case of Narendra N. Thacker, supra, etc., are applicable to the facts and the decisions of Hon'ble jurisdictional High Court are binding on this Tribunal. Respectfully following the same we hold that the action of the authorities below in not adjusting the seized cash towards the tax liability of the assessee for Assessment Year 2004-05 from the date of the seizure, and the balance amount for the Assessment Year 2005-06 and charging of interest u/s. 234B and 220(2) of the Act for non- payment or short payment of advance tax are bad in law. We consequently hold that no interest u/s. 234B and 220(2) of the Act shall be charged by the AO from the date of seizure 7 ITA Nos. 151-152/Kol/2014 Shyam Sundar Beriwala., AY 2004-05 & 2005-06 of the cash till the date of completion of assessment in respect of AYs. 2004-05 and 2005-
06. We answer the point accordingly in favour of the assessee and allow these appeals of the assessee.
17. In the result, both the appeals of assessee are allowed.
Order is pronounced in the open court on 09.11.2016
Sd/- Sd/-
(Waseem Ahmed) (K. Narasimha Chary)
Accountant Member Judicial Member
Dated :9th November, 2016
Jd.(Sr.P.S.)
Copy of the order forwarded to:
1. APPELLANT - Shri Shyam Sunder Beriwala, 220/3/1, G. T. Road, Ghusuri, Howrah-711107.
2 Respondent -DCIT, Central Circle-V11, Kolkata
3. The CIT(A), Kolkata
4. CIT , Kolkata
5. DR, Kolkata Benches, Kolkata /True Copy, By order, Asstt. Registrar.