Income Tax Appellate Tribunal - Pune
Satishchand G. Mittal,, Jalgaon vs Income-Tax Officer,, on 26 February, 2019
आयकर अपीऱीय अधिकरण पण
ु े न्यायपीठ "ए" पण
ु े में
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "A", PUNE
सुश्री सुषमा चावऱा, न्याययक सदस्य एवं, श्री डी. करुणाकरा राव, ऱेखा सदस्य के समक्ष
BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM
आयकर अपीऱ सं. / ITA No.2334/PUN/2016
यििाारण वषा / Assessment Year : 2008-09
Shri Satishchand G. Mittal,
Gurukrupa,
Near Onkareshwar Mandir,
Jay Nagar,
Jalgaon - 425002 .... अऩीऱाथी/Appellant
PAN: ABFPA5093H
Vs.
The Income Tax Officer,
Central Circle-2, Nashik .... प्रत्यथी / Respondent
अऩीऱाथी की ओर से / Appellant by : Shri Sanket Joshi
प्रत्यथी की ओर से / Respondent by : Shri Ashok Babu
सन
ु वाई की तारीख / घोषणा की तारीख /
Date of Hearing : 21.02.2019 Date of Pronouncement: 26.02.2019
आदे श / ORDER
PER SUSHMA CHOWLA, JM:
The appeal filed by assessee is against order of CIT(A)-12, Pune, dated 11.07.2016 relating to assessment year 2008-09 against order passed under section 154 of the Income-tax Act, 1961 (in short 'the Act'). ITA No.2334/PUN/2016
2 Shri Satishchand G. Mittal
2. The assessee has raised the following grounds of appeal:-
On facts and in law, 1] The learned CIT(A) erred in confirming the levy of interest u/s 234B and 234C without appreciating that the computation of interest made by the A.O. is not correct.
2] The learned CIT(A) erred in holding that -
a. The cash seized during the course of search action u/s 132 could not be adjusted against the advance tax liability u/s 208 for the year in which search action was conducted and hence, the computation of interest u/s 234B and 234C made by the A.O. was correct.
b. Explanation 2 to section 132B inserted w.e.f. 01.06.2013 which states that the term 'existing liability' used in sub-section (1) to section 132B does not include advance tax payable, is retrospective in nature and hence, seized cash cannot be adjusted against the advance tax liability for A.Y.2008-09.
3] The learned CIT(A) failed to appreciate that -
a. Explanation 2 to section 132B has been inserted prospectively w.e.f. 01.06.2013 and the legislature, in its own wisdom, has not made it applicable retrospectively and hence, there is no reason to hold that the said explanation inserted w.e.f. 01.06.2013 is applicable even to the earlier years.
b. When two contradictory views are possible, the view favourable to the assessee should be adopted in view of the Supreme Court decision in the case of Vegetable Products Ltd. [88 ITR 192] and therefore, the view taken by ITAT, Ahmedabad in the case of Kanishka Prints Pvt. Ltd. [143 ITD 716] should have been followed over the view taken by ITAT, Delhi in the case of Spaze Towers Pvt. Ltd.
3. The only issue raised in the present appeal is against levy of interest under section 234B and 234C of the Act.
4. Briefly, in the facts of the case, search and seizure action had taken place at the residential as well as business premises of assessee and cash was seized during the course of search. The assessee moved an application dated 02.01.2008 that cash seized be adjusted against advance tax liability. Further, in the computation of income filed along with return of income for the year, the ITA No.2334/PUN/2016 3 Shri Satishchand G. Mittal assessee had adjusted cash seized of ₹ 1 crore against advance tax liability. However, the Assessing Officer giving effect to the order of CIT(A) had charged interest under section 234A/234B/234C of the Act without considering seized cash as adjusted against advance tax liability. The Assessing Officer also levied interest under section 220(2) of the Act. The assessee made an application under section 154 of the Act, which was rejected. The assessee thereafter, filed an appeal before the CIT(A), he also rejected the claim of assessee.
5. The assessee is in appeal against the order of CIT(A) before us.
6. The learned Authorized Representative for the assessee pointed out that the issue stands covered by the order of Tribunal in the case of M/s. Happy Home Developers Vs. ACIT in ITA No.1392/PUN/2015, relating to assessment year 2010-11, order dated 29.09.2017.
7. The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below.
8. We have heard the rival contentions and perused the record. The only issue raised in the present appeal is whether the assessee is liable to levy of interest under section 234B and 234C of the Act. During the course of search, cash of ₹ 1 crore was seized. The assessee vide an application dated 02.01.2008 requested the Assessing Officer that the said cash seized may be adjusted against advance tax liability. However, the plea of assessee was ITA No.2334/PUN/2016 4 Shri Satishchand G. Mittal rejected and the assessee was held liable to levy of interest under section 234A/234B/234C of the Act. The CIT(A) has referred to Explanation 2 to section 132B of the Act, which was inserted by the Finance Act, 2013 w.e.f. 01.06.2013 and has held that the said Explanation was to be applied prospectively. As per the said Explanation, it is declared that seized assets could be applied against advance tax liability also as it was applicable against the existing tax liability.
9. The question which arises is whether the said Explanation inserted w.e.f. 01.06.2013 as clarificatory is applicable to earlier years. We find that the Tribunal in the case of M/s. Happy Home Developers Vs. ACIT (supra) on similar issue of applicability of Explanation 2 to section 132B of the Act, which was inserted w.e.f. 01.06.2013 and whether the same is applicable to earlier period, it was held as under:-
"9. We have heard both the parties on the issue relating to inclusion of the advance tax liabilities within the meaning of the „existing liabilities‟ as used in the provision to section 132 B of the Act read with its Explanation2 to said section for the period prior to the amendment. For adjudicating the said issue, we proceed to extract the relevant portion of the said section 132B of the Act and the same reads as under:
"Section 132B . Application of seized or requisitioned assets.
(1) The assets seized under section 132.......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 Gift-
tax 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.
............
............
Explanation 2.-For the removal of doubts, it is hereby declared that the "existing liability" does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII."
ITA No.2334/PUN/2016
5 Shri Satishchand G. Mittal
10. The above Explanation-2 was brought into the statute by the Finance Act, 2013 w.e.f 01.06.2013. Considering the language of the said Explanation-2, the Revenue proceeded to adjust the seized cash against the regular tax demand only and justified their action by describing the amendment as clarificatory one. However, the assessee has taken this issue to the judicial forum which eventually decided issue in favour of the assessee, and the judgment of Punjab & Haryana High Court in the case of Space Towers Private Limited (supra) has brought requisite clarity on the issue. Therefore, for the period prior to the amendment, the „existing liability‟ includes the "advance tax liability" in accordance with the provisions of part C of chapter XVII of the Act.
11. Subsequently, accepting the above judgment, the CBDT issued direction to Field Officers by way Circular No.20/2017 dated 12/06/2017. The contents of para 3 and 4 of the circular are relevant and for the sake completeness of this order, we proceed to extract the said paragraphs here as under :
"3. Several Courts have held that the insertion of Explanation 2 to section 132B of the Act, is prospective in nature and not applicable to cases prior to 01.06.2013. The SLPs filed by the Department against the judgment of the Hon'ble Punjab and Haryana High Court in the case of Cosmos Builders and Promoters Ltd. and the Hon'ble Allahabad High Court in the case of Sunil Chandra Gupta, have been dismissed. Subsequently, the CBDT has also accepted the judgment of the Hon'ble Punjab & Haryana High Court in the case of Spaze Towers Pvt. Ltd. dated 17.11.2016, wherein it was held that the Explanation 2 to Section 132B of the Act is prospective in nature.
4. Accordingly, it has now been settled that insertion of Explanation 2 to Section 132B of the Act shall have a prospective application and so, appeals may not be filed by the Department on this issue for the cases prior to 01.06.2013 and those already filed may be withdrawn/ not pressed upon."
12. Therefore, the issue is now settled and the expression „any existing liabilities‟ does include the advance tax liabilities prior to 01.06.2013. The case of the assessee falls prior to the said date of 01.06.2013. The cash was seized in the search initiated on 06.01.2010. Assessee requested for adjustment of the same towards the advance tax liabilities vide his letter dated 11.03.2010. Considering the above legal position in the matter and facts of the present case, we are of the opinion, the Ground Nos. 1 to 3 raised by the assessee have to be decided in his favour and against the Revenue. Considering the relief, the adjudication of Ground 4 which was raised without prejudice, becomes an academic exercise. Therefore, the same is dismissed as academic."
10. The issue raised in the present appeal is squarely covered by the order of Tribunal in M/s. Happy Home Developers Vs. ACIT (supra) and following the same parity of reasoning, we direct the Assessing Officer to allow adjustment of seized cash of ₹ 1 crore against advance tax liability, as requested by the ITA No.2334/PUN/2016 6 Shri Satishchand G. Mittal assessee vide application dated 02.01.2008. Consequently, no interest is to be charged under section 234B and 234C of the Act. Further interest levied under section 220(2) of the Act is consequential and the same shall also stands deleted. The grounds of appeal raised by assessee are thus, allowed.
11. In the result, the appeal of assessee is allowed.
Order pronounced on this 26th day of February, 2019.
Sd/- Sd/-
(D.KARUNAKARA RAO) (SUSHMA CHOWLA)
ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER
ऩुणे / Pune; ददनाांक Dated : 26th February, 2019.
GCVSR
आदे श की प्रयिलऱपप अग्रेपषि/Copy of the Order is forwarded to :
1. अऩीऱाथी / The Appellant;
2. प्रत्यथी / The Respondent;
3. आयकर आयुक्त(अऩीऱ) / The CIT(A)-12, Pune;
4. The Pr.CIT, Central, Nagpur;
5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, ऩुणे "ए" / DR 'A', ITAT, Pune;
6. गार्ड पाईऱ / Guard file.
ु ार/ BY ORDER, आदे शािस सत्यावऩत प्रतत //True Copy// वररष्ठ तनजी सधिव / Sr. Private Secretary आयकर अऩीऱीय अधधकरण ,ऩुणे / ITAT, Pune