Income Tax Appellate Tribunal - Panji
Assistant Commissioner Of ... vs M/S. Pratibha Constructions Engineers ... on 13 September, 2017
आयकर अपील
य अ धकरण] पण
ु े यायपीठ "ए" पण
ु े म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "A", PUNE
BEFORE MS. SUSHMA CHOWLA, JM AND
SHRI ANIL CHATURVEDI, AM
आयकर अपील सं
. / ITA No.2269/PUN/2014
नधा रण वष / Assessment Year : 2006-07
Assistant Commissioner of Income Tax, .......... अपीलाथ /
(Central) Circle, Kolhapur,
Appellant
C.S.No.624/3, Shriram Heights, 1st Floor,
Shahupuri 1st Lane, Kolhapur.
बनाम v/s
M/s. Pratibha Constructions Engineers
And Contractors (India) Pvt. Ltd.,
223/5, Jadhav House, E Ward, .......... यथ /
Tarabai Park, Kolhapur.
Respondent
PAN No.AACCP6886E
Assessee by : Shri Nikhil Pathak &
Shri N.J. Jadhav.
Revenue by : Shri Mukesh Jha, JCIT.
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 10.08.2017 Date of Pronouncement: 13.09.2017
आदे श / ORDER
PER ANIL CHATURVEDI, AM :
This appeal filed by the Revenue is emanating out of the order of Commissioner of Income Tax (A) - Kolhapur dt.19.09.2014 for the assessment year 2006-07.
2. The relevant facts as culled out from the material on record are as under :-
2Assessee is a company stated to be carrying on the business of civil construction and contractors. A search action u/s 132 of the Act was carried in Prathiba Group of cases on 15.06.2010. At the time of search, cash of Rs.2,42,85,000/- was found at the residence of the Directors of the assessee and the same was seized by the Department. In pursuance to the notice u/s 153A of the Act, assessee filed return of income on 07.07.2011 declaring total income of Rs.9,52,41,801/- which included additional income of Rs.5,91,86,178/- offered at the time of search. While filing the return on 07.07.2011 u/s 153A of the Act, assessee considered the seized cash as self-
assessment tax paid on 15.06.2010. Assessee also gave letter in this regard to the AO on 28.02.2012. AO appropriated Rs.1,99,22,068/- towards self-assessment tax on 28.03.2013 and levied interest u/s 234B of the Act on Rs.1,99,22,068/- upto 28.03.2013 by considering the date of appropriation (i.e. 28.03.2013) as date of payment. The assessee's contention of considering the cash paid towards self-assessment tax on the date of seizure of cash i.e., 15.06.2010 was not accepted by AO.
Aggrieved by the order of AO, assessee carried the matter before Ld. CIT(A), who decided the issue in favour of the assessee by holding as under :
"7. Ground no.3 relates to charging of interest under section 234B from date of seizure of cash of Rs.1,99,22,068/- upto the date appropriation of cash. Facts of the case are that in the course of search proceedings cash of Rs.2,42,85,000/- was seized. While filling return on 07/07/2011 under section 153A in respect of this assessment year, assessee considered the seized cash as self-assessment tax paid on 15/06/2010. Assessee gave letter in this regard to the assessing officer on 28/02/2012. The assessing officer appropriated Rs.1,99,22,068/- towards self- assessment tax on 28/03/2013 and in respect of demand Rs.1,82,102/- on 28/03/2014. Therefore, interest under section 234B was levied on Rs.1,99,22,068/- upto 28/03/2013. In effect 3 the assessing officer has considered date of appropriation of cash on 28/03/2013 as date of payment whereas the date of seizure i.e. 15/06/2010 should be considered as date of payment while calculating interest under section 234B. The assessee relied on the case of Commissioner of Income Tax V/s R V Raibagy & Co. (Kar) ITR No.3 to 10 of 2003 dated 29/03/2005 as per which the seized cash has to be considered as self-assessment tax. In the case of M J Ramani V/s DCIT ITA No.383 and 384 of 2012 it was decided that date of return filed showing undisclosed income is considered as date of payment of self-assessment tax in respect of seized cash. In the case of Shriram S Sarada V/s DCIT ITA No.1172/RJT/2010 (Rajkot) it was held that date of seizure of cash is to be considered as date of payment of advance tax while calculating interest under sections 234B and 234C.
8. Deciding in the line of findings given in the above cases, I find that at the time of filing of return on 07/07/2011 the assessee's cash Rs.2,42,85,000/- was already available with the Department. Therefore, the assessing officer is directed to compute the interest under section 234B taking into account the fact that self-assessment tax was paid on 07/07/2011. Ground taken by the appellant is hereby allowed."
3. Aggrieved by the order of Ld. CIT(A), Revenue is now in appeal before us and has raised the following grounds :
1. On the facts and in the circumstances of the case, the Ld.CIT(A) was not justified in allowing seized cash amounting to Rs.2,42,85,000/- as Self Assessment Tax paid as on 07/07/2011 i.e. the date of filling of return, due to which interest u/s 234B being reduced from Rs.85,70,832/- to Rs.57,13,939/- after giving credit to the self assessment tax aid on the seized cash.
2. On the facts and in the circumstances of the case, whether the Ld.CIT(A) has right in not appreciating the fact that as per provisions of section 132B of the I.T. Act, the seized asset cannot be utilized the payment of Self Assessment Tax payable as the same is not existing liability.
3. The order of Ld.CIT(A) may be vacated and that of the Assessing Officer be restored.
4. Before us, Ld.D.R. supported the order of AO. He further submitted that unless an assessment has been framed there would not be determination of any liability for the relevant year and therefore the assets seized could not be applied for adjustment against advance tax liability. He further submitted that the expression "existing liability" as used in Sec.132(5)(iii) of 4 the Act would refer to liability which was crystallized or determined under the provisions of the Act. He placed reliance on the decision of Hon'ble Delhi High Court in the case of CIT Vs. Sri Chand Gupta in ITA No.18/2002 order dt.31.07.2015. He also placed on record the copy of the aforesaid order. Ld.A.R. on the other hand, reiterated the submissions made before AO and Ld.CIT(A) and further submitted that pursuant to the notice u/s 153A of the Act assessee filed its return of income on 07.07.2011 and in the computation of income it had shown the seized cash towards the payment of income tax liability. He further submitted that assessee vide letter dt.28.02.2012 addressed to the AO had requested for appropriation of cash towards the tax liability. He further placed reliance on the decision of Hon'ble Bombay High Court in the case of CIT Vs. Mr. Jafferali Kasamlai Rattonsey in ITA No.2059 of 2011 dt.18.02.2013 and the decision of Pune Tribunal in the case of ITA No.1039/PUN/2015 dt.31.05.2017. He further submitted that CBDT vide recent circular No.20/2017 dt.12.06.2017 has also clarified that explanation 2 of Sec.132B of the Act is prospective in nature. He thus supported the order of Ld.CIT(A).
5. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to adjustment of seized cash against the tax liability. It is an undisputed fact that cash of Rs.2,42,85,000/- was seized at the time of search on 15.06.2010 and in the return of income filed by the assessee on 07.07.2011 u/s 153A, assessee had considered the seized cash towards the payment of tax liability. Assessee 5 vide letter dt.28.02.2012 submitted on 28.03.2012 had requested the Commissioner of Appeals to appropriate the cash seized towards income tax liability. It is Revenue's case that the seized cash cannot be adjusted against the tax liability because the liability crystallizes only after the assessment is finalized. We find that identical issue arose before the Co-ordinate Bench of the Tribunal in the case of Jivaram Magaji Chaudhary in ITA No.1039/PUN/2015 order dt.31.05.2017 wherein the Co-ordinate Bench of the Tribunal after considering the decisions of Ahemdabad Tribunal in the case of Kanishka Prints Pvt. Ltd., Vs. ACIT reported in (2014) 159 TTJ 629 (Ahd) and Punjab and Haryana High Court in the case of Spaze Towers Private Limited Vs. DCIT, decided the issue in favour of assessee by holding as under :
"8. We have heard the rival submissions and perused the material on record. The issue in the present case is about the adjustment of cash seized at the time of search against the advance tax liability. It is an undisputed fact that cash of Rs.2.55 crore was seized on 06/08/2010. It is also an undisputed fact that Assessee vide letter dtd 28/09/2010, addressed to CIT(C) had requested for adjusting of seized cash against the advance tax liability for AY 2011-12. It is Revenue's case that the seized cash cannot be adjusted against advance tax liability in view of the amendment made to Section 132B by insertion of Explanation 2 by Finance Act 2013, wherein it is stated that "existing liability"
does not include advance tax payable. On the issue as to whether the insertion of Explanation 2 to s.132B by Finance Act 2013, is prospective or retrospective, we find that the Co-ordinate Bench of Ahmedabad Tribunal in the case of Kanishka Prints(supra) has observed the amendment made of s.132B by insertion of Explanation 2 is prospective and is applicable from 1st June 2013. The relevant observation of the Tribunal is as under:-
"11. We have heard that the rival submissions and perused the material on record. It is an undisputed fact that during the course of search at the residence of directors on 8.2.2007 and locker on 7.3.2007 aggregate cash of Rs.43 lacs was seized. It is also an undisputed fact that Assessee vide his letter dated 13.3.2007 submitted that out of the cash seized, Rs 10 lacs be treated towards payment of advance tax in the case of assessee and similarly balance of Rs. 33 lacs be treated towards payment of advance tax in case of family members/group 6 companies. It is also a fact that vide aforesaid letter, the Assessee had requested that cash of Rs 8 lacs be considered as advance tax in the case of Shreeji Prints P. Ltd. The co-ordinate Bench of Tribunal in the case of Shreeji Prints (ITA No 359/Ahd/2012 - order dated 20.4.2012) decided in favour of Assessee by holding as under:
It is evident from a bare reading of the aforesaid provisions that the existing liability under the Income-tax can be discharged from the assets or money seized. In the present case, the search operation was conducted on 22-9-2005 and the assessee filed return on 31-5-2006 declaring the seized money as income. In our opinion, if the assessee has declared income, during the year under consideration in that eventuality he is liable to pay advance tax as per law therefore the A.O. is required to find out whether such liability was existing on the date of seizure. If such liability is existing then he is empowered to apply/adjust the money seized in discharge of the existing liability even without any written representation from the assessee. Now coming to the fact of the present case, it is not disputed that the money seized from the premises of Shri Lalit Patel and same was subsequently declared in the return of income filed on 31-5-2006. Hence, it can very well be inferred from the return so filed that the respondent/assessee was required to pay advance tax on such income as mandated u/s.208 of the I.T.Act. Therefore, in view of the fact that there is no ambiguity in the provision so far application/adjustment of the seized money is concerned. Further, the judgments as relied upon by the Ld. D.R. would not apply on the facts and circumstances of the present case since this is not a case where application u/s.132(5) is made. Moreover, Section 132(5) is no more on statue book, even otherwise there is divergence in opinion between the Hon'ble High Court of Madhya Pradesh and Hon'ble Delhi High Court as fairly pointed by the Ld.D.R. The order of the ITAT Delhi Bench in ITA No.1151/Del/2008 as relied by the Ld. D.R. is on different set of facts therefore, is not applicable on the facts of the present case. The issue whether the seized money should be applied towards advance tax liability of assessee and credit should be given credit there-from the date of seizure of money has been decided in favour of the assessee by the decision of ITAT Rajkot Bench in ITA No. 172/RJT/2010 in the case of Shri Ram S. Sarada V. DCIT and the decision of ITAT Mumbai Bench in the case of Sudhakar M. Shetty v. ACIT in ITA No.4238 & 4239/MUM/2007. Respectfully following the ratio laid therein we do not find any infirmity into the impugned order."
12. Before us, Ld. D.R. has relied on the amendment made to s. 132A vide Finance Bill of 2013, We find that the amendment has been made by insertion of Explanation and the Explanation has been made applicable with effect from 1st June, 2013,. For ready reference, the amendment made by Finance Bill 2013 and the memorandum is reproduced hereunder:-
713. The amendment made by Finance Bill 2013 reads asunder:- Amendment of section 132b.
34. In section 132B of the Income-tax Act, the Explanation shall be numbered as explanation 1 thereof and after explanation 1 as so numbered the following explanation shall be inserted with effect from the 1st day of June, 2013, (emphasis supplied) namely:-
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 Par C of Chapter XVII."
The explanatory memorandum to the Finance Bill reads as under:-
The existing provisions contained in section 132B of the Income-tax Act, inter alia, provide that seized assets may be adjusted against any existing liability under the Income Tax Act. Wealth tax Act, the Expenditure-tax Act, the Gift- tax Act and the Interest tax Act and the amount of liability determined on completion of assessments pursuant to search, including penalty levied or interest payable and in respect of which such person is in default or deemed to be in default.
Various courts have taken a view that the term "existing liability" includes advance tax liability of the assessee, which is not in consonance with the intention of the legislature. The legislative intent behind this provision is to ensure the recovery of outstanding tax/interest/penalty and also to provide for recovery of taxes/ interest /penalty, which may arise subsequent to the assessment pursuant to search.
Accordingly, it is proposed to amend the aforesaid section so as to clarify that the existing liability does not include advance tax payable in accordance with the provisions of Part C of Chapter XVII of the Act.
This amendment will take effect from 1st June, 2013.
(emphasis supplied)
14. In Taxmann's publication "Interpretation of Statutes"
2nd Edition by Shri D.P. Mittal at page 807 it has been stated as under:- "The effect to be given to an explanatory amendment depends upon several factors, including its language. When the legislature has made the explanation operative prospectively by words expressed therein, its operation shall have to be confined to the future date. The same reasoning governs the case when Parliament limits the retrospectivity of the Explanation with effect from a particular date. In such a situation, giving future respectivity to the Explanation would be hijacking the intention of the Legislature into an impermissible area-CIT vs. Rajasthan Mercantile Co. Ltd. (1995) 211ITR 400 (Delhi). Thus, there is no doubt that ordinarily, a statue, and particularly when the same has been made applicable 8 with effect from a particular date, should be construed prospectively and not retrospectively."
15. Thus considering the totality of the aforesaid, interpretation of applicability of explanation, and amendment made by Finance Bill 2013, facts and respectfully following the decision of the co-ordinate Bench, we are of the view that the amended Explanation cannot be applied in present case. We therefore allow the appeal of the Assessee and direct the AO to give credit of Rs 10 lacs as advance tax. Thus the appeal of the Assessee is allowed."
9. We further find that, Hon'ble Punjab & Haryana High Court in the case of Spaze Towers (supra) has also held that the amendment made by insertion of Explanation 2 to section 132B is prospective. The relevant substantial question before Hon'ble High Court & its observations are reproduced herewith for ready reference:
"II. Whether under the facts & circumstances of the case, the Tribunal order is unsustainable, as Explanation 2 to Section 132B of the Income Tax Act, 1961 inserted by the Finance Act, 2013 w.e.f. 01.06.20103 is 'prospective' in nature?
III. Whether under the facts & circumstances of the case, Explanation 2 to Section 132B of the Income Tax Act, 1961, though inserted by the Finance Act, 2013 is 'prospective' in nature, pursuant to the judgment of this Hon'ble Court in the case of CIT vs Sh. Sandeep Jain & others in ITA 261 of 2014, CIT (Central) Ludhiana vs. Cosmos Builders & Promoters Ltd., in ITA No.425 of 2014?"
3. The appeal is pressed only in respect of these questions of law and not in respect of the questions of law raised in the original appeal.
4. The appeal is admitted on the above questions of law. The judgement of a Divison Bench of this Court dated 29.09.2014 in ITA-261-2014 titled as Commissioner of Income Tax (Central), Ludhiana Vs Sh. Sandeep Jain and others covers the case in favour of the assessee. It was held that Explanation 2 to Section 132B of the Income Tax Act, 1961 is prospective in nature w.e.f. 01.06.2013. The present appeal is in respect of the assessment year 2008- 2009. In view of the said judgment, Explanation 2 would not be applicable to the assessee's case. This judgment was followed by another judgment of a Divison Bench of this Court dated 14.07.2015 to which one of us (S.J. Vazifdar, CJ) was a party titled as Commissioner of Income Tax (Central), Ludhiana Vs M/s Cosmos Builders and Promoter Ltd. By an order dated 06.05.2016, the Petition 9 for Special Leave to Appeal against the judgment filed by the department was dismissed by the Supreme Court.
5. We are bound by the above judgment. In fact, in M/s Cosmos Builders and Promoters Ltd. case, the judgment in Sh.Sandeep Jain and others was followed. We follow the same in this appeal also. As we are bound by that judgment, we have not considered Mr. Sethi's argument on behalf of the respondent that the judgment does not lay down the correct law. He also relied upon the memorandum explaining the Finance Bill to contend that Explanation 2 to Section 132B is retrospective.
6. In these circumstances, the questions of law are answered in favour of the appellant/assessee. It is admitted that the order of the Tribunal is liable to be set aside and is accordingly set aside."
10. Before us, Revenue has not placed any contrary binding decision in its support nor has placed any material to demonstrate that against the decision of Ahmedabad Tribunal in the case of Kanishka Prints(supra), Revenue has preferred any appeal before High Court or the aforesaid decision of Ahmedabad Tribunal has been reversed, set aside or overruled in any manner by the higher court. In view of the aforesaid facts, we are of the view that, that cash seized at the time of search be adjusted against the advance tax liability and as per ld. Authorised Representative submission the credit for it be given from the date of its request made to CIT(C) for adjustment of cash. We thus direct accordingly. In the result, the grounds of Assessee are allowed."
6. We further find that CBDT vide Circular 22/2017 dt.12.06.2017 has also accepted the decision of Punjab and Haryana High Court in the case of Spaze Towers (supra) wherein it was held that the explanation 2 of Sec.132B of the Act is prospective in nature. Before us Revenue has relied on the decision of Sri Chand Gupta (supra). We find that the facts of that case relied upon by Revenue are distinguishable with the present case because in that case assessee had not made any request that the amount seized be applied towards the discharge of liability under the Act whereas in the present case assessee had requested for adjustment of cash towards tax liability.
Considering the totality of the aforesaid facts and relying on the decision of the Co-ordinate Bench of Pune Tribunal cited 10 hereinabove, we find no reason to interfere with the order of Ld.CIT(A) and thus the grounds of Revenue are dismissed.
7. In the result, the appeal of the Revenue is dismissed.
Order pronounced on 13th day of September, 2017.
Sd/- Sd/-
(SUSHMA CHOWLA) (ANIL CHATURVEDI)
या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
पण
ु े Pune; दनांक Dated : 13th September, 2017. Yamini आदे श क" # त%ल&प अ'े&षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. CIT(A), Kolhapur.
4. CIT-I / II, Kolhapur / CIT (Central), Pune.
5. "वभागीय %त%न&ध, आयकर अपील य अ&धकरण, "ए" / DR, ITAT, "A" Pune;
6. गाड, फाईल / Guard file.
आदे शानस ु ार/ BY ORDER,स या // True Copy // व.र/ठ %नजी स&चव / Sr. Private Secretary आयकर अपील य अ&धकरण ,पण ु े / ITAT, Pune.