Income Tax Appellate Tribunal - Hyderabad
Sunil Kumar D Shah, Hyderabad vs Assessee on 12 December, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'A', HYDERABAD
BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER
AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA No.210/Hyd/2012 : Assessment year 2007-08
ITA No.211/Hyd/2012 : Assessment Year 2008-09
Shri Sunil Kumar D. Shah, V/s Dy. Commissioner of Income-tax,
Hyderabad Central Circle 2, Hyderabad
( PAN - AWHPS 5100 R)
(Appellant) (Respondent)
Appellant by : Shri A.Srinivas
Respondent by : Shri V.Srinivas
Date of Hearing 18.5.2012
Date of Pronouncement 25.5.2012
ORDER
Per D.Karunakara Rao, Accountant Member:
These appeals filed by the assessee are directed against similar but separate orders of the Commissioner of Income-tax(Appeals) I, Hyderabad dated 12.12.2011, dismissing the appeals of the assessee in limine for the assessment years 2006-07 and 2007-08, for default of non-payment of taxes due on the returned income.
2. While grounds No.1 to 3 of these appeals contest the additions made by the assessing officer for the years under appeal, while making the assessments under S.143(3) read with S.153 of the Act, effective grounds of the assessee, which need to be determined first, and which are common in both these appeals are those at Sl. Nos. 6 to 8 of the Grounds of Appeal, which read as follows-
"1. The CIT(A) erred in dismissing the appeal in limine applying the provisions of Section 249(4)(a).
2. The CIT(A) ought to have seen that the cash seized by the department during the course of search was adjusted towards the 2 ITA No.210 & 211/Hyd/2012 Shri Sunil Kumar D.Shah, Hyderabad tax arrears of A.Y. 2007-08 and thus erred in applying the provisions of Section 249(4)."
3. Learned counsel for the assessee mentioned that it is a case where there is a search action under S.132 of the Act, in the course of which there was seizure of cash to the tune of Rs.5 lakhs. Assessee required for adjustment of the seized cash towards tax liability for the years under consideration, which the Department did not do. During the proceedings before us, the learned counsel for the assessee demonstrated that there was seizure of cash to the tune of Rs.5 lakhs. The said amount was offered by the assessee towards taxes for the years under consideration. It was also mentioned that the assessing officer did not adjust the same towards taxes. The learned counsel argued stating that when the assessee's cash was lying with the Department, and when the assessee requested the Department to adjust the same towards its liability towards taxes, it is for the Department to proceed on the basis of the request of the assessee and to adjust the same, which was not done by the Department in time. This lapse led to the creation of tax demand. In these circumstances, the assessee filed an appeal before the CIT(A), which was held as non-maintainable by the first appellate authority, by mentioning that the cash was adjusted subsequent to the filing of the appeals by the assessee before him. The CIT(A), dismissed the appeals of the assessee in limine underlining the fact that he does not have authority to condone the delay in payment of taxes on admitted income, in view of the provisions of S.249(4) of the Act.
4. Per contra, learned Departmental Representative, for the Revenue supported the orders of the CIT(A). However, the fact of seized cash lying with the Revenue is undisputed.
5. We heard the parties and perused the orders of the Revenue authorities and the papers filed before us. It is a fact that there was a 3 ITA No.210 & 211/Hyd/2012 Shri Sunil Kumar D.Shah, Hyderabad search operation on the premises of the assessee, in the course of which there was also seizure of cash to the extent Rs.5 lakhs. Further, it is also a fact that the assessee made a request for adjustment of the said cash seized towards taxes due on the admitted income for the years under appeal. We have also perused the Chandigarh Bench decision of the Tribunal in the case of Nikka Mal Babu Ram V/s. ACIT (41 SOT 407), which is relevant for the proposition that cash seized from the assessee in search proceedings under S.132 can be adjusted against the tax liability, which was not done in the instant case, despite the request of the assessee. The tax liability relates to the admitted income too. We have also perused the decision of the Chennai Bench of the Tribunal in the case of Prem Nath Nagpal V./s. ACIT (128 TTJ (Del) 53), wherein a similar proposition has been laid down. In these factual matrix of the case, when the Department failed to adjust the seized cash towards the taxes due, notwithstanding the request of the assessee, till the appeals were filed by the assessee before the CIT(A), the default if any, on account of the non-payment of taxes on returned income is attributable to the Revenue, for which assessee should not be penalized.
6. Provisions of S.249(4)(a) reads as follows-
"Form of appeal and limitation.
249. (1) to (3)....
(4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal,--
(a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or
(b) .......
Provided that......"
4 ITA No.210 & 211/Hyd/2012Shri Sunil Kumar D.Shah, Hyderabad The above provisions of S.249(4)(a) of the Act specifies that no appeal shall be admitted in a case where the assessee has not paid the taxes due on the income returned by him, at the time of filing of the appeal, in a case where the return was filed by the assessee. The expression 'assessee has paid the tax due on the income returned' is not defined in the section. The common sensical interpretation of the above expression implies that money to the extent of tax determined by the assessee on the admitted income, must reach the Government before the return of income is filed. In the present case, the assessee's cash to the tune of Rs.5 lakhs was seized during the operation under S.132 of the Act, and the same was requested to be adjusted by the Revenue towards taxes on the admitted income. The returns of income for both the years bear witness to the said request. Normally, the cash seized during the search operations is kept in P.D. Account and it shall be assessed and appropriated towards the tax liability. In this case, there is a situation, where the assessee made a written request for appropriating the cash seized against the taxes due on the returned income, which has not been acted upon by the Revenue, despite the offer of the assessee. In other words, to our mind, this is a case of deemed payment. In the situation, to our mind, the expression 'paid' used in the Act is inclusive of all kinds of payments including 'deemed payment', if any, and that being so, the case of the assessee must be considered as covered by the said expression and consequently, assessee must be deemed to have paid the taxes due on the income returned by him for the years under appeal.
7. It is trite law that right of appeal is a precious right, which must be protected and should not be taken away from the assessee for the reasons discussed by the authorities below. Therefore, we are of the opinion that the impugned orders of the CIT(A) are required to be reversed. We accordingly set aside the impugned orders of the CIT(A) for both the years, and restore these matters to the file of the CIT(A), with a 5 ITA No.210 & 211/Hyd/2012 Shri Sunil Kumar D.Shah, Hyderabad direction to condone the delay in the payment of taxes on admitted income by the assessee, which has taken place only on account of late adjustment of cash seized at the time of search, by the Revenue towards the taxes due from the assessee for the years under appeal, and proceed to dispose off the appeals for both he appeals before him afresh on merits in accordance with law and after giving reasonable opportunity of hearing to the assessee.
8. In view of our decision, in the context of grounds No.6 to 8 of these appeals, to set aside the impugned orders of the CIT(A) and restore these matters to the file of the CIT(A) for fresh adjudication on merits of the issues raised by the assessee in the appeals before him, we are not inclined to go into merits of the other grounds.
9. In the result, both these appeals of the assessee are allowed for statistical purposes.
Order pronounced in the Court on 25.5.2012
Sd/- Sd/-
(Saktijit Dey) (D.Karunakara Rao)
Judicial Member. Accountant Member.
Dt/- 20th May, 2012
Copy forwarded to:
1. Shri Sunil Kumar D. Shah, C/o. R.B.Kabra & Co., Chartered Accountants, 4-1-917, Parsi Lane, Tilak Road, Abids, Hyderabad
2. Dy. Commissioner of Income-tax Central Circle 2, Hyderabad 3 Commissioner of Income-tax(Appeals) I, Hyderabad
4. Commissioner of Income-tax I, Hyderabad
5. Departmental Representative, ITAT, Hyderabad B.V.S.