Income Tax Appellate Tribunal - Mumbai
Satpaul D. Agarwal (Huf) vs Assistant Commissioner Of Income Tax ... on 26 November, 1997
ORDER
M. A. Bakshi, J.M.
1. We find it convenient to dispose of these two cross-appeals, one by the assessee and one by the Revenue for asst. yr. 1989-90, by this consolidated order.
2. We first take up the appeal of the assessee. The dispute in this appeal is relating to the levy of interest under s. 234A, 234B and 234C. The AO had made assessment under s. 143(3) and levied interest. The assessee appealed to the CIT(A) and inter alia objected to the action of the AO in not treating a sum of Rs. 1,50,000 being the cash seized during the search on 25th November, 1988, as tax paid in advance for purposes of levy of interest under s. 234A, 234B and 234C.
3. Rival contentions have been heard and records perused. There was a search and seizure action in this case on 25th/26th November, 1988. Out of the cash of Rs. 1,75,000 found a sum of Rs. 1,50,000 was seized. During the course of search, the assessee disclosed income of Rs. 3,73,815 of taxation on account of value of jewellery. On 15th March, 1989, a request was made to the AO for adjustment of the sum of Rs. 1,50,000 against the taxes that may be found due in the course of proceedings under s. 132(5). An order under s. 132(5) was passed on 23rd of March, 1989, and since the likely liability of the assessee was more than the cash seized, the Asstt. CIT directed for retention of the seized assets. The assessee filed the return of income and sought the adjustment of Rs. 1,50,000 against the tax liability. Whereas the cash seized has been adjusted against the demand, the amount has not been treated as payment of advance tax. It is the case of the assessee that the amount had been paid during the year under appeal and the request has also been made for appropriation of the said amount towards the tax liability. Reliance has been placed on the decision of the Tribunal in the case of Rohit M. Jhaveri vs. ITO 22 BCAJ 269, in support of the contention that when there is a request of the assessee to treat the seized cash as payment towards advance tax of the same year, it should have been accepted as such.
4. The learned Departmental Representative relied upon the orders of the Revenue authorities.
5. We have given our careful consideration to the rival contentions. It is not disputed that a sum of Rs. 1,50,000 has been seized during the previous year relevant to asst. yr. 1989-90. The assessee had also made a request for adjustment of the said amount towards the tax liability. Sec. 132(5) empowers the Revenue to retain any seized assets or cash seized on the date of search if it is found that the tax liability of the assessee exceeds the value of such seized assets.
Though the AO has to wait for adjustment of seized assets till the finalisation of the assessment, yet in the case of cash it cannot be said that the assessee had defaulted in payment of taxes when the amount had been retained by the Revenue Department. Respectfully following the decision of the Bombay Bench of the Tribunal in the case of Rohit M. Jhaveri (supra), we hold that the cash seized by the search party that was required to be adjusted against the taxes due should be treated as advance tax for purposes of computation of interest under s. 234A, B and C. It is the claim of the assessee that if the amount of Rs. 1,50,000 is treated as advance tax, then no interest under s. 234A, B and C would be chargeable. This claim may be examined by the AO by treating the amount of Rs. 1,50,000 as advance tax. For that purpose, the issue is remitted to the file of the AO to be decided afresh in accordance with law.
6. We now take up the appeal of the Revenue. The only issue involved in this appeal is relating to the deduction under Chapter VI-A. The assessee made certain investments during the year under appeal and claimed deduction under Chapter VI-A. The AO denied the deduction on the ground that investment had not been made out of the income chargeable to tax of the current year. The CIT(A) has allowed the deduction on finding that the investment had been made (sic) by the assessee out of the income of earlier years chargeable to tax. In this connection, reliance has been placed on the decision of the Punjab High Court in the case of Ravi Kumar Mehra vs. CIT (1988) 172 ITR 108 (P&H) and the decision of the Tribunal in the case of ITO vs. Sunil Krishna Ganguly (1988) 32 TTJ (Cal) 16 : (1988) 27 ITD 137 (Cal).
7. Since finding of fact recorded by the CIT(A) is not rebutted by any evidence and the issue being covered by the decisions referred to above, we respectfully following the same, dismiss the appeal of the Revenue.
8. In the result, whereas the appeal of the assessee is allowed, the appeal of the Revenue is dismissed.