Ita/382/2011 Of M/S Marble Centre International P Ltd v. The Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 11 DAY OF JUNE 2020| PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE HEMANT CHANDANGOUDAR| LT.A. NO.382 OF JZO1L c/W L.T.A.§NO.383 OF ZOLL IN LT.A. NO.382 OF JZOLL BETWEEN M/S MARBLE CENTRE INTERNATIONAL P. LTD.NO.12A, 7TH CROSS, R.D.LAYOUT,BANNERGHATTA ROAD, BENGALURU|REPRESENTED BY ITSMANAGING DIRECTORSRI RAJKUMAR LADHA,AGED ABOUT 438 YERS,SON OF SRI RAMDEV LADHA. | — ADPELLANT. (BY SRIYUTHS SHARAT.S AND CHYTHANYA K K, ADVS.) AND THE ASSISTANT COMMISSIONER OF INCOME TAXCENTRAL CIRCLE -1(2),BENGALURU. ... RESPONDENT (BY SRI EI SANMATHI, ADV.) THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT,1961, ARISING OUT OF ORDER DATED 30/06/2011 PASSED IN ITANO.1014/BANG/2010, FOR THE ASSESSMENT YEAR 2007-08,|PRAYING TO. I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED|THEREIN, I]. ALLOW THE APPEAL AND SET ASIDE THE ORDER DATED|30/06/2011 PASSED BY THE ITAT IN ITA NO.1014/BANG/2010, INTHE INTEREST OF JUSTICE AND EQUITY. IN I.T.A. NO.383 OF JZO1 BETWEEN M/S RPG MARBLE PVT. LTD., NO.11/3, BANNERGHATTA ROAD,BENGALURU||REPRESENTED BY ITS DIRECTOR, |SRI PRAVAN KUMAR GUPTA,AGED ABOUT 34 YEARS,SON OF SRI SHIVAPRASAD MALOO),. — ADPELLANT. (BY SRIYUTHS SHARAT.S AND CHYTHANYA K K, ADVS.) AND THE ASSISTANT COMMISSIONER OF INCOME TAXCENTRAL CIRCLE-1 (2)BENGALURU. .. RESPONDENT (BY SRI EI SANMATHI, ADV.) THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT,1961, ARISING OUT OF ORDER DATED 30/06/2011 PASSED IN ITA|NO.1015/BANG/2010, FOR THE ASSESSMENT YEAR 2007-08,PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED|THEREIN, I]. ALLOW THE APPEAL AND SET ASIDE THE ORDER DATED|30/06/2011 PASSED BY THE ITAT IN ITA NO.1015/BANG/2010, INTHE INTEREST OF JUSTICE AND EQUITY. THESE APPEALS COMING ON FOR ADMISSION, THIS DAY,ALOK ARADHE J.,DELIVERED THE FOLLOWING: COMMON JUDGMENT These appeals under Section 260A of theIncome Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) have been filed by the assessee.| Thesubject matterOT I.T.A.No.382/2011.&I.T.A.No.383/2011 pertains to Assessment year|2007-08. Since, common questions of law arise forconsideration in these appeals, tney were heard| analogously and are being decided by this common. judgment. Tne appeals were admitted on following.substantial questions of law: (i)Whether on the facts and In thecircumstances of the case theHonourable Tribunal was rignt inlaw in holding that the letter ofcircumstances of the case theHonourable Tribunal was rignt inlaw in holding that the letter of request dated 15.03.2007 but onlyas on the date of filing the returnof income for the purpose ofcomputationOF|Interest underSection 234B and 7234C? (ii)[stheimplied findingOf|HonourableTribunalthattheappellant has offered the cashseized as aavance tax against theliability in| Dlock assessment, notperverse in the light of the letter ofrequest dated 15.03.2007?HonourableTribunalthattheappellant has offered the cashseized as aavance tax against theliability in| Dlock assessment, notperverse in the light of the letter ofrequest dated 15.03.2007? 2.For the facility of reference facts from ITA.No.383/2011 are being referred to. The assessee isa private limited company which is engaged in thebusiness of trading random slabs of marbles andgranites. A proceeding under Section 122 of theAct was initiated and a searcn took place in thebusiness premises of the assessee and residentialpremises of the Director and accountant. During the course of the said proceeding, casn amount ofRs.4.77 Crores was seized by the department and.was deposited in the personal deposit account. Tneassessee agreed to disciose Rs.50 Lakns and stockOT Rs.1.40Crores as|adaitional incomefor|AssessmentYear2007-08and|SENT|acommunication dated 15.03.2007, in which arequest was made to treat Rs.50 Lakhs out of thecash seized as advance tax payable by the assesseefor the Assessment year 2007-08. course of the said proceeding, casn amount ofRs.4.77 Crores was seized by the department and.was deposited in the personal deposit account. Tneassessee agreed to disciose Rs.50 Lakns and stockOT Rs.1.40Crores as|adaitional incomefor|AssessmentYear2007-08and|SENT|acommunication dated 15.03.2007, in which arequest was made to treat Rs.50 Lakhs out of thecash seized as advance tax payable by the assesseefor the Assessment year 2007-08. ‘3.The assessee filed the return of incomeON|31.10.7007|declaring|totalincomeOf Rs.3,58,15,790/-, which was processed under.Section 143(1) of the Act and notices under Section 147and|Section143(2) wereissuedON)19.05.7008. The assessee filed the details as.sougnt for by the respondent. An order of assessment was passed on 31.12.2008 underSection 143(3) of the Act. Aggrieved by theaforesaid order, the assessee filed an appeal beforethe Commissioner of Income Tax (Appeals). TheCommissioner of Income Tax (Appeals) by an orderdated 24.06.2010 inter alia held that the assessee|is entitled to grant of relief in respect of interestfrom the date of filing of the return till the date oforder of assessment. Thus, the appeal preferred bythe assessee was partly allowed. Tne tribunal Dy an order dated 30.06.2011 dismissed the appealpreferred by the assessee. In the aforesaid factualDackground, these appeals have Deen filed. 4learned counsel for the assessee has.invited|theattention|OT thiscourtCOacommunication dated 15.03.2007 and has pointedout that the assessee nad made a request to adjust qa sum of Rs.50 Lakhs out of the cash seizedtowards advance tax payable for the Assessmentyear 2007-08. While pointing out to the statementof total income, it was pointed out that beforeseizure of the casn, four installments of advancetax|WadSpaidON)15.06.2006,14.09.2006,14.17.7006 and 08.03.7007. Our attention has also|been invited to provisions of Section 132B of theAct and it has been pointed out that Explanation 2Nas peen inserted to the aforesaid Section with.effect from 01.06.7013. It has also been submittedthat in respect of the aforesaid explanation, CircularNo.20/2017 dated 12.06.2017 has been issuedwherein it has been stated that insertion of.Explanation 2 to Section 132B of the Act snail naveprospective application. It is further submitted thatadvance tax liability can be adjusted against thecash lying in the account of revenue, which was seized from assessee. In support of aforesaidSubmission, reliance has been placed on decision ofAllanabad Hign Court In |COMMISSIONER OFINCOMETAX,KANPURVS,SF|SUNILCHANDRA GUPTA’, 2015-TIOL-673-HC-ALL-IT.|It is pointed out that Special Leave Petition waspreferred by the revenue against the aforesaidorder, wnich was dismissed by the Supreme Courtby an order dated 29.04.2016. It is also submittedthat payment of interest in the instant case iscompensatory in nature and amount belonging tothe assessee was in possession of the revenue andthe aforesaid amount was also to be taken into.account to determine the tax liability. In Support ofaforesaid submission, reference has been made todecision of division bench of this court In."M/SSHRI RAGHAVENDRA TRADERS SANTHEPET,|HASSAN VS, ASSISTANT COMMISSIONER OF| INCOMETAX’,2O011-TIOL-58/7-HC-KAR-ITTherefore, it is submitted that the first substantialquestion of law framed by this court deserves to beanswered in favour of the assessee and against therevenue and the second substantial question of lawneed not be answered. 5 |On the other hand, learned counsel fortne revenue submitted tnat tne advance tax cannotbe adjusted towards the tax as it is not an existingliability. It is further submitted that the assesseedid not make computation of advance tax asrequired under Section 209(1)(a) of the Act and asper Section 210(1) of the Act is required tocalculate the amount of advance tax. Therefore, thetribunal is justified in taking the view that for thepurposes of adjustment of the cash seized against the advance tax payable can be treated as tax paidon the date of filing of the return. | 5 |On the other hand, learned counsel fortne revenue submitted tnat tne advance tax cannotbe adjusted towards the tax as it is not an existingliability. It is further submitted that the assesseedid not make computation of advance tax asrequired under Section 209(1)(a) of the Act and asper Section 210(1) of the Act is required tocalculate the amount of advance tax. Therefore, thetribunal is justified in taking the view that for thepurposes of adjustment of the cash seized against the advance tax payable can be treated as tax paidon the date of filing of the return. | 6.We have considered the submissions.made on poth the sides and have perused therecord. Admittedly, in the instant case, theassessee has offered a sum of Rs.50 Lakhs on15.03.2007 towards the advance tax payable for.tne Assessment year 2007-08. It IS also pertinentto mention here that prior to seizure of the cash,the assessee had paid advance tax in fourinstallmentsON)15.06.2006,14.09.2006,14.12.2006 and 08.03.2007, which is evident fromstatement.Of totalincome.However,thedepartment did not adjust the aforesaid amounteven though the casn was available with thedepartment. The aforesaid amount could have beenadjusted against the advance tax. We concur with the view taken by High Court of Allahabad, whichNas been upheld by the Supreme Court. It is alsopertinent to note that Explanation 2 to Section132B nas been held to be prospective in nature andthe aforesaid position has been settled by CircularNo.20/2017 dated 12.06.201/7.7].In view of the preceding analysis, wenold that the tribunal ought to have held the dateof payment of tax by the assessee as 15.03.2007i.e., the date on which the request was made bythe assessee to adjust the casn seized against theadvance tax payable towards the tax for theAssessment year 2007-08. The first substantialquestion of law is answered in favour of theassessee and against the revenue. In the facts ofthe case, in view of our answer to first substantialquestion of law, it is not necessary to answer the second substantial question of law. The orderspassed by the Income Tax Appellate Tribunal isnereby quashed and it is directed that date ofpayment of tax snail be taken as 15.03.2007 i.e.,the date on which the request was made by theassessee to adjust the casn seized against theadvance tax payable for the Assessment year 200/7O8. | In the result, the appeals are allowed. Sd/-JUDGE. Sd/-.JUDGE.