Case Law Details
Chaitram Alonkar Vs ITO (ITAT Delhi)
ITAT Allows Full Cost of Acquisition as Land Conversion Reduced Saleable Area; Jurisdiction Challenge Rejected as Assessee Participated Without Timely Objection; Section 50C Addition Upheld Because Seized Cash Confirmed On-Money Receipt; ITAT Directs LTCG Recalculation After Finding Cost of Acquisition Wrongly Restricted.
The Income Tax Appellate Tribunal (ITAT), Delhi, considered an appeal arising from an assessment completed under Sections 143(3) read with 153A of the Income Tax Act for AY 2017-18. The assessee had filed a return in response to a notice under Section 142(1), declaring long-term capital gains (LTCG) from the sale of land. During assessment, the Assessing Officer (AO) recomputed the LTCG by adopting stamp duty valuation under Section 50C and made an addition towards differential capital gains. The AO also referred the matter for penalty proceedings under Section 271D for an alleged violation of Section 269SS.
Before the Tribunal, the assessee challenged the jurisdiction of the AO, the computation of cost of acquisition, the adoption of fair market value (FMV) under Section 50C, and the levy of interest under Sections 234A, 234B and 234C. The Tribunal admitted the jurisdictional grounds raised for the first time but rejected them on merits. It held that the assessee had participated in the proceedings without objecting to jurisdiction and that any challenge was barred by Section 124(3) of the Act. The Tribunal found that the AO had territorial jurisdiction and that the assessee could not question it after the prescribed time.
On the issue of cost of acquisition, the Tribunal noted that the original agricultural land measured 1290.45 sq. metres, while the converted land sold measured 936.26 sq. metres. The AO had restricted the cost of acquisition to the converted area sold. The Tribunal held that the entire cost incurred for acquiring the original land was attributable both to the land sold and to the area set aside for roads and drainage during conversion. Since there was no finding that the claimed acquisition cost was excessive and no evidence of separate sale of the differential area, the reduction of cost was unjustified. The Tribunal directed the AO to recompute LTCG by adopting the full cost of acquisition of ₹1,10,979 along with applicable indexation.
Regarding valuation under Section 50C, the Tribunal observed that cash seized and requisitioned under Section 132A was admitted by the assessee to be sale proceeds from property transactions. The CIT(A) had referred the matter to the Departmental Valuation Officer (DVO), who determined the FMV, and the addition was accordingly restricted. The Tribunal upheld the adoption of FMV under Section 50C, finding no error in the CIT(A)’s approach and noting that the differential amount represented on-money received by the assessee. The grounds challenging FMV adoption and denial of exemption-related claims were rejected.
On the levy of interest, the Tribunal distinguished between the various provisions. It held that the seized cash had been in the Revenue’s possession well before the due date for filing the return and was sufficient to cover the tax liability. Since the taxes payable on returned and assessed income could have been appropriated from the seized cash, the assessee could not be held responsible for non-payment. Consequently, the Tribunal directed deletion of interest under Sections 234A and 234B. However, for Section 234C, the Tribunal held that interest could still apply in respect of advance tax instalments that fell due before the seizure of cash on 22 November 2016. It therefore directed the AO to recompute interest under Section 234C accordingly.
The appeal was partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal is filed against order dt 30/10/2023 passed u/s 250 of the Income Tax Act, 1961 [‘the Act’] by the Commissioner of Income-tax, Appeals-3, Bhopal [`Ld. CIT(A)’] for assessment year 2017-18 [‘AV] which in turn arisen out of order of assessment passed u/s 143(3) r.w.s. 153A of the Act by the Income Tax Officer-1, Chhindwara [ ‘Ld. AO’]
2. Tersely stated facts of the case are that;
2.1 The assessee is an individual and identified as non-filer. On the basis of proceedings conducted u/s 132A of the Act on 22/11/2016 and statement of the assessee recorded therein on 08/12/2016, the Ld. AO vide notice u/s 142(1) of the Act dt. 04/07/2018 called upon the assessee to furnish return of income. In the event of failure to comply with the notice, further opportunity vide notice dt. 15/11/2018 was granted, pursuant which the assessee filed his return of income [`ITIV] on 12/12/2018 declaring taxable income 246,34,580/-, comprising of long-term capital gain [`LTCG’] of 244,01,486 and balance from other sources and reporting agricultural income of 21,22,400/-. The return of the assessee was subjected to scrutiny vide notice dt. 12/12/2018. In such scrutiny assessment a solitary addition of 232,90,398/- towards difference of LTCG was made and by making reference of violation of provision of section 269SS the total income u/s 143(3) r.w.s. 153A of the Act vide order dt 27/12/2018 was assessed 279,24,978/-.
2.2 Assessee aggrieved by the addition preferred an appeal u/s 246A r.w.s. 249 of the Act which was partly allowed by the Ld. CIT(A). Still aggrieved thereby, the assessee filed the present appeal u/s 253(1) of the Act with following substantive grounds of grievance for adjudication;
1. The learned Commissioner of Income tax (Appeal) was not Justified in not taking the cost of acquisition value at Rs. 1,10,979 without appreciating that appellant have sold 1290.45 sq Mt of land thus cost of acquisition should have been taken for the entire land.
2. The learned Commissioner of Income tax (Appeal) was not Justified in adopting the FMV at Rs. 69,49,000 on the basis of valuation report given by the departmental valuer which was based on the diverted land whereas appellant have sold the agriculture land as per agreement dated 16.12.2015 and thus addition of Rs. 16,41,686 was confirmed.
3. The learned Commissioner of Income tax (Appeal) was not Justified in confirming the addition of Rs. 16,41,686 without appreciating the fact that department have wrongly seized all the sale amount and appellant have no occasion to invest the amount so that he can claim the deduction available under section 54 of the IT Act.
4. The learned Commissioner of Income tax (Appeal) was not justified in deciding the legal issue raised by the appellant with regard to the levy of interest under section 234A, B and C of the Act even though appellant have filed detailed reply on the issue of levy of interest on the present facts and circumstances of case which is supported by legal Judgments.
WITHOUT PREJUDICE TO ABOVE THE APPELLANT IS ALSO RAISNG THE FOLLOWING LEGAL GROUNDS WHICH GOES TO
THE ROOT OF THE CASE
5. The order passed by the Jurisdictional AO is void ab notio as the appellant case falls under the Jurisdiction of Central circle being a search case under section 132A and hence order passed by the Income tax Officer Chhindwara is bad in law and without Jurisdiction and deserves to be quashed.
6. The order passed by the AO is without Jurisdiction as appellant have filed income of more than Rs. 15,00,000 and hence Jurisdiction is not vested with the Income tax Officer, and it should be passed by the ACIT only and hence on this ground also order deserves to be quashed.
3. In the course of hearing, the Ld. AR Usrethe appearing for the assessee adverting to legal ground number 5 & 6 at the beginning challenged the very jurisdiction of the Ld. AO in farming the assessment in reference to u/s 153A of the Act. Pressing into service the decision in ‘ABC India Ltd Vs DCIT’ [ITA No 1645/Kol/2025] it was contended that, the jurisdiction to assess income u/s 153A was vested with Asstt./Dy. Commissioner of Income Tax and not with the Income Tax Officer. Insofar as the incorrectness of area considered for computing cost of acquisition and adoption of fair market value determined by departmental valuation officer u/s 50C of the Act [Td. DVO’], it was submitted that, the error is apparent and therefore needs to be corrected before the actual LTCG to be taxed. As against the grievance of charging interest u/s 234A, 234B & 234C of the Act is concerned, it was agitated that, the part of sale consideration received in cash was first seized by the police and same was requisitioned u/s 132A of the Act on 22/11/2016. Since such seizure, the assessee followed for release and in-spite of continuing persuasion, the Revenue did not release the same. Because of withholding of seized cash, the assessee was prevented from discharging tax liability. Therefore no interest attributable for such period, hence to be deleted.
4. Au contraire, the Ld. DR Padha in response to legal ground vehemently rebutted that, neither before the Ld. AO nor before the Ld. CIT(A) the legal ground challenging the jurisdiction was raised but in the present proceedings first time. Adverting to the records it was contended that, for the year under consideration the Ld. AO had territorial jurisdiction over the assessee, wherein the assessee failed to file his return u/s 139(1) within prescribed time limit. Identifying the assessee as non-filer, assuming jurisdiction the Ld. AO initiated assessment proceedings were by notice u/s 142(1) of the Act. All the more, in view of s/s 3 of section 124 of the Act, the assessee is barred from challenging the jurisdiction at this juncture. As far as the levy of interest u/s 234A, 234B & 234C is concerned, referring to the decision rendered in ‘GT Vs Anjum MH Ghaswala’ [2002, 1 SCC 633 (SC)] the Ld. Padha submitted that, such levy of interest is automatic & no relief is possible. Insofar as merits of additions upheld by the Ld. CIT(A) is concerned, the Ld. DR relied upon impugned order and prayed for sustaining them in very terms.
5. We have heard the rival parties at length and subject to rule 18 of ITAT-Rules, 1963 perused the material placed on record and considered the facts of the case in the light of settled position of law which are forewarned to the respective parties.
6. We observed that,
6.1 Upon cash being seized by the Mohgaon Police Thana in-charge, the Revenue requisitioned seized cash of 246,80,500/- u/s 132A of the Act on 22/11/2016. A statement of the assessee was recorded on 08/12/2016, wherein he admitted the ownership and source thereof as sale proceeds received on transfer/sell of certain immovable properties owned by him.
6.2 Although the appellant did fail to file return u/s 139(1) of the Act, but filed it in response to notice u/s 142(1) of the Act wherein LTCG of 244,01,489/- was declared taking sale consideration of 256,50,000/-. The return so filed in view of the proceedings conducted u/s 132A of the Act was subjected to scrutiny assessment u/s 143(3) of the Act.
6.3 In the course of assessment proceedings the Ld. AO noticed that, the assessee was the owner of piece of agricultural land [‘Capital Asset’] which vide order dt. 24/02/2016 issued by the Ld. Sub-Divisional Officer, Chhindwara rLd. SDO’] converted/diverted into plot admeasuring 936.26sq.mtr. The said pieces/plots of diverted/converted land were then sold to four customers/buyers vide separate registered sale-deeds all dt. 30/07/2016 for a total sale consideration of 215,85,000/- It was noticed that, the stamp duty valuation [`SDV1 of such four plots sold were 285,97,712/- [289,87,712/- as stands corrected by Ld. CIT(A) in the course of appellate proceedings].
6.4 Invoking the provisions of section 50C of the Act, the Ld. AO called upon the appellant to show-cause as to why the differential amount in the light of seized cash should not be added to returned LTCG. In the event of the appellant’s endorsement that the seized cash was accrued to him & was arisen as sales-proceeds on transfer of properties, the Ld. AO recomputed the LTCG relacing the sale consideration adopted by the appellant with that of SDV of 285,97,712/- [Z89,87,712/-as stands corrected by Ld. CIT(A)] and accordingly framed the assessment making a solitary addition of 232,90,398/- being differential LTCG attributable to full value of sale consideration.
6.5 While culminating the proceedings u/s 143(3) r.w.s. 153A of the Act, the Ld. AO vide para 6 of his order, after rendering clear findings over receipt of cash from four parties by the appellant in relation to transfer of immovable properties, alleged the violation of provisions of section 269SS of the Act and consequently made the reference to the Ld. JCIT for considering the case imposing penalty u/s 271D of the Act.
7. We also note that,
7.1 When the matter travelled up in first appeal, in adjudicating the grievance the Ld. CIT(A) observed that, while adopting SDV in place of sale consideration received by the appellant no reference to Ld. DVO was made, therefore the Ld. CIT(A) remanded the issue back to file of Ld. AO with a direction to refer the same to Ld. DVO to ascertain & determine FMV for in terms of section 50C of the Act. After taking into account the Ld. DVO’ s report the Ld. CIT(A) partly allowed the claim of the assessee by substituting full value of sale consideration from SDV of 289,87,712/- as adopted by Ld. AO to FMV of 269,49,000/- [As stands corrected from Z64,49,000/-u/s 154 of the Act dt. 24/11/2023]. Insofar as the error in computing the cost of acquisition computed with reference to incorrect area of converted land is concerned, the Ld. CIT(A) rejected the appellant’s plea holding that entire cost of acquisition was taken into consideration by converted plots sold were inclusive of area meant for roads & drainage.
8. Now first coming to adjudication of legal ground 5 & 6 raised challenging the jurisdiction of the assessing officer;
8.1 Admittedly, these grounds were raised first time in the present proceedings. The appellant contended that, adjudication as to whether the Ld. AO had the jurisdiction over the appellant for the year under adjudication requires no inquiry into fresh facts or material. These grounds admittedly ascended out of the impugned orders and goes to challenge validity thereof. We note so that, undeniably no new facts are required to be investigated or verified for the purpose, therefore such being a bald legal ground deserves admission in the light of ratio laid down by the Hon’ble Apex Court in `CIT Vs National Thermal Power Company Ltd.’ [198, 229 ITR 383 (SC)]. After due consideration of appellant’s plea and submission, we are satisfied that, omission to raise such legal grounds while filing first appeal was neither wilful nor unreasonable, for the reason we deem it fit to admit in the light of Hon’ble High Court in the case of ‘,kora Sugar Mills Pvt. Ltd. Vs CIT’ [1980, 124 ITR 482 (MP)], and `CIT Vs Western Rolling Mills Pvt. Ltd.’ reported at 156 ITR 54 (Bom) and ‘Jute Corporation of India Ltd. Vs CIT’ find placed in 187 ITR 688(SC) and ‘Ahmedabad Electricity Co. Ltd. v CIT’ reported in 199 ITR 351(Bom). Ergo same stands admitted.
8.2 Now coming to adjudication we note that, the challenge to the jurisdiction of Ld. AO is devoid of merits and law. We say upon twin findings that; (a) the appellant did not file his return, the Ld. AO having territorial jurisdiction over the appellant assumed the jurisdiction by notice u/s 142(1) of the Act and accessed the income accordingly. The return exceeding monetary limit was filed by the appellant after submitting to the jurisdiction without challenge. Therefore reliance placed on CBDT Instruction No 1/2011 dt. 31/01/2011 by the appellant could hardly be any of help. (b) and the challenge to jurisdiction is time barred in view of s/s (3) of section 124 of the Act. Without re-producing the text of the former provision in verbatim, it shall suffice & purposive to state here that, in view of the restriction placed by clause (c) of s/s (3) of section 124 of the Act the appellant is not entitled to call in question the jurisdiction of Ld. AO after the expiry of one month from the date of notice u/s 153A(1)/153C(2) or after the completion of assessment whichever is earlier.
8.3 The Hon’ble Supreme Court in DIT(E) Vs Kalinga Institute of Industrial Technology’ [2023, TaxPub(DT) 3566 (SC)] reversed the decision of High Court’s order which set aside assessment notices on jurisdictional grounds, holding that where an assessee participates in proceedings pursuant to notice u/s 142(1) without questioning the jurisdiction, such participation constitutes implied acceptance of jurisdiction. The Hon’ble Apex Court also emphasized the time clock set in s/s (3) which precludes assessee from raising jurisdictional objections if not done within thirty days of receiving notice. This judgment firmly establishes that procedural participation without timely objection amounts to waiver of the right to challenge jurisdiction.
8.4 The Hon’ble Karnataka High Court in Adarsh Developers Vs DIT’ [2024, 158 taxmann.com 81 (Kar)] reinforcing above principle held that, where an assessee, after service of notice u/s 143(2), files response and participates in proceedings culminating in an assessment order, then cannot subsequently challenge the jurisdiction. Likewise, in `Subhash Chander Vs CIT’ [2008, 166 Taxman 307 (P&H)] their Hon’ble lordships have elucidated that, mandate prescribed u/s 124 for reference to higher authorities arises only when a timely objection is raised; absence of such timely objection, right stands forfeited. A reference can also be made to the decision of Hon’ble Jurisdictional High Court decision in `Sitaram Rathore Vs CIT’ [1994, Taxman 265 (MP)].
8.5 In view of the aforestated discussion, findings we after placing reliance on the former judicial precedents, dismissed both the legal grounds number 5 & 6.
9. Next comes to incorrect cost of acquisition considered while computing the long-term capital gains.
9.1 It is admitted fact that the assessee had a piece of agricultural land which prior to transfer was converted/diverted into vide order dt. 24/02/2016 issued by the Ld. SDO. The converted plot of land admeasuring 936.26sq.mtr. was sold to four customers/purchaser vide separate sale-deeds executed which give rise to LTCG in the hands of appellant. It is also not disputed by the rival parties that, the area of such land prior to its conversion/diversion was 1290.45sq.mtr. In computing the LTCG, the Ld. AO considered the cost of acquisition at 280,518/- with reference to area of land converted/sold in place cost of acquisition of Z1,10,979/- of total area of land prior to such conversion/diversion. In an appeal the Ld. CIT(A) rejected the appellant contention holding that, the cost qua area of land foregone for roads and drainage already subsumed in the area sold thus the sale consideration received therefore.
9.2 The action of restricting the cost of acquisition of total area of unconverted land to area of converted land, to equivalent cost with reference to area sold is devoid of rationale and merits. There is no findings rendered about the excessiveness of cost claimed to have incurred by the appellant in acquiring the piece of unconverted/original land. Nor there is any whisper in the orders of the tax authorities below about sale of such differential area for cash separately. Further there is hardly any basis founded in restricting the cost of acquisition except reference to area sold vis-a-vis area converted. The total cost incurred by the appellant towards acquisition of capital asset is attributable to both (i) area of land sold and (ii) area of land foregone for conversion or diversion etc., owning to rules/regulation of conversion/diversion. Therefore, such cost of acquisition cannot be reduced on the premise that such area never been sold but reserved for utilities. We find the action of reduction of cost of acquisition much less with merits and without any basis. In view thereof, we set-aside the adjudication laid in para 4.1.4 of the impugned order and direct the Ld. AO to re-computation of LTCG with reference to full cost of acquisition of Z1,10,979/-as claimed by the appellant after applicable indexation. The first ground of raised in the appeal memo accordingly stands allowed.
10. Next comes to challenge to FMV adopted
10.1 We note that, in the course of the scrutiny assessment proceedings, the Ld. AO called upon the appellant to substantiate source of cash seized & requisitioned u/s 132A of the Act. On the perusal of submission it was noticed that, such cash attributable to on-money accepted by the appellant in relation to sell of immovable properties. The observations of the Ld. AO although was solidified with the statement of the appellant recorded in 132A proceedings, but also found corroborated with the corresponding sale-deeds executed by the appellant. The seized cash, appellant’s confirmation about the source thereof and the apparent difference in the full value of consideration recorded in sale-deed over SDV undoubtedly established the receipt of on-money in very terms of explanations. The Ld. AO accordingly taxed the seized cash to the extent of differential amount of SDV over sale-consideration noted in the executed sale-deed, and farmed the assessment u/s 143(3) r.w.s. 153A of the Act.
10.2 In appeal, finding the irregularity in the order of assessment with reference to Ld. AO’s failure to refer the matter for expert valuation, the Ld. CIT(A) rightly remanded the issue for determination of FMV and based on the Ld. DVO’s report the addition was restricted to 216,41,686 [stands corrected from 211,41,686/- vide order of rectification dt. 24/11/2023 passed u/s 154 of the Act].
10.3 There is hardly any material placed challenging the impugned action of Ld. CIT(A) & claim for exemption u/s 54 etc. Therefore we find no error in invoking section 50C of the Act in the present case and adopting FMV as full values consideration for computing LTCG. All the more when differential amount of sale-consideration qua SDV/FMV is attributable to on-money received by the appellant as confirmed in the statement recorded u/s 132A of the Act. Therefore all the pleas raised by the appellant in relation to ground no. 2 & 3 stands rejected and so is the ground, as it left with much less merits.
11. Grievance against applicability & application of interest u/s 234A, 234B & 234C of the Act.
11.1 The issue of chargeability or levy of interest of u/s 234A, 234B & 234C of the Act is no-more res-integra in view of Hon’ble Apex Court decision in ‘ CIT Vs Anjum MH Ghaswala’ [2001, 119 Taxman 352 (SC)] wherein their hon’ble lordships have held that, levy of interest contemplated u/s 234A, 234B and 234C is mandatory in nature and no power for waiver or reduction been expressly conferred therefore cannot reduce or waive such statutory levy except to the extent of granting relief under the Circulars issued by the Board u/s 119. Therefore the appellant without challenging applicability of interest, restricted all his plea against application thereof in view of the peculiar facts & circumstances of his case. It was averred that, alleged on-money i.e. part of sale consideration received in cash seized by the police was requisitioned u/s 132A of the Act and since then it is in possession of the Revenue. The non-payment of taxes is solely attributable to non-availability of seized cash.
Such cash should be appropriated towards tax determined on assessment. In view of withholding the seized cash, interest being compensatory in nature for non-payment of taxes, not to be levied, hence to be deleted. In support of this plea, the appellant relied the decision of Ld. Co-ordinate bench in Witin Kumar Vs ACIT’ [1457/Kol/2016 dt. 04/04/2018].
11.2 We have thoughtfully considered the issue, plea and case laws pressed into service and note that, the appellant was to pay tax on returned income at the time of filing and differential assessed tax upon assessment. Admittedly, the assessee did not discharge of taxes on returned as well as assessed income but pleaded to appropriate the same out of seized cash available with the Revenue since 22/11/2016. According to the plea of the appellant once seized cash is adjusted towards taxes arising on returned income & assessed income on a respective date, there will be no tax that will be leftover for attracting levy of interest u/s 234A, 234B & 234C of the Act.
11.3 We find that the interest u/s 234A of the Act is chargeable only for the period of delay in filing the return of income. The due date of filing return of income u/s 139(1) of the Act was 31/07/2017 whereas the appellate filed his return of income u/s 142(1) of the Act on 12/12/2018. The cash seized since was possession with the Revenue from 22/11/2016 i.e. much earlier than the due date of filing of return of income. The non-payment of taxes on returned income was beyond appellant’s control. Hence, it could be safely concluded that the Revenue was in possession of the seized cash for adjustment tax on returned income, so is the position with assessed tax. The tax payable by the appellant on the returned income [as well as assessed income] was eligible for appropriation out of seized cash by the due date of filing of return. Hence, default in appropriation cannot be attributable to the appellant. On appropriation of taxes on retuned income stands discharged by such due date, therefore mere belated filing of return would not liable for levy of interest u/s 234A of the Act.
11.4 In coming to aforestated proposition reliance is placed on the decision of Hon’ble Apex Court in the case of `CIT Vs Pranoy Roy’ [2008, 9 TMI 150 (SC)] , wherein their hon’ble lordships have held that, even where the return of income is filed late, if the assessee has paid the taxes before the due date of the filing of the return which is not less than the tax payable on the returned income which has been accepted, no interest can be levied u/s 234A of the Act.
11.5 Since seized cash equivalent to tax on returned income was in possession with the Revenue much before the expiry of financial year, the appellant’s tax liability stood discharged for the purpose of compensatory levy of interest u/s 234A of the Act. Hence, we see there could be no occasion for charging of interest u/s 234A of the Act on returned income. Similar view found taken by the Ld. Co-ordinate bench in Witin Kumar Vs ACIT’ (supra). Maintaining the parity therewith, we set-aside the impugned adjudication and direct the Ld. AO to delete the same in its entirety.
11.6 Insofar as the application of interest u/s 234B of the Act is concerned, it could be seen from the facts narrated above, that the seized cash was available with Revenue from 22/11/2016 onwards. The interest u/s 234B of the Act is chargeable for default in payment of advance tax w.e.f. first day of the assessment year i.e. from 01/04/2017 until the discharge of tax liability. The amount of seized cash approximately exceeded three times of assessed tax liability. Had the Revenue adjusted the tax, there would not have been any levy of interest u/s 234B of the Act. When the seized cash of 246,80,500/- was in possession from 22/11/2016, it would be unfair and unjust to charge interest on the assessee u/s 234B of the Act, merely because, the seized cash was given or to be given credit on a later date. What the Revenue proposed to do in the facts and circumstances of the case was to charge interest for the default in payment of tax already collected by seizing the more than equivalent cash. It can only justify levy of charge/interest only if it has suffered a loss and not otherwise.
11.7 By withholding the seized cash, the Revenue suffered no loss, thus cannot claim compensatory interest for nonpayment of returned tax or assessed tax. We find this view fortified in the decision of Hon’ble Delhi High Court in the case of `CIT Vs Anand Prakash’ [2009, 179 Taxman 44 (Del)].
11.8 This follows from the conclusion that, the levy of interest u/s. 234B is compensatory in nature. It is on our considered view therefore be just and fair to conclude that, the appellant could not be fastened with interest liability for the delayed/ proposed adjustment of seized cash against the tax on payable on returned as well assessed income. The appellant, in our mindful view is entitled to complete relief from application of interest u/s 234B of the Act. Similar view can also be found in Witin Kumar Vs ALIT’ (supra). Therefore, maintaining parity with the former judicial precedents, we set-aside the impugned adjudication and direct the Ld. AO to delete entire amount of interest levied/charged u/s 234B of the Act.
11.9 The interest u/s 234C of the Act is levied for deferment of payment of advance tax during the financial year relevant to assessment year in four instalments viz; 15th June 2016, 15th September 2016, 15th December 2016 & 15th March 2017. In the instant case, since, the cash was seized on 22/11/2016 i.e. much after expiry of first two instalments but much before balance two instalments were due, therefore assessee cannot in entirety claim non-chargeability of interest u/s 234C of the Act, nor the Revenue can be allowed to charge/levy interest for defaults of all instalments.
11.10 Having regard to status of appellant assessee as individual, tax arisen on account capital gain etc., the default in discharge of advance tax instalments (if any) up to the date of seizure & requisition of cash u/s 132A of the Act can only be attributable to the appellant, thus qualifying for levy of compensatory interest u/s 234B of the Act. As the cash was seized & remained in possession of the Revenue since 22/11/2016, and the appellant in view of our elaborated discussion & adjudication laid in relation to other interest in foregoing paragraphs already stands discharged of assessed tax liability by such seizure date, therefore no default post such date be attributable to the appellant for levy of interest u/s 234C of the Act. In view thereof, we set-aside the impugned adjudication and direct the Ld. AO to recompute the interest leviable u/s 234C of the Act (if any) in aforestated terms. The ground number 4 raised in the appeal memo, thus stands allowed for statistical purposes in aforestated terms.
12. In result, the appeal is partly allowed for statistical purposes in afforested terms.
U/r 34 of ITAT Rules, order pronounced in the open court on the date mentioned herein above.
Author Bio
