ACIT, Mangalore v. Islamic Academy of Education (R), Mangalore

ITA 568/BANG/2009 | 2004-2005
Pronouncement Date: 29-01-2010 | Result: Dismissed

Appeal Details

RSA Number 56821114 RSA 2009
Bench Bangalore
Appeal Number ITA 568/BANG/2009
Duration Of Justice 7 month(s) 25 day(s)
Appellant ACIT, Mangalore
Respondent Islamic Academy of Education (R), Mangalore
Appeal Type Income Tax Appeal
Pronouncement Date 29-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 29-01-2010
Date Of Final Hearing 21-01-2010
Next Hearing Date 21-01-2010
Assessment Year 2004-2005
Appeal Filed On 04-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI N.L. KALRA A.M.AND SHRI GEORGE GEORGE K J.M. ITA NO.568(BNG)/09 (ASSESSMENT YEAR : 2004-05) THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE MANGALORE. VS. M/S. ISLAMIC ACADEMY OF EDUCATION NITYANANDANAGAR MANGNALROE. APPELLANT. RESPONDENT. ITA NO. 631(BANG)/09 (ASSESSMENT YEAR 2004-05) (BY ASSESSEE) REVENUE BY : SMT. JACINTA ZIMIK VASHAI. ASSESSEE BY : SHRI DINESH. O R D E R PER BENCH : THE REVENUE AS WELL AS THE ASSESSEE HAVE FILED APPEALS AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI BA NGALORE DT.23.3.2009. 2. THE ASSESSING OFFICER COMPLETED ASSESSMENT VIDE ORDER DT.24.12.2007 IN WHICH THE ASSESSING OFFICER DETERMINED THE INCOME OF THE ASSESSEE AT RS.61 16 710. ON THE ASSESSED INCOME THE ASSESSING OFFICER DETERMINED T HE TAX AND INTEREST PAYABLE AT RS.28 37 532. THERE WERE PRE PAID TAXES TO THE EXT ENT OF RS.1 03 04 669. HENCE A SUM OF RS.74 67 137 WAS DETERMINED AS EXCESS REFUND ABLE BY THE ASSESSING OFFICER. ON SUCH AMOUNT WHICH IS REFUNDABLE THE ASSESSING O FFICER ALLOWED INTEREST UNDER SECTION 244A TO THE EXTENT OF RS.6 34 707. THE ASS ESSING OFFICER ISSUED A NOTICE UNDER SECTION 154 ON 5.1.2009 VIDE WHICH THE ASSESS ING OFFICER PROPOSE TO WITHDRAW THE INTEREST UNDER SECTION 244A ALLOWED ON SELF-ASS ESSMENT TAX WHICH IS INCLUDED IN THE PRE PAID TAX OF RS.1 03 04 669. IN RESPONSE TO THE NOTICE ISSUED BY THE ASSESSING ITA NOS.568 & 631(BNG)/09 - 2 - OFFICER THE ASSESSEE VIDE LETTER DT.20.1.2009 SUBM ITTED THAT INTEREST WAS ALREADY GRANTED AND THEREFORE THE SAME CANNOT BE WITHDRAWN BY PASSING AN ORDER UNDER SECTION 154 OF THE INCOME TAX ACT 1961 BECAUSE THE ISSUE OF NOT ALLOWING INTEREST IN SELF ASSESSMENT TAX IS DEBATABLE. IT WAS FURTHER S UBMITTED THAT THERE ARE VARIOUS CASE LAWS IN WHICH IT HAS BEEN HELD THAT THE POWER UNDER SECTION 154 CANNOT BE INVOKED ON AN ISSUE WHICH IS DEBATABLE. THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTABLE BY THE ASSESSING OFFICER. ACCORDING TO THE ASSESSING OFFICER INTEREST UNDER SECTION 244A WAS REGULARLY ALLOWED ON THE PAYMENT OF SELF A SSESSMENT TAX. THE WITHDRAWAL OF INTEREST UNDER SECTION 244A IS NOTHING BUT RECTIFYI NG A MISTAKE APPARENT ON RECORD AND THUS MISTAKE IS NOT A DEBATABLE ISSUE. THE LEARNED ASSESSING OFFICER REFERRED TO SECTION 244A IN WHICH IT HAS BEEN MENTIONED THAT IN TEREST IS PAYABLE ON ADVANCE TAX OR TDS ETC. NOTHING IS MENTIONED IN SECTION 244A THAT INTEREST UNDER SECTION 244A CAN BE GIVEN ON SELF ASSESSMENT TAX. 3. THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A). IT WAS SUBMITTED THAT THE ISSUE ON WHICH THE ASSESSING OFFICER HAS DONE R ECTIFICATION IS A DEBATABLE ISSUE AND THEREFORE THE ASSESSING OFFICER SHOULD NOT HAVE PASSED ORDER UNDER SECTION 154 ON THE DEBATABLE ISSUE. THE LEARNED A.R. RELIED ON THE FOLLOWING DECISIONS BEFORE THE LEARNED CIT(A) IN WHICH IT HAS BEEN HELD THAT RECTI FICATION UNDER SECTION 154 CANNOT BE DONE ON A DEBATABLE ISSUE. I) T.S. BALARAM ITO VS. VOLKART BROTHERS (82 ITR 50) (SC) II) CIT VS. KESHRI METAL (P) LTD. (237 ITR 165) (SC ). III) CIT VS. HERO CYCLES (228 ITR 463) (SC) IV) CIT VS. SOUTH INDIAN BANK LTD. (249 ITR 304) (S C) V) SATISHCHANDRA & CO. VS. CIT (234 ITR 70) (KAR) VI) ACIT VS. B.C. PARTHASARATHY (101 TTJ 448) (BAN GALORE TRIBUNAL) ITA NOS.568 & 631(BNG)/09 - 3 - VII) CIT VS. SATYANARAYANAN BHALOTIA (14 TAXMAN 34) (CAL) VIII) CIT VS. LAKSHMI PRASAD LAHKAR (220 ITR 100) ( GAU) IX) CIT VS. M M T C LTD. (246 ITR 725) (DEL) X) ADDITIONAL CIT VS. GRINDWELL NORTON LTD. (102 TT J 265) (MUM) THE LEARNED CIT(A) MENTIONED THAT THE ASSESSING OFF ICER HAS POINTED THAT INTEREST ON SELF ASSESSMENT TAX IS NOT PAYABLE UNDER SECTION 24 4A AND THEREFORE THE MISTAKE MADE IN THE ASSESSMENT ORDER IS A MISTAKE OF LAW. 4. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE AND THE CONTENTIONS OF THE ASSESSING OFFICER HAS MENTIONED IN THE ORDER HELD AS UNDER : ABOVE INTERPRETATION OF LAW IS APPRECIATED. BUT THE HON'BLE JURISDICTIONAL HIGH COURT HOLDS A DIFFERENT VIEW ON THIS ISSUE. IT HAS FAVOURED PURPOSIVE INTERPRETATION OF THE PROVISIONS OF SECTION 24A(1)(B) OF INCOME TAX ACT OVER THE LITERAL INTERPRETATION. TH IS INTERPRETATION HAS COME IN THE WAKE OF CONTROVERSY AS TO THE EXPLANATI ON TO SECTION 244A(1)(B) WHICH PROVIDES THAT DATE OF PAYMENT OF T AX OR PENALTY MEANS THE DATE ON AND FROM WHICH THE AMOUNT OF TAX OR PEN ALTY SPECIFIED IN THE NOTICE OF DEMAND ISSUED UNDER SECTION 156 IS PAID I N EXCESS OF SUCH DEMAND. THUS A CONTROVERSY HAS ARISEN THAT WHETH ER THE SELF ASSESSMENT ADJUSTED IS IN PURSUANCE OF A NOTICE OF DEMAND OR N OT ? THE KARNATAKA HIGH COURT IN CIT VS. NGEF LTD. (244 ITR 665) (KAR) HELD THAT WHEN AN ASSESSMENT IS COMPLETED THE SELF ASSESSMENT TAX AL READY PAID UNDER SECTION 140A GETS ADJUSTED AGAINST THE ASSESSMENT T AX AND THUS PARTAKES OF THE CHARACTER OF ASSESSED TAX. THEREFORE THE S ELF ASSESSMENT TAX PAID BY THE ASSESSEE SHOULD ALSO BE TAKEN INTO ACCO UNT FOR THE PURPOSE OF ALLOWING INTEREST UNDER SECTION 244A(1) OF INCOME T AX ACT. THIS DECISION IS BINDING. RESPECTFULLY FOLLOWING THE SAME I DIR ECT THE A.O. TO ADJUST THE SELF ASSESSMENT TAX AGAINST THE DEMAND RAISED AND C OMPUTE THE INTEREST UNDER SECTION 244A(1) OF INCOME TAX ACT AND IF IT R ESULTS IN REFUND ISSUE THE REFUND. 5. WE HAVE HEARD BOTH THE PARTIES. IT IS NOTED THA T SEARCH UNDER SECTION 132 WAS CONDUCTED ON 21.9.2005 AT OFFICE PREMISES OF THE AS SESSEE AND ALSO AT RESIDENTIAL PREMISES OF ITS CHAIRMAN SRI Y. ABDULLA KUNHI. DUR ING THE COURSE OF SEARCH PROCEEDINGS AT THE RESIDENTIAL PREMISES OF SRI Y. ABDULLA KUNHI A SUM OF RS.76 39 525 WAS FOUND ITA NOS.568 & 631(BNG)/09 - 4 - AND OUT OF WHICH A SUM OF RS.74 LAKHS WAS SEIZED. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153A OF THE INCOME TAX ACT 1961 AND IN RESPONSE TO THAT NOTICE THE ASSESSEE FILED A RETURN OF INCOME ON 27.2.2006 VIDE WHICH INCOME OF RS.2 51 41 336 WAS DISCLOSED. AS PER THE RETURN THE ASSESSEE WAS LIABLE TO PAY SELF ASSESSMENT TAX OF RS.1 02 63 449. THE ASSESSEE DID NOT PAY THE SELF ASSESSMENT TAX DUE AS PER THE RETURNED INCOME. THE ASSESSEE FILED A LETTER DT.27 .2.2006 VIDE WHICH HE ASKED THAT SEIZED CASH SHOULD BE ADJUSTED AGAINST THE SELF ASS ESSMENT TAX OF RS.1 02 63 449. THE ORDER UNDER SECTION 154 DT.3.2.2009 DOES NOT INDICA TE AS TO WHEN THE CASH SEIZED WAS ADJUSTED AGAINST THE SELF ASSESSMENT TAX ON ACCOUNT OF LETTER OF ASSESSEE DT.27.2.2006. AS PER PARA 3 OF THE ASSESSMENT ORD ER DT.24.12.2007 THE ASSESSING OFFICER HAS MENTIONED THAT THE ASSESSEE FILED RETUR N OF INCOME ON 27.2.2006 AND IN THAT RETURN THE ASSESSEE DISCLOSED ADDITIONAL INCOM E OF RS.6 33 05 350. THIS ADDITIONAL INCOME INCLUDED UNACCOUNTED DONATIONS TO THE EXTENT OF RS.1 58 05 350 UNEXPLAINED CREDITORS FOR BUILDING TO THE EXTENT OF RS.3.5 CRORES AND UNEXPLAINED EXPENDITURE OF RS.1.25 CRORES. SUCH ADDITIONAL INC OME WAS DISCLOSED AS PER THE STATEMENT RECORDED UNDER SECTION 132(4). THE ASSES SEE FILED A REVISED RETURN ON 27.2.2007 VIDE WHICH AN INCOME OF RS.2 25 33 625 WA S DECLARED. THE REASON FOR FILING REVISED RETURN WAS FOR THE PURPOSE OF CLAIMING DEPR ECIATION WHICH WAS NOT CLAIMED IN THE ORIGINAL RETURN. THE ASSESSEE FILED ANOTHER RE VISED RETURN ON 28.3.2007 VIDE WHICH AN INCOME OF RS.4 20 43 975 WAS DISCLOSED AND THE A SSESSEE ALSO CLAIMED EXEMPTION UNDER SECTION 11 OF THE INCOME TAX ACT 1961. THE ASSESSING OFFICER IN THE COMPUTATION OF INCOME VIDE ORDER DT.24.12.2007 CONS IDERED THE EXCESS OVER ITA NOS.568 & 631(BNG)/09 - 5 - EXPENDITURE AND INCLUDED THE ADDITIONAL INCOME TO T HE EXTENT OF RS.5 02 29 802. SUCH ADDITIONAL INCOME WAS CLARIFIED IN PARA 6.1.6 OF TH E ASSESSMENT ORDER AND THE ADDITIONAL INCOME CONSISTED OF UNEXPLAINED EXPENDITURE AND UNE XPLAINED CREDITORS FOR BUILDING. 6. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER H AS NOT TREATED THE CASH SEIZED AS UNDISCLOSED INCOME. SECTION 132B OF THE INCOME TAX ACT 1961 DEALS WITH THE APPLICATION OF SEIZED CASH OR REQUISITIONED ASS ET. AS PER PROVISO TO SECTION 132B(1)(I) IT IS MENTIONED THAT THE ASSESSEE CAN M AKE AN APPLICATION FOR THE RELEASE OF ASSETS WITHIN 30 DAYS FROM THE END OF THE MONTH IN WHICH THE ASSET IS SEIZED PROVIDED THE ASSESSEE CAN SPECIFY THE ASSESSING OFFICER THA T ASSET AS SEIZED IS EXPLAINED. IN CASE SUCH ASSET IS EXPLAINED THEN THE SEIZED ASSET IS TO BE RELEASED AFTER ADJUSTING THE EXISTING LIABILITY. SECTION 132B (1)(I) IS REPRODU CED FOR READY REFERENCE : 132B(1)(I) -- THE AMOUNT OF ANY EXISTING LIABI LITY UNDER THIS ACT THE WEALTH TAX ACT 1957 (27 OF 1957) THE EXP ENDITURE TAX ACT 1987 (35 OF 1987) THE GIFT TAX ACT 1958 (18 OF 1958) AND THE INTEREST TAX ACT 1974 (45 OF 1974) AND THE AMOUNT OF THE LIABILITY DETERMINED ON COMPLETION OF THE ASSESSMENT (UNDER S ECTION 153A AND THE ASSESSMENT OF THE YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS INITIATED OR REQUISITION IS MADE OR THE AMOUNT OF LIABILITY DETERMINED ON COMPLETION OF THE ASSESSMENT UNDER CH APTER XIV-B FOR THE BLOCK PERIOD AS THE CASE MAY BE) (INCLUDIN G ANY PENALTY LEVIED OR INTEREST PAYABLE IN CONNECTION WITH SUCH ASSESSM ENT) AND IN RESPECT OF WHICH SUCH PERSON IS IN DEFAULT OR IS DE EMED TO BE IN DEFAULT MAY BE RECOVERED OUT OF SUCH ASSETS. AS PER THE ABOVE PROVISION THE SEIZED CASH COULD H AVE BEEN UTILIZED FOR SATISFYING THE EXISTING LIABILITY OR SHOULD HAVE BEEN UTILIZED AGA INST THE LIABILITY DETERMINED ON THE COMPLETION OF ASSESSMENT UNDER SECTION 153A. SUB-S ECTION 4 OF SECTION 132B MENTIONS THAT THE CASH WHICH HAS NOT BEEN ADJUSTED AS PER SE CTION 132B(1)(I) THEN THE BALANCE IS TO BE RELEASED TO THE ASSESSEE AND THE ASSESSEE HAS TO GET INTEREST UNDER SECTION ITA NOS.568 & 631(BNG)/09 - 6 - 132B(4) AND INTEREST IS FOR THE PERIOD FROM THE DAT E IMMEDIATELY FOLLOWING THE EXPIRY OF THE PERIOD OF 120 DAYS FROM THE DATE ON WHICH TH E LAST OF THE AUTHORIZATION FOR SEARCH UNDER SECTION 132 IS EXECUTED TO THE DATE OF COMPLETION OF ASSESSMENT. THE PROVISIONS OF THE ACT CLEARLY MENTIONS THAT THE SEI ZED CASH SHOULD HAVE BEEN ADJUSTED AGAINST THE EXISTING LIABILITY OR SHOULD HAVE BEEN ADJUSTED. UNDER SECTION 140A(1) THE ASSESSEE WAS REQUIRED TO PAY TAX OF RS.1 02 63 449 ON THE INCOME DECLARED IN THE RETURN AND THE ASSESSEE MADE A REQUEST THAT SEIZED CASH MAY BE ADJUSTED AGAINST THE TAX PAYABLE AS PER THE RETURN FILED AND THE DEPARTM ENT ACCORDINGLY ADJUSTED THE CASH AGAINST THE TAX WHICH WAS PAYABLE ON THE BASIS OF R ETURN. SECTION 140A(3) SPECIFIES THAT THE ASSESSEE IS TO BE DEEMED TO BE AN ASSESSEE IN DEFAULT IF THE ASSESSEE FAILS TO PAY THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (1) OF SECTION 140A. THUS THE TAX WHICH IS PAYABLE AS PER THE RETURN IS TO BE PAID UNDER SECTION 140A(1) AND IF THE ASSESSEE IS NOT PAYING S UCH TAX ALONG WITH THE RETURN THEN THE ASSESSEE IS TO BE DEEMED IN DEFAULT AS PER SECT ION 140A(3). THUS AN EXISTING LIABILITY STOOD AGAINST THE ASSESSEE IN VIEW OF THE RETURN FILED VIDE WHICH THE TAX WAS PAYABLE TO THE EXTENT OF RS.1 02 63 449. THUS THE AMOUNT WHICH HAS BEEN PAID IS NOT A SELF ASSESSMENT TAX UNDER SECTION 140A BUT IT IS SE IZED CASH WHICH HAS BEEN ADJUSTED AGAINST THE EXISTING LIABILITY. MOREOVER THE A.O. WAS REQUIRED TO PROCESS THE RETURN OF INCOME FILED UNDER SECTION 143(1) AND WAS REQUIRED TO ISSUE INTIMATION ON THE BASIS OF THE INCOME RETURNED. NO SUCH DETAILS HAVE BEEN FUR NISHED TO SHOW THAT THE ASSESSING OFFICER PROCESSED THE EARLIER RETURN VIDE WHICH THE ASSESSEE WAS PAYABLE TO PAY TAX TO THE EXTENT OF RS.1 02 63 449. THE ASSESSING OFFICE R HAS BASICALLY PASSED ORDER UNDER ITA NOS.568 & 631(BNG)/09 - 7 - SECTION 154 ON THE GROUND THAT SEIZED CASH HAS BEEN PAID AS SELF ASSESSMENT TAX. THE FACTS ON RECORD DOES NOT SHOW THAT THE ASSESSEE HAS PAID SELF ASSESSMENT TAX UNDER SECTION 140A(1). THE AMOUNT WAS REALIZED FROM THE SEIZED CASH FOR ADJUSTMENT OF EXISTING LIABILITY. IN CASE THE RETURN WAS PROCESS ED THEN THE INTIMATION WAS TO BE TREATED AS A DEMAND NOTICE UNDER SECTION 156 AND ON THAT BASIS THE SEIZED CASH SHOULD HAVE BEEN ADJUSTED AGAINST THE LIABILITY. 7. MOREOVER IT IS SETTLED LAW THAT THE ORDER UNDER SECTION 154 CANNOT BE MADE ON THE DEBATABLE ISSUE OF FACTS AND LAW. THE ASSESSIN G OFFICER CAN HAVE JURISDICTION UNDER SECTION 154 IN CASE THE MISTAKE IS CLEAR DIS TINCT AND APPARENT FROM RECORD. SUCH FACTUAL ASPECT IS NOT AVAILABLE IN THE RECORD TO SHOW THAT THE ASSESSING OFFICER COULD HAVE WITHDREW THE INTEREST UNDER SECTION 244A BY HOLDING THAT THE SEIZED CASH WAS ADJUSTED AGAINST SELF ASSESSMENT TAX UNDER SECT ION 140A(1). WE THEREFORE FEEL THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN WIT HDRAWING THE INTEREST UNDER SECTION 244A BECAUSE THE ISSUE WAS DEBATABLE. IT IS TRUE T HAT THE LEARNED CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ADJUST THE SELF A SSESSMENT TAX AND PAY THE INTEREST UNDER SECTION 244A(1) OF THE INCOME TAX ACT 1961. OUR FINDING IS THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN WITHDRAWING THE INTERE ST UNDER SECTION 244A(1) BECAUSE THE SEIZED CASH WAS ADJUSTED AGAINST THE EXISTING L IABILITY AND INTEREST UNDER SECTION 244A WAS LIABLE FROM THE DATE ON WHICH THE AMOUNT W AS ADJUSTED AGAINST THE EXISTING LIABILITY TO THE DATE WHEN THE AMOUNT WAS REFUNDED. WE THEREFORE DISMISS THE APPEAL OF THE REVENUE AND WE UPHOLD THE APPEAL OF THE ASSE SSEE THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN PASSING ORDER UNDER SECTION 15 4 OF THE INCOME TAX ACT 1961. ITA NOS.568 & 631(BNG)/09 - 8 - 8. IN THE RESULT THE APPEAL OF REVENUE IS DISMISSE D AND THAT OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 29.01.20 10. SD/- SD/- (GEORGE GEORGE K) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DT.29.01.2010. COPY TO : 1. THE ASSESSEE. 2. THE ASSESSING OFFICER. 3. CIT(APPEALS) 4. CIT 5. DEPARTMENTAL REPRESENTATIVE ITAT BANGALORE. 6. GUARD FILE ITAT BANGALORE. 7. GUARD FILE ITAT NEW DELHI. * GPR BY OR DER ASSISTANT R EGISTRAR