SNJ DISTILLERS PVT. LTD..COMPANY,CHENNAI vs. ACIT, CENTRAL CIRCLE 3(2), , CHENNAI
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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI MANJUNATHA. G & SHRI MANOMOHAN DAS
PER MANOMOHAN DAS, J.M: This is an appeal by the assessee is directed against the order of the Learned Commissioner of Income-Tax (Appeals) [hereinafter (CIT(A)] dated 31-01-2023 pertaining to the Assessment Year (AY) 2013-14. The grounds of appeal of the assessee are as under: “1. The learned Commissioner of Income-tax (Appeals) erred in not directing the assessing officer to grant credit for Rs. 50,00,000 being the cash seized as per the directions of the Hon'ble High Court in the write petition filed by the appellant. 2. The appellant submits that the assessing officer having assessed the cash seized from Sri Bilash Khatiwada of Rs. 50,00,000 as
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undisclosed income of the appellant ought to have granted credit for the said cash seized to the appellant against the tax demanded.
The learned Commissioner of Income-tax (Appeals) has decided the appeal on irrelevant considerations and facts.
The appellant submits that the Hon'ble High Court of Madras has not directed the CIT(A) to adjudicate the issue of double taxation but only to consider the fact of double taxation while considering the appeal of the appellant for grant of credit of the cash seized of Rs. 50,00,000/-.
The learned CIT(A) erred in observing that it is not possible to give directions to the AO of the appellant as prayed especially when the status of seized amount is not known and the individual, Shri Bilash Khatiwada, ex-employee of the assessee, has not been impleaded by the appellant in the writ petition filed before the Hon'ble High Court especially when Sri Bilash Khatiwada has no cause of action in the writ proceedings.
The learned CIT(A) ought to have seen that the assessing officer was well aware of the fact of assessment of the cash seized in the hands of Sri Bilash Khatiwada before completion of assessment in the appelalnt's case and therefore there is no need for the appellant to inform about the said fact to him.
The learned CIT(A) ought to have seen that the assessing officer has not returned the seized amount in terms of section 132B(3) either to the appellant nor to Sri Bilash Khatiwada.
The appellant submits that he is not responsible for the practical difficulty experienced by the assessing officer for not granting credit for the cash seized when he in his all wisdom has assessed the cash seized as undisclosed income of the appellant.
The Assessing officer has not indicated whether the assessment made on the appellant by him is substantive in nature or protective when the same amount was assessed in the hands of Sri Bilash Khatiwada by his counterpart at Delhi.
The learned CIT (A) having found that a sum of Rs.25,38,359 is still lying with the PD account with the Department ought to have directed the assessing officer to grant credit for the said amount to the appellant without any formality to be observed by the appellant.
The appellant therefore prays that the assessing officer may be directed to grant credit for the cash seized of Rs.50,00,000 in his hands or else to delete the addition of Rs.50,00,000 made in the
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hands of the appellant as it amounted to double addition and render justice.” 2. The facts of the case are that the Assam Police on 11-05-2012
had seized cash of Rs. 50,00,000/- at Bakoklia in Karbi Anglong
District of Assam from one Mr. Bilash Kathiwada who is a resident of
Rajendra Nagar, New Delhi. Before the ADIT, Investigation, Unit-2
Guwahati, Mr. Bilash Khatiwada admitted that he was an employee of
Gaming India Distributors Pvt. Ltd, a Chennai base company and in
the process of starting office at Dimapur, he was carrying the sum of
Rs. 50 lakhs. It was also deposed by him that Gaming India
Distributors Pvt. Ltd. is one of the group concerns of M/s SNJ
Distilleries Pvt. Ltd. During the enquiries, it was noticed that the
payment of salary of Bilash Katiwada was debited to the profit and loss
account of M/s SNJ Distilleries Pvt. Ltd. Subsequently, Shri
Jayamrugan, Managing Director of M/s SNJ Distilleries Pvt. Ltd
claimed that the payment was sourced in cash from Nandhini
Transport Pvt. Ltd. Shri Jayamurugan during the Investigation
submitted that the amount of Rs. 50 lakhs came in cash from books
from Nandhini Transports Pvt. Ltd. to Gaming India Ditributors Pvt. Ltd
as investment being share application money which was withdrawn
from time to time and paid to Bilash Khatiwada. The learned Assessing
Officer [AO], Chennai observed that the said amount of Rs. 50 lakhs
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were the unaccounted cash belongs to SNJ Distilleries Pvt. Ltd and
need to be taxed in the hands of M/s SNJ Distilleries Pvt. Ltd. The said
sum of Rs. 50 lakhs had not been admitted in the return of income and
ultimately, the Ld. AO the same was brought to tax as undisclosed
cash u/s 69A of the Act.
Being aggrieved, the assessee filed appeal before the Ld.
CIT(A)-18, Chennai vide ITA No 301/15-16 and submitted that the
assessee decided not to press the ground related to addition of Rs. 50
lakhs to end the litigation but prayed to give direction to the AO to give
credit of Rs. 50 lakhs against the tax payable by them. The Ld. CIT(A)
vide order dated 07-01-2016 accepted the prayer of the assessee and
directed the AO to give credit of Rs. 50,00,000/- against the tax
payable by the assessee but sustained the addition made by the
learned AO.
Thereafter, the assessee approached the Hon’ble High Court of
Madras vide W.P. No. 18887 of 2018 & WMP No. 22273 of 2018
seeking direction to the ACIT, Central Circle-II (1), Chennai to dispose
of the representation dated 14-10-2016 & reminder dated 04-07-2017
with regard to giving credit for the seized sum of Rs. 50 lakhs with
effect from 12-05-2012. The Hon’ble High Court vide order dated 25-
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07-2018 disposed of the said writ petition by directing the ACIT,
Central Circle-II (1), Chennai to consider the said representations of
the assessee and pass order on merits and in accordance with law
within a period of three weeks from the date of receipt of copy of the
order of the Hon’ble High Court.
The Ld. AO in compliance to the order of the Hon’ble High Court
passed order dated 12-09-2018 which read as under:
“In connection with the writ petition the Hon’ble Madras High Court has directed the undersigned to dispose of your petition on merits within three weeks of receipt of its order. In this regard, it is to inform you that the cash of Rs. 50 lakhs was seized in the hands of Shri Bilash Khatiwada, who was assessed with the ACIT (CC)-25, New Delhi and the seized cash was transferred in the PD account of Pr.CIT, Central-1, Delhi. This office vide letter dated 30-07-2018 to the Deputy/Assistant Commissioner of Income Tax, Central Circle-25, Delhi, requested to para-wise comments stating the reasons for not transferring the seized cash of RS. 50 lakhs lying in the PD account of Pr. CIT, Central-1, Delhi to the PD account of Pr. CIT, Chennai-2, Chennai.In response to which the PCIT(C )-1, New Delhi, vide letter dated 23- 08-2018 intimated that out of total cash seizure of Rs. 50 lakhs, a sum of Rs. 24,61,641/- has been adjusted towards tax liability of Shri Bilash Khatiwada and the balance sum of Rs. 25,38,359/- was returned back to the PD account of Pr. CIT, Jorhat, Assam. Thus, as the part of seized cash had been adjusted towards the tax liability of Shri Bilash Khatiwada, it appears that he had claimed the ownership of seized cash and offered the seized cash as his undisclosed income. Since the seized ash of Rs. 50 lakhs had never been transferred to the PD account of Pr. CIT, Central-2, Chennai. Therefore, your request for adjustment of the seized cash against your tax liability cannot be processed under the given circumstances”.
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The assessee, thereafter, filed another Writ Petition No. 8030 of
2019 before the Hon’ble High Court of Madras. The Hon’ble High
Court vide order dated 11-08-2022 inter-alia observed as under:
“5. In such circumstances, I see merit of the petitioner to challenge the order dated 26-09-2016 by way of appeal against the non-grant of credit of a sum of Rs. 50,00,000/- as directed by the Commissioner of Income-Tax (Appeals) in order dated 07-01-2016. The appellate authority would be better positioned, seeing as the issue in this matter relates, prima facie, the double taxation of the amount of Rs. 50,00,000/-, once in the hands of the petitioner and secondly, in the assessment of Bilash Khatiwada. 6. The petitioner is granted liberty to avail of appellate remedy within four weeks from today and appeal, if filed as aforesaid, shall be entertained by the Commissioner (Appeals) without reference to limitation, heard and disposed, in accordance with law. This writ petition stands disposed as above. Connected miscellaneous petition is closed”. 7. The assessee on the basis of the aforesaid order of the Hon’ble
High Court, filed appeal before the Ld. CIT(A)-18, Chennai for a
direction to the ld. AO to give credit for Rs. 50 lakhs w.e.f. 12-05-2012
along with interest thereon to the assessee immediately.
The Ld. CIT(A) considered the appeal of the assessee and vide
para No. 6.1 of his order dated 31-01-2023 observed as under:
“6.1. The grounds of the assessee filed in the appeal consequent to the order of the Hon’ble High Court, and the written submissions filed by the AR are duly considered. The written submissions are basically reiterating its stand as made out in its grounds of appeal. The Hon’ble High Court in its order has observed that, -“The appellate authority would be better positioned, seeing as the issue in this matter relates, prima facie, the double taxation of the amount of Rs. 50,00,000/-, once in the hands of the petitioner and secondly, in the assessment of Bilash Khatiwada”. However, the jurisdiction over the case of Shri Bilash Khatiwada does not lie with the undersigned
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and moreover, in the appeal filed by the assessee in consequent to the order of the Hon’ble High Court, the assessee did not raise the issue of double taxation in the grounds preferred by it in this appeal. As appearing from the grounds and the connected written submissions, it is not the case of the assessee that there is double taxation in the hands of the assessee. To state more specifically, the assessee never raised in the grounds double taxation if an in its hands. Therefore, there is no locus standi for me to adjudicate on double taxation if any in the hands of the assessee. The assessee only seeks that there is double taxation in the case of another assessee. (the individual – Shri Bilash Khatiwada), whose jurisdiction does not lie with the undersigned. The assessment order in the case of the individual Shri Bilash Khatiwada, a copy of which has come to notice now, shows the assessment order of the individual for the impugned AY 2013-14.” Assessment order Originally, Shri Bilash Khatiwada and the assessee had stated that the amount seized belong to the assessee. However, later on, Shri Bilash Khatiwada changed his stand and filed revised return of income claiming that the seized amount of Rs. 50,00,000/- was his income from other source. The learned AO of Shri Bilash Khatiwada, AO, New Delhi accepted the revised return of income as filed by Shri Bilash Khatiwada. The learned CIT(A) finally disposed of the appeal in favour of the assessee. The Ld. CIT(A) directed the ld.AO to approach the PCIT, Guwahati, Assam for appropriation of the amount of Rs. 25,38,359/- towards the tax liability of the assessee if the amount is still available.The ld. CIT(A) also issued other directions to the ld. AO of the assessee as stated in the order. The ld. CIT(A) vide para No. 7 of the order stayed the proceedings for the collection of any outstanding demand relating to the addition of said amount of Rs. 50 lakhs.”
Being dissatisfied, the assessee filed the present appeal before
the Tribunal.
Heard the representatives of both the parties and perused the
materials available on record. The Ld. AR submitted for issuance of a
direction to the Ld. AO to grant credit for the cash seized of
Rs.50,00,000/- or else to delete the addition of Rs. 50,00,000/- in the
hands of the assessee.
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On the other hand, the ld. DR supported the order of the CIT(A).
We have carefully considered the submissions of both the
parties and perused the materials available on record. The Ld. CIT(A)
have made a number of observations which are not necessary to
mention here. In our opinion, the same amount should not be
assessed in the hands of two persons. The amount of Rs. 50,00,000/-
was seized from the custody of Shri Bilash Khatiwada. By filing a
revised return of income, Shri Bilash Khatiwada claimed that the
seized amount of Rs. 50,00,000/- was his income from other sources
and surrendered the entire amount for taxation purpose. This revised
return of income of Shri Bilash Khatiwada has already been accepted
by the learned AO, New Delhi vide assessment order dated 18-03-
2014. If the said amount of Rs. 50,00,000/- was the income of the
individual Shri Bilash Khatiwada, then, whether the claim of the
assessee over the said sum of Rs. 50,00,000/- will be tenable? The
assessment order made by the Ld. A.O, Chennai dated 30-03-2015
may have to be cancelled because, the assessment order passed in
respect of the individual Shri Bilash Khatiwada is prior in time i.e. 18-
03-2014 than the assessment order made by the Ld. AO, Chennai.
The assessment order passed by the Ld. A.O, Chennai is dated 30-03-
2015. The individual Shri Bilash Khatiwada did not make any claim
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before the AO, Chennai that the said amount of Rs. 50,00,000/- was
belong to the assessee company. However, the assessee company is
free to proceed against Shri Bilash Khatiwada through a proper legal
way if that sum was belongs to it. We have no jurisdiction to direct the
Tax Authority at Delhi to cancel the assessment order made by the
AO, New Delhi. But the fact is that the same amount has been
assessed by two different Tax Authorities in the hands of two different
persons. In our view, the CIT(A), ought to consider this aspect as the
assessment order passed by the Ld. AO, New Delhi was before him
while passing of the order dated 31-01-2023 by him. But the Ld.
CIT(A) stated that the matter of double taxation was not before him
and therefore, both the assessment orders as passed by the Ld. AO’s
new Delhi and Chennai are in force. In view of the peculiar nature of
the case, we are of the considered view that the Ld. AO, Chennai
should reframe the assessment order by considering the assessment
order dated 18-03-2014 passed by the Ld. AO, New Delhi on the
matter. Accordingly, we set aside the assessment order passed by Ld. AO, Chennai dated 30-03-2015 as well as the orders of the 1st
appellate authority and so far as the seized amount of Rs. 50,00,000/-
is concerned and direct the Ld. AO, Chennai for passing of a de-novo
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assessment order in respect of that seized amount by giving to the assessee an opportunity of being heard. Order passed accordingly.
In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced on 31st August, 2023.
Sd/- Sd/- (मंजुनाथ. जी) (मनोमोहन दास) (Manjunatha. G) (Manomohan Das) �ाियक सद�/Judicial Member लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य चे�ई/Chennai, �दनांक/Dated: 31st August, 2023. EDN/-
आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ*/Appellant 2. +,थ*/Respondent 3. आयकर आयु-/CIT 4. िवभागीय +ितिनिध/DR 5. गाड( फाईल/GF
