C I T vs. O P MIGLANI

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ITA/379/2007HC Punjab & HaryanaPHHC01073077200702 September 2008Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY TEWARI4 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court addressed the second question first, answering it in favour of the revenue, relying on its own decision in CWP No. 2046 of 2005, Lalit Hosiery and others v. Union of India and others. This decision held that a provision in a Finance Act could be given effect to even if not immediately incorporated into the main Income Tax Act, and thus, the surcharge was applicable. Regarding the first question, the High Court found the Tribunal's decision unexceptionable. The Tribunal had held that interest was chargeable not on the entire tax on undisclosed income, but on the tax as reduced by the sum of Rs. 46.70 lacs paid by the assessee up to 13.10.2000, considering this payment was made before the due date for filing the return. The High Court relied on decisions from the Bombay High Court in Lachman Chaturbhuj Java v. R.G. Nitsure and others, and its own decisions in Harmanjit Trust v. CIT and CIT v. Surinder Kumar Parmod Kumar. Consequently, the High Court held that the first question could not be considered a substantial question of law, and the appeal was partly allowed, with the second question answered in favour of the revenue and the appeal dismissed concerning the first question.

What were the facts?

The Revenue filed an appeal under Section 260-A of the Income Tax Act against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had partially deleted interest levied under Section 158BFA(1) and deleted a surcharge levied under the proviso to Section 113. The assessment was for the Block Assessment Period 01.04.1990 to 17.08.2000. A search was conducted on the assessee's premises on 17.08.2000. The assessee requested copies of seized documents and extension for filing the block return, enclosing challans evidencing payment of Rs. 40 lacs with an application dated 13.10.2000. The return was ultimately filed on 13.12.2000. The dispute pertains to interest of Rs. 5,70,366/- for alleged delay in filing the return and a surcharge.

What were the issues?

The Tribunal had to decide two substantial questions of law: 1. Whether the Tribunal was correct in law in confirming the order of the CIT(A) in partially deleting interest levied under Section 158BFA(1) of the Income Tax Act in respect of taxes paid up to the deemed due date of filing the Block Return? 2. Whether the Tribunal was correct in law in deleting the surcharge levied under the proviso to Section 113 on the ground that the search had taken place prior to the insertion of the proviso w.e.f. 01.06.2002? Assessee's Contentions: For issue 1, the assessee contended that interest should not be levied on taxes paid up to the due date for filing the return, as per the ITAT's finding that Rs. 46.70 lacs were paid before the due date. The assessee relied on decisions in Lachman Chaturbhuj Java v. R.G. Nitsure, Harmanjit Trust v. CIT, and CIT v. Surinder Kumar Parmod Kumar. Revenue's Contentions: For issue 2, the revenue relied on the High Court's decision in CWP No. 2046 of 2005, Lalit Hosiery and others v. Union of India and others, which held that a provision in a Finance Act could be given effect to even if not immediately incorporated into the main Income Tax Act, and therefore, the surcharge was applicable. The revenue argued that the insertion of the proviso w.e.f. 01.06.2002 did not affect the assessee's liability.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 158BFA(1),Section 158BC,Section 113

AI-generated summary — verify with the full judgment below

In the High Court of Punjab and Haryana at Chandigarh CM No. 18192-CII of 2007 and Date of Decision:02.09.2008 Commissioner of Income-tax (Central) Ludhiana ...... Appellant Versus Dr.O.P. Miglani,Miglani Nursing Home, Kunjpura Road, Karnal ...... Respondent Coram: Hon'ble Mr. Justice Adarsh Kumar Goel Hon'ble Mr. Justice Ajay Tewari

1.

Whether Reporters of local papers may be allowed to see the judgment?

2.

To be referred to the Reporters or not?

3.

Whether the judgment should be reported in the Digest? Present: Mr.Krishan Mehta, Advocate for the appellant. Mr.Deepak Sharma, Advocate for the respondent. **** Ajay Tewari, J. C.M. No. 18192-CII of 2007

For the reasons mentioned in the application, delay of 12 days in refiling the appeal is condoned. C.M. stands disposed of. ITA N. 379 of 2007 This appeal has been filed under Section 260-A of the Income Tax Act (hereinafter referred to as 'the Act') by the revenue against the order dated 29.09.2006 passed by the Income Tax Appellate Tribunal, Delhi Bench 'F', New Delhi (hereinafter referred to as 'the Tribunal') in IT(SS) A.No. 349/Del/02 for the Block Assessment Period 01.04.90 to 17.08.2000 proposing following substantial questions of law:- (i)Whether on the facts and circumstances of the case, the Tribunal was correct in law in confirming the order of the Ld. CIT (A) in partially deleting interest levied u/s 158BFA (1) of the I.T. Act in respect of taxes paid up to the deemed due date of filing the Block Return? (ii)Whether on the facts and circumstances of the case, the Tribunal was correct in law in deleting the surcharge levied under proviso to section 113 on the ground that search had taken place in the case of the assessee prior to the insertion of the proviso w.e.f. 01.06.2002?” Taking the second question first, we may notice that this Court in CWP No. 2046 of 2005, Lalit Hosiery and others v. Union of India and others decided on 18.10.2006 held as follows:- “Having regard to the fact that in the Finance Act 2000, a specific provision has been incorporated, merely because addition in the Income Tax Act has been incorporated only w.e.f. 1.6.2002, did not affect liability of the assessee to pay surcharge. It is not possible to accept that a provision in a Finance Act could not be given effect to unless the same was incorporated in the main Income Tax Act.” In this view of the matter the second question is answered in favour of the revenue.

As regards the first question, it is seen that a search was conducted on the premises of the assessee-respondent on 17.8.2000. Pursuant to this, notice under Section 158 (BC) of the Act was served on the assessee on 29.8.2000 whereby he was called upon to file the return of income within 30 days as per which the said return could be filed on or before 28.9.2000. By letters dated 1.9.2000, 10.9.2000, 22.9.2000, 6.10.2000 and 13.10.2000 the assessee requested for copies of the seized documents, without the perusal of which return could not be filed, and also sought extension of time for filing a block return up to 13.10.2000. Along with the application dated 13.10.2000 the assessee enclosed challans evidencing payment of Rs. 40 lacs. There was no communication from the Assessing Officer as to whether extension of time sought for was granted or refused and, ultimately the return was filed on 13.12.2000. The entire assessment is not relevant for the purpose of this order since the only question which survives is with regard to the demand of interest for Rs. 5, 70, 366/- on account of alleged delay in filing the return. In appeal the Appellate Authority set aside the demand for interest up to 13.10.2000 on the ground that the return could be filed up to the said date. In further appeal the Tribunal held that interest was chargeable not on the entire tax on the undisclosed income but on the tax as reduced by the sum of Rs. 46.70 lacs paid by him up to 13.10.2000 on the footing that this amount was paid by the assessee before the due date for filing the return. In our opinion, this finding of the Tribunal is unexceptionable. In this regard reliance has been placed on the decision of the Bombay High Court in the case of Lachman Chaturbhuj Java v. R.G. Nitsure and others reported as 132 ITR 631 as well as of this Court in the case of Harmanjit Trust v. CIT reported as 148 ITR 214 and in CIT v. Surinder Kumar Parmod Kumar reported as 193 ITR 71. In this view of the matter, question No.1 cannot be held to be substantial question of law. Thus, this appeal is partly allowed. Question No.2 is answered in favour of the revenue while with regard to question No.1, the appeal is dismissed. (AJAY TEWARI) JUDGE ADARSH KUMAR GOEL) JUDGE September 02, 2008 sunita

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