JAINCO DEVELOPERS (P) LTD.,NEW DELHI vs. ACIT, CIRCLE- 13(1), NEW DELHI

That under the facts, the payment of tax of Rs.74,44,694/- should have been deemed to be paid on 11.04.2012 therefore the credit of Rs.74,44,694/- should be given assuming payment made on 11.04.2012, therefore interest U/s.234A & 234B should be calculated accordingly. 3. That under the facts and circumstances of the case, both the lower authorities erred in law as well as on merits in rejecting the application filed U/s.154 of the I.T. Act.‖ 3. We have heard the rival submissions and perused the material available on record. A search and seizure operation was carried out on 19.10.2011 at the premises of M/s Aggarwal Associates and Jainco Group of cases, which included the assessee company also. During the search, fixed deposit receipts to the extent of ₹71,36,097/- and ₹20,38,885/- were seized. The assessee vide letter dated 11.04.2012 requested the Income Tax Department to adjust the fixed deposit receipts against the advance tax liability for AY 2012-13. Later, the assessee filed its return of income belatedly on 26.03.2013 within the time limit prescribed u/s 139(4) of the Act declaring total income of ₹2,12,72,940/- wherein it was specifically requested to adjust the fixed deposits receipts towards the self assessment tax payable by the assessee. This is evident from the computation of total income of the assessee. The ld AO completed the assessment proceedings u/s 143(3) of the Act on 31.03.2015 accepting the return of income but did not give credit for self assessment tax by way of adjustment of seized fixed deposits as claimed by the assessee in the return of income and proceeded to raise a demand on the assessee charging interest u/s 234B of the Act till 31.03.2015. The assessee filed rectification petition u/s 154 of the Act before the ld AO on 06.04.2015, which was disposed of beyond the time limit prescribed u/s 154(8) of the Act on 04.07.2017, rejecting the claim of the assessee on the following two grounds: –

It is pertinent to note that the no finding whatsoever was given by the ld AO in its order with regard to assessee’s claim, seeking adjustment of seized fixed deposits with the self assessment tax of the assessee. This action of the ld AO was upheld by the ld CIT(A).

The short issue that arise for our consideration in this appeal is whether the assessee is entitled for seeking credit of appropriation of seized fixed deposits as self assessment tax liability of the assessee. The ld DR before us vehemently argued that self assessment tax is the tax payable by the assessee at the time of filing of income tax return and advance tax payable by the assessee for AY 2012-13 expired on 31.03.2012 and that in the instant case, assessee had made the first request for adjustment of seized assets only on 11.04.2012. In these circumstances, the same does not fall within the ambit of adjustment of advance tax. Similarly, the request for adjustment of seized assets was made on 11.04.2012, but the assessee had filed return belatedly only on 26.03.2013 and hence the same would also not fall within the ambit of adjustment towards self assessment tax.

We are unable to comprehend ourselves to accept to this proposition of the ld DR in view of the fact that any tax that is paid or sought to be paid by the assessee after the expiry of the financial year could only be construed as advance payment of self assessment tax. In the instant case, the assessee had made a request for adjustment of seized fixed deposits towards the tax liability in terms of section 132B of the Act on 11.04.2012 itself. Obviously, that request had to be construed only towards payment of self assessment tax liability, dehors the actual date of filing of return of income. The most

The seized cash of Rs. 1.76 crores was not given credit by the ld AO in this rectification order u/s 154 of the Act. 7. Aggrieved, the assessee preferred an appeal before the ld CIT(A), who upheld the action of the ld AO stating that the existing liability does not include advance tax payable and observed that by applying the provisions of Explanation 2 to section 132B of the Act, the assessee‘s plea has been rightly rejected by the ld AO. 8. We are unable to comprehend ourselves to accept to the action of the lower authorities in the instant case. No doubt, in the rectification application made by the assessee u/s 154 of the Act, the assessee had erroneously requested the ld AO to treat the seized cash of Rs. 1.76 crores to be adjusted towards advance tax payable. This is infact not in consonance with provisions of Explanation 2 to section 132B of the Act. However, this rectification application arose from the order u/s 143(3) of the Act dated 31.03.2016 passed by the ld AO wherein, the ld AO had failed to give credit for treatment of seized cash of Rs. 1.76 crores as self assessment tax. In other words, seized cash of Rs. 1.76 crores was not given credit by the ld AO in the assessment framed u/s 143(3) of the Act dated 31.03.2016. It is not in dispute that the assessee had indeed made a claim for adjustment of seized cash of Rs. 1.76 crores with his self assessment tax payable by the assessee along with return of income on 31.08.2015 itself. This was conveniently ignored by the lower authorities. From the bare reading of provisions of section 132B of the Act together with Explanation 2 thereon, there is no prohibition to adjust the seized cash with self assessment tax. What is prohibited is only adjustment of seized cash with the advance tax. Hence, we hold that the assessee is entitled for adjustment of seized cash of Rs. 1.76 crores with self assessment tax payable by the assessee in the return of income. Our view is further fortified by the decision of the coordinate bench of Kolkata Tribunal in the case of ACIT Vs. Narendra N. Thacker reported in 82 taxmman.com 64 and the decision of the Hon‘ble Punjab and Haryana High Court in case of Spaze Towers (P) Ltd Vs. DCIT reported in 76 taxmann.com 371.

In view of the aforesaid observations and respectfully following the judicial precedents relied upon herein above, the ground No. 2 raised by the assessee is hereby allowed.‖ 7. We find that the seized fixed deposit receipts ultimately had been adjusted against the regular tax arrears for AY 2012-13 by the Income Tax Department at a later period. In view of the aforesaid observations and respectfully following the judicial precedent relied upon hereinabove, we direct the ld AO to adjust the fixed deposit receipts towards self assessment tax payable by the assessee w.e.f. 11.04.2012 and recompute the interest u/s 234B of the Act accordingly. Since the seized fixed deposit receipts are now

Since, the relief is granted to the assessee on merits, the ground No. 1 raised by the assessee stating that the rectification order passed u/s 154 of the Act on 04.07.2017 is barred by limitation, need not be gone into and the same is hereby left open.

With these directions, the grounds raised on merits by the assessee are hereby allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes.