This document provides a detailed analysis of the Income Tax Appellate Tribunal’s final decision on the case between Arun Bansal, Delhi and ACIT Central Circle 20, Delhi, concerning the assessment year 2019-20. The case number is ITA 2615/DEL/2022, presided over by President Shri G.S. Pannu and Judicial Member Shri Saktijit Dey.
The appeal filed by the assessee, Arun Bansal, was directed against the order dated 20.10.2022 of the Commissioner of Income Tax (Appeals)-27, New Delhi, for the assessment year 2019-20. The primary issue in this case was the levy of interest under section 234B of the Income Tax Act, 1961.
During the hearing on 23.05.2023, the Revenue was represented by Ms. Sapna Bhatia, CIT-DR, and the assessee was represented by Sh. Somil Aggarwal, Advocate, and Sh. Om Prakash Bansal. The Tribunal proceeded to adjudicate the appeal based on the materials on record and submissions made by both parties.
The sole ground of appeal raised by the assessee was:
“Ld. CIT(A) has erred in confirming addition of Rs. 12,30,000/- made by the Ld. AO by invoking the provisions of section 68.”
Arun Bansal is a resident individual. On 01.12.2018, a search and seizure operation under section 132 of the Act was conducted in the case of Faquir Chand Lockers and Vaults Pvt. Ltd. During the search, locker No. 168 in the name of the assessee was found, containing cash amounting to Rs.1,07,00,000/-. The assessee could not explain the source of the cash and offered it as income. The cash was seized by the Department, and the assessee subsequently filed his return of income on 07.07.2019, declaring an income of Rs.4,71,290/-. The Assessing Officer (AO) completed the assessment by adding back the seized cash, but levied interest under section 234B of the Act for non-payment of advance tax.
The assessee argued that he had offered the cash as income during the search itself and requested the AO to adjust the tax liability from the seized cash. However, the Department’s system did not accept the return without payment of self-assessment tax, and the AO did not adjust the tax from the seized cash, leading to the levy of interest under section 234B. The assessee further contended that under identical circumstances, interest under section 234B was deleted in the case of his brother by the Tribunal.
The Tribunal noted that the cash seized was in the possession of the Department from 01.12.2018, and the assessee had requested the adjustment of the tax liability from the seized cash. The Tribunal observed that self-assessment tax is an existing liability created on 1st April once the financial year ends. Therefore, the AO should have adjusted the tax liability from the seized cash, and the levy of interest under section 234B was not justified.
The Tribunal found merit in the assessee’s contention and deleted the interest charged under section 234B. The Tribunal directed the CIT(A) to re-adjudicate the appeal on its merits, ensuring adequate opportunity of hearing to both parties.
Order pronounced in the open court on 29th May, 2023.
(G.S. PANNU)
PRESIDENT
(SAKTIJIT DEY)
JUDICIAL MEMBER
This case highlights the importance of addressing substantive issues on their merits and ensures that tax liabilities are adjusted appropriately from seized assets. The decision underscores the need for thorough verification of claims and the importance of fair treatment in tax matters.
The appellant, Arun Bansal, challenged the addition made by the AO under section 68 of the Income Tax Act, 1961, for the assessment year 2019-20. The CIT(A) dismissed the appeal, confirming the addition and the levy of interest under section 234B.
The appellant argued that the CIT(A)’s confirmation of the addition and levy of interest under section 234B was incorrect. They asserted that the CIT(A) did not address the substantive issues raised in the appeal on their merits.
The Tribunal observed that the CIT(A) dismissed the appeal based on an erroneous factual finding. The Tribunal found no material evidence from the Revenue to support the claim that the appellant had not requested the adjustment of tax liability from the seized cash. Consequently, the Tribunal decided to remand the case back to the CIT(A) for a decision on its merits.
The Tribunal’s decision in the case of Arun Bansal, Delhi vs ACIT Central Circle 20, Delhi, reaffirms the importance of addressing the substantive merits of a case rather than relying on procedural assumptions. The restoration of the case to the CIT(A) for a fresh decision ensures a fair and just resolution based on accurate facts.
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