AFR Reserved on: 25.10.2017 Delivered on:09.11.2017 Court No. 4 Case : INCOME TAX APPEAL No. 39 of 2009 Appellant : Mahabeer Prasad Jain Respondent : Commissioner Of Income Tax Counsel for Appellant : Amit Mahajan Counsel for Respondent : Krishna Agarwal, Piyush Agarwal Hon'ble Abhinava Upadhya, J. Hon'ble Ashok Kumar, J. (Delivered by Ashok Kumar, J.) 1. This is appeal arises from decision of Income Tax Appellate Tribunal dated 28.11.2008 passed by Tribunal in ITA No.18/Agra/2007 . 2. following questions of law have been framed by assessee. (i) Whether, on facts and in circumstances of case, Tribunal was justified in confirming demand of interest u/s 234 and 234 B of Income Tax Act ? (ii) Whether, interest of Rs.16,398/ under Section 234A is liable to be deleted as amount of Rs.4,90,899/ allegedly belonging to appellant stood seized by department on 31.05.1990 and appropriated vide order dated 23.11.1990 under Section 132(5) of Act ? (iii) Whether, interest of Rs.1,31,184/ under Section 234 B is liable to be deleted as amount of Rs.4,90,899/ allegedly belonging to appellant stood seized by department on 31.05.1990 and appropriated vide order dated 23.11.1990 under Section 132(5) of Act ? (iv) Whether, term 'existing liability under Act' has been correctly interpreted and applied in facts and circumstance existing in present case ? 3. We have heard Sri Amit Mahajan, learned counsel for appellant and Sri Piyush Agarwal, learned Senior Standing 2 Counsel for Department. 4. brief facts of case are that search and seizure operation under Section 132(1) has held on office premises of Chief General Manager, Dispatch and Coordination, Central Coal Field Ltd., Ranchi on 30.07.1990. During course of search, cash amounting to Rs.4,90,889/ was seized. said amount which was found during course of search, was for purchase of coal in office of Chief General Manager, Central Coal Field Ltd., Ranchi. 5. order under Section 132 (5) of Income Tax Act, 1961 (hereinafter referred as 'The Act') has been passed in name of M/s Gyan Chand Mahavir Prasad Jain Industries, Firozabad of which sole proprietor was Mahabir Prasad Jain. While passing order under Section 132(5), authority has found undisclosed income of appellant and it has been estimated at Rs.5,40,889/ . 6. Section 132(5) of Act provides procedure for search and seizure. Sub Section 5 of Section 132 of Act provides as follows: (5) Where any money, bullion, jewellery or other valuable article or thing (hereafter in this section and in sections 132A and 132B referred to as assets) is seized under sub section (1) or sub section (1A), as result of search initiated or requisition made before 1 st day of July, 1995, Income tax Officer, after affording reasonable opportunity to person concerned of being heard and making such enquiry as may be prescribed, shall, within one hundred and twenty days of seizure, make order, with previous approval of Joint Commissioner, i. estimating undisclosed income (including income from undisclosed property) in summary manner to best of his judgment on basis of such materials as are available with him; ii. calculating amount of tax on income so estimated in accordance with provisions of Indian Income tax Act, 1922 (11 of 1922), or this Act; (iia) determining amount of interest payable and amount of penalty imposable in accordance with provisions of Indian Income tax Act, 1922 (11 of 1922), or this Act, as if order had 3 been order of regular assessment; (iii) specifying amount that will be required to satisfy any existing liability under this Act and any one or more of Acts specified in clause (a) of sub section (1) of section 230A in respect of which such person is in default or is deemed to be in default, and retain in his custody such assets/or part thereof as are in his opinion sufficient to satisfy aggregate of amounts referred to in clauses (ii), (iia) and (iii) and forthwith release remaining portion, if any, of assets to person from whose custody they were seized: Provided that if, after taking into account materials available with him, Income tax Officer is of view that it is not possible to ascertain to which particular previous year or years such income or any part thereof relates, he may calculate tax on such income or part, as case may be, as if such income or part were total income chargeable to tax at rates in force in financial year in which assets were seized and may also determine interest or penalty, if any, payable or imposable accordingly: Provided Further that where person has paid or made satisfactory arrangements for payment of all amounts referred to in clauses (ii), (iia) and (iii) or any part thereof, Income tax Officer may, with previous approval of Chief Commissioner or Commissioner, release assets or such part thereof as he may deem fit in circumstances of case. 7. After order passed under Section 132(5) of Act, notice under Section 143(2) has been issued and in pursuance thereto appellant assessee appeared and after considering submission of assessee, assessing authority has passed order dated 02.03.1993 under section 143(3) of Act by which assessing authority has treated recovered cash as undisclosed investment and accordingly assessing authority has determined taxable income at Rs. 5,34,120/ . demand notice has been issued under Section 156 wherein demand of Rs.4,20,914/ was raised. said amount comprised tax at Rs. 2,73,332/ interest under Section 234(A) of Act at Rs.16,398/ and interest under Section 234(B) of Act at Rs.1,31,184/ . 8. This part of order passed under Section 143(3) has been challenged by appellant assessee before Commissioner of Income Tax (Appeals). Before Commissioner of Income Tax (Appeals) it has been contended by appellant that amount 4 of Rs.4,90,889/ does not belong to him. It has also been contended by appellant that interest under Section 234A and under Section 234B of Act cannot be levied. appellant has challenged demand itself by praying that tax stands be adjusted against amount which has been recovered and retained by department during course of search. 9. Before CIT(A) appellant has contended that since in order of demand there is no specific mention of charging of interest hence same cannot be realised. Commissioner of Income Tax (Appeals) vide its order dated 18.08.2006 has dismissed appeal filed by appellant and has held that interest can be charged even when same has not been mentioned in order of assessment. 10. Since CIT(A) has brushed aside submission and contention as well as objection of appellant assessee with regard to charge of interest, assessee has filed appeal before ITAT, Agra which appeal has been dismissed by ITAT by impugned judgment and order dated 28.11.2008. 11. present appeal, therefore, arises from order of ITAT dated 28.11.2008. 12. sole issue which has been raised by means of present appeal is confined to confirmation of demand of interest under Sections 234A and 234B of Act, therefore, it would be relevant to place provision of Section 234A and Section 234B of Act, which are as follow; 234A. Interest for defaults in furnishing return of income. (1) Where return of income for any assessment year under sub section (1) or sub section (4) of Section 139, or in response to notice under sub section (1) of section 142, is furnished after due date, or is not furnished, assessee shall be liable to pay simple interest at rate of one per cent for every month or part of month comprised in period commencing on date immediately following due date, and, 5 (a) where return is furnished after due date, ending on date of furnishing of return; or (b) where no return has been furnished, ending on date of completion of assessment under section 144, on amount of tax on total income as determined under sub section (1) of section 143, and where regular assessment is made, on amount of tax on total income determined under regular assessment, as reduced by amount of, (i) advance tax, if any, paid; (ii) any tax deducted or collected at source; (iii) any relief of tax allowed under section 90 on account of tax paid in country outside India; (iv) any relief of tax allowed under section 90A on account of tax paid in specified territory outside India referred to in that section; (v) any deduction, from Indian income tax payable, allowed under section 91, on account of tax paid in country outside India; and (vi) any tax credit allowed to be set off in accordance with provisions of section 115JAA or section 115JD. Explanation 1. In this section, "due date" means date specified in sub section (1) of Section 139 as applicable in case of assessee. Explanation 2. In this sub section, "tax on total income as determined under sub section (1) of section 143" shall not include additional income tax, if any, payable under section 143. Explanation 3. Where, in relation to assessment year, assessment is made for first time under section 147 or section 153A, assessment so made shall be regarded as regular assessment for purposes of this section. Explanation 4. [* * *] (2) interest payable under sub section (1) shall be reduced by interest, if any, paid under section 140A towards interest chargeable under this section. (3) Where return of income for any assessment year, required by notice under section 148 [or section 153A] issued after determination of income under sub section (1) of section 143 or after completion of assessment under sub section (3) of section 143 or section 144 or section 147, is furnished after expiry of time allowed under such notice, or is not furnished, assessee shall be liable to pay simple interest at rate of one per cent for every month or part of month comprised in period commencing on day immediately following expiry of time allowed as aforesaid, and, (a) where return is furnished after expiry of time aforesaid, ending on date of furnishing return; or (b) where no return has been furnished, ending on date of 6 completion of reassessment or recomputation under section 147 or reassessment under section 153A, on amount by which tax on total income determined on basis of such reassessment or recomputation exceeds tax on total income determined under sub section (1) of section 143 or on basis of earlier assessment aforesaid. Explanation. [* * *] (4) Where as result of order under section 154 or section 155 or section 250 or section 254 or section 260 or section 260 or section 263 or section 264 or order of Settlement Commission under sub section (4) of section 245D, amount of tax on which interest was payable under sub section (1) or sub section (3) of this section has been increased or reduced, as case may be, interest shall be increased or reduced accordingly, and (i) in case where interest is increased, Assessing Officer shall serve on assessee notice of demand in prescribed form specifying sum payable, and such notice of demand shall be deemed to be notice under section 156 and provisions of this Act shall apply accordingly; (ii) in case where interest is reduced, excess interest paid, if any, shall be refunded. (5) provisions of this section shall apply in respect of assessments for assessment year commencing on 1st day of April, 1989 and subsequent assessment years. 234B. Interest for defaults in payment of advance tax. (1) Subject to other provisions of this section, where, in any financial year, assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where advance tax paid by such assessee under provisions of section 210 is less than ninety per cent of assessed tax, assessee shall be liable to pay simple interest at rate of one per cent for every month or part of month comprised in period from 1st day of April next following such financial year to date of determination of total income under sub section (1) of section 143 and where regular assessment is made, to date of such regular assessment, on amount equal to assessed tax or, as case may be, on amount by which advance tax paid as aforesaid falls short of assessed tax. Explanation 1. In this section, "assessed tax" means tax on total income determined under sub section (1) of section 143 and where regular assessment is made, tax on total income determined under such regular assessment as reduced by amount of, (i) any tax deducted or collected at source in accordance with provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income; (ii) any relief of tax allowed under section 90 on account of tax paid in country outside India; (iii) any relief of tax allowed under section 90A on account of tax 7 paid in specified territory outside India referred to in that section; (iv) any deduction, from Indian income tax payable, allowed under section 91, on account of tax paid in country outside India; and (v) any tax credit allowed to be set off in accordance with provisions of section 115JAA or section 115JD. Explanation 2. Where, in relation to assessment year, assessment is made for first time under section 147 or section 153A, assessment so made shall be regarded as regular assessment for purposes of this section. Explanation 3. In Explanation 1 and in sub section (3) "tax on total income determined under sub section (1) of section 143" shall not include additional income tax, if any, payable under section 143. (2) Where, before date of determination of total income under sub section (1) of section 143 or completion of regular assessment, tax is paid by assessee under section 140A or otherwise, (i) interest shall be calculated in accordance with foregoing provisions of this section up to date on which tax is so paid, and reduced by interest, if any, paid under section 140A towards interest chargeable under this section; (ii) thereafter, interest shall be calculated at rate aforesaid on amount by which tax so paid together with advance tax paid falls short of assessed tax. (2A) (a) where application under sub section (1) of section 245C for any assessment year has been made, assessee shall be liable to pay simple interest at rate of one per cent for every month or part of month comprised in period commencing on 1st day of April of such assessment year and ending on date of making such application, on additional amount of income tax referred to in that sub section; (b) where as result of order of Settlement Commission under sub section (4) of section 245D for any assessment year, amount of total income disclosed in application under sub section (1) of section 245C is increased, assessee shall be liable to pay simple interest at rate of one per cent for every month or part of month comprised in period commencing on 1st day of April of such assessment year and ending on date of such order, on amount by which tax on total income determined on basis of such order exceeds tax on total income disclosed in application filed under sub section (1) of section 245C; (c) where, as result of order under sub section (6B) of section 245D, amount on which interest was payable under clause (b) has been increased or reduced, as case may be, interest shall be increased or reduced accordingly; (3) where, as result of order of reassessment or recomputation under section 147 or section 153A, amount on which interest was payable in respect of shortfall in payment of advance tax for any 8 financial year under sub section (1) is increased, assessee shall be liable to pay simple interest at rate of one per cent for every month or part of month comprised in period commencing on 1st day of April next following such financial year and ending on date of reassessment or recomputation under section 147 or section 153A, on amount by which tax on total income determined on basis of reassessment or recomputation exceeds tax on total income determined under sub section (1) of section 143 or on basis of regular assessment as referred to in sub section (1), as case may be;] (4) where, as result of order under section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264, amount on which interest was payable under sub section (1) or sub section (3) has been increased or reduced, as case may be, interest shall be increased or reduced accordingly, and (i) in case where interest is increased, Assessing Officer shall serve on assessee notice of demand in prescribed form specifying sum payable and such notice of demand shall be deemed to be notice under section 156 and provisions of this Act shall apply accordingly; (ii) in case where interest is reduced, excess interest paid, if any, shall be refunded; (5) provisions of this section shall apply in respect of assessments for assessment year commencing on 1st day of April, 1989 and subsequent assessment years. 13. Having heard learned counsel for parties and after perusal of orders passed by authorities below as well as impugned judgment and order of Tribunal, we have noticed that while deciding appeal, CIT(A) has recorded categorical finding that appellant assessee has purchased 5 bank drafts towards amounting of Rs.4,90,899/ on 31.05.1990. said drafts were purchased for lifting coal by road from collieries of CCL, Ranchi. These five drafts were deposited along with application prepared by appellant's company by 31st May, 1990. During course of examination and verification, assessing authority has asked appellant to explain source of investment while purchasing aforesaid drafts. appellant has explained that he has authorised by one Mahesh Chandra Bansal of Firozabad for lifting coal from CCL, Ranchi and accepted that he has no knowledge about any purchase of 9 said drafts. In his submission, person authorised has further explained that he did not know who had made said investment in bank. In fact, he had denied transaction. 14. This stand of authorised person was challenged and thereafter fresh explanation has been given that appellant has not clearly given any authority to said authorised person namely Mahesh Chandra Bansal. assessing authority has noticed contradiction in statement of authorised authority in changed stand by appellant. assessing authority had noticed that Mahesh Chandra Bansal had denied allegation of appellant. He came to conclusion that since Mr. Bansal denied having done any work with assessee and having made any investment on behalf of assessee or any other person while purchasing of said drafts and since no plausible explanation has been furnished about investment in purchase of drafts and stands clearly establishes that investment in bank drafts amounting of Rs.4,90,899/ has been made in name of appellant and same was made by appellant himself which was nothing but clearly undisclosed source and accordingly addition under Section 69 of Act has been made. 15. During course of appellate proceeding before CIT(A), CIT(A) has referred matter to assessing authority for his comments. assessing authority vide his letter dated 26.10.2005 has submitted his comments as under; Regarding pt. No.5 to 7 of assessee's contention that he has been writing letters to Branch Manager of concerned bank to seek information about persons who applied for or obtained said drafts. Perusal of letters reveals that assessee has written letters to concerned bank only on 05.02.03, 26.11.04 and 21.1.05 whereas assessment proceedings were started after filing of return on 12.12.91. assessee could have obtained desired information from bank during course of assessment proceedings as well as at appeal stage but he did not do so. Only he has tried from 5.2.03 by merely writing letter. 10 assessee has earnestly not tried to obtain information from Bank. He could not have collect information from Bank personally but he failed to do so. After lapse of 12 years simply writing letter in bank in get information is only to press his claim that he has written several letters. But onus was on assessee to prove investment in aforesaid drafts. Everybody knows that information from banks after lapse of such long period will not be available. Such papers are destroyed after three to four years by bank. 16. After examination of entire material available with CIT(A), CIT(A) concluded that contention of appellant that he has failed to receive any reply from bank with regard to purchase of draft is not at all relevant. Admittedly, drafts were purchased in name of appellant by depositing cash (no source of availability of cash is explained), therefore, evidence regarding purchase of drafts will not throw any new light on facts. CIT(A) further mentioned that moreover onus was on appellant to submit any additional evidence with regard to his explanation, which he failed. CIT(A) has further mentioned that five drafts were purchased in name of appellant and same were deposited by appellant with affidavit and application with own signature is itself sufficient proof that appellant has invested sum of Rs.4,90,899/ from unaccounted source and therefore assessing authority has fully justified in making addition of Rs.4,90,899/ . 17. CIT(A), therefore, arrived at conclusion that in view of aforesaid facts and determination of addition by assessing authority, appellant is liable to pay interest under Section 234A of Act. 18. While affirming view of imposition of interest under Section 234A and 234B, CIT(A) has relied upon several decisions of High Court as well as of Hon'ble Supreme Court which are discussed in detail in order of CIT(A) dated 30.03.1993. CIT(A) has held by following decisions that levy of interest is mandatory in facts and circumstances 11 of present case. He has held that moment it is found that legitimate tax has not been paid by specified date interest become payable. He has further held that there is subjectivity or discretion in matter of levy of such interest under Section 234A and 234B of Act. He has, therefore, noted that in present case, default committed by appellant assessee is not in dispute, and therefore, interest was clearly leviable under Section 234A and 234B as per law. 19. In appeal before ITAT, assessee has submitted that department has failed to exercise power to get require details from bank from where drafts were purchased. It is further contended on behalf of assessee that, in fact, department has failed to prove that investment was actually made by appellant and further that order of CIT(A) is incorrect both on facts and law in affirming levy of interest. 20. ITAT has considered grounds of appeal and observed in paragraph 5.1 of its order dated 28.11.2008, that interest levied under reference is under Sections 234A and 234B. While latter section concerns default of short fall in payment of advance tax, which law mandates assessee to pay in full by close of relevant previous year, former is in relation to delay in furnishing of its return of income (ROI) by assessee, i.e., default which is independent of assessee's tax liability or its payment in time, if any. 21. In present case, assessee admittedly failed to furnish return as also not deposited advance tax as required under law, therefore, appellant/assessee is liable to pay interest under Sections 234A and section 234B. 22. We have heard learned counsel for parties and we find no illegality in order of CIT(A) and in impugned 12 order of ITAT. Both appellate authorities after considering judgments which are relied upon by learned counsel for assessee correctly arrived at conclusion to hold that assessee/appellant is liable to pay interest under section 234A and under section 234B of Act. Tribunal has held that no infirmity is noticed in levy of interest in present case. 23. In view of aforesaid facts, since Tribunal has recorded categorical findings of fact, which is supported by law, we find no force in instant appeal. Accordingly, appeal is dismissed. Order Date : 09.11.2017 A.Kr.* [Ashok Kumar, J.] [Abhinava Upadhya, J.] MahabeerPrasadJain v. CommissionerofIncome-tax