Madan B. Lokur, J.:— The Revenue is aggrieved by an order dated February 6, 2002, passed by the Income-tax Appellate Tribunal, Delhi Bench C (“the Tribunal”), in I.T.A No. 823.Del/1996.
2. A common order was passed in respect of two assessees, namely, M/s. K.K Marketing and M/s. Kesr Kimam Karyalaya. In respect of K.K Marketing, the Revenue has filed Income-tax Appeal No. 16 of 2003 while in the case of Kesr Kimam Karyalaya, the Revenue has filed Income-tax Appeal No. 11 of 2003. The assessment year in both the appeals is the same, that is, 1994–95, In respect of this assessment year, the assessees were required to pay the first instalment of advance tax on September 15, 1993, while the next two instalments were due on December 15, 1993, and March 15, 1994.
3. A search was carried out in the premises of the assessees in August, 1993. During the search, a large amount of cash was recovered and so, when payment of advance tax was becoming due in September, 1993, the assessees wrote to the Department that the cash seized may be adjusted towards advance tax. This request was reiterated in December, 1993, also.
4. On December 16, 1993, an order was passed under section 132(5) of the Income-tax Act, 1961 (“the Act”), and the assessments in the case of the assessees were completed on November 28, 1994. While passing the assessment orders under section 143(1)(a) of the Act, it was held that the assessees were entitled to a refund of Rs. 48,78,295 as against the advance tax liability of Rs. 48,55,000. The Assessing Officer charged interest from both the assessees under sections 234B and 234C of the Act.
5. Feeling aggrieved, both the assessees moved applications under section 154 of the Act praying that interest was wrongly charged because requests had earlier been made to adjust the amount seized in cash against the impending advance tax liability. The Assessing Officer turned down the applications under sections 154 of the Act.
6. In appeal, the Commissioner of Income-tax (Appeals) (QT(A)) held that in the case of Kesr Kimam Karyalaya, interest under sections 234B and 234C could be charged up to the date of the order under section 132(5) of the Act, that is, December 16, 1993, while in the case of K.K Marketing, the Commissioner of Income-tax (Appeals) held that the request for adjustment of cash was made by the partners of the assessee and not by the assessee itself and so the adjustment could not be made.
7. Both the assessees challenged these orders in appeal before the Tribunal, which accepted their contentions by the impugned order.
8. The Tribunal noted that the assessees had made a request for adjustment of the seized cash before the date on which advance tax became due. It was also noted that ultimately the liability of the assessees towards advance tax was less than the amount found refundable to them. It was also noted that since the question of charging interest under sections 234B and 234C of the Act was highly debatable, it would be appropriate not to charge interest from the assessees.
9. Before us, learned counsel for the Revenue contended that substantial questions of law arise for consideration inasmuch as both the assessees were liable to pay interest under the provisions of sections 234B and 234C of the Act. It was also contended that cash belonging to the partners of the assessees could not be adjusted against the liability of the assessees.
10. We are of the view that the present appeals do not raise any question of law, much less any substantial question of law. There is no dispute that the offer for adjustment of the seized cash was made by the assessees before the advance tax liability became due. Therefore, it is not as if the assessees had any intention of shirking their advance tax liabilities. In similar circumstances, the Tribunal had taken the view that the adjustment of the cash recovered could be made against advance tax liability and the Revenue in the grounds of appeal has not disputed this. The orders passed by the Tribunal in this regard, which have been referred to in paragraph 9 of the impugned order, appear to have been accepted by the Revenue.
11. In so far as the adjustment of the cash seized against the liability of the firm is concerned, the Tribunal rightly held that there is no difference between a firm and its partners. Its partners constitute a firm and they are liable to make good any demand of taxes on behalf of the firm. The partners of the concerned assessee had categorically prayed that the cash seized from their premises, which also happened to be the premises of the firm, should be adjusted against the advance tax liability of the firm/asses-see. Such a request could have been made by the partners to bind the assessee and there could not have been any ground for rejecting such a request.
12. It must also be noted that the Revenue accepted the return filed by the assessees and, in fact, it was found that they were entitled to a refund, which was more than the amount of cash that was seized. On the basis of the above facts, we do not find any error of law having been committed by the Tribunal in accepting the contentions urged by the assessees. While it is true that tax laws and equity do not always go hand in hand, but in the present cases, since there is nothing to prohibit the assessees from making a request for adjustment of the cash seized against advance tax liabilities, equity demands that the cash amount ought to have been adjusted as prayed for by the assessees to save it from any liability of interest.
13. We are of the view that no substantial question of law arises. Both the appeals are dismissed.