Chief Manager, LIC of India, Branch-III, Khurda v. ACIT(TDS), Bhubaneswar

ITA 347/CTK/2010 | 2003-2004
Pronouncement Date: 23-09-2011

Appeal Details

RSA Number 34722114 RSA 2010
Assessee PAN EYEAR2008H
Bench Cuttack
Appeal Number ITA 347/CTK/2010
Duration Of Justice 11 month(s) 17 day(s)
Appellant Chief Manager, LIC of India, Branch-III, Khurda
Respondent ACIT(TDS), Bhubaneswar
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 23-09-2011
Assessment Year 2003-2004
Appeal Filed On 06-10-2010
Judgment Text
IN THE INCME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE : SHRI K.K.GUPTA AM AND SHRI K.S.S.PRASAD RAO JM SL. NO ITA NO APPELLANT RESPNODENT ASSESSMENT YEAR 1. 347 348 349 AND 350 /CTK/2010 CHIEF MANAGER BRANCH III LIC OF INDIA BBSR ACI T (TDS) 2003 - 04 2004 - 05 2006 - 07 2007 - 08 2. 351 352 353 354 355 AND 356/CTK/2010 SR.BRANCH MANAGER BRANCH I LIC OF INDIA BBSR - DO - 2003 - 04 2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 - 09 FOR THE APPELLANT: SHRI N.C.PATTNAIK AR FOR THE RESPONDENT SHRI S.C. MOHANTY DR DATE OF HEARING : 23.09.2011 DATE OF PRONOUNCEMENT : 23.09.2011 ORDER SHRI K.S.S.PRASAD RAO JM : ALL THESE APPEALS ARE FILED BY THE TWO DIFFERENT ASSESSEE S HAVING BEEN AGGRIEVED BY THE ORDERS OF THE COMMISSIONER OF INCOME - TAX (APPEALS) CONFIRMING THE DEMAND RAISED U/S.201(1) AND INTEREST LEVIED U/S.201(1A) OF THE INCOME - TAX ACT 1961 FOR THE ASSESSMENT YEARS 2003 - 04 2004 - 05 2006 - 07 AND 2007 - 08 IN RESPECT OF ASSESSEE AT SL.1 AND FOR THE ASSESSMENT YEARS 2003 - 04 2004 - 05 200 5 - 06 2006 - 07 AND 2007 - 08 AND 2008 - 09 . SINCE THE SE APPEALS HAVE RAISED COMMON GROUNDS ALL THE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE COM MON IN ALL THE APPEALS UNDER CONSIDERATION ARE AS UNDER : 1 . THAT THE IMPUGNED ORDER OF THE ASSESSING OFFICER AS WELL AS APPELLATE AUTHORITY IN THE COURT BELOW ARE ILLEGAL ARBITRARY AND WITHOUT ANY APPRECIATION OF JUDICIAL PRONOUNCEMENTS OF HIGH COURTS AND SUPREME COURT FOR WHICH IT IS LIABLE TO BE QUASHED SET - ASIDE. ITA NOS.285 286 287 288 289 290 AND 291/CTK/2010 2 2 . THAT THE ASSESSMENT MADE BY THE ASSESSING AUTHORITY U/S. 201 FOR THE RESPECTIVE ASSESSMENT YEARS IS BARRED BY TIME AS THE SAME HAS BEEN INITIATED ONLY DURING THE YEAR 2008 HURRIEDLY WITHOUT AFFORDING ADEQUATE OPPORTUNITY TO PRODUCE RELEVANT BOOKS OF ACCOUNTS AND SATISFACTORY EXPLANATION VIOLATING THE PRINCIPLE OF NATURAL JUSTICE AS OBSERVED BY SUPREME COURT AND OTHER HIGH COURTS. 3 . THAT THE PROCEEDINGS UNDER SECTION 201 AND 201(A) HAS BEEN I NITIATED UNDER A CONFUSED ASSUMPTION THAT THE CA AND ACA ARE TAXABLE WHEREAS THOSE ARE TAX - FREE INCOMES SUBJECT TO A LIMIT AND COVERED UNDER RULE 2BB OF THE INCOME TAX ACT WHICH ARE REIMBURSIBLE EXPENSES LAID OUT WHOLLY NECESSARILY AND EXCLUSIVELY FOR T HE PERFORMANCE OF DUTIES. 4 . THAT THE LAW IS WELL SETTLED THAT ON THE DATE OF FILING THE TDS RETURN WOULD DETERMINE THE TDS LIABILITY AND ASSESSEE CANNOT BE TREATED AS ASSESSEE - IN - DEFAULT RETROSPECTIVELY IN THE ABSENCE OF ANY BONAFIDE FINDING THAT THE CO NDUCT OF THE ASSESSEE WAS NOT FAIR AND HONEST. 5 . THAT UNLESS THERE IS AN OBLIGATION ON THE PART OF THE RECIPIENT TO PAY TAX UNDER THE HEAD SALARIES THE OBLIGATION TO DEDUCT TAX UNDER SECTION 192 DOES NOT ARISE. HENCE INITIATION OF PROCEEDINGS U/S 201 A ND 20(A) IS HAD AND LIABLE TO B E QUASHED. 6 . THAT THE ASSESSEE U/S 192 BEING AN OFFICER OF THE LIC OF INDIA WHICH IS A REPUTED PUBLIC SECTOR UNDERTAKING OF GOVT. OF INDIA ABIDE BY THE RULES AND REGULATIONS OF THE GOVT. AND IT CANNOT BE PRESUMED THAT IT HAD ACTED DELIBERATELY AND INTENTIONALLY NOT DEDUCTED THE TAX AND TO BE PROCEEDED U/S. 201 OF THE ACT. 7 . OTHER POINTS IT ANY SHALL HE URGED AT THE TIME OF HEARING AS THE LEARNED COMMISSIONER APPEALS AT CUTTACK HAD DISCHARGED ONE OF THE BRANCH OFFICE OF LIC A T CUTTACK FROM THE BURDEN OF 201(1 A) AND DROPPED THE PROCEEDINGS. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE AND THEIR LEGAL IMPLICATIONS. ITA NOS.285 286 287 288 289 290 AND 291/CTK/2010 3 4. ON CAREFUL ANALYSIS OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL IN THE LIGHT O F THE RIVAL SUBMISSIONS OF BOTH THE PARTIES THE UNDISPUTED FACTS RELATING TO THE ISSUES ARE THAT AS THERE WAS CONFUSION IN THE CBDT CIRCULAR DT.4.1.2001 AND THE CIRCULAR OF THE LIC GIVING GUIDELINES REGARDING EXEMPTION OF CONVEYANCE ALLOWANCE AND ADDITION AL CONVEYANCE ALLOWANCE AS WELL AS A STAY ORDER OF THE HONBLE ORISSA HIGH COURT ON 15.1.2004 IN WRIT PETITION (C) NO.275 OF 2004 AND MISC. CASE NO.269/04 THE ASSESSEE WAS RESTRAINED FROM MAKING ANY DEDUCTION OF TDS U/S.192 OF THE I.T.ACT 1961 TILL THE DI SPOSAL OF THE SAID CASE DURING APRIL 2008 IN ORDER TO AVOID CONTEMPT PROCEEDINGS BY HONBLE HIGH COURT. WITHOUT CONSIDERING THE GRAVITY OF THE SITUATION AND BONAFIDE OF THE ASSESSEE WHO IS IN A CONFUSED STATE OF AFFAIRS THE LEARNED CIT(A) HAVE UPHELD THE IMPOSITION OF TAX U/S.201 AND INTEREST U/S.201(1A) OF THE ACT WITHOUT GIVING ADEQUATE REASONS. THE LEARNED CIT(A) HAS IGNORED THE CONTENTIONS RAISED BY THE ASSESSEE BEFORE HIM REGARDING THE DETAILS OF FACTUAL ASPECT REGARDING THE SELF - DECLARATION OF THE DE DUCTEE AND COMPLETION OF PROCEEDINGS U/S.201 WITHIN 4 YEARS FROM THE END OF THE RELEVANT YEARS AND FAILED TO APPRECIATE THE STATUTORY CHECK OF OBLIGATION BY VIRTUE OF THE STAY ORDER PASSED BY THE HONBLE HIGH COURT ON 15.1.2004. HENCE THE PRESENT APPEALS ARE FILED BEFORE THE TRIBUNAL. 5. DURING THE COURSE OF HEARING BOTH THE LEARNED REPRESENTATIVES OF THE PARTIES HAVE CONCEDED THAT THE ISSUES IN THESE APPEALS ARE AKIN TO THOSE IN ITA NOS.285 286 287 288 289 290 AND 291/CTK/2010 IN THE CASE OF BRANCH MANAG ER BARANCH - II LIC OF ORISSA BHUBANESWAR V. ACIT(TDS) BHUBANESWAR FOR THE AYS 2001 - 02 2002 - 03 2003 - 04 2004 - 05 2005 - 06 2006 - 07 AND 2008 - 09 DISPOSED OF BY THIS TRIBUNAL IN A COMMON ORDER DT. 25.08 .2011 WHEREIN THE TRIBUNAL HAS CONSIDERED SIMILAR SUCH I SSUES AFTER TAKING INTO CONSIDERATION THE RELEVANT CBDT CIRCULAR AS WELL AS THE CIRCULARS ISSUED BY THE LIC AND ITA NOS.285 286 287 288 289 290 AND 291/CTK/2010 4 VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING THE STAY ORDER OF THE HONBLE HIGH COURT OF ORISSA HELD AS UNDER : 7 . ON CAREFUL ANALYSIS OF THE ORD ERS PASSED BY THE DEPARTMENTAL AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AS WELL AS THE JUDICIAL PRONOUNCEMENT RELIED UPON BY THEM IT IS FOUND THAT THE JUDICIAL PRONOUNCEMENT THAT HAVE BEEN RELIED BY THE ASSESSEE ARE ALL PASSED IN THE CASE OF INDIVIDUAL DEVELOPMENT OFFICERS ONLY BUT NOT IN THE CASE OF EMPLOYERS OF THE DEVELOPMENT OFFICERS. HERE IN THE PRESENT CASE THE ASSESSEE IS THE EMPLOYER AND ASSESSMENT ORDERS HAVE BEEN PASSED TREATING THE ASSESSEE AS ASSESSEE IN DEFAULT BECAUSE THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE PAID BY THE ASSESSEE TO THE DEVELOPMENT OFFICERS. CONSEQUENTLY THE INTEREST HAS ALSO BEEN LEVIED U/S.201(1A) OF THE I.T.ACT 1961. THEREFORE THE RELIANCE PLACED BY THE ASSESSEE ON THE VARIOUS DECISIONS OF THE TRIBUNAL AS WELL AS HIGH COURT IS NOTHING BUT MISPLACED ONE. DURING THE COURSE OF HEARING IT IS SUBMITTED THAT THE ASSESSEE HAS PAID THE DEMAND SOON AFTER THE STAY ORDER OF THE HONBLE HIGH COURT WAS VACATED. THE PAYMENT INCLUDED THE TAX AS WELL AS THE CONSEQUENTIAL INTEREST ALSO. AS THE NON - DEDUCTION OF TAX AT SOURCE IS DUE TO BONAFIDE CONFUSION IN THE CIRCULAR OF CBDT AS WELL AS THE STAY ORDER OF THE HONBLE HIGH COURT THE INTEREST AM OUNT RECOVERED FROM THE ASSESSEE IS NOT LIABLE TO BE LEVIED AGAINST THE ASSESSEE. HENCE THE ASSESSEE SOUGHT FOR NECESSARY ORDERS WITH REGARD TO THE INTEREST LEVIED AGAINST THE ASSESSEE AND PAID BY THE ASSESSEE ALREADY. SINCE THE ASSESSEE IS FOUND AS ASSE SSEE N DEFAULT HAVING FAILED TO DEDUCT TAX AT SOURCE U/S.192 ON THE PAYMENT OF CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE TO THE DEVELOPMENT OFFICERS OF THE ASSESSEE THE DEMAND OF TDS FROM THE ASSESSEE BY THE DEPARTMENT IS VALID AS THE ASSE SSEE IS HELD TO BE ASSESSEE IN DEFAULT. IN VIEW OF THE ABOVE THE ORDER OF THE DA PERTAINING TO THE DEMAND U/S.201(1) FOR ALL THE AYS UNDER CONSIDERATION IS UPHELD. 8. NOW CONSIDERING THE LEVY OF INTEREST U/S.201(1A) OF THE I.T.ACT IT IS FOUND THAT THE NON - DEDUCTION OF TAX WAS DUE TO THE BONAFIDE DOUBT OF THE ASSESSEE IN VIEW OF THE CBDT CIRCULAR AS WELL AS THE STAY ORDER GRANTED BY THE HONBLE ORISSA HIGH COURT THERE IS NO INTENTIONAL DEFAULT ON THE PART OF THE ASSESSEE. THEREFORE IN THE LIGHT OF THI S PARTICULAR FACTS WE ARE OF THE CONSIDERED VIEW THAT LEVY OF INTEREST U/S.201(1A) IS NOT JUSTIFIED. SINCE THE ASSE SSEE HAS PAID THE INTEREST U/S.2 01(1A) ON VACATION OF THE S TAY ORDER OF THE ORISSA HIGH COURT WE ARE OF CONSIDERED VIEW THAT THE ASSESSEE I S ENTITLED TO GET REFUND OF THE SAID ITA NOS.285 286 287 288 289 290 AND 291/CTK/2010 5 AMOUNT PAID TO THE DEPARTMENT. ACCORDINGLY WE MODIFY THE ORDER OF THE LEARNED CIT(A) TO THIS EXTENT AND DIRECT THE ASSESSING OFFICER TO REFUND THE INTEREST PORTION TO THE ASSESSEE SUBJECT TO VERIFICATION OF THE ACCOUN TS AS THERE IS NO INTENTION OR NEGLIGENCE ON THE PART OF THE ASSESSEE FOR NOT DEDUCTING TAX AT SOURCE ON THE PAYMENT OF CONVEYANCE ALLOWANCE AND ADDITIONAL CONVEYANCE ALLOWANCE TO ITS DEVELOPMENT OFFICERS. 6. ON COMPARISON OF THE FACTUAL ASPECTS INVOLVE D IN THE PRESENT APPEALS ON HAND WITH THOSE INVOLVED IN ITA NOS. 285 286 287 288 289 290 AND 291/CTK/2010 (SUPRA) ARE IDENTICAL AND THE DECISION THEREIN SQUARELY APPLIES TO THE INSTANT CASES ON HAND. THEREFORE CONSISTENT WITH THE VIEW TAKEN THEREIN WE H OLD THAT THE DEMAND RAISED U/S.201(1) IS PERFECTLY JUSTIFIED. SO FAR AS THE LEVY OF INTEREST U/S.201(1A) IN VIEW OF THE BONAFIDE DOUBT ENTERTAINED BY THE ASSESSEES ON THE CDBDT CIRCULAR AND ALSO THE STAY ORDER OF THE HONBLE ORISSA HIGH COURT WE HOLD THA T THE LEVY OF INTEREST U/S.201(1A) IS NOT JUSTIFIED FOR THE PERIOD FROM 15.1.2004 TO 31.1.2006. THEREFORE WE ACCORDINGLY DIRECT THE DEPARTMENT TO REFUND THE AMOUNT OF INTEREST THAT WAS LEVIED U/S.201(1A) AND COLLECTED FROM THE ASSESSEE FOR THE PERIOD UP T O 31.1.2006 OF COURSE AFTER VERIFICATION OF THE RECORDS AND AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEES. 7. IN THE RESULT ALL THE APPEALS ARE ALLOWED IN PART. (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRASAD RA O) JUDICIAL MEMBER DATE: 23 RD SEPTEMBER 2011 H.K.PADHEE SENIOR PRIVATE SECRETARY. ITA NOS.285 286 287 288 289 290 AND 291/CTK/2010 6 C OPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: BRANCH MANAGER BARANCH - II LIC OF ORISSA BHUBANESWAR. 2. THE RESPONDENT: A CIT(TDS) BHUBANESWAR 3. THE CIT 4. THE CIT(A) 5. THE DR CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY.