FIREFLY CREATIVE STUDIO PRIVATE LIMITED V. UNION OF INDIA

WP/13364/2018

AI Insights

The case involves Firefly Creative Studio Private Limited, the petitioner, who filed a writ petition against various respondents including the Union of India, Ministry of Finance, and others, concerning the non-crediting of TDS (Tax Deducted at Source) by the fifth respondent, Rockline Entertainments Private Limited. The petitioner contested the response from the second respondent, which indicated that the petitioner must pay tax on income without tax credit, contrary to Section 205 of the IT Act. The court's decision allows the petitioner to seek remedies through the Jurisdictional Assessing Officer and to request action against the fifth respondent for failing to remit deducted TDS.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 722210 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 08-04-2022
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALAGI
• Assessee Lawyers: MANU KULKARNI
• Keywords: Income Tax; Jurisdictional Assessing Officer; Tax credit; TDS; Assessment of Liability
• Section: 205; 201(1); 201(1A); 276B

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 08TH DAY OF APRIL 2022 BEFORE THE HON’BLE MR. JUSTICE B. M. SHYAM PRASAD WRIT PETITION NO.13364/2018 (T-IT) BETWEEN : FIREFLY CREATIVE STUDIO PRIVATE LIMITED HAVING ITS REGISTERED OFFICE AT 5TH FLOOR, PLOT NO.15, KKR SQUARE KAVURI HILLS, JUBILEE HILLS POST, HYDERABAD - 500 033, TELANGANA REPRESENTED BY EXECUTIVE DIRECTOR. ... PETITIONER (BY SRI.MANU KULKARNI, ADVOCATE FOR SRI. SUNAYANA BASU MALLIK, ADVOCATE) AND : 1 . UNION OF INDIA MINISTRY OF FINANCE, DEPARTMENT OF REVENUE 128-A/ NORTH BLOCK NEW DELHI REPRESENTED BY ITS REVENUE SECRETARY 2 . CENTRAL BOARD OF DIRECT TAXES (INCOME TAX) CBDT HEAD QUARTERS ROOM NO.155, NORTH BLOCK 2 NEW DELHI – 110 001. REPRESENTED BY CHAIRPERSON 3 . INCOME TAX OFFICER, TDS WARD-3(1), 4TH FLOOR, HMT BHAVAN, BELLARY ROAD, BENGALURU – 560 032. 4 . DEPUTY COMMISSIONER OF THE INCOME TAX CIRCLE 14(1), 6TH FLOOR, C BLOCK, IT TOWERS HYDERABAD – 500 004. 5 . ROCKLINE ENTERTAINMENTS PRIVATE LIMITED NO.96, DR. RAJ KUMAR ROAD RAJAJI NAGAR, BANGALORE – 560 096 REPRESENTED BY ITS MANAGING DIRECTOR ALSO AT MALL NO.8 KATHA NO.320, JALAHALLI CROSS, CHOKKASANDRA BANALORE – 560 057. ... RESPONDENTS (BY SRI. JEEVAN J. NEERALAGI, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE RESPONSE OF R-2 DATED 28.2.2017 VIDE ANNEXURE-H TO GRIEVANCE APPLICATION CBODT/E/2017/00103 ONLY TO THE EXTENT OF \"PETITIONER HAS TO PAY TAX IN HIS INCOME WITHOUT TAX CREDIT\" THAT IS TO THE EXTENT OF ASSESSMENT OF LIABILITY VIS-A-VIS PETITIONER AS IT IS IN CONTRAVENTION OF THE EXPRESS TERMS OF SECTION 205 OF THE IT ACT. 3 THIS WRIT PETITION COMING ON FOR ORDERS, THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R The petitioner has sought for the following reliefs: “a) Issue a writ of certiorari or any other appropriate writ or order quashing the response of 2nd Respondent dated 28/02/2017 vide Annexure ‘H’ to grievance application CBODT/E/2017/00103 only to the extent of “petitioner has to pay tax in his income without tax credit” that is to the extent of assessment of liability vis-à-vis Petitioner as it is in contravention of the express terms of section 205 of the IT Act; b) Issue a writ of mandamus or any other appropriate writ or order or direction directing Respondent Nos.1, 3 and 4 to consider the representations dated 03/02/2016 (Annexure –G), 24/03/2016 (Annexure-G1), 31/05/2016 (Annexure-M), 3/01/2017 (Annexure-H), 20/02/2018 (Annexure-R), 24/02/2018 (Annexure- R1), 07/03/2018 (Annexure-R2), 26/05/2017 (Annexure-J), 02/06/2017 (Annexure-J), 05/06/2017 (Annexure-K), 07/06/2017 (Annexure- 4 L), 28/07/2017 (Annexure-M), 16/08/2017 (Annexure-N) and 07/09/2017 (Annexure-O) and act on letter received on 13/09/2017 (Annexure-Q) to collect the TDS amount, complete the action initiated against Respondent No.5 within a fixed time frame as this Hon’ble Court deems fit.” The petitioner’s grievance is because of the communication issued consequent to the fifth respondent’s failure to deposit with the Income Tax Department the TDS deducted. From the respondents’ pleadings it is obvious that the petitioner - the deductee - shall not be called upon to be responsible for any TDS deducted but not credited in view of the provisions of Section 205 of the Income Tax Act 1961 (for short, ‘the IT Act’) but for appropriate relief in this regard, the petitioner must approach the Jurisdictional Assessing Officer. The petitioner’s grievance is to be considered by the concerned Assessing Officer in the light of the 5 provisions of Section 205 of the IT Act. This Court is of the considered view that the petitioner must work out his remedy before the Jurisdictional Assessing Officer and must be reserved liberty in this regard. As regards the petitioner’s other grievance viz., the proceedings initiated by the authorities against the deductor – the fifth respondent, the respondents have stated as follows: “7. The Respondent respectfully submits that the averments made in the para 16 of the said petition, it is to say that, though the Respondent No.5 did not respond to many notices issued by the Respondent No.3 to submit the details called for, he appeared for recording of statement and furnished part details required to complete the TDS assessment. After taking into account the details furnished by the deductor, action U/s 201(1) and 201(1A) of the Act for the assessment year 2015-16 has been completed vide order dated 28.02.2018 treating Respondent No.5 as an assesse deemed to be in default for failure to remit the tax deducted at source amounting to Rs.40,00,000/- to the central Govt. Account within the stipulated period.” 6 However, it is not disputed that because of the failure to credit TDS, the authorities could consider initiation of proceedings under Section 276B of the IT Act, and initiation of the same has not been considered. The provisions of Section 276B of the IT Act undoubtedly are part of the IT Act to build confidence in the TDS Scheme and every measure as is available in law must be considered to ensure that confidence is sustained, and if necessary by initiation of appropriate proceedings against the defaulters. Hence, the following: ORDER a. The petitioner is at liberty to approach the Jurisdictional Assessing Officer insofar as its remedy consequent to the provisions of Section 205 of the IT Act. b. The petitioner shall also be at liberty to file a representation with the Deputy Commissioner of Income Tax, TDS, Bengaluru for 7 consideration of initiation of action against the fifth respondent as contemplated under Section 276B of the IT Act. c. The Deputy Commissioner of Income Tax, TDS Bengaluru shall consider such representation and communicate the decision in this regard to the petitioner within twelve [12] weeks from the date of receipt of the representation. Sd/- JUDGE RB "