Dy.Commissioner of Income tax (TDS) Circle-2, Nagpur V. Power Grid Corporation of India Limited , Nagpur

ITA 105/NAG/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 66784 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 21-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R RAJA GOPALAN
• Keywords: Reasonable cause
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I. T. A.NO. 99/NAG/2012 (AY: 2005-2006) I.T.A. NO.100/NAG/2012 (AY: 2006-2007) I.T.A. NO.101/NAG/2012 (AY: 2007-2008) I.T.A. NO.102/NAG/2012 (AY: 2008-2009) I.T.A. NO.103/NAG/2012 (AY: 2009-2010) I.T.A. NO.104/NAG/2012 (AY: 2010-2011) I.T.A. NO.105/NAG/2012 (AY: 2011-2012) DY. COMMISSIONER OF INCOME TAX (TDS) , CIRCLE-2, GROUND FLOOR, AAYAKAR BHAVAN, TELANGHKEDI ROAD, CIVIL LINES, NAGPUR 440 001. VS. POWER GRID CORPORATION OF INDIA LIMITED, WESTERN REGION TRANSMISSION SYSTEM-1, SAMPRITI NAGAR, NEAR RING ROAD, UPPALWADI, NAGPUR 440 026. PAN: NGPP 00473 E (APPELLANT) ( RESPONDENT) APPELLANT BY : SHRI PRAKASH MANE, CIT RESPONDENT BY : SHRI R. RAJA GOPALAN DATE OF HEARING: 4.3.2013 DATE OF ORDER: 1.5.2013 O R D E R PER BENCH: THERE ARE SEVEN APPEALS UNDER CONSIDERATION. ALL T HE SEVEN APPEALS ARE FILED BY THE REVENUE AGAINST THE COMMON ORDER OF CIT (A)- II, NAGPUR DATED 22.12.2011 FROM AY 2005-2006 TO 2010-2011 RESPECTIVELY. FOR T HE SAKE OF CONVENIENCE, ALL THE SEVEN APPEAL ARE BEING CLUBBED AND ADJUDICATED IN T HIS CONSOLIDATED ORDER. APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE F OLLOWING PARAGRAPHS. 2. IN ALL THE SEVEN APPEALS, REVENUE HAS RAISED THE IDENTICAL GROUNDS. THEREFORE, FIRSTLY, WE SHALL TAKE UP THE GROUNDS RA ISED IN ITA NO. 99/NAG/2012 FOR THE ASSESSMENT YEAR 2005-2006 WHICH READ AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT (A)-II, NAGPUR IS CORRECT IN LAW IN DIRECTING THE A O TO WAIT TILL FINALITY OF THE ORDER OF CALCUTTA HIGH COURT FOR RECOVERY OF TDS AND INTEREST. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD CIT (A)- II, NAGPUR IS CORRECT IN LAW IN STOPPING THE DEPART MENT FROM RECOVERING THE TAX AND INTEREST, PARTICULARLY WHEN NO ORDER U/S 22 1 HAS BEEN PASSED AND POSSIBILITY OF RECOVERY IN FUTURE IS NOT APPEALABLE U/S 246A OF THE IT ACT, 1961. 2 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE REVENUE IN ALL THESE YEARS, FROM 2005-06 TO 2010-11, IS AGGRIEVED AGAINS T THE DIRECTION OF THE CIT (A), WHO DIRECTED THE AO TO WAIT TILL FINALITY OF THE JU DGMENT OF THE HONBLE HIGH COURT OF CALCUTTA, BEFORE RECOVERING THE TDS AND INTEREST TH US THE CIT(A) PREVENTED THE AO FROM RECOVERING THE TDS MADE BY THE DEDUCTOR. THE ASSESSING OFFICER BASED ON THE PROVISIONS OF SECTION 201(1) AND 201(1A) R.W.S 192 OF THE ACT, RAISED THE DEMAND AS PER THE TABLE GIVEN BELOW. AY AMOUNT OF TDS DEMAND BY IT DEPT. INTEREST U/S 201 (RS.) TOTAL DEMAND (RS) 2005 - 06 83,69,522/ - 66,66,136/ - 1,50,35,658/ - 2006 - 07 81,80,231/ - 56,96,760/ - 1,38,76,991/ - 2007 - 08 74,87,258/ - 41,50,526/ - 1,16,37,784/ - 2008 - 09 25,82,769/ - 10,96,999/ - 36,79,768/ - 2009 - 10 27,97,886/ - 8,11,742/ - 36,09,628/ - 2010 - 11 34,36,131/ - 5,81,335/ - 40,17,466/ - 2011 - 12 20,44,538/ - 1,56,311/ - 22,00,849/ - 3.1. AGGRIEVED WITH THE ORDERS OF THE AO, ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE CIT (A), ASSES SEE SUBMITTED THAT IN FACT, TDS WAS MADE ON CERTAIN PERQUISITES ACCRUED TO THE EMPLOYEES OF THE ASSESSEE AND THE SAID TDS AMOUNTS WERE NOT DEPOSITED TO THE GOVE RNMENT OF INDIA ACCOUNT FOLLOWING THE DIRECTIONS OF THE HONBLE CALCUTTA HI GH COURT VIDE WRIT PETITION NO.5642(W) OF 2002, DATED 27.3.2002. IN THE SAID WR IT PETITION, THE VALIDITY OF IT RULE-3 WAS QUESTIONED AND THE SAME IS STILL PENDING FOR FINALITY. HOWEVER, THE HONBLE HIGH COURT OF CALCUTTA PASSED AN INTERIM OR DER, WHEREBY ASSESSEE WAS DIRECTED BY THE COURT THAT THE TDS AMOUNTS, IF ANY, DEDUCTED WOULD BE KEPT IN SEPARATE ACCOUNT BY THE AUTHORITY UNTIL FURTHER ORD ERS OF THIS COURT . ASSESSEE FOLLOWED THE SAME AND THE AMOUNT DEDUCTED WAS ACCOR DINGLY KEPT IN A SEPARATE ACCOUNT ABOUT WHICH THERE IS NO DISPUTE. CIT (A) C ONSIDERED THE ABOVE SUBMISSIONS OF THE ASSESSEE AND ALSO CONSIDERED THE BINDING JUD GMENT OF THE HONBLE BOMBAY HIGH COURT, WHICH UPHELD THE VALIDITY OF THE SAID I T RULE-3 AND CONFIRMED THE DECISION OF THE AO IN RAISING THE DEMAND IN PRINCIP LE. PARA 5 AND 5.1 OF THE CIT (A)S ORDER ARE RELEVANT IN THIS REGARD. HOWEVER, CONSIDERING THE DIRECTION OF THE 3 HONBLE HIGH COURT OF CALCUTTA FOR OPENING A SEPARA TE ACCOUNT AND DEPOSITING THE TDS, INCLUDING INTEREST, DONE BY THE ASSESSEE IN TH E SAID SEPARATE ACCOUNT UNTIL FURTHER ORDERS OF THE HONBLE HIGH COURT, THE CIT ( A) HELD THAT THE RECOVERIES AND THE LEVY OF PENALTY, IF ANY, ARE SUBJECTED TO THE F INAL OUTCOME OF THE JUDGMENT OF THE HONBLE HIGH COURT OF CALCUTTA. PARA 5.2 OF THE CI T (A)S ORDER IS RELEVANT IN THIS REGARD. IN THE ABOVE SAID FACTUAL MATRIX OF THE CAS E AND AGGRIEVED WITH THE SAID DIRECTION OF THE CIT (A), REVENUE FILED AN APPEAL B EFORE THE TRIBUNAL. 5. DURING THE E-COURT PROCEEDINGS BEFORE US, LD DR MENTIONED THE FACTS OF THE CASE THAT LEAD TO THE ABOVE SAID DIRECTION OF THE C IT (A), WHICH IS NOW BEING DECIDED. LD DR RELIED ON THE ORDER OF THE AO AND P LEADED FOR VACATING THE DIRECTION OF THE CIT (A). HE FURTHER MENTIONED THAT BOTH THE AMOUNTS COULD BE CALCULATED WITH INTEREST. 6. ON THE OTHER HAND, SHRI R. RAJA GOPALAN, LD COU NSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THE DEVELOPMENT BEFORE THE DE LHI BENCH OF THE ITAT, WHEREIN AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION VIDE IT A NOS. 5001 TO 5005/DEL/2012 (AYS 2007-08, 2010-11 AND 2011-12). REASONABLY, IN THE SAID ORDER OF THE TRIBUNAL IT IS DECIDED THAT THE ASSESSEE HAS A REASONABLY CA USE IN VIEW OF THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT AND PARA 5 OF THE S AID ORDER IS RELEVANT IN THIS REGARD. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE ORDE RS OF THE REVENUE AUTHORITIES AND THE PAPER BOOK PLACED BEFORE US, CO NTAINING THE RELEVANT ORDERS OF THE HONBLE CALCUTTA HIGH COURT AS WELL AS THE DELH I BENCH OF THIS TRIBUNAL. TO START WITH THE INTERIM ORDER OF THE HONBLE CALCUTTA HIGH COURT DATED 27.3.2002 READS AS UNDER: I HAVE ONLY TO ADD THAT IF ANY DEDUCTION IS MADE THAT WILL BE KEPT IN A SEPARATE ACCOUNT BY THE AUTHORITY CONCERNED UNTIL F URTHER ORDERS OF THIS COURT. 8. THE DECISION OF THE CIT (A) VIDE PARA 5 TO 5.2 T HAT LEAD TO THE ISSUE OF DIRECTIONS TO THE REVENUE TO AWAIT THE FINALITY OF THE JUDGMENT OF THE HONBLE HIGH 4 COURT TO BE RECOVERED OF TDS WITH INTEREST AND THE SAID PARAS ARE REPRODUCED AS UNDER: 5. THE ORDERS OF AO ARE U/S 201(1) & 201(1A) IE FOR TDS, WHICH APPELLANT HAS DEDUCTED IN CASE OF THE EMPLOYEES AND WHICH HAS NOT BEEN DEPOSITED IN CENTRAL GOVERNMENT ACCOUNT AND IT IS IN RESPECT OF COMPENSATORY INTEREST WHICH BECOME DUE ON LATE DEPOSITING OF TDS DEDUCTED . ORDERS OF AO ARE NOT PENAL IN NATURE AND IT IS MERELY FOR RECOVERY OF TD S AND COMPENSATORY INTEREST THEREON. AO HAS RAISED THE AFORESAID DEMA NDS STRICTLY IN ACCORDANCE WITH THE ACT UNDER THE DUE PROCEDURE ESTABLISHED BY LAW. HE HAS RAISED DEMANDS, WHICH OTHERWISE SHOULD HAVE BEEN DEPOSITED IN ACCORDANCE WITH LAW. HAD APPELLANT BEEN NOT RESTRAINED BY HONBLE HIGH COURT OF CALCUTTA FROM DOING SO AS CLAIMED BY THE APPELLANT BEFORE AO AND BEFORE ME AND IT IS CLEAR FROM HONBLE HIGH COURT ORDER FILED BEFORE ME . 5.1. IT IS CLEAR THAT THESE DEMAND ARE RAISED IN RE SPECT OF EMPLOYEES OF APPELLANT, WHO ARE WORKING IN MAHARASHTRA AND THEY ARE UNDER THE JURISDICTIONAL HONBLE HIGH COURT OF MUMBAI AND HON BLE HIGH COURT OF BOMBAY HAS DISMISSED THE PETITION OF ALL INDIA LIC EMPLOYEES FEDERATION & OTHERS AS MENTIONED BY AO ABOVE. HENCE, IN THE CAS E OF EMPLOYEES OF THE APPELLANT, WHO ARE WITHIN THE JURISDICTION OF BOMBA Y HIGH COURT, THE SAID RULING HAS BECOME FINAL. HENCE, AOS ACTION IN THI S REGARD IS UPHELD. 5.2. HOWEVER, I HASTEN TO ADD THAT THE APPELLANT HA S QUOTED THE ORDER OF HONBLE HIGH COURT OF CALCUTTA REGARDING NON DEPOSI TING TO TDS AND CONSEQUENTIAL INTEREST THEREON. AO HAS TO WAIT TIL L THE FINALITY OF ORDER OF CALCUTTA HIGH COURT FOR RECOVERY OF TDS AND INTERES T. IT MAY NOT BE OUT OF PLACE TO MENTION THAT IN RESPECT OF POWER GRID EMPL OYEES, KOLKATA HIGH COURT IN THE CASE OF ASSTT. COMMISSIONER OF INCOME TAX, C IRCLE-3, PURNIA HIGH COURT HAS OBSERVED THAT RESPONDENT GIVEN LIBERTY TO APPL Y FOR VACATION AND/OR VACATION OF THE INTERIM ORDER UPONNOTICE TO THE WRI T PETITIONER AND THE GRID POWER CORPORATION. HENCE, AO IS FREE TO TAKE ACTI N AS DEEM FIT IN VIEW OF THE ABOVE DIRECTIONS OF HONBLE HIGH COURT. AOS ORDER REGARDING INTEREST IS ALSO AS PER LAW AND IS ALSO UPHELD BUT IT WILL BE CIRCUM CISED BY THE FINAL ORDER OF HONBLE CALCUTTA HIGH COURT AS THE SAID AMOUNT WAS DEPOSITED IN A PARTICULAR BANK AO ON THE DIRECTION OF HONBLE HIGH COURT AND APPARENT CONTENTION THAT NO INTEREST CAN BE DEMANDED U/S 201(1A) OF IT ACT I S CORRECT AS IT IS PREVENTED BY ORDER OF HONBLE HIGH COURT FROM DEPOS ITING THE SAID AMOUNT IN GOVERNMENT ACCOUNT, HENCE, THE AMOUNT OF INTEREST I F ANY PAYABLE BY APPELLANT AS MENTIONED ABOVE WILL BE SUBJECT TO FIN AL ORDER OF HONBLE CALCUTTA HIGH COURT IN THE MATTER. 9. FURTHER, WE HAVE EXAMINED THE ORDER OF THE DELHI BENCH OF THE TRIBUNAL VIDE ITA NO.5001 TO 5005/DEL/2012 (SUPRA), DATED 22.11.2 012 AND PARA 5 OF THE SAID ORDER IS RELEVANT AS IT CONTAINS THE DISCUSSION OF THE EXISTENCE OF REASONABLE CAUSE WHICH READS AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE FIND MERIT IN THE ARGUMENT OF AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. THE AMOUNT IN QUES TION WAS DEPOSITED IN A 5 SEPARATE BANK ACCOUNT, AS DIRECTED BY THE COMPETENT JURISDICTIONAL HIGH COURT IE HONBLE CALCUTTA HIGH COURT. THE ASSESSEE HAVIN G ACTED UNDER THE COURT ORDER, CIT (A) HAS RIGHTLY DELETED THE INTEREST. H IS ORDERS ARE UPHELD. 10. FROM THE ABOVE EXTRACTS, THE INTERIM ORDER OF T HE HONBLE CALCUTTA HIGH COURT, ITO IS EVIDENT THAT THE ASSESSEE IS OPEN A SEPARATE ACCOUNT FOR PARKING THE TDS MADE BY THE ASSESSEE AND THE SAID DIRECTOR IS S CRUPULOUSLY FOLLOWED BY THE ASSESSEE FOR ALL THESE AYS. THE SAID DIRECTION CANN OT BE IGNORED IN VIEW OF THE JURISDICTIONAL HIGH COURT JUDGMENT. THEREFORE, WE A RE OF THE CONSIDERED OPINION THAT THE DIRECTION GIVEN IN THIS REGARD BY THE CIT (A) V IDE PARA 5.2 OF THE IMPUGNED ORDER, IS FAIR AND REASONABLE AND THE SAME DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE IN ALL T HE SEVEN APPEALS ARE DISMISSED . 11. IN THE RESULT, ALL THE SEVEN APPEALS FILED BY TH E REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 01.05.2013. SD/- SD/- (R.K. GUPTA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 1.5.2013 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR NAGPUR, BENCH, ITAT, NAGPUR. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI