Idea Cellular Ltd., Pune V. Commissioner of Income-tax (TDS),

ITA 1125/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1025 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARSHVARDHINI BUTY
• Assessee Lawyers: RONAK G DOSHI
• Keywords: Principle of natural justice; Non-deduction of tax
• Section: 201(1); 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NOS. 1125 & 1126/PN/2014 %' ( ')( / ASSESSMENT YEARS : 2009-10 & 2010-11 IDEA CELLULAR LIMITED, SHARADA CENTRE, 11/1, ERANDWANA, OFF. KARVE ROAD, PUNE 411004 PAN : PNEB01430C ....... / APPELLANT ' / V/S. COMMISSIONER OF INCOME TAX (TDS), 402, 4 TH FLOOR, PMT COMMERCIAL COMPLEX, SWARGATE, PUNE - 411037 / RESPONDENT ASSESSEE BY : SHRI RONAK G. DOSHI REVENUE BY : SMT. HARSHVARDHINI BUTY / DATE OF HEARING : 24-09-2015 / DATE OF PRONOUNCEMENT : 14-10-2015 * / ORDER PER VIKAS AWASTHY, JM : THE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (TDS), PUNE PASSED U/S. 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE AC T) FOR ASSESSMENT YEARS 2009-10 AND 2010-11. BOTH THE IMPUG NED ORDERS ARE DATED 31-03-2014. 2 ITA NOS. 1125 & 1126/PN/2014, A.YS. 2009-10 & 2010-11 2. THE BRIEF FACTS OF THE CASE ARE : THE ASSESSEE IS A TELECOM SERVICES PROVIDER. A SURVEY WAS CONDUCTED IN ASSESSEE S CASE FOR THE PURPOSE OF TDS VERIFICATION ON 23-04-2008, AND AN ORDER U /S. 201(1) AND 201(1A) WAS PASSED ON 24-03-2011, RAISING THE DEMAND OF RS.2,00,35,000/-. THE ASSESSEES CASE WAS TAKEN UP FOR V ERIFICATION FOR THE PERIOD RELEVANT TO THE ASSESSMENT YEARS 2009-10 A ND 2010-11, AS WELL. THE DY. COMMISSIONER OF INCOME TAX (TDS)-I, PUNE VID E ORDER DATED 19-03-2012 FOR ASSESSMENT YEAR 2009-10 AND ORD ER DATED 26-03- 2012 FOR THE ASSESSMENT YEAR 2010-11 RAISED DEMAND U/ S. 201(1) AND 201(1A) OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE U/S . 194H OF THE ACT ON TRADE DISCOUNT ALLOWED TO PREPAID DISTRIBUTORS. TH E DETAILS OF THE DEMAND RAISED ARE AS UNDER: A.Y. TDS U/S. 194H INTEREST U/S. 201(1A) TOTAL 2009 - 10 6,35,25,863 3,04,92,384 9,40,18,247 2010 - 11 6,43,36,230 1,89,97,140 8,33,33,370 2.1 THEREAFTER, THE COMMISSIONER OF INCOME TAX (TDS) INITIAT ED REVISION PROCEEDINGS U/S. 263 OF THE ACT ON THE GROUND T HAT THE ASSESSEE WAS LIABLE TO DEDUCT TDS U/S. 194J ON ROAMING CHARGES PAID BY IT TO THE OTHER TELECOM OPERATORS. THESE PAYMENTS ARE IN THE NATURE OF FEE FOR TECHNICAL SERVICES. THE ASSESSING OFFICER HAS NEITH ER EXAMINED THE ISSUE OF ROAMING CHARGES NOR MADE ANY ENQU IRY/ INVESTIGATION IN THIS REGARD. A SHOW CAUSE NOTICE U/S. 263 WAS ISSUED TO THE ASSESSEE ON 30-03-2014, U/S. 201(1) AND 201(1A) AS KING THE ASSESSEE TO APPEAR FOR HEARING ON 31-03-2014. THE CO MMISSIONER OF INCOME TAX (TDS) ON 31-03-2014 SET ASIDE THE ORDER PA SSED U/S. 201(1) AND 201(1A) OF THE ACT FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11 AND DIRECTED THE ASSESSING OFFICER TO REASSESS THE TDS LIA BILITY AFTER CONSIDERING THE ISSUE OF ROAMING CHARGES. 3 ITA NOS. 1125 & 1126/PN/2014, A.YS. 2009-10 & 2010-11 AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME TAX (TD S) U/S. 263, THE ASSESSEE HAS COME IN APPEAL FOR BOTH THE IMPUGN ED ASSESSMENT YEARS. 3. SHRI RONAK G. DOSHI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (TDS) HAS ERRED IN ASSUMING THE JURISDICTION U/S. 263. THE ISSUE RAISED BY THE COMMISSIONER OF INCOME TAX (TDS) U/S. 263 PROCEEDING HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE PUNE BENC H OF TRIBUNAL IN ITA NO. 159/PN/2008 FOR ASSESSMENT YEAR 2006-07, DEC IDED ON 08-04-2009, AS WELL AS THE DELHI BENCH OF THE TRIBUNAL I N THE CASE TITLED IDEA CELLULAR LIMITED VS. DCIT REPORTED AS 121 TTJ 3 52 (DELHI). THE LD. AR FURTHER SUBMITTED THAT THE COMMISSIONER OF INCO ME TAX (TDS) WHILE EXERCISING HIS POWER U/S. 263 HAS ALSO VIOLATED T HE PRINCIPLES OF NATURAL JUSTICE. THE SHOW CAUSE NOTICE U/S. 2 63 WAS ISSUED BY THE COMMISSIONER OF INCOME TAX (TDS) ON 30-03- 2014 WHICH HAPPENS TO BE SUNDAY. NOTICE WAS SERVED BY AFFIXATION A T THE OFFICE PREMISES OF THE ASSESSEE ON SAME DAY. THE ASSESSEE W AS DIRECTED TO APPEAR ON 31-03-2014. THE ASSESSEE APPEARED ON 31-0 3-2014 AND EXPRESSED INABILITY TO FURNISH EXPLANATION AT SUCH A SHORT NOTICE AND PRAYED FOR ADJOURNMENT. HOWEVER, THE COMMISSIONER OF INC OME TAX (TDS) IN AN ARBITRARY AND UNJUSTIFIED MANNER PASSED THE IM PUGNED ORDER ON 31-03-2014 ITSELF WITHOUT AFFORDING ANY OPPORTUNIT Y OF HEARING TO THE ASSESSEE. 3.1 THE LD. AR SUBMITTED THAT UNDER THE PROVISIONS OF SECT ION 201(1) OF THE ACT THE ASSESSEE CAN BE SERVED NOTICES SEPARAT ELY FOR MORE THAN ONE DEFAULT. THE ASSESSING OFFICER INITIATED PROCEEDINGS U/S. 201(1) AND 201(1A) FOR ALLEGEDLY NON-DEDUCTION OF TAX AT SOURCE O N DISCOUNT 4 ITA NOS. 1125 & 1126/PN/2014, A.YS. 2009-10 & 2010-11 ALLOWED TO PRE-PAID DISTRIBUTORS U/S. 194H OF THE ACT. TH E LD. AR SUBMITTED THAT IN CONTEXT OF SECTION 201 OF THE ACT, REVISION PROCEE DINGS U/S. 263 CAN BE INITIATED ONLY IN RESPECT OF THE ISSUES ST ATED IN THE SHOW CAUSE NOTICE. THE ISSUE OF ROAMING CHARGES WAS NO T SUBJECT MATTER OF SHOW CAUSE NOTICE, THEREFORE, QUESTION OF ORDER PASSED BY THE ASSESSING OFFICER BEING ERRONEOUS DOES NOT ARISE. IN THE NOTICE THERE WAS NO MENTION OF ANY VIOLATION UNDER THE PROVISIONS OF SEC TION 194J. THUS, IN THE ORDER PASSED U/S. 201(1) AND 201(1A) NO DEMAN D COULD HAVE BEEN RAISED FOR ANY ALLEGED VIOLATION U/S. 194J OF THE ACT BY THE ASSESSING OFFICER. MERELY, BECAUSE, NO CONSOLIDATED ORDER I S PASSED FOR THE VIOLATIONS U/S. 194H AND 194J DOES NOT MAKE THE ORD ER U/S. 201(1) AND 201(1A) ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. SEPARATE ORDERS COULD HAVE BEEN PASSED FOR EVERY DEFAU LT OF NON- DEDUCTION/SHORT DEDUCTION OF TDS PROVIDED, IT IS WITHIN THE TIME LIMIT AS PRESCRIBED U/S. 201(3) OF THE ACT. THE LD. AR SUBMITTED THAT THE IMPUGNED ORDERS ARE LIABLE TO BE SET ASIDE ON THE GROUND S OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE AS WELL AS ON MERITS. IN SUPP ORT OF HIS SUBMISSIONS, THE LD.AR PLACED RELIANCE ON THE FOLLOWING CASE LAWS: I. MALABAR INDUSTRIAL CO. LTD. VS. CIT, 243 ITR 83 (SC); II. CIT VS. MAX INDIA LTD., 295 ITR 282 (SC); III. VODAFONE INDIA LTD. VS. UNION OF INDIA, 40 TAXMANN.COM 545 (BOM-HC); IV. SHRI PALANI TRANSPORT CO. VS. AO, 46 TAXMANN.COM 187 (GIJ-HC); V. SKYCELL COMMUNICATIONS LIMITED VS. DCIT, 251 ITR 53 (MAD-HC); AND VI. IDEA CELLULAR LIMITED VS. DCIT, 121 TTJ 352 (T-DEL). 4. SMT. HARSHVARDHINI BUTY REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE ORDERS OF COMMISSIONER OF INCO ME TAX (TDS) AND PRAYED FOR DISMISSING THE APPEALS OF THE ASSESSEE. 5 ITA NOS. 1125 & 1126/PN/2014, A.YS. 2009-10 & 2010-11 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUT HORITIES BELOW. THE FIRST GROUND RAISED BY THE ASSESSEE IN APPEAL IS DENIA L OF OPPORTUNITY OF HEARING IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. A PERUSAL OF THE RECORDS SHOWS THAT THE COMMISSIONER OF IN COME TAX (TDS) ISSUED SHOW CAUSE NOTICE U/S. 263 ON 30-03-2014 I.E . ON SUNDAY AND SERVED THE SAME BY AFFIXATION AT THE PREMISES OF THE ASSESSEE, ON THE SAME DAY. THE ASSESSEE WAS DIRECTED TO APPEAR BE FORE THE COMMISSIONER OF INCOME TAX (TDS) ON THE VERY NEXT DAY I.E. 31-03-2014. THE COMMISSIONER OF INCOME TAX (TDS) PASSED THE IMPUGNED ORDERS ON 31-03-2014, ITSELF. THE FACTS CLEARLY SHOW THAT THE IMPUGNED ORDERS WERE PASSED IN GROSS VIOLATION OF PRINCIPLE S OF NATURAL JUSTICE, BY DENYING PROPER OPPORTUNITY OF HEARING TO THE ASSESS EE. 6. ONE OF THE PILLARS OF PRINCIPLES OF NATURAL JUSTICE IS AUDI ALTERAM PARTEM I.E. NO ONE SHOULD BE CONDEMNED UNHEARD. THE PRINCIPLES OF NATURAL JUSTICE ARE FIRMLY GROUNDED IN ARTICLE 14 AND 21 OF THE CONSTITUTION OF INDIA. THE PRINCIPLES HAVE TO BE MANDATOR ILY APPLIED IRRESPECTIVE OF THE FACT AS TO WHETHER THERE IS ANY STAT UTORY PROVISION OR NOT. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE WA S NOT AFFORDED ANY OPPORTUNITY, MUCH LESS THE SUFFICIENT OPPORTUNITY TO GI VE REPLY TO THE SHOW CAUSE NOTICE. AS HAS BEEN POINTED OUT BY THE LD. AR, THE SHOW CAUSE NOTICE WAS ISSUED AND SERVED ON SUNDAY I.E. W EEKLY HOLIDAY, DIRECTING THE ASSESSEE TO APPEAR THE VERY NEXT DAY. THE HON'BLE SUPREME COURT OF INDIA HAS TIME AND AGAIN EMPHAS IZED THAT THE PRINCIPLES OF NATURAL JUSTICE HAVE TO BE ADHERED WHILE DISCHARGING ADMINISTRATIVE, QUASI-JUDICIAL OR JUDICIAL FUNCTIONS. 6 ITA NOS. 1125 & 1126/PN/2014, A.YS. 2009-10 & 2010-11 7. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF VODAFONE INDIA LTD. VS. UNION OF INDIA (SUPRA) WHILE DECIDING AN ISSUE IN WRIT P ETITION, WHERE THE ASSESSING OFFICER HAD GIVEN LESS THAN 24 HOURS TO REPLY SHOW CAUSE NOTICE OBSERVED, THAT IT IS A FLAW IN THE DECISION MA KING PROCESS AND THEREFORE AMENABLE TO JUDICIAL REVIEW. THE JUSTICE MUS T NOT ONLY BE DONE BUT ALSO APPEAR TO HAVE BEEN DONE. THE NON-CON SIDERATION OF THE PETITIIONERS RESPONSE TO THE NOTICE BY MAKING IT IMPOSSIB LE TO THE PETITIONER TO FILE ITS REPLY FOR THE CONSIDERATION OF THE ASS ESSING OFFICER DOES CAUSE PREJUDICE TO THE PETITIONER LEADING TO PALPABLE INJUSTICE. IN THE INSTANT CASE, FROM THE FACTS ON RECORD IT IS EVIDENT THAT THE COMMISSIONER OF INCOME TAX (TDS) HAS IN A HURRIEDLY MANNE R WITHOUT AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSEE HAS PASS ED THE IMPUGNED ORDERS BY VIOLATING THE PRINCIPLE OF AUDI ALTERAM PARTEM. THUS, THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE ON THIS GROUND ALONE. 8. THE LD. AR HAS FURTHER SUBMITTED THAT THE ISSUE RELATING TO APPLICABILITY OF TDS U/S. 194J IN RESPECT OF ROAMING CHARGES PAID TO OTHER TELECOM OPERATORS HAS ALREADY BEEN DECIDED IN FAVO UR OF THE ASSESSEE BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASS ESSEES OWN CASE IN THE ASSESSMENT YEAR 2006-07. THE LD. AR HAS PLA CED ON RECORD A COPY OF THE ORDER IN ITA NO. 159/PN/2008 DECIDED ON 08-04-2009 IN ASSESSEES OWN CASE. A PERUSAL OF THE ORDER SHOWS THA T ONE OF THE GROUND RAISED BY THE REVENUE IN APPEAL FOR THE ASSESSM ENT YEAR 2006- 07 IS : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN ALLOWING ROAMING CHARGES OUT OF THE PURVIE W OF PROVISIONS OF SECTION 194J OF THE I.T. ACT, 1961 EVEN THOUGH IT I S A TECHNICAL SERVICES PROVIDED BY THE ASSESSEE TO ITS SUBSCRIBERS. 7 ITA NOS. 1125 & 1126/PN/2014, A.YS. 2009-10 & 2010-11 9. THE CO-ORDINATE BENCH OF THE TRIBUNAL BY FOLLOWING THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN I TA NO. 3031/DEL/2005 AND 1875/DEL/2006 FOR THE ASSESSMENT YEA RS 2003-04 AND 2004-05 RESPECTIVELY DECIDED ON 28-03-2008, WHEREIN THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE HELD AS UNDER: 4. RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL P RECEDENTS WE HOLD THAT THE CIT(A) WAS JUSTIFIED IN ALLOWING ROAMING C HARGES OUT OF THE PURVIEW OF PROVISIONS OF SECTION 194J OF THE ACT EV EN THOUGH IT IS A TECHNICAL SERVICES PROVIDED BY THE ASSESSEE TO ITS SUBSCRIBERS. THIS GROUND OF APPEAL I.E. GROUND NO. 2 RAISED BY THE RE VENUE IS THEREFORE, DISMISSED. AS WE HAVE HELD THAT THERE WAS INDEED NO REQUIREMENT OF DEDUCTION OF TAX AT SOURCE, ON THE FACTS OF THIS CA SE, GRIEVANCE RAISED BY THE REVENUE IN GROUND NO. 1, REGARDING ISSUANCE OF CERTIFICATE U/S 197, IS RENDERED IN FRUCTUOUS. ONCE WE HOLD THAT THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE, THE ISSUE OF CERTIFICATE U/S 197 IS OF NO CONSEQUENCE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED PRONOUNCED IN THE OPEN COURT TODAY ON 8TH DAY OF APRIL 2009. 10. THUS, THE ISSUE RAISED BY THE COMMISSIONER OF INCOME T AX (TDS) U/S. 263 PROCEEDINGS HAS ALREADY BEEN ADJUDICATED IN FAVO UR OF THE ASSESSEE. WE FIND MERIT IN THE APPEALS OF THE ASSESSEE FO R BOTH THE ASSESSMENT YEARS. 11. IN THE RESULT, IMPUGNED ORDERS ARE SET ASIDE AND BOT H THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 14 TH DAY OF OCTOBER, 2015. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 14 TH OCTOBER, 2015 RK 8 ITA NOS. 1125 & 1126/PN/2014, A.YS. 2009-10 & 2010-11 *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(TDS), PUNE 4. !'( %%)* , )* , + +,- , / DR, ITAT, B BENCH, PUNE. 5. ( . /0 / GUARD FILE. // ! % // TRUE COPY// #1 / BY ORDER, %2 )- / PRIVATE SECRETARY, )* , / ITAT, PUNE