Bhemarasetty Suneetha, Hyderabad V. THE Dy. DIRECTOR OF INCOME TAX (IT & TP), Visakhapatnam

ITA 119/VIZ/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8862 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 09-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R S NARAYAN
• Assessee Lawyers: B V RAO
• Keywords: Residential status; Principle of natural justice; Period of limitation; Application of stay; Time period of passing order
• Section: 201(1); 6

Judgement Text

ITA NO. 119 /VIZAG/ 2016 BHEMARA SETTY SUNEETHA, HYDERABAD 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D .S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 119 /VIZAG/ 2016 ( / ASSESSMENT YEAR: 2008 - 09 ) S.A. NO.10/VIZAG/2016 ( / ASSESSMENT YEAR: 2008 - 09) BHE E MARASETTY SUN I THA, HYDERABAD DY. DIRECTOR OF INCOME TAX (IT &TP) VISAHAPATNAM [PAN NO. BEMPS6488D ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI B.V. RAO, AR / RESPONDENT BY : SHRI S.R.S. NARAYAN, DR / DATE OF HEARING : 31.05.2017 / DATE OF PRONOUNCEMENT : 23.06.2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A) - 10, HYDERABAD DA TED 26.11.2015 FOR THE A.Y. 2008 - 09. 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE TREATMENT OF ASSESSEE AS ASSESSEE IN DEFAULT U/S 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 ITA NO. 119 /VIZAG/ 2016 BHEMARA SETTY SUNEETHA, HYDERABAD 2 (HEREINAFTER CALLED AS THE ACT) FOR NON - DEDUCTION OF TDS U/S 195A OF THE ACT. THE ASSESSEE HAS RAISED TOTAL 5 GROUNDS AS FOLLOWS: 1. THE ORDER OF THE LD. CIT (A), IN UPHOLDING THE ORDER OF ASSESSING OFFICER BY TREATING THE APPELLANT AS 'ASSESSEE IN DEFAULT' U/S 201(1)/(1A) FOR NON - DEDUCTION OF TDS IS ERRONEOUS IN LAW, CONTRARY T O THE FACTS, PROBABILITIES OF THE CASE AND AGAINST PRINCIPLES OF EQUITY AND NATURAL JUSTICE. 2. THE CIT(A) FURTHER ERRED IN LAW BY TREATING THE APPELLANT AS ASSESSEE IN DEFAULT BY IMPLY STATING THAT THERE IS NO MENTION ABOUT PAYMENTS BEING MADE BETWEEN DE CEMBER, 2000 TO MARCH, 2006 IGNORING THE VERY FACT THAT IT WAS CLEARLY MENTIONED IN THE SALE AGREEMENT CUM GPA THAT THE PAYMENTS WERE ALREADY MADE AND ALSO THE FACT THAT THE AU SOLELY RELIED ON THE VENDOR'S ADDRESS IN DOCUMENT, WITHOUT CONSIDERING THE MATE RIAL DOCUMENTARY EVIDENCE PRODUCED THAT THE PAYMENTS WERE MADE THAT TOO IN CASH FROM DECEMBER 2000 TO MARCH 2006. THEREFORE, TREATING THE APPELLANT AS ASSESSEE IN DEFAULT AND UPHOLDING THE ORDER U/S 201(1)/(1A) IS TOTALLY UNJUSTIFIED UNWARRANTED BOTH IN LA W AND FACTS. 3. SUBJECT TO GROUND NO. 2, EVEN IF THE PAYMENTS ARE MADE TO THE VENDOR (WITHOUT ACCEPTING), THE PROVISIONS OF SEC 195 WILL NOT APPLY IN LIEU OF THE PROVISIONS OF SEC 6 REGARDING DETERMINATION OF RESIDENTIAL STATUS AS THE VENDOR STAYED IN IN DIA FOR MORE THAN 365 DAYS IN THE FOUR PREVIOUS CONSECUTIVE YEARS DETAILS OF WHICH ARE ALREADY AVAILABLE ON RECORD FOR WHICH THERE IS NO DISPUTE. THEREFORE, INVOKING THE PROVISIONS OF SEC 195 AND TREATING THE APPELLANT AS ASSESSEE IN DEFAULT IS NOT IN ACCO RDANCE WITH LAW. 4. SUBJECT TO GROUND NO. 2 AND 3, THE ENTIRE PURCHASE CONSIDERATION WAS PAID FROM TIME TO TIME DURING DECEMBER 2000 TO MARCH 2006 IN CASH FOR WHICH THERE IS NO DISPUTE AND THEREFORE, THE VERY ORDER PASSED DT. 31.03.2014 IS BARRED BY LIMIT ATION U/S SEC 201(1)(3)(II). 5. THE APPELLANT CRAVE TO SUBMIT THAT ALL FACTS, CONTENTIONS AND CASE LAWS MENTIONED IN THE ACCOMPANIED STATEMENT OF FACTS SHALL BE TREATED AS PART AND PARCEL OF THESE GROUNDS OF APPEAL. FOR THESE AND OTHER REASONS THAT MAY B E URGED AT THE TIME OF HEARING, PRAYS THE HON'BLE ITAT TO CANCEL THE ORDER PASSED U/S 201(1)/ (1A). 3. NO ARGUMENT HAS BEEN MADE BY THE ASSESSEE IN RESPECT OF GROUND NOS.1, 2, 3 & 5 AND THE ENTIRE ARGUMENT OF THE ASSESSEE WAS REVOLVED AROUND THE TIME LIM IT FOR PASSING THE ORDER U/S ITA NO. 119 /VIZAG/ 2016 BHEMARA SETTY SUNEETHA, HYDERABAD 3 201(1)/201(1A) OF THE ACT. THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR, HAS PURCHASED IMMOVABLE PROPERTY ADMEASURING 226 SQ.YDS. AT ALLIPURAM, VISAKHAPATNAM FOR A CONSIDERATION OF RS. 49,72,000/ - FROM SRI GUDIVADA S. NAIDU, A NON - RESIDENT INDIAN VIDE DOCUMENT N O.3187 REGISTERED ON 18.7.2007 BEFORE THE SUB - REGISTRAR, VISAKHAPATNAM. THE NON RESIDENT HAS NOT FILED THE RETURN OF INCOME FOR THE SALE OF THE ASSET WHICH RESULTED IN CAPITAL GAINS. AS PER SECT ION 1 9 5 OF THE ACT, THE ASSESSEE REQUIRED TO DEDUCT THE TAX AT SOURCE ON PAYMENT MADE TO THE NON RESIDENT. SINCE THE ASSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE, THE A.O. INVOKED THE PROVISIONS OF SECTION 201(1) & 201(1A) OF THE ACT AND TREATED THE ASSESS EE AS ASSESSEE IN DEFAULT AND RAISED THE DEMAND OF RS. 18,94,016/ - AGAINST WHICH THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A). THE CIT(A) UPHELD THE ORDER OF THE A.O AND WHILE ADJUDICATING THE ORDER OF THE A.O. THE LD.CIT(A) HELD THAT ORDER U/S 201 & 201( 1A) OF THE ACT WAS PASSED ON 31.3.2014 I.E. WITHIN THE PERIOD OF 6 YEARS FROM THE END OF FINANCIAL YEAR AND AS PER SECTION 201(3), IT IS WITHIN THE LIMITATION PERIOD AND ACCORDINGLY DISMISSED THE APPEAL. FOR READY REFERENCE, WE EXTRACT THE RELEVANT PARAG RAPH NO.6 OF THE CIT(A) ORDER: ITA NO. 119 /VIZAG/ 2016 BHEMARA SETTY SUNEETHA, HYDERABAD 4 GROUND NO.4 IS WITH REGARD TO THE VALIDITY OF THE ORDER PASSED U/S 201(1)/201(1A). IT IS THE ARGUMENT OF THE ASSESSEE THAT AS PER SECTION 6 OF THE I.T. ACT THE VENDOR WAS A RESIDENT AND PAYMENTS WERE MADE DURING THE PERI OD DECEMBER 2000 TO MARCH 2006 AND NO ACTION COULD HAVE BEEN TAKEN AS PER THE PROVISIONS OF SECTION 201(3) AFTER 31.3.2012. AS ALREADY MENTIONED ABOVE, NO EVIDENCE HAS BEEN FURNISHED THAT THE PAYMENTS WERE MADE TO THE BROTHER OF THE VENDOR DURING THE PERI OD DECEMBER, 2000 TO MARCH 2006 AS CLAIMED BY THE ASSESSEE AND FINALLY THE AGREEMENT TO SALE WITH GENERAL POWER OF ATTORNEY WAS REGISTERED ON 4.5.2007 I.E. IN FY 2007 - 08 AND THE IMPUGNED ORDER U/S 201(1)/201(1A) WAS PASSED ON 31.3.2014 I.E. WITHIN 6 YEARS FROM THE END OF THE FY AS PER THE PROVISIONS OF SECTION 201(3). THEREFORE THIS GROUND OF APPEAL RAISED BY THE ASSESSEE HAS NO MERIT AND DISMISSED. 4. APPEARING FOR THE ASSESSEE, THE LD. A.R. ARGUED THAT IN THIS CASE, THE PROPERTY WAS REGISTERED ON 4.5. 2007 RELEVANT FINANCIAL YEAR WAS 2007 - 08 AND THE IMPUGNED ORDER U/S 201(1) & 201(1A) OF THE ACT WAS PASSED ON 31.3.2014. ACCORDING TO THE LD. A.R., THE ORDER U/S 201/ 201(1A) OF THE ACT SHOULD NOT BE PASSED BEYOND 4 YEARS AS HELD BY HONBLE DELHI HIGH COUR T IN W.P. NO.2166/2012 IN BHAR TI AIRTEL AND ANOTHER VS. UOI, 76 TAXMANN.COM 256 (DELHI). 5. ON THE OTHER HAND, THE LD. D.R. ARGUED THAT THE ASSESSEE HAS PURCHASED THE PROPERTY AND PAID THE PURCHASE CONSIDERATION WITHOUT DEDUCTION OF TAX AT SOURCE. SHE IS REQUIRED TO DEDUCT THE TAX AT SOURCE AND REMIT THE SAME TO THE GOVERNMENT OF INDIA ACCOUNT AND ALSO REQUIRED TO FILE THE TDS RETURN BEFORE THE A.O. BUT SHE HAS NEITHER DEDUCTED THE TAX AT SOURCE NOR FILED THE RETURN OF INCOME. AS PER THE PROVISIONS OF IN COME TAX ACT U/S 201 /201(1A) , THERE IS NO TIME LIMIT IN RESPECT OF NON - RESIDENTS. LD. D.R. RELIED ON THE DECISION OF HONBLE ITA NO. 119 /VIZAG/ 2016 BHEMARA SETTY SUNEETHA, HYDERABAD 5 BOMBAY HIGH COURT IN THE CASE OF DIT (INTERNATIONAL TAXATION) VS. MAHINDRA & MAHINDRA LIMITED 225 TAXMAN 0306 WHEREIN IT WAS HE LD THAT 6 YEARS IS THE MAXIMUM TIME LIMIT FOR PASSING THE ORDER U/S 201(1) OR 201(1A) OF THE ACT IF THERE IS NO TIME LIMIT SPECIFIED IN THE ACT . FURTHER, THE LD. D.R. ARGUED THAT IN THIS CASE, THE ASSESSEE REQUIRED TO DEDUCT THE TAX AT SOURCE BUT NOT DEDU CTED SAME AND THE ASSESSEE ALSO FAILED TO FURNISH THE TDS RETURN BEFORE THE A.O. SINCE THERE IS NO TIME LIMIT, THE INTENTION OF THE LEGISLATURE IN T HE CASE OF NON - RESIDENTS TO TREAT THE ASSESSEE IN DEFAULT WITHOUT LIMITATION AND ACCORDINGLY ARGUED THAT CI T (A) HAS RIGHTLY DISMISSED THE APPEAL . 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS PLACED ON RECORD. THE RELEVANT PROVISIONS OF SECTION 201(1A) OF THE ACT IS REPRODUCED AS UNDER: 201 (1A) 1 WITHOUT PREJUDICE TO THE PROVISIONS OF SUB - SEC TION (1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPANY AS IS REFERRED TO IN THAT SUBSECTION DOES NOT DEDUCT OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT SHALL BE LIABLE TO PAY SIMPLE INTEREST AT 2 FIFTEEN] PER CENT PER ANNUM ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID.] 7. THE HONBLE DELHI HIGH COURT WHILE DECIDING THE WRIT PETITION IN THE CASE OF BHARTI AIRTEL & ANOTHER RENDERED THE JUDG EMENT CONSIDERING THE STATEMENT OF O BJECTS AND R EASONS OF THE F INANCE ( NO. 2) B ILL , 2009 . IN RESPECT OF TIME LIMIT, HONBLE BOMBAY HIGH ITA NO. 119 /VIZAG/ 2016 BHEMARA SETTY SUNEETHA, HYDERABAD 6 COURT HAS CONSIDERED THE ISSUE IN DETAIL AND HELD THAT 6 YEARS IS REASONABLE PERIOD FOR INITIATING THE ACTION U/S 201 A ND 201(1A). THE HONBLE DELHI HIGH COURT IN THE DECISION RELIED UPON BY THE ASSESSEE CONSID ERED THE ISSUE WITH REGARD TO THE LIMITATION OF TIME FOR INITIATING THE PROCEEDINGS U/S 201/201(1A) AND HELD THAT 4 YEARS IS THE REASONABLE TIME FOR INITIAT ING PROCEEDINGS U/S 201/201(1A). WHILE HOLDING SO, THE HONBLE HIGH COURT HAS RELIED ON THE DECISION OF CIT VS. NHK JAPAN BROADCASTING LIMITED [305 ITR 137] AND THE CIT VS . HUTCHISON ESSAR TELECOM. LIMITED [ 323 ITR 330 ] , FURTHER, HONBL E DELHI HIGH COURT HAS CONSIDERED AMENDMENT MADE TO SECTION 201 OF THE ACT VIDE FINANCE BILL, 2009 AND VIEWED THAT THE PARLIAMENT DID NOT MAKE ANY AMENDMENT TO THE TIME LIMITS FOR THE NON RESIDENTS WHICH INDICATES THAT THE PARLIAMENT HAS ACCEPTED THE JUDICIAL PRONOUNCEMEN TS FOR THE LIMITATION PERIOD ALREADY SET OUT BY THE COURTS. THE HONBLE DELHI HIGH COURT ALSO CONSIDERED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE VS. CIT (2010) (10) SCC 29, W HEREIN, THE HONBLE SUPREME COURT HELD TH AT THE PROCEEDINGS SHOULD BE INITIATED U/S 201/201(1A) WITHIN REASONABLE PERIOD AND IT CANNOT EXTEND WITHOUT LIMITATION . A FTER CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN GE INDIA TECHNOLOGY AND THE VODAFONE ESSAR MOBILES LTD. THE HONBLE DELH I ITA NO. 119 /VIZAG/ 2016 BHEMARA SETTY SUNEETHA, HYDERABAD 7 HIGH COURT FOLLOWED ITS OWN DECISION IN THE CASE OF CIT VS. NHK JAPAN BROADCASTING LIMITED (SUPRA) AND HELD THAT 4 YEARS IS THE REASONABLE PERIOD FOR INITIATING THE PROCEEDINGS U/S 201/201(1A) OF IT ACT. THE LD. DR RELIED ON THE DECISION OF HONBLE BOMB AY HIGH COURT IN THE CASE OF MAHINDRA & MAHINDRA LTD. CONSIDERING THE HONBLE SUPREME COURT DECISION IN CIT VS. VEGETABLE PRODUCTS LTD., 88 ITR 192 (SC) AND CIT VS. KARAMCHAND PREMCHAND LTD (1960) 40 ITR 106, WE ARE ALSO OF THE VIEW THAT THE DECISI ON FAVOURABLE TO THE ASSESSEE IS REQUIRED TO BE TAKEN. ACCORDINGLY FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT WE HOLD THAT REASONABLE PERIOD IS 4 YEARS FOR INITIATING OF PROCEEDINGS U/S 201/201(1A). IN THE INSTANT CASE THE PROPERTY WAS REGISTERED ON 18.7.2007 AND THE ASSESSEE IS LIABLE TO DEDUCT THE TDS DURING THE F.Y.2007 - 08 AND THE 4 YEARS TIME LIMIT FOR INITIATING ACTION U/S 201/201A EXPIRES BEFORE MARCH 2012. IN THE INSTANT CASE, NOTICE U/S 195 TREATING THE ASSESSEE AS ASSESSEE IN DEFAULT WAS I SSUED ON 11.08.2013 BEYOND THE 4 YEARS OF THE FINANCIAL YEAR IN WHICH THE ASSESSEE REQUIRED TO DEDUCT TAX AT SOURCE . A S HELD BY HONBLE DELHI HIGH COURT, THE TIME LIMIT FOR INITIATING THE PROCEEDINGS U/S 201 AND 20 1(1A) IS 4 YEARS AND IT IS BARRED BY LIMIT ATION . THEREFORE, FOLLOWING THE DECISION OF HONBLE DELHI HIGH COURT, WE ARE UNABLE TO SUSTAIN THE ORDERS OF THE LOWER AUTHORITIES. ITA NO. 119 /VIZAG/ 2016 BHEMARA SETTY SUNEETHA, HYDERABAD 8 ACCORDINGLY, THE ORDER PASSED U/S 201 / 201(1A) IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED . 8. THE ASSESSEE F ILED STAY PETITION REQUESTING STAY OF DEMAND IN STAY PETITION. SINCE THE APPEAL OF THE ASSESSEE IS PRONOUNCED, THE PETITION FOR STAY OF DEMAND BECAME INFRUCTUOUS AND ACCORDINGLY DISMISSED. 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND STAY PETITION DISMISSED. T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 23 RD JUN 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM: /DATED : 23 .06.2017 VG/SPS ITA NO. 119 /VIZAG/ 2016 BHEMARA SETTY SUNEETHA, HYDERABAD 9 / COPY OF THE ORDER FORWARDED TO : - 1. / THE APPELLANT B. SUNEETHA, C/O M/S ANJANEYULU&CO, CHARTERED ACCOUNTANTS, 30, BHAGYALAKSHMI NAGAR, GANDHI NAGAR, HYDERABAD - 500 080 2 . / THE RESPONDENT DY. DIRECTOR OF INCOME TAX (IT&TP), VISAKHAPATNAM 3 . / CIT(IT&TP), HYDERABAD 4 . ( ) / CIT(A) - 10, HYDERABAD 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM