ITO, Jaipur V. M/S VODAFONE ESSAR DIGILINK LTD., Jaipur

ITA 239/JPR/2012

• Counselvise Citation: 23923114 RSA 2012
• Duration Of Justice: 1 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 13-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A K KHANDELWAL
• Keywords: Business income; Additional evidence; Question of law
• Section: 133A; 201(1); 12

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI B.R. JAIN AND SHRI KUL BHARAT) I.T.A. NO. 239/JP/2012 ASSTT. YEAR: 2009-10 PAN NO. AAACA3202D INCOME TAX OFFICER, VS. M/S VODAFONE ESS AR DIGILINK LTD. WARD-TDS-2, JAIPUR (FORMERLY AIRCEL DIGILINK IN DIA LTD.) 5 TH FLOOR, GAURAV TOWERS, MALVIYA NAGAR, JAIPUR (APPELLANT) (RESPONDENT) I.T.A. NOS. 250 TO 252/JP/2012 ASSTT. YEARS 2007-08 TO 2009-10 PAN NO. AAACA3202D M/S VODAFONE ESSAR DIGILINK LTD. VS. INCOME TAX OF FICER, (FORMERLY AIRCEL DIGILINK INDIA LTD.) WARD-TDS-2, JAIPUR. 5 TH FLOOR, GAURAV TOWERS, MALVIYA NAGAR, JAIPUR . (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI A.K. KHANDELWAL. APPELLANT BY :SHRI SALIL KAPOOR DATE OF HEARING : 23.08.2013 DATE OF PRONOUNCEMENT : 29-08-2013 O R D E R PER KUL BHARAT, J.M. THESE FOUR APPEALS, THREE BY THE ASSESSEE AND ONE BY THE REVENUE FILED AGAINST THE ORDER DATED 23/12/2011 PASSED BY THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS)-III, JAIPUR. SINCE THE COMMON ISSUES ARE INVOLVED, WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE IN IT A NO. 239/JP/2012. THE GROUNDS RAISED IN THIS APPEAL ARE AS UNDER:- THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS I N HOLDING THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX REGARDING SUC H DISTRIBUTION/CHANNEL PARTNERS, WHO HAVE CERTIFIED THAT THEY HAVE FILED T HEIR RETURN OF INCOME FOR THE CONCERNED ASSESSMENT YEAR AND THEIR TOTAL INCOM E DECLARED THEREIN WAS INCLUDING THE BUSINESS INCOME FROM THE PURCHASES AN D SALE OF PREPAID PRODUCTS OF THE APPELLANT COMPANY IGNORING THE FACT THAT: (A) THE ASSESSEE COMPANY DID NOT PROVIDE THE DETAIL S OF THE DEDUCTEES REGARDING FILING OF IT RETURNS BEFORE THE AO (TDS) DURING THE PROCEEDINGS. (B) THE DETAILS PROVIDED BEFORE THE LD. CIT(A) DID NOT REFLECT THE CORRECT FIGURE OF COMMISSION SHOWN BY THE DEDUCTEES IN THEI R IT RETURNS AS THE LD. CIT(A) DIRECTED THE AO TO VERIFY THE FIGURE S. (C) MANY OF THE DEDUCTEES DID NOT HAVE PAN AND THER EFORE, THE CLAIM OF FILING OF IT RETURN BY THEM COULD NOT HAVE BEEN CON SIDERED. (D) INCOMPLETE AND UNVERIFIED INFORMATION COULD NOT HAVE BEEN CONSIDERED AS ADDITIONAL EVIDENCE U/R 46A OF THE IN COME TAX RULE. 3. BRIEFLY THE STATED FACTS ARE THAT IN THIS CASE A TDS SURVEY U/S 133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 29/12/2 008. IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE DEDUCTOR HAS MADE PAYMENTS OF COMMISSION T O VARIOUS CHANNEL PARTNERS APPOINTED ALL OVER THE STATE CALLED DISTRIBUTORS OF PRE-PAID PRODUCTS FOR SALE OF STARTER PACKS (SIM CARDS) AND SERVICE TICKETS/RECHARGE COUPONS. TDS WA S REGULARLY DEDUCTED BY THE ASSESSEE U/S 194H OF THE ACT. THE DEDUCTOR HAS TREATED THESE PAYMENTS AS DISCOUNT AND HAS NOT DEDUCTED ANY TDS ON THESE PAYMENTS MADE ON OR AFTER 01 ST JANUARY, 2007. AFTER TDS VERIFICATION, A SHOW CAUSE NOTICE DATED 05/10/2009 WAS ISSUED BY THE ASSESSING OFFICER AND ANOTHER SHOW CAUSE NOTICE DATED 25/10/2010 WAS ISSU ED AND THE ASSESSEE WAS ASKED TO FILE HIS SUBMISSION BY 29/10/2010, WHICH WAS FURTHER ADJ OURNED TO 24/11/2010. SUBSEQUENTLY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, AN ORDER U/S 201 AND 201(A) READ WITH SECTION 194H OF THE INCOME TAX ACT, 1961 (HEREINAFT ER TO BE REFERRED AS THE ACT) WAS 3 PASSED, WHEREBY THE ASSESSING OFFICER TREATED THE A SSESSEE AS ASSESSEE IN DEFAULT U/S 201 OF THE ACT. 4. FEELING AGGRIEVED BY THIS ORDER, THE ASSESSEE FI LED AN APPEAL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE, DIRECTED THE ASSESSING OFFICER TO DELETE THE LIABILITY U/S 201(1) OF THE ACT IN RESPE CT OF SUCH DISTRIBUTORS/CHANNEL PARTNERS, WHO HAVE CERTIFIED THAT THEY HAVE FILED THEIR RETUR N OF INCOME FOR THE CONCERNED ASSESSMENT YEAR AND THEIR TOTAL INCOME DECLARED THEREIN WAS IN CLUDING OF THE BUSINESS INCOME FROM THE PURCHASE AND SALE OF PREPAID PRODUCTS OF THE APPELL ANT COMPANY. THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO VERIFY THE FACTUAL CORRECT NESS OF THE SAID CLAIM AFTER GIVING AN OPPORTUNITY OF HEARING TO THE APPELLANT AND TO ALLO W RELIEF ACCORDINGLY. AGAINST THIS ORDER, THE REVENUE IS IN APPEAL. 5. THE LD. CIT D.R. SUBMITTED THAT THE ORDER OF LD CIT(A) IS PATENTLY ILLEGAL AND UNJUSTIFIED. 6. ON THE CONTRARY, THE LEARNED COUNSEL FOR THE ASS ESSEE SUPPORTED THE ORDER OF LD. CIT(A) ON THIS ISSUE AND SUBMITTED THAT THE LD. CIT (A) HAS ONLY DIRECTED TO VERIFY THE CLAIM. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE CAN NOT BEN TERMED AS ASSESSEE IN DEFAULT WHEN THE TAX HAS BEEN PAID IN V IEW OF THE DECISION OF THE HONBLE APEX COURT RENDERED IN THE CASE OF HINDUSTAN COCA COLA B EVERAGES LTD. VS. CIT 293 ITR 226. IN REJOINDER, THE LD. CIT D.R. SUBMITTED THAT THE D IRECTION OF LD. CIT(A) TANTAMOUNT TO SETTING ASIDE OF THE ISSUE AND SUCH POWER IS NOT AV AILABLE TO THE LD. CIT(A). HE FURTHER SUBMITTED THAT THE LD. CIT(A) AT ONE HAND DIRECTED TO DELETE THE ADDITION, ON THE OTHER HAND, DIRECTED THE ASSESSING OFFICER TO VERIFY THE CLAIM OF THE ASSESSEE THAT THE PAYEE COMPANY HAVE DECLARED IN THEIR RETURN OF INCOME, THE PAYMEN TS MADE BY THE ASSESSEE AND TAX HAS BEEN PAID BY THE RECIPIENTS. 4 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LD. CIT(A) HAS DECIDED THIS ISSUE AS UNDER:- THE AO IS, THEREFORE, DIRECTED TO DELETE THE APPEL LANTS LIABILITY CREATED U/S 201(1) OF THE I.T. ACT, IN RESPECT OF S UCH DISTRIBUTORS/CHANNEL PARTNERS, WHO HAVE CERTIFIED THAT THEY HAVE FILED T HEIR RETURN OF INCOME FOR THE CONCERNED ASSESSMENT YEAR AND THEIR TOTAL INCOM E DECLARED THEREIN WAS INCLUDING THE BUSINESS INCOME FROM THE PURCHASE AND SALE OF PREPAID PRODUCTS OF THE APPELLANT COMPANY. ACCORDINGLY, THE AO IS DIRECTED TO VERIFY THE FACTUAL CORRECTNESS OF THE SAID CLAIM AF TER GIVING AN OPPORTUNITY OF HEARING TO THE APPELLANT AND TO ALLOW RELIEF ACCORD ING TO THE DECISION GIVEN ABOVE IN THIS PARA. 8. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E RIVAL CONTENTIONS OF THE RESPECTIVE REPRESENTATIVE OF THE PARTIES. AS PER SE CTION 251 OF THE I.T. ACT IN DISPOSING OF AN APPEAL, COMMISSIONER OF APPEAL SHALL HAVE THE PO WER TO CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT BUT NO POWER IS AVAILABLE FOR SETTING ASIDE THE ISSUE. FURTHER WE FIND MERIT INTO THE CONTENTION OF THE LD. CIT D.R. THAT THE LD. CIT(A) ON ONE HAND DIRECTED THE ASSESSING OFFICER TO DELETE THE LIABILITY CREATED U /S 201(1) OF THE ACT AND ON THE OTHER HAND HE IS DIRECTING THE ASSESSING OFFICER TO VERIFY THE FACTUAL CORRECTNESS OF THE CLAIM OF THE ASSESSEE. IT IS NOT COMING FROM THE RECORDS WHETHER SUCH CLAIM WAS MADE BEFORE THE ASSESSING OFFICER. IN THIS VIEW OF THE MATTER, WE F EEL THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SETTING ASIDE THE ISSUE FOR VERIFICATION OF THE CLAIM OF THE ASSESSEE. HENCE, THIS GROUND OF THE REVENUE IS ALLOWED. THE IMPUGNED DIRECTION IN THE ORDER DATED 23/12/2011 IS HEREBY SET ASIDE. 9. NOW WE TAKE UP ITA NOS. 250 TO 252/JP/2012. ALL THESE APPEALS HAVE COMMON GROUNDS READ AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX APPEALS-III, JAIPUR (LE ARNED CIT(A)) HAS ERRED IN PASSING THE ORDER UNDER SECTION 250 OF THE INCOME TAX ACT, 1961 (ACT), CONFIRMING THE ALLEGATION OF THE INCOME TA X OFFICER. TDS-2, JAIPUR 5 (LEARNED TDS OFFICER) THAT THE APPELLANT IN LIABL E TO DEDUCT TAX ON DISCOUNT EXTENDED TO ITS PRE-PAID DISTRIBUTORS OF PRE-PAID S IM CARDS/TALKTIME. EACH OF THE GROUND IS REFERRED TO SEPARATELY, WHICH MAY KINDLY BE CONSIDERED INDEPENDENT OF EACH OTHER. 1. GROUND NO. 1- THE APPEAL IS NOT LIABLE TO DEDUCT TAX ON DISCOUNT EXTENDED TO ITS PRE-PAID DISTRIBUTORS ON DISTRIBUTION OF PR E-PAID SIM CARDS/TALKTIME. 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE LEARNED TD S OFFICER IN HOLDING THE APPELLANT TO BE AN ASSESSEE IN DEFAULT FOR NON DE DUCTION OF TAX ON DISCOUNT EXTENDED BY THE APPELLANT TO THE DISTRIBUTORS OF IT S PRE-PAID SIM CARDS/TALKTIME DURING THE PERIOD JANUARY, 2007 TO M ARCH, 2007 AND THUS, HOLDING THE APPELLANT IS LIABLE TO PAY TAX UNDER SE CTION 201(1) AND INTEREST UNDER SECTION 201(1A) OF THE ACT. 1.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE LEARNED TD S OFFICER BY HOLDING THAT THE RELATIONSHIP BETWEEN THE APPELLANT AND THE DIST RIBUTORS OF PRE-PAID SIM CARDS/TALK TIME IS NOT THAT OF PRINCIPAL TO PRINCI PAL AND THE DISCOUNT ALLOWED TO THE DISTRIBUTORS IS IN NATURE OF COMMISS ION LIABLE FOR DEDUCTION OF TAX AS ENVISAGED UNDER SECTION 194H OF THE ACT. 1.3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A)/TDS OFFICER HAS ERRED IN APPLYING THE PROVIS IONS OF SECTION 194H OF THE ACT TO THE CASE OF THE APPELLANT, SINCE THE APP ELLANT IS NOT RESPONSIBLE UNDER THE DISTRIBUTION AGREEMENT TO MAKE ANY PAYMEN T TO THE PREPAID DISTRIBUTORS AND RESPONSIBILITY/OBLIGATION TO MAKE PAYMENT IS A CONDITION PRECEDENT FOR APPLICATION OF SECTION 194H OF THE AC T WHICH IS ABSENT IN THE PRESENT CASE. 1.4 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A)/TDS OFFICER HAS ERRED IN NOT APPRECIATING TH AT DISCOUNT ALLOWED BY THE APPELLANT IS NOT INCOME IN THE HANDS OF ITS DIS TRIBUTORS AND THAT INCOME, IF ANY, ARISES ONLY WHEN THE PREPAID SIM CARDS/TALK TI ME IS FURTHER DISTRIBUTED BY THE DISTRIBUTORS. 1.5 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATING THE FACTS OF THE CASE AND THE SUBMISSION MADE BY THE APPELLANT WHILE RELYING ON THE ADVERSE JUDGM ENT OF HIGH COURTS ON THIS ISSUE AND ALSO THE DECISION OF HIS PREDECESSOR IN THE CASE OF M/S TATA TELESERVICES LIMITED. HEREINAFTER ALL THE GROUNDS ARE WITHOUT PREJUDICE T O GROUND NO. 1 ABOVE. 6 2. GROUND NO. 2- APPELLANT HAS DISCHARGED ITS ONUS BY SUBMITTING SUFFICIENT INFORMATION TO ENABLE THE LEARNED TDS OFFICER TO VE RIFY WHETHER THE TAXES HAVE BEEN PAID BY THE PAYEE ON DISCOUNT. 2.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT DIRECTING THE LEARNED TDS OFFICER TO FOLLOW THE RULING OF THE MUMBAI BENCH OF ITAT IN THE CASE OF VODAFONE ESSAR LIMITED, (ITA NOS. 6058,6059,6060/MUM/2009) (DECEMBER, 2010) (MUMBAI T RIBUNAL) WHERE THE HONBLE TRIBUNAL DIRECTED THE TDS OFFICER TO IN VOKE HIS POWERS UNDER THE ACT AND VERIFY PAYMENT OF TAXES BY THE PAYEES F ROM THEIR RESPECTIVE ASSESSING OFFICERS BASIS THE PERMANENT ACCOUNT NUMB ERS OF THE PAYEES FURNISHED BY THE ASSESSEE. 3. GROUND NO. 3- NO INTEREST UNDER SECTION 201(1A) OF THE ACT CAN BE CHARGED. 3.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE LEARNED TD S OFFICER IN CHARGING INTEREST UNDER SECTION 201(1A) OF THE ACT. 10. THE ASSESSEE HAS ALSO RAISED THE ADDITIONAL GRO UND VIDE LETTER DATED 31-05-2012 WHICH READS AS UNDER:- ORDER PASSED U/S 201(1) OF THE ACT ON JANUARY 17, 2011 IS BAD IN LAW AND THE PROCEEDINGS ARE BARED BY LIMITATION.. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. TDS OFFICER HAS ERRED IN PASSING THE ORDER U/S 201(1)/ 201(1A) OF THE ACT AFTER LAPSE OF ONE YEAR FROM THE END OF THE FINANCI AL YEAR IN WHICH THE PROCEEDINGS WERE INITIATED AND HENCE THE IMPUGNED O RDER IS BARRED BY LIMITATION AND IS BAD IN LAW. 11. THE ASSESSEE'S COUNSEL SHRI SALIL KAPOOR, ADVOC ATE IN SUPPORT OF THE GROUND RAISED IN APPEAL CONTENDS THAT THE ASSESSEE IS NOT LIABLE TO MAKE DEDUCTION OF TAX AT SOURCE AS SECTION 194H IS NOT APPLICABLE TO HIM, AS THE ASSES SEE WAS NOT RESPONSIBLE TO MAKE PAYMENT AS THE ASSESSEE WAS TO RECEIVE THE PAYMENT FROM THE DISTRIBUTOR AND NOT TO MAKE THE PAYMENT. SECONDLY, THE DISTRIBUTOR IS NOT ASSES SEE'S AGENT AND THAT THE BUSINESS TRANSACTION IS PRINCIPAL TO PRINCIPAL BASIS. THIRDL Y, THE DISCOUNT ALLOWED BY THE ASSESSEE IS NOT THEIR INCOME IN VIEW OF THE FACT THAT THEY HAVE FURTHER PASSED THAT DISCOUNT TO SUB- 7 DISTRIBUTOR / AGENT. FOURTHLY, THE ASSESSEE CANNOT BE TREATED AS ASSESSEE IN DEFAULT UNLESS AND UNTIL IT IS HELD BY THE ASSESSING OFFICER THAT RECI PIENT HAS NOT PAID TAXES ON THE INCOME RECEIVED FROM THE ASSESSEE IN VIEW OF THE JUDGEMENT RENDERED BY HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF JAGARAN PRAKASHAN LTD. VS. DCI T, 345 ITR 288. IN SUPPORT, THE LD. AR ALSO FILED THE WRITTEN SUBMISSIONS. 12. ON THE CONTRARY, THE LD. DR SUBMITTED THAT ON M ERIT THE ISSUE HAS ALREADY BEEN DECIDED AGAINST THE ASSESSEE ON THE IDENTICAL FAC TS BY THE HON'BLE HIGH COURTS IN THE CASES OF VODAFONE ESSARE CELLULAR LTD. VS. ACIT (TDS), 33 2 ITR 255 (KER.), BHARTI CELLULAR LTD. VS. ACIT, 354 ITR 507 (CAL.) AND CIT VS. CIT VS. I DEA CELLULAR LTD. (DEL.). 13. WE HAVE CONSIDER4ED THE RIVAL SUBMISSIONS OF TH E PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND MERIT INTO THE CONTENT IONS OF THE LD. DR THAT THE ISSUE HAS ALREADY BEEN DECIDED AGAINST THE ASSESSEE BY VARIOU S HON'BLE HIGH COURTS RENDERED IN THE CASES OF VODAFONE ESSARE CELLULAR LTD. VS. ACIT (TD S), 332 ITR 255 (KER.), BHARAT CELLULAR LTD. VS. ACIT, 354 ITR 507 (CAL.) AND CIT VS. CIT VS. IDEA CELLULAR LTD. (DEL.). WE FIND THAT THE HON'BLE DELHI HIGH COURT ON IDENT ICAL FACTS HAS HELD AS UNDER: WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE SA ID BENCH. IDENTICAL VIEW IS TAKEN BY THE CALCUTTA BENCH IN THE CASE OF ASST. CIT V. BHARTI CELLULAR LTD. [2007] 294 ITR (AT) 283 . BOTH THESE BENCHES SPECIFICALLY REJECTED THE ARGUMENTS OF THE ASSESS EE BASED ON AHMEDABAD STAMP VENDORS ASSOCIATION [2002] 257 ITR 202 (GUJ), BHOPAL SUGAR INDUSTRIES LTD. [1977] 40 STC 42 (SC), KERALA STA MP VENDORS ASSOCIATION [2006] 282 ITR 7 (K ER) AND BAJAJ AUTO LTD. [1995] 6 SCC 566 DISTINGUISHING THOSE JUDGMENTS AND HOLDING THAT T HEY ARE NOT APPLICABLE IN THE GIVEN SITUATION. WE AGREE WITH THE SAME. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE DEL HI HIGH COURT IN THE CASE OF CIT VS. CIT VS. IDEA CELLULAR LTD. (SUPRA), WE FIND NO INFI RMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS UPHELD. THUS THE GROUNDS RAISED BY THE ASSESSEE IN THE APPEALS ARE DISMISSED. 8 14. NOW COMING TO THE ADDITIONAL GROUND, THE LD. DR HAS STRONGLY OBJECTED TO THE ADMISSION OF THE ADDITIONAL GROUND AND SUBMITTED TH AT THIS ISSUE CANNOT BE ADMITTED IN VIEW OF THE FACT THAT MATERIAL FACTS FOR DECIDING THE IS SUE ARE NOT PART OF THE RECORD. THE ASSESSEE IS SEEKING THE ADDITIONAL EVIDENCE IN THE SHAPE OF AUTHORIZATION LETTER, INDICATING REQUISITE INFORMATION IN SURVEY PROCEEDINGS FOR RAISING GROUN D OF APPEALS. HE SUBMITTED THAT THIS IS CONTRARY TO THE RATIO LAID DOWN BY THE HON'BLE SUP REME COURT IN THE CASE OF NTPC LTD. VS. CIT (1998) 229 ITR 383 (SC). 15. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESS EE SHRI SALIL KAPOOR SUBMITTED THAT THE ISSUE RAISED IS PURELY ON THE QUESTION OF LAW A RISING FROM THE ASSESSMENT ORDER. THEREFORE, IT CANNOT BE SAID THAT THIS ISSUE IS NOT ARISING OUT OF THE RECORD. HE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF N TPC LTD. VS. CIT (1998) 229 ITR 383 (SC). 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE HON'BLE APEX COURT IN THE CASE OF OF NTPC LTD. VS. CIT (SUPRA) HAS HELD THAT UNDOUBTEDLY, THE TRIBUNAL HAS THE DISCRETION TO ALL OW OR NOT TO ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIB UNAL IS ONLY REQUIRED TO CONSIDER THE QUESTION OF LAW ARISING FROM FACTS WHICH ARE ON REC ORD IN THE ASSESSMENT PROCEEDINGS, THERE IS NO REASON WHY SUCH A QUESTION SHOULD NOT BE ALLO WED TO BE RAISED WHERE IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASS ESS THE TAX LIABILITY OF AN ASSESSEE. IN THE PRESENT CASE THE UNDISPUTED FACTS ARE THAT A SURVEY WAS CONDUCTED AND ON THE BASIS OF THE EVIDENCE GATHERED DURING THE COURSE OF SURVEY PROCE EDINGS, REVENUE INITIATED PROCEEDINGS U/S 201 OF THE ACT. THEREFORE, IN OUR CONSIDERED VI EW, THE OBJECTION OF THE LD. DR IS NOT TENABLE IN LAW AND THE SAME IS REJECTED. THUS THE A DDITIONAL GROUND RAISED BY THE ASSESSEE IS ADMITTED FOR ADJUDICATION. 9 17. NOW COMING TO THE MERIT OF THE ADDITIONAL GROU NDS, BOTH THE PARTIES HAVE FILED THE WRITTEN SUBMISSIONS AS WELL AS MADE ORAL SUBMISSION S. THE CONTENTIONS OF THE LD. COUNSEL FOR THE ASSESSEE IN THE FORM OF WRITTEN SUBMISSION ARE AS UNDER :- THE PROCEEDINGS U/S 201(1) OF THE ACT WERE INITIA TED ON 29- 12-2008 WHEN A SURVEY U/S 133A OF THE ACT WAS UNDER TAKEN AND A NOTICE DATED 29-12-2008 WAS ISSUED AND TWO INSPECTO RS WERE DEPUTED FOR VERIFICATION OF TDS FOR THE FINANCIAL Y EARS 2005-06, 2006-07, 2007-08 AND 2008-09 RELEVANT TO ASSESSMENT YEARS 2006-07 TO 2009-10. THEREAFTER A SPECIFIC NOTICE WAS ISSUED ON 14-01-2009 ASKING FURTHER DETAILS IN RESPECT OF MRP AND DEALE R PRICE OF ALL THE PRODUCTS SOLD THROUGH DISTRIBUTORS / DEALERS. HENCE , THE PROCEEDINGS U/S 201(1) WERE INITIATED ON 29-12-2008 OR 14-01-20 09. THE ORDER U/S 201, HOLDING THE ASSESSEE TO BE THE ASSESSEE IN DEFAULT, WAS PASSED ON 17-01-2011 WHICH IS BARRED BY TIME LIMITA TION AS THE SAME WAS REQUIRED TO BE PASSED ON OR BEFORE 31-03-2010 I .E. WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH TH E PROCEEDINGS U/S 201 WERE INITIATED. NO DOUBT A SHOW CAUSE NOTICE WAS ISSUED ON 05-10-20 09 TO THE APPELLANT ASSESSEE BUT THAT CANNOT BE TREAT ED AS INITIATION OF PROCEEDINGS. THE PROCEEDINGS HAS TO BE CONSIDERED A S INITIATED FROM THE DATE OF SURVEY AND THE NOTICE DATED 29-12-2008 OR 14-01-2009. THE PROCEEDINGS ARE INITIATED, THE MOMENT NOTICE IS ISSUED AND NOT WHEN THE SHOW CAUSE IS ISSUED. THE SHOW CAUSE MAY N OT BE ISSUED IF NO DEFAULT IS ALLEGEDLY FOUND BUT THAT DOES NOT MEA N THAT PROCEEDINGS WERE NOT INITIATED. THE INITIATION OF PROCEEDINGS I S INDEPENDENT OF THE ISSUANCE OF SHOW CAUSE. THE ORDER U/S 201 COULD HAV E BEEN PASSED WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH PROCEEDINGS ARE INITIATED AND FOR THIS PURPOSE RELI ANCE IS PLACED ON THE DECISION OF MAHINDRA & MAHINDRA LTD. VS. DCIT, 30 SOT 374 BOMBAY (SPECIAL BENCH). IT IS HELD IN PARA 20 (X) O F THE SAID DECISION THAT MAXIMUM TIME LIMIT FOR PASSING THE ORDER U/S 2 01(1) OR (1A) IS 10 THE SAME AS PRESCRIBED U/S 153(2) OF THE ACT, BEING ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH PROCEEDINGS U/S 201(1) ARE INITIATED. THE AMENDMENT WAS INTRODUCED IN SECTION 201 BY WAY OF INSERTION OF SUB-SECTION 3 BY THE FINANCE (NO.2) AC T, 2009 FROM 01- 04-2010 WHICH CANNOT BE MADE APPLICABLE TO THE CASE OF THE APPELLANT - ASSESSEE AS PROCEEDINGS HAVE ALREADY BE COME BARRED BY TIME LIMITATION ON 31-03-2010. 18. ON THE CONTRARY, CONTENTIONS OF THE LD. DR ON T HE MERIT OF THE ADDITIONAL GROUND ARE AS UNDER:- ON MERITS OF ADDITIONAL GROUND RAISED BY THE ASS ESSEE IT IS CONTENTED THAT THE TWO LETTERS DATED 29.12.2008 AN D 14.01.2009 ARE IN RELATION TO SURVEY PROCEEDINGS WITH THE LIMITED PURPOSE OF COLLECTING INFORMATION FROM THE ASSESSEE AND THE S AME DOES NOT REVEAL ANY ACTION PURSUANT TO THE POWER CONTENT U/S 201 OF THE I.T. ACT. IT THEREFORE, IS FARFETCHED TO PRESUME THAT LE TTER DATED 29.012.2008 AND A FURTHER LETTER DATED 14.01.2009 W HICH WAS IN CONTINUATION OF THE EARLIER LETTER DATED 29.12.2008 ARE IN CONSEQUENCE OF FAILURE TO DEDUCT OR PAY IN TERMS OF SECTION 201 OF THE ACT. THE FIRST NOTICE ISSUED FOR INITIATING PROCEED INGS IN RESPECT OF SHORT DEDUCTION AT SOURCE WAS DATED 05.10.2009. GOI NG BY THIS SHOW CAUSE NOTICE THE LIABILITY STOOD DETERMINED BY PASS ING THE ORDER WITH IN THE PERIOD IN THE LIMITATION PROVIDED UNDER THE STATUE. IT SHALL ALSO OBSERVE THAT THE INCOME TAX OFFICER IN SURVEY PROCEEDINGS MAKE REQUISITION INFORMATION FOR F.Y. 2008-09 RELATED TO A.Y. 2009-10 IN THE LETTER DATED 29.12.2008 AS WELL AS IN THE LETTE R DATED 14.01.2009 AND THE PREVIOUS YEAR 31.03.2009 HAS NOT EXPIRED BY THAT TIME. THESE LETTERS THEREFORE, COULD NOT BE ISSUED IN DETERMINA TION OF SHORT DEDUCTION OF TAX FOR THE YEAR ENDED ON 31.03.2009. THE POST SURVEY VERIFICATION COULD NOT BE TREATED AS PROCEEDINGS IN ITIATED U/S 201. THE VERIFICATION OF TDS MADE BY THE ITO FOR SECTION 192, 194A, 11 194C, 194H, 194I, 194J OF THE INCOME TAX ACT, 1961. THE CONSEQUENCES OF FAILURE TO DEDUCT OR PAY TDS U/S 1 92, 194A, 194C, 194H, 194I, 194J OF THE INCOME TAX ACT, 1961 RESULT S IN TO INITIATION OF PROCEEDINGS U/S 201(1) OF THE INCOME TAX ACT, 19 61. IT IS ALSO VITAL TO BE MENTIONED HERE THAT SECTION 201- IS CONSEQUEN CES OF FAILURE TO DEDUCT OR PAY TDS. 19. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO T HE CONTENTIONS OF BOTH THE PARTIES. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT PERIOD FOR RECKONING THE LIMITATION IS TO BE TAKEN FROM THE DATE WHEN SURVEY WAS CONDUCTED ON THE PREMISES OF THE ASSESSEE. ON THE CONTRARY, THE CONTENTION OF THE LD . DR IS THAT SURVEY PROCEEDINGS AND PROCEEDINGS U/S 201 OF THE ACT ARE TWO DIFFERENT AN D DISTINCT PROCEEDINGS. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISION OF SPEC IAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF MAHINDRA & MAHINDRA LTD. VS. DCIT, 30 SOT 4 74 (BOMBAY) WHEREIN THE SPECIAL BENCH AFTER REFERRING VARIOUS PROVISIONS OF THE ACT AND RELYING ON THE DECISION OF HON'BLE DELHI HIGH COURT THAT PROCEEDINGS U/S 201 OF THE AC T ARE THE ASSESSMENT PROCEEDINGS AND THE LIMITATION PRESCRIBED FOR ASSESSMENT PROCEEDING S WOULD ALSO APPLY ON THE PROCEEDINGS U/S 201 OF THE ACT. THE FACTS AS WERE RAISED IN THE CASE OF MAHINDRA & MAHINDRA LTD. VS. DCIT (SUPRA) ARE DIFFERENT FROM THE FACTS IN THE PR ESENT CASE. IN MAHINDRA & MAHINDRA, IT WAS NOT A CASE OF A SURVEY PROCEEDINGS VIS-A-VIS A SSESSMENT PROCEEDINGS BUT IN THE CASE IN HAND, THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT LIMITATION FOR THE PURPOSE OF SECTION 201 IS TO BE RECKONED FROM THE DATE OF SURV EY PROCEEDING I.E. 29-12-2008 AND SUBSEQUENT NOTICE DATED 14-01-2009 WAS ISSUED CALLI NG FOR CERTAIN DETAILS. WE FIND NO MERIT INTO THE CONTENTIONS OF THE LD. COUNSEL FOR THE AS SESSEE. FIRSTLY, THE SURVEY PROCEEDINGS AND ASSESSMENT PROCEEDINGS ARE TWO DIFFERENT AND DISTIN CT PROCEEDINGS . THE LETTER DATED 14-01- 2009 WAS IN CONTINUATION TO THE INFORMATION GATHERE D ON 29-12-2008. THEREFORE, IT CANNOT BE SAID THAT PROCEEDINGS U/S 201 OF THE ACT WAS INI TIATED. A BARE READING OF SECTION 201 12 MAKES IT CLEAR THAT IT IS INVOKED AS A CONSEQUENCE OF FAILURE TO DEDUCT OR PAY TAX. THEREFORE, IN OUR CONSIDERED VIEW, THE INFORMATION GATHERED DU RING SURVEY PROCEEDING AND ON THE BASIS OF SUCH INFORMATION, IF THE AO FINDS THAT ASSESSEE WAS REQUIRED TO DEDUCT TAX AND THE ASSESSEE HAS NOT DEDUCTED THE TAX OR HAS NOT PAID T HE TAX AFTER DEDUCTION THEN HE WOULD BE EMPOWERED TO INVOKE THE PROVISIONS OF SECTION 201 O F THE ACT BY ISSUING SHOW CAUSE NOTICE FOR INITIATION OF PROCEEDINGS U/S 201 OF THE ACT. H ENCE, THE POINT OF TIME WHEN THE AO FINDS THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AND HA S NOT DEDUCTED OR PAID CONSEQUENCE THEREOF, HE ISSUES THE SHOW CAUSE NOTICE TO THE ASS ESSEE WOULD BE STARTING POINT FOR RECKONING LIMITATION FOR THE PURPOSE OF SECTION 201 OF THE ACT. IN VIEW OF THE ABOVE DISCUSSIONS, WE FIND NO MERIT IN THE GROUND RAISED BY THE ASSESSEE AND THE SAME IS HEREBY REJECTED. 19. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED AND THAT OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29-08-2013 . SD/- SD/- (B.R. JAIN) (KUL BHARAT) ACCOUNTANT MEMEBR JUDICIAL MEMBER JAIPUR DATED: 29 TH AUG 2013 *MISHRA COPY FORWARDED TO:- 1. THE ITO, WARD- TDS -1, JAIPUR. 2. M/S. VODAFONE ESSAR DIGILINK LTD., JAIPUR . 3. THE CIT (A) 4. THE CIT 5. THE D.R. 6.GUARD FILE (ITA NO.239/JP/2012) BY ORDER AR, ITAT, JAIPUR 13