Kingfisher Airlines Ltd., Bangalore V. ACIT, Bangalore

ITA 369/BANG/2012

• Counselvise Citation: 36921114 RSA 2012
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 04-05-2012
• Assessment Year: 2010-2011
• Appeal Filed On: 13-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA CITI
• Assessee Lawyers: K R PRADEEP
• Keywords: Recovery proceedings; Opportunity of being heard; Principle of natural justice; Non-deduction of tax; Right to appeal
• Section: 133A; 133(6); 201(1); 246; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NOS. 369 TO 371/BANG/2012 ASSESSMENT YEARS : 2010-11 TO 2012-13 M/S. KINGFISHER AIRLINES LTD., # 35/2, CUNNINGHAM ROAD, BANGALORE 560 052. PAN : AAACD 5301J VS. THE ASSISTANT COMMISSIONER OF INCOME TAX (TDS), CIRCLE 16(2), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI K.R. PRADEEP, C.A. RESPONDENT BY : SHRI S.K. AMBASTHA, CIT-I (DR) DATE OF HEARING : 04.05.2012 DATE OF PRONOUNCEMENT : 25.05.2012 O R D E R PER N.K. SAINI, ACCOUNTANT MEMBER THESE THREE APPEALS FILED BY THE ASSESSEE ARE DIRE CTED AGAINST THE SEPARATE ORDERS EACH DATED 29.02.2012 OF THE CIT(AP PEALS)-V, BANGALORE. 2. SINCE THE ISSUES INVOLVED ARE COMMON IN THESE AP PEALS, WHICH WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OF BY T HIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.369 TO 371 /BANG/12 PAGE 2 OF 31 3. FIRST WE WILL DEAL WITH ITA NO.369/BANG/2012 FOR THE A.Y. 2010-11. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL:- 1. THAT THE ORDER OF THE ASSESSING OFFICER IN SO FAR AS IT IS AGAINST THE ASSESSEE IS OPPOSED TO LAW, FACTS, CIRC UMSTANCES, NATURAL JUSTICE, EQUITY AND ALL OTHER KNOWN PRINCIP LES OF LAW. 2. THE NOTICE, PROCEEDINGS AND ORDER ARE ALL BAD I N LAW, WITHOUT JURISDICTION AND INVALID. 3. THAT THE LEARNED AUTHORITIES BELOW ERRED IN NOT PROVIDING SUFFICIENT AND ADEQUATE OPPORTUNITY TO THE APPELLAN T AS REQUIRED UNDER LAW, THEREBY VIOLATING THE PRINCIPLES OF NATU RAL JUSTICE, HENCE ON THIS GROUND ALONE THE ORDER REQUIRES TO BE CANCELLED. 4. THAT THE ORDER U/S 201(1) & 201(1A) HAS BEEN PA SSED WITHOUT CONSIDERING THE PRINCIPLES SETTLED BY THE H ONOURABLE HIGH COURT OF KARNATAKA. 5. THAT THE LEARNED CIT(A)/AO ERRED IN HOLDING THE ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT. 6. THAT THE DEMAND RAISED U/S 201(1) OF THE ACT OF RS. 74,94,21,701/- IS HEREBY DISPUTED. 7. THAT THE INTEREST LEVIED U/S 201(1A) OF THE ACT OF RS. 28,70,53,151/- IS HEREBY DISPUTED. 8. THAT THE LEARNED CIT(A) ERRED IN NOT VACATING T HE ORDER PASSED BY THE AO U/S 201(1)AND 201(1A) AS IT IS NON SPEAKING, SILENT AND NO REASONS HAVE BEEN GIVEN AS TO HOW THE DEFAULT HAS BEEN DETERMINED. 9. THAT AN ORDER U/S 201(1) OF THE ACT CAN BE PASS ED FOR ANY FAILURE ON THE PART OF THE APPELLANT TO DEDUCT AND PAY AND NOT OTHERWISE. THE LEARNED CIT(A)/AO ERRED IN PASSING A N ORDER OVERLOOKING AND WITHOUT CONSIDERING THE TDS PAID. 10. THE LEARNED AO ERRED IN OVERLOOKING THE ORDER OF ITAT WHEREIN THE REASON FOR DELAY HAS BEEN HELD TO BE RE ASONABLE. 11. THE EFFECT OF DIRECT PAYMENT U/S 191 OF THE AC T AND CIRCULAR NO.275/201/95-IT(B) ISSUED BY THE BOARD HA S NOT BEEN RECKONED BEFORE QUANTIFYING THE LIABILITY. 12. THE NOTICE OF DEMAND ISSUED IN THIS CASE IS NO T AS PER LAW AS THE REQUISITE STATUTORY TIME HAS NOT BEEN GIVEN. ITA NO.369 TO 371 /BANG/12 PAGE 3 OF 31 13. THE CIT(A)/AO ERRED IN NOT PROVIDING SUFFICIEN T OPPORTUNITY BEFORE LEVY OF INTEREST U/S 201(1A) OF THE ACT AND PASSING OF THE ORDER. 14. FOR THE ABOVE AND OTHER GROUNDS AND REASONS WH ICH MAY BE SUBMITTED DURING THE COURSE OF HEARING OF THIS A PPEAL, THE ASSESSEE REQUESTS THAT THE APPEAL BE ALLOWED AS PRA YED AND JUSTICE BE RENDERED. 4. FROM THE ABOVE GROUNDS, IT IS CLEAR THAT THE GRI EVANCE OF THE ASSESSEE RELATES TO ACTION OF THE LD. CIT(A) IN CON FIRMING THE ACTION OF THE ASSESSING OFFICER HOLDING THE ASSESSEE AS ASSESSEE IN DEFAULT U/S. 201(1) INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS T HE ACT IN SHORT] AND THE INTEREST LEVIED U/S. 201(1A) OF THE ACT. APART FR OM THAT, THE GRIEVANCE OF THE ASSESSEE IS THAT SUFFICIENT AND ADEQUATE OPPORT UNITY OF BEING HEARD WAS NOT PROVIDED TO THE ASSESSEE WHICH VIOLATED THE PRI NCIPLES OF NATURAL JUSTICE. 5. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE COMPANY IS ENGAGED IN THE BUSINESS AND OPERATING AS A SCHEDULE PASSENGER AIRLINE IN INDIA. A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED IN THE ASSESSEES PREMISES ON 18.03.2011 IN ORDER TO VERIFY TDS COMPL IANCE. ACCORDING TO THE ASSESSING OFFICER, THE SAID SURVEY REVEALED THA T THE ASSESSEE WAS NOT REMITTING THE TAXES DEDUCTED AT SOURCE BY IT TO GOV ERNMENTS ACCOUNT WITHIN THE DUE DATES AS PRESCRIBED IN THE ACT. THE AO DUR ING THE COURSE OF VERIFICATION OF TDS COMPLIANCES NOTICED THAT TDS OF Q 74,94,21,701 WAS DEDUCTED FROM THE SALARIES PAID TO THE EMPLOYEES IN THE F.Y. 2009-10, BUT THE AMOUNT WAS NOT REMITTED TO THE GOVERNMENT ACCOU NT. THE AO ISSUED A SHOW CAUSE NOTICE DATED 21.12.2011 ASKING THE ASSES SEE TO EXPLAIN AS TO ITA NO.369 TO 371 /BANG/12 PAGE 4 OF 31 WHY THE ASSESSEE SHOULD NOT BE TREATED AS AN ASSES SEE IN DEFAULT AND ALSO ASKED TO FURNISH ITS SUBMISSIONS, IF ANY, BY 2 6.12.2011. 6. THE AO OBSERVED THAT SHRI VENKATADRI, AVP, TAXAT ION OF THE ASSESSEE COMPANY DURING THE COURSE OF SURVEY HAD AC CEPTED THAT TDS WAS DEDUCTED FROM THE SALARIES PAID TO THE EMPLOYEE S AND THE SAME HAD NOT BEEN REMITTED TO THE GOVERNMENT ACCOUNT TILL DA TE. ACCORDING TO THE AO, THE ASSESSEE HAD ACCEPTED THAT THERE WAS DEFAUL T ON ITS PART REGARDING NON-PAYMENT OF TDS AMOUNT TO THE GOVERNMENT ACCOUNT FOR THE REASON THAT THERE HAVE BEEN FINANCIAL CONSTRAINTS BECAUSE OF LOSS IN THE AIRLINE INDUSTRY. THE AO OBSERVED THAT THE FAILURE TO PAY THE TDS AFTER DEDUCTING ATTRACTS THE PROVISIONS OF SECTION 201(1)(B) OF THE ACT AND THAT AS PER SECTION 201(1A) OF THE ACT WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (1) OF SECTION 201 OF THE ACT, IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPANY AS IS REFERRED TO IN THAT SUB-SECTION RESPO NSIBLE FOR DEDUCTING/COLLECTING TAX AT SOURCE DOES NOT DEDUCT/ COLLECT TAX AT SOURCE WHOLLY OR PARTLY UNDER SECTIONS 192 TO 196C AND 206 C IS LIABLE TO PAY INTEREST @ 1% PER MONTH (OR PART THEREOF) FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE/COLLECTIBLE TO THE DATE ON WHICH THE TAX IS ACTUALLY PAID. HE ALSO POINTED OUT THAT THOSE PROVISIONS HAS BEEN AME NDED W.E.F. 01.04.2010. THE AO ON THE BASIS OF THE DETAILS FUR NISHED BY THE ASSESSEE WORKED OUT THE TAX AND INTEREST PAYABLE AT Q 74,94,21,761 AND Q 28,70,53,151 RESPECTIVELY VIDE ORDER DATED 30.12.20 11 PASSED U/S. 201(1) & 201(1A) OF THE ACT. ITA NO.369 TO 371 /BANG/12 PAGE 5 OF 31 7. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A PPEALS) AND THE ARGUMENTS MADE BEFORE HIM ARE SUMMARIZED BY THE LD. CIT(A) IN PARA 4.1 TO 4.4 OF THE IMPUGNED ORDER WHICH ARE REPRODUCED V ERBATIM AS UNDER:- 4.1. THE ORDERS PASSED U/S 201(1) & 201(1A) ARE V AGUE, SILENT, NON SPEAKING AND NO REASONS OR CAUSE HAVE BEEN SHOW N AS TO HOW THE AO HAS DETERMINED THE DEFAULT IN TERMS OF SECTI ON 201(1) AND THE LEVY OF INTEREST U/S 201(1A) OF THE ACT. NO OPP ORTUNITY HAS BEEN PROVIDED AS REQUIRED UNDER LAW BEFORE PASSING OF THE ORDERS. THE LEARNED AO ERRED IN PASSING AN ORDER OVERLOOKIN G AND WITHOUT CONSIDERING THE TDS REMITTANCES MADE TO THE ACCOUNT OF CENTRAL GOVERNMENT BY THE APPELLANT. 4.2. INTEREST U/S 201(1A) IS COMPENSATORY IN NATUR E, THEREFORE CANNOT BE CHARGED AFTER THE DATE FROM WHICH THE PAY EE / DEDUCTEE HAS DEPOSITED THE TAX, APPARENTLY THIS ASPECT HAS N OT BEEN CONSIDERED IN THE ORDERS. HENCE, THE APPELLANT PRAY S THAT INTEREST U/S-201(1A), IF ANY, REQUIRES TO BE RESTRICTED TO T ILL THE DATE OF PAYMENT OF TAXES BY THE PAYEE / DEDUCTEE. 4.3. THE ASSESSEE IS SUFFERING FROM SEVERE FINANCI AL CRUNCH AND ITS OPERATIONS HAVE BECOME STRAINED. THESE ASPECTS ARE KNOWN TO THE DEPARTMENT AND THE SAME HAS BEEN COMMUNICATED V OLUNTARILY BY THE ASSESSEE AT PERIODICAL INTERVALS. FROM THE O RDER PASSED BY THE A.O IT IS NOT KNOWN WHETHER THE FINANCIAL STRAI N HAS BEEN CONSIDERED BEFORE PASSING THE ORDER. THE VARIOUS CO URTS HAVE HELD THAT THE PENAL PROVISIONS UNDER THE IT ACT CAN BE INVOKED ONLY IN THE ABSENCE OF EXISTENCE OF REASONABLE CAUS E OR ABSENCE OF GOOD AND SUFFICIENT REASONS. NO PERSON CAN BE DECLA RED AS ASSESSEE IN DEFAULT UNLESS THE A.O IS SATISFIED BAS ED ON THE OBJECTIVE REASONS THAT THE CONDITIONS U/S-201(1) AN D 220(1) ARE ATTRACTED AND UNTIL SUCH TIME NO ORDER SHALL BE MAD E. IN THIS CASE THERE IS NO EVIDENCE OF SUCH SATISFACTION. 4.4 . THE A.O HAS PASSED AN ORDER AGAINST THE ASSES SEE WITHOUT FIRST EXHAUSTING THE REMEDIES PROVIDED U/S-191 OF T HE IT ACT. IN THIS CASE SEVERE FINANCIAL PROBLEMS, LACK OF LIQUID ITY, HUGE EROSION OF NETWORTH AND CONTINUOUS LOSSES ARE ALL I N THE CONTEMPORANEOUS KNOWLEDGE OF THE A.O. INSPITE OF SU CH KNOWLEDGE THE A.O HAS CHOOSEN TO HOLD THE ASSESSEE IN DEFAULT INSTEAD OF COLLECTING DIRECTLY FROM THE RECIPIENT O F THE INCOME AS IS PROVIDED U/S-191 R.W CIRCULARS OF BOARD IN NO.27 5/201/96- IT(B) DT. 29.01.1997. HENCE, IN THIS CASE THE ASSES SEE CANNOT BE HELD TO BE IN DEFAULT. ITA NO.369 TO 371 /BANG/12 PAGE 6 OF 31 8. THE AO WAS ALSO PRESENT BEFORE THE LD. CIT(A) AN D SUBMITTED THAT THOUGH THE ASSESSEE HAD CLAIMED THAT SUBSTANTIAL SU MS HAD BEEN CREDITED TO THE GOVERNMENT ACCOUNT, NO DOCUMENTARY EVIDENCE IN SUPPORT OF THE CLAIM WAS FURNISHED BEFORE THE AO. 9. THE LD. CIT(A) AFTER CONSIDERING THE ABOVE SUBMI SSIONS CONFIRMED THE ACTION OF THE AO BY OBSERVING IN PARA 6 OF THE IMPUGNED ORDER AS UNDER:- 6. ON CAREFUL CONSIDERATION OF THE ARGUMENTS MADE ON BEHALF OF THE APPELLANT AND ON BEHALF OF THE DEPARTMENT I NOTICED THAT THE APPELLANT NEVER DENIED THE FACT THAT TAXES HAVE BEEN DEDUCTED FROM THE SALARIES PAID TO ITS EMPLOYEES. THEREFORE, THE ARGUMENT OF THE APPELLANT THAT THE TAXES SHOULD BE COLLECTED FROM THE DEDUCTEES IS NOT ACCEPTABLE. WHAT THE APPELLANT WIT HHOLDING IS NOT ITS FUNDS BUT THE AMOUNT WHICH BELONG TO THE GO VERNMENT OF INDIA AS PER LAW. THEREFORE, THE APPELLANT CAN NOT SAY THAT FINANCIAL CRUNCH IS THE REASON FOR NOT REMITTING TH E TDS MADE TO THE GOVERNMENT ACCOUNT. THE APPELLANT HAD NO RIGHT TO WITHHOLD THE TAX DEDUCTED FROM ITS EMPLOYEES WITHOUT PAYING IT TO THE GOVERNMENT ACCOUNT. BECAUSE OF THIS ACTION OF THE A PPELLANT THE DEDUCTEES ARE NOT IN A POSITION TO CLAIM THE CREDIT FOR TAX DEDUCTED IN THEIR CASES. INVIEW OF THIS I AM UNABLE TO ACCEP T THE ARGUMENTS MADE ON BEHALF OF THE APPELLANT AND ACCORDINGLY THE ACTION OF THE A.O IS CONFIRMED AND THE APPEAL IS DISMISSED. 10. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER PASSED BY THE AO IS NON-SP EAKING, SILENT AND NO REASON HAS BEEN GIVEN AS TO HOW THE DEFAULT HAS BEE N DETERMINED. IT WAS FURTHER STATED THAT THE AO AS WELL AS THE LD. CIT(A ) HAD NOT GIVEN OPPORTUNITY AS REQUIRED UNDER LAW BEFORE PASSING TH EIR RESPECTIVE ORDERS. IT WAS CONTENDED THAT THE DUE DATE FOR DEDUCTION OF TA X AT SOURCE ARISES ON PAYMENT OF SALARY AND NOT ON CREDIT, HOWEVER THE AS SESSEE WAS TREATED AS ITA NO.369 TO 371 /BANG/12 PAGE 7 OF 31 ASSESSEE IN DEFAULT U/S. 201(1) OF THE ACT OVERLOOK ING THE PAYMENT OF TDS AND TAXES PAID DIRECTLY BY THE RECIPIENTS. IT WAS F URTHER CONTENDED THAT THE INTEREST U/S. 201(1A) IS COMPENSATORY, THEREFORE TH E TAXES PAID BY THE DEDUCTEE/PAYEE HAS TO BE RECKONED WHILE QUANTIFYING THE INTEREST AND THAT THE QUANTIFICATION OF INTEREST IN RESPECT OF NON-SA LARY PAYMENTS HAS TO BE AS PER RULE 30 OF THE INCOME-TAX RULES, 1962. IT WAS ALSO CONTENDED THAT THE ORDER PASSED BY THE AO IS WITHOUT JURISDICTION BECA USE THE INCOME-TAX AUTHORITY FOR TDS PAYMENT AND SUBSEQUENT PROCESS/PR OCEEDINGS IS NOTIFIED AS DIRECTOR GENERAL OF INCOME TAX (SYSTEM)/NSDL. I T WAS FURTHER SUBMITTED THAT W.E.F. 1.4.2010 NEW PROVISION HAS BE EN INCORPORATED IN THE FORM OF SECTION 200A(1)(D) OF THE ACT WHEREIN NEW P ROCEDURE FOR QUANTIFYING THE PAYMENT HAS BEEN PRESCRIBED AND THE NEW PROCEDU RE OUTLINES THE FOLLOWING STEPS BEFORE ANY RECOVERY STEPS ARE TAKEN AGAINST THE ASSESSEE:- STEP-1 . SECTION 200 (1) ANY PERSON DEDUCTING ANY SUM IN ACCORDANCE (WITH THE FOREGOING PROVISIONS OF THIS C HAPTER) SHALL PAY WITHIN THE PRESCRIBED TIME, THE SUM SO DEDUCTED TO THE CREDIT OF THE CENTRAL GOVERNMENT OR AS THE BOARD DIRECTS. (2) ANY PERSON BEING AN EMPLOYER, REFERRED TO IN S UB-SECTION (1A) OF SECTION 192, SHALL PAY, WITHIN THE PRESCRIB ED TIME, THE TAX TO THE CREDIT OF THE CENTRAL GOVERNMENT OR AS THE B OARD DIRECTS. STEP -2 . SECTION 200 (3) ANY PERSON DEDUCTING ANY SUM ON O R AFTER THE 1ST DAY OF APRIL, 2005 IN ACCORDANCE WITH THE F OREGOING PROVISIONS OF THIS CHAPTER OR, AS THE CASE MAY BE, ANY PERSON BEING AN EMPLOYER REFERRED TO IN SUB-SECTION (1A) O F SECTION 192 SHALL AFTER PAYING THE TAX DEDUCTED TO THE CREDIT O F THE CENTRAL GOVERNMENT WITHIN THE PRESCRIBED TIME, PREPARE SUCH STATEMENTS FOR SUCH PERIOD AS MAY BE PRESCRIBED AND DELIVER OR CAUSE TO BE DELIVERED TO THE PRESCRIBED INCOME-TAX AUTHORITY OR THE PERSON AUTHORIZED BY SUCH AUTHORITY SUCH STATEMENT IN SUCH FORM AND VERIFIED IN SUCH MANNER AND SETTING FORTH SUCH PART ICULARS AND WITHIN SUCH TIME AS MAY BE PRESCRIBED. ITA NO.369 TO 371 /BANG/12 PAGE 8 OF 31 STEP -3 SECTION 200A(1) WHERE A STATEMENT OF TAX DEDUCTION AT SOURCE HAS BEEN MADE BY A PERSON DEDUCTING ANY SUM (HEREAFTER REFERRED TO IN THIS SECTION AS DEDUCTOR) UNDER SECT ION 200, SUCH STATEMENT SHALL BE PROCESSED IN THE FOLLOWING MANNE R, NAMELY: (A) THE SUMS DEDUCTIBLE UNDER THIS CHAPTER SHALL BE COMPUTED AFTER MAKING THE FOLLOWING ADJUSTMENTS, NAMELY: (I) ANY ARITHMETICAL ERROR IN THE STATEMENT; OR (II) AN INCORRECT CLAIM, APPARENT FROM ANY INFORMA TION IN THE STATEMENT; (B) THE INTEREST, IF ANY, SHALL BE COMPUTED ON THE BASIS OF THE SUMS DEDUCTIBLE AS COMPUTED IN THE STATEMENT; (C) THE SUM PAYABLE BY, OR THE AMOUNT OF REFUND DUE TO, THE DEDUCTOR SHALL BE DETERMINED AFTER ADJUSTMENT OF AM OUNT COMPUTED UNDER CLAUSE (B) AGAINST ANY AMOUNT PAID U NDER SECTION 200 AND SECTION 201, AND ANY AMOUNT PAID OT HERWISE BY WAY OF TAX OR INTEREST; (D) AN INTIMATION SHALL BE PREPARED OR GENERATED AN D SENT TO THE DEDUCTOR SPECIFYING THE SUM DETERMINED TO BE PAYABL E BY, OR THE AMOUNT OF REFUND DUE TO, HIM UNDER CLAUSE (C); AND (E) THE AMOUNT OF REFUND DUE TO THE DEDUCTOR IN PUR SUANCE OF THE DETERMINATION UNDER CLAUSE (C) SHALL BE GRANTED TO THE DEDUCTOR: 11. IT WAS FURTHER STATED THAT EVEN FOR THE LIABILI TY TO PAY INTEREST U/S. 201(1A) OF THE ACT, THE STEPS 2 & 3 MENTIONED ABOVE REQUIRES TO BE APPLIED WITH, THEREFORE THE LIABILITY QUANTIFIED IN ASSESSE ES CASE WAS AGAINST THE PROVISIONS OF INCOME-TAX ACT AND THEREFORE REQUIRES TO BE QUASHED. IT WAS CONTENDED THAT THE ASSESSEE REQUESTED FOR AN ADJOUR NMENT BY WRITING A LETTER DATED 19.12.2011, BUT NO RESPONSE WAS GIVEN BY THE AO TO THE SAID LETTER. IT WAS FURTHER CONTENDED THAT THE NOTICE F OR HEARING ON 26.12.2011 WAS RECEIVED BY THE ASSESSEE ON 29.12.2011, HOWEVER THE AO WITHOUT VERIFYING THE SERVICE OF NOTICE ON THE ASSESSEE PAS SED THE ORDER ON ITA NO.369 TO 371 /BANG/12 PAGE 9 OF 31 30.12.2011, THEREFORE PROPER OPPORTUNITY OF BEING H EARD WAS NOT GIVEN TO THE ASSESSEE, WHICH IS AGAINST THE PRINCIPLES OF NA TURAL JUSTICE. IT WAS ALSO CONTENDED THAT THE AO ALLEGED THAT CERTAIN INFORMAT ION WERE CALLED FOR, HOWEVER NOTHING IS MENTIONED IN HIS ORDER, WHAT WER E THE INFORMATIONS CALLED FOR, AS SUCH THE ORDER PASSED BY THE AO AS W ELL AS THE LD. CIT(A) WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEARD IS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. IT WAS STATED THAT THE TAX AUTHOR ITIES HAVE NOT MENTIONED UNDER WHICH SECTION OF THE ACT, THE TDS WAS TO BE D EDUCTED, THEREFORE THE ASSESSEE HAS ARBITRARILY BEEN DECLARED AS ASSESSEE IN DEFAULT, PARTICULARLY WHEN NOTHING WAS BROUGHT ON RECORD THAT THE ASSESSE E ACCEPTED THE LIABILITY. 12. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PROVISIONS OF SECTION 201 OF THE ACT ARE PENAL PROVISIONS, THEREF ORE PROPER OPPORTUNITY OF BEING HEARD IS TO BE GIVEN, HOWEVER IN THE PRESENT CASE NO OPPORTUNITY WAS GIVEN TO EXPLAIN THE REASON FOR MAKING THE DELA YED PAYMENT OF SALARY. IT WAS CONTENDED THAT AT THE TIME OF SURVEY ON 18.0 3.2011, NO RETURN WAS FOUND WHICH COULD HAVE BEEN SUBSTANTIATED THAT ASSE SSEE COMMITTED ANY DEFAULT, MORE OVER, NOWHERE THE LIABILITY TO DEDUCT AND PAY THE TAX HAS BEEN DETERMINED BY THE AO, THEREFORE THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE AO. IT WAS FURTHER SU BMITTED THAT THE PROVISIONS CONTAINED IN SECTION 192(3) OF THE ACT PROVIDES FOR ADJUSTMENT OF TAXES, HOWEVER IN THE PRESENT CASE THE AO WITHOUT CONSIDER ING THIS FACT THAT THE RECIPIENT HAS ALREADY PAID THE TAXES, DECLARED THE ASSESSEE AS AN ASSESSEE IN DEFAULT, THEREFORE, THE ACTION OF THE AO WAS AGAINST THE PROVISIONS OF LAW. IT WAS ACCORDINGLY SUBMITTED TH AT THE ORDER PASSED BY ITA NO.369 TO 371 /BANG/12 PAGE 10 OF 31 THE AO WITHOUT PROVIDING DUE AND PROPER OPPORTUNITY OF BEING HEARD WAS NOT SUSTAINABLE AND THE LD. CIT(A) WITHOUT CONSIDER ING THE FACTS OF THE PRESENT CASE IN RIGHT PERSPECTIVE CONFIRMED THE ACT ION OF THE AO IN AN ARBITRARY MANNER, THEREFORE THE IMPUGNED ORDER PASS ED BY HIM IS NOT SUSTAINABLE. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- (I) CIT V. INTEL TECH INDIA PVT. LTD. (2011) 55 DTR (KAR) 173 (II) CHILDRENS EDUCATION SOCIETY V. DCIT (1999) 31 9 ITR 409 (KAR) (III) MITTAL STEEL LTD. V. ACIT (1985) 240 ITR 707 (KAR) (IV) CWT V. KANTHILAL MANILAL 152 ITR 447 (SC) (V) CIT V. KHEMCHAND RAMDAS (1938) 6 ITR 414 (PC) 13. IN HIS RIVAL SUBMISSIONS, THE LD. CIT(DR) SUBMI TTED THAT THE TAX DEDUCTION AT SOURCE IS A METHOD OF COLLECTING TAXES ON BEHALF OF THE GOVERNMENT AT THE TIME OF PAYMENT OR CREDIT AND THE ACT CASTS A LEGAL RESPONSIBILITY ON THE DEDUCTOR TO DEDUCT TAX ON THE CORRECT AMOUNT AT THE CORRECT RATE AND DEPOSIT IT TO THE GOVERNMENT ACCOU NT. IT WAS FURTHER SUBMITTED THAT THE DEDUCTORS ARE ALSO REQUIRED TO C OMPUTE SURCHARGE AND CESS OVER AND ABOVE THE SUM OF THE PRESCRIBED RATES OF TDS AND IF THE DEDUCTOR FAILS TO DEDUCT TAX OR FAILS TO DEPOSIT TA XES AFTER DEDUCTION, THEN INTEREST, PENALTY AND PROSECUTION PROVISIONS MAY GE T ATTRACTED. IT WAS CONTENDED THAT THE ASSESSEE HAD NOT FILED WITHIN TH E PRESCRIBED TIME ANY STATEMENT ON TAX DEDUCTED UNDER CHAPTER XVII OF THE ACT, WHICH WAS REQUIRED AS PER THE PROVISIONS OF SECTION 200(3) OF THE ACT. IT WAS FURTHER CONTENDED THAT THE ASSESSEE HAD DEDUCTED, BUT NOT P AID TO THE GOVERNMENT ACCOUNT THE AMOUNT OF TAX DETAILED IN TH E RELEVANT ORDERS PASSED U/S. 201(1) & 201(1A) OF THE ACT. IT WAS ST ATED THAT THE ABOVE FACTS WERE MENTIONED BY THE AO HAVING JURISDICTION OVER T HE TDS PROVISIONS OVER ITA NO.369 TO 371 /BANG/12 PAGE 11 OF 31 THE ASSESSEE THAT THE ASSESSEE COMPANY HAD NOT FILE D THE STATEMENT U/S. 200(3) OF THE ACT, TAX DEDUCTED AND PAID TO THE GOV ERNMENT ACCOUNT AND THE TDS RETURNS U/S. 206(1) OF THE ACT. 14. IT WAS FURTHER CONTENDED THAT IN THE PRESENT CA SE THE ASSESSEE HAD LIABILITY TO PAY TO THE GOVERNMENT ACCOUNT A SUBSTA NTIAL AMOUNT OF TAX ACTUALLY DEDUCTED UNDER VARIOUS PROVISIONS OF CHAPT ER XVII-B OF THE ACT WHICH WAS EVIDENT FROM THE DETAILS FURNISHED BY THE ASSESSEE ITSELF ON 18.03.2011 DURING THE COURSE OF SURVEY AND THAT THE TAX AUDIT REPORT ALSO REVEALED THE DEFAULTS OF PAYMENT IN ILLUSTRATIVE MA NNER, THEREFORE THE ASSESSEE WAS IN DEFAULT IN TERMS OF THE PROVISIONS CONTAINED IN SECTION 200 OF THE ACT AND NOT AN ASSESSEE DEEMED TO BE IN DEF AULT IN TERMS OF FAILURE TO DEDUCT TAX. IT WAS STATED THAT THE AUDITED ACCO UNTS OF THE ASSESSEE REVEALED THAT THE TAX DEDUCTED AT SOURCE HAD BEEN D IVERTED FOR BUSINESS AND NON-BUSINESS PURPOSES. IT WAS ALSO STATED THAT THE ORDERS U/S. 201(1) & 201(1A) OF THE ACT WERE PASSED BY THE AO SINCE TH E DETAILS FILED DURING AND SUBSEQUENT TO SURVEY ESTABLISHED THE FACT OF DE FAULT IN PAYMENT OF SUBSTANTIAL AMOUNTS RELATING TO TAX DEDUCTED AT SOU RCE, AS SUCH THE ASSESSEE HAD NOT ONLY FAILED TO PAY DEDUCTED TAX TO THE GOVT. ACCOUNT, BUT HAD ALSO NOT FURNISHED THE QUARTERLY STATEMENTS AS PER THE PROVISIONS OF SECTION 200(2) OF THE ACT. IT WAS CONTENDED THAT T HE ASSESSEE DELIBERATELY AVOIDED THE FURNISHING OF INFORMATIONS, DETAILS AND RECORDS OF PAYMENTS, DEDUCTED TAX, PAID TAX ETC., DESPITE AT LEAST 8 LET TERS ISSUED BY THE AO AFTER THE SURVEY ON 18.03.2011, WHEN THE DEFAULT WAS DETE CTED BY THE AO AND ADMITTED BY THE ASSESSEE. IT WAS CONTENDED THAT SI NCE THE TAX HAS BEEN DEDUCTED AS PER THE PROVISIONS OF CHAPTER XVII-B OF THE ACT, SO THERE WAS ITA NO.369 TO 371 /BANG/12 PAGE 12 OF 31 NO GROUND FOR ANY GRIEVANCE OR ANY REASON FOR APPEA L, WHEN THE AMOUNTS OF DEDUCTED TAX, NATURE OF PAYMENTS AND THE PERIOD/MON TH/QUARTER WHEN THE TAX WAS DEDUCTED FROM ELIGIBLE PAYMENTS WERE GIVEN/ PROVIDED BY THE ASSESSEE ITSELF TO THE AO. 15. IT WAS CONTENDED THAT FOR THE YEAR UNDER CONSID ERATION THE DUE DATE OF FILING THE RETURN U/S. 206(1) OF THE ACT HAD ALR EADY BEEN EXPIRED, THEREFORE, THERE WAS NO BASIS OF APPEAL AGAINST THE ORDER U/S. 201(1) AND 201(1A) OF THE ACT, AS SUCH, THE FILING OF APPEAL W AS MERELY A DILATORY AND DEFLECTORY TACTICS OF THE ASSESSEE TO STALL THE REC OVERY OF TAX DEDUCTED, BUT NOT PAID. IT WAS FURTHER CONTENDED THAT CONTINUOU S AND HABITUAL DEFAULT IN PAYMENTS OF TDS AMOUNTS DEDUCTED AS PER LAW OVER A LONG PERIOD OF TIME CANNOT BE TURNED INTO A VIRTUE BY CLAIMING THAT IN THE ABSENCE OF RETURN U/S. 206(1) OF THE ACT, THE ASSESSING OFFICERS ORDER WA S WITHOUT BASIS OR WAS NON-SPEAKING. IT WAS ALSO CONTENDED THAT THE ASSES SEE DEDUCTED THE TAX, THEREFORE THE PROVISIONS OF CHAPTER XVII-B OF THE A CT ARE APPLICABLE AND THERE IS NO PROVISION UNDER THE ACT TO STAY IN ANY MANNER EITHER WHOLE OR PART OF THE PAYMENT DULY AND PROPERLY RAISED U/S. 2 01(1) & 201(1A) OF THE ACT AFTER DUE DILIGENCE & PROCESS, AND THERE IS NO POWER OBVIOUS OR INHERENT WITH ANY APPELLATE AUTHORITY INCLUDING THE ITAT TO INTERFERE WITH THE RECOVERY PROCEEDINGS IN RESPECT OF THE DEDUCTED TDS MERELY BECAUSE ANY FRIVOLOUS AND FARCICAL APPEAL HAD BEEN FILED ON FLI MSY GROUNDS, AS SUCH THE AO CANNOT BE PREVENTED FOR RECOVERING THE DEDUCTED AMOUNTS ON THE BOGUS PRETEXT AND NON-FILING OF TDS RETURNS U/S. 20 6 OF THE ACT, RECOURSE TO SECTION 191 OF THE ACT AND PENDING VERIFICATION OF SURVEY U/S. 197 OF THE ACT. LD. CIT(DR) SUBMITTED THAT THERE IS NO BAR UNDER TH E INCOME-TAX ACT TO ITA NO.369 TO 371 /BANG/12 PAGE 13 OF 31 PASS AN ORDER BEFORE THE END OF FINANCIAL YEAR OR P ASS MULTIPLE ORDERS U/S. 201(1) OF THE ACT FOR THE SAME ASSESSMENT YEAR AND THAT THE TAX COLLECTED ON BEHALF OF THE CENTRAL GOVERNMENT CANNOT BE RETAI NED BEYOND A PRESCRIBED TIME OF PAYMENT AND CORRESPONDING DEDUCT ION/COLLECTION OF TAX IRRESPECTIVE OF THE LIABILITY U/S 201(1A) OF THE AC T. THEREFORE, A DEFAULTER U/S. 201(1) OF THE ACT CANNOT TAKE REFUGE OF APPEAL S AND LITIGATIONS AND USE THE APPELLATE MACHINERY TO CONTINUE REFUSING TO PAY AND DELAYING THE PAYMENT OF COLLECTED TAX AND DIVERTING SUCH AMOUNTS FOR ITS BUSINESS OR OTHER PURPOSES. IT WAS FURTHER SUBMITTED THAT THE CENTRAL GOVERNMENT CANNOT BE A PERCEIVED OR PRESUMED PARTNER OF THE AS SESSEE IN ITS BUSINESS VENTURE OR MISADVENTURE, WHETHER IN PROFIT OR LOSS, THEREFORE EXTRA CAUTION HAVE TO BE EXERCISED WHILE DEALING WITH SUCH CASES BY THE APPELLATE AUTHORITIES. 16. AS REGARDS TO THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AO/LD. CIT(A) DID NOT PROVIDE SUFFICIENT AND AD EQUATE OPPORTUNITY THEREBY VIOLATED THE PRINCIPLES OF NATURAL JUSTICE, THE LD. CIT(DR) SUBMITTED THAT THE ASSESSEE WAS PUT ON NOTICE WITH REGARD TO NON-PAYMENT OF TAX DEDUCTED DURING THE SURVEY U/S. 133A OF THE ACT ON 18.03.2011 ITSELF, THEREAFTER AT LEAST 5 LETTERS WERE ISSUED TO THE AS SESSEE ON VARIOUS DATES SPREAD OVER 6 MONTHS BEGINNING FROM 22.03.2011 AND LAST BEING DATED 10.10.2011, ASKING THE ASSESSEE TO CLARIFY THE STAT US OF E-TDS, QUARTERLY STATEMENTS AND TO SUBMIT NECESSARY PROOF, TO FURNIS H THE DETAILS OF PAYMENT OF TAXES DEDUCTIBLE/NON-DEDUCTIBLE AND TO FURNISH T HE DETAILS OF TAX DEDUCTED/NOT DEDUCTED AND PAID/NOT PAID TO GOVT. AC COUNT. HOWEVER, THE ASSESSEE FOR REASONS BECOMING OBVIOUS TO THE AO ON 21.12.2012, CHOSE ITA NO.369 TO 371 /BANG/12 PAGE 14 OF 31 NOT TO RESPOND TO SUCH REQUESTS OF THE AO AND THERE BY FOREGONE THE OPPORTUNITY TO EXPLAIN, FURNISH DETAILS AND RECONCI LIATIONS, IF ANY EXISTED FOR MORE THAN 9 MONTH, BEFORE THE ORDERS U/S. 201(1)/20 1(1A) OF THE ACT WERE PASSED, AFTER ISSUE OF SHOW CAUSE NOTICES DATED 21. 12.2011 BASED ON ADMITTED AND ACCEPTED PARTICULARS OF TAX DEDUCTED, BUT NOT PAID. IT WAS CONTENDED THAT IN THE CONTEXT OF NOTICE U/S. 201(1) OF THE ACT, IT HAD BEEN JUDICIALLY HELD THAT WHERE AFTER SEVERAL REQUESTS T O FURNISH RELEVANT DETAILS/ DOCUMENTS BY THE AO, THERE IS SUPPRESSION OF MATERI AL DOCUMENTS, AN ADVERSE INFERENCE MUST BE DRAWN AGAINST THE PARTY, WHO HAS SUPPRESSED THE FACTS AND THAT THE NOTICE U/S. 201(1) OF THE AC T CANNOT BE CONSIDERED AS EXTRANEOUS OR ERRONEOUS MERELY BECAUSE THE RELEVANT MATERIAL DOCUMENTS HAVE NOT BEEN FURNISHED BY THE ASSESSEE. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS:- (I) VODAFONE INTERNATIONAL HOLDINGS B.V. (2009) 31 1 ITR 46 (BOM) (II) JINDAL THERMAL POWER CO. LTD. (2010) 321 ITR 31 (KAR.) 17. THE LD. CIT(DR) CONTENDED THAT SHOW CAUSE NOTIC E DATED 21.12.2011 WAS ISSUED AND SERVED, FIXING THE DATE F OR 26.12.2011 AND SHRI VENKATADRI, AVP(TAXATION) OF THE ASSESSEE FAXED REP LY ON THE SAME DATE (21.12.2011) ADMITTING TDS LIABILITY OF Q 74.94 CRORES U/S. 192(2B) OF THE ACT (REFERENCE WAS MADE TO PAGES 24 & 25 OF THE DEP ARTMENTAL PAPERBOOK), BUT NO EXPLANATION FOR DEFAULT WAS SUBM ITTED BY THE ASSESSEE BEFORE THE ORDER U/S. 201(1) DATED 30.12.2011 NOR A NY ADJOURNMENT WAS SOUGHT. HOWEVER IT WAS ADMITTED THAT NOTICE DATED 13.12.2011 WAS FAXED TO THE ASSESSEE COMPANY AND SHRI K.R. PRADEEP, C.A. , FIXING THE DATE FOR ITA NO.369 TO 371 /BANG/12 PAGE 15 OF 31 19.12.2011 AND SHRI K.R. PRADEEP, C.A. SOUGHT ADJOU RNMENT VIDE LETTER DATED 19.12.2011 FOR 05.01.2012 WITHOUT ANY POWER O F ATTORNEY. THE LD. CIT(DR) SUBMITTED THAT THE ASSESSEE WAS GIVEN AMPLE OPPORTUNITIES TO PAY THE DEDUCTED TAXES AS PER SECTION 200 OF THE ACT AN D AVOID PROCEEDINGS U/S. 201(1) OF THE ACT. IT WAS FURTHER SUBMITTED T HAT AFTER THE PROCEEDINGS U/S. 201(1) OF THE ACT, NO NOTICE IS STATUTORILY PR ESCRIBED AND IN CASE OF NON- PAYMENT OF DEDUCTED TAX SUCH ACTION IS AUTOMATIC. IT WAS FURTHER STATED THAT THE ORDER U/S. 201(1) OF THE ACT IS NOT AN ASS ESSMENT ORDER DETERMINING THE LIABILITY THROUGH PROTRACTED PROCEEDINGS, BUT A PENAL PROVISION AND THE LIABILITY TO PAY THE DEDUCTED TAX IS NOT THE PENALT Y AMOUNT NOR THE ORDER IS A PENALTY ORDER. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MITTAL STEEL LTD. 240 ITR 707 (KAR) . IT WAS FURTHER STATED THAT THE ASSESSEE WAS ADMITTE DLY IN DEFAULT OF PAYMENT OF DEDUCTED TAX AND FOR THAT PURPOSE OPPORTUNITY WA S TO BE GIVEN TO THE ASSESSEE TO EXPLAIN FOR NON-PAYMENT IN TERMS OF FIN ANCIAL CRISIS, WHICH HAD ALREADY BEEN GIVEN ON 17.11.2011 BY THE AO. IT WAS CONTENDED THAT THE ASSESSEE VIDE LETTER DATED 17.11.2011 TO THE AO WIT HOUT GIVING DETAILS OF DEDUCTED TAX REMAINING UNPAID OVER THE YEARS, MEREL Y MENTIONED ABOUT THE UNFRIENDLY AND DETERIORATING MACRO-ECONOMIC SITUATI ON, HUGE BUSINESS LOSSES AND FINANCIAL STRAIN LEADING TO LIQUIDITY P ROBLEM, BUT AS A MATTER OF FACT THE ASSESSEE HAD NOT PAID THE ENTIRE AMOUNT OF TAX DEDUCTED. IT WAS POINTED OUT THAT IN THE LETTER DATED 17.11.2011, TH E ASSESSEE ALSO STATED THAT IT HAD IN THE LAST FEW YEARS MADE EVERY EFFORT TO REMIT LARGE AMOUNT OF SUM TOWARDS TDS, BUT NO DETAIL WAS FURNISHED IN RES PONSE TO THE AOS LETTER U/S. 133(6) OF THE ACT DATED 10.10.2011 AND MERELY VAGUE, EVASIVE, ITA NO.369 TO 371 /BANG/12 PAGE 16 OF 31 MISDIRECTING AND MISLEADING REPLY WAS OFFERED. IT WAS STATED THAT NO EFFORT WHATEVER WAS REQUIRED FOR PAYMENT OF DEDUCTED TAX T O GOVERNMENT ACCOUNT IF THE CONSCIENCE WAS CLEAN AND INTENTION WAS NOT T O USE FUNDS AS WORKING CAPITAL. IT WAS FURTHER STATED THAT THE THINKING O F THE ASSESSEE WAS SKEWED AND ABSURD WHICH WAS BASED ON THE FALLACIOUS PRESUM PTION THAT DEDUCTED TDS WAS ONE OF THE SOURCE OF WORKING CAPITAL AND TH AT THE REVENUE DEPARTMENT SHOULD/MUST STEP INTO THE SHOES OF ANY O THER LENDER. IT WAS ACCORDINGLY SUBMITTED THAT THERE HAD BEEN NO LACK O F OPPORTUNITY AT ALL AND THE AO HAD GONE OUT OF WAY TO UPHOLD THE TENETS OF NATURAL JUSTICE AND ONE CAN BRING HORSE TO THE WATER, BUT CANNOT FORCE IT T O DRINK. 18. IT WAS FURTHER STATED THAT IN THE CASES RELIED BY THE LD. COUNSEL FOR THE ASSESSEE, THE FACTS ARE DIFFERENT AND THE RATIO OF THOSE DECISIONS CANNOT BE APPLIED TO THE ASSESSEES CASE. IT WAS STATED THAT IN THE CASE OF M/S. MITTAL STEEL LTD. 240 ITR 207 RELIED BY THE LD. COUNSEL FOR THE ASSESSEE, THE HONBLE HIGH COURT OF KARNATAKA HELD THAT MERELY BE CAUSE NO PROCESS OR PROCEDURE HAS BEEN PRESCRIBED (FOR ISSUE OF NOTICES ETC.), SECTION 201 OF THE ACT CANNOT BE HELD ULTRA VIRES AND THAT SECTION 201 IS A PENAL PROVISION TO TREAT THE ASSESSEE IN DEFAULT FOR TAX DEDUCTIBLE /TAX DEDUCTED AND THE AO MUST PROVIDE OPPORTUNITY TO THE PERSON WHO IS DEEME D TO BE THE ASSESSEE IN DEFAULT, BUT IT HAS BEEN CLEARLY HELD THAT THE C ONTENTION THAT THERE CAN BE DIRECT PAYMENT OF TAX BY THE PAYEE U/S. 191 HAS NO RELEVANCE. 19. IT WAS FURTHER STATED THAT IN THE CASE OF M/S. INTEL TECH INDIA PVT. LTD. 55 DTR 173 (KAR) , THE ASSESSEE DEDUCTOR DISPUTED THE LIABILITY TO D EDUCT OR PAY WHERE THE DEDUCTEE HAD FILED THE RETURN AND PAI D THE TAXES ON ITS INCOME AND THAT IN THE ANOTHER DECISION RELIED BY T HE LD. COUNSEL FOR THE ITA NO.369 TO 371 /BANG/12 PAGE 17 OF 31 ASSESSEE IN THE CASE OF COMMISSIONER OF WEALTH-TAX V. KANTILAL MANILAL 152 ITR 447 (SC) , THE DECISION BY THE HONBLE SUPREME COURT WAS REN DERED IN THE CONTEXT OF SECTION 2(M)(III) OF THE WEALTH-TAX ACT, WHERE IT WAS HELD THAT THE TAX LIABILITY WHICH WAS TO BE REDUCED FROM THE NET WEALTH, COULD ONLY BE DONE AFTER THE END OF PREVIOUS YEAR AND DETERMINATI ON OF TAX LIABILITY, SO THE FACTS WERE NOT SIMILAR TO THE FACTS OF THE ASSESSEE S CASE. 20. IT WAS FURTHER STATED THAT IN CASE OF NON-DEDUC TION, THE ASSESSEE MAY DISPUTE THE VERY APPLICATION OF TDS PROVISIONS AND CLAIM THE BONA FIDE BELIEF THAT TAX WAS NOT DEDUCTIBLE AND MAY ALSO TAK E SHELTER OF SECTION 191TO CHALLENGE THE ACTION U/S. 201(1) OF THE ACT, HOWEVER, NO SUCH DISPUTE ARISES WHEN TAX HAS BEEN ADMITTEDLY DEDUCTED AND NO T PAID. THEREFORE IN SUCH CASES OF DEFAULT, EVEN THE ORDER U/S. 201(1) O F THE ACT WAS NOT REQUIRED TO HOLD THE ASSESSEE IN DEFAULT, THROUGH A PROCESS NORMALLY FOLLOWED IN CASES OF DISPUTED LIABILITY TO DEDUCT. RELIANCE WAS PLACED ON THE DECISION OF ITAT DELHI BENCH IN THE CASE OF ACIT VS. CATMOSS RETAIL LTD., ORDER DATED 16.09.2011 (15 TAXMANN.COM 20 DEL HI). 21. IT WAS CONTENDED THAT INTEREST U/S. 201(1A) OF THE ACT IS COMPENSATORY IN NATURE AND MANDATORY AND NO AUTHORI TY HAS BEEN GIVEN THE POWER UNDER THE ACT TO WAIVE OR REDUCE THE INTE REST PAYABLE FOR THE DEFAULT AND THAT IT IS ALSO SETTLED NOW THAT INTERE ST U/S. 201(1A) OF THE ACT IS PAYABLE EVEN IN CASES WHERE THE TAX AMOUNT IS NOT D EDUCTED OR HAS NOT BEEN OR IS NOT PAYABLE BY REASON OF SECTION 191 OF THE ACT. 22. AS REGARDS TO THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ORDER OF THE LD. CIT(A) IS A NON-SPEAKING ORDER AND NO REASON HAS BEEN GIVEN AS TO HOW THE DEFAULT HAS BEEN DETERMINED, TH E LD. CIT(DR) ITA NO.369 TO 371 /BANG/12 PAGE 18 OF 31 SUBMITTED THAT THE SAID GROUND IS NOT ONLY FRIVOLOU S BUT ALSO RIDICULOUS, PARTICULARLY WHEN THE ASSESSEES APPEAL BEFORE THE LD. CIT(A) WAS NOT MAINTAINABLE IN THE FIRST PLACE AS THE ADMITTED LIA BILITY TOWARDS THE DEDUCTED TAX U/S. 200 OF THE ACT WAS NOT PAID AND THERE WAS NO GRIEVANCE OF THE ASSESSEE ARISING FROM THE NON-PAYMENT OF DEDUCTED T AX. THEREFORE THE ORDER OF THE LD. CIT(A) WAS RIGHT IN HOLDING THAT T HERE WAS NO MERIT IN THE ASSESSEES APPEAL. 23. AS REGARDS TO THE CBDT CIRCULAR NO.275/201/95-I T(B), IT WAS SUBMITTED THAT THE SAID CIRCULAR IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE, PARTICULARLY WHEN SECTION 191 OF T HE ACT HAS NO ROLE IN CASE WHERE TAX HAS BEEN DEDUCTED BY THE ASSESSEE. IT WAS ALSO STATED THAT FOR PAYMENT OF DEDUCTED TAX, NOTICE OF DEMAND U/S. 156 WAS NOT REQUIRED AT ALL BECAUSE RECOVERY OF DEDUCTED TAX RE MAINING UNPAID U/S. 200 OF THE ACT CAN BE MADE WITHOUT THE ORDER U/S. 201(1 ) OR NOTICE U/S. 156 OF THE ACT. RELIANCE WAS PLACED ON THE DECISION OF TH E ITAT DELHI BENCH IN THE CASE OF CATMOSS RETAIL LTD. (SUPRA) . 24. AS REGARDS TO THE CHALLENGE TO THE JURISDICTION OF THE AO, THE LD. CIT(DR) SUBMITTED THAT THE ACIT, CIRCLE 16(2), BANG ALORE UNDER THE CONTROL AND SUBORDINATION OF CIT(TDS), BANGALORE HAS JURISD ICTION OVER THE ASSESSEE RELATING TO ALL TDS PROVISIONS (EXCEPT CER TAIN SPECIFIED SECTIONS) CONTAINED IN CHAPTER XVII-B AND XVII-BB OF THE ACT BY VIRTUE OF CBDT NOTIFICATION NO.223 AND 224/2007 [2007] 293 ITR (ST .) 040 AND ADDL. CIT, RANGE 16, BANGALORES CONSEQUENTIAL NOTIFICATION DA TED 27.09.2007. IT WAS FURTHER STATED THAT SECTION 200A OF THE ACT INTRODU CED BY THE FINANCE ACT, 2009 W.E.F. 1.4.2010 IS MERELY A PROCEDURAL SECTION TO STREAMLINE THE ITA NO.369 TO 371 /BANG/12 PAGE 19 OF 31 PROCESS OF QUARTERLY STATEMENTS FILED U/S. 200(3) O F THE ACT IN THE COMPUTERIZED SET-UP AND INSTITUTIONALIZE THE PRACTI CE ALREADY IN EXISTENCE SINCE 01.04.2005 WITH REGARD TO ELECTRONIC FILING O F TDS STATEMENTS AND RETURNS, PROCESSING THEREOF AND ISSUE OF REFUNDS IN TDS CASES. THE SAME IS COMPARABLE TO THE INTRODUCTION OF SECTION 139B/C /D OF THE ACT BY THE FINANCE ACT, 2006 FOR E-FILING OF RETURNS OF INCOME AND THAT OF SECTION 143(1) TO 143(1C) BY THE FINANCE ACT, 2008 FOR PROC ESSING OF SUCH RETURNS BY CPC, WHICH IN TURN DOES NOT CONFER ANY JURISDICT ION OF ASSESSMENT AND RECOVERY TO CPC. IT WAS FURTHER STATED THAT RULES 31A AND 37A OF THE INCOME-TAX RULES, 1962, AS IT EXISTED PRIOR TO THEI R SUBSTITUTION BY NEW RULE 31A W.E.F. 01.04.2010 ALREADY HAD PRESCRIBED RULES FOR E-TDS QUARTERLY STATEMENTS AND TDS RETURNS TO BE FILED WITH NSDL. THE NEW RULE 31A ONLY EMPOWERS THE DGIT (SYSTEMS) TO SPECIFY THE PROCEDUR ES, FORMATS AND STANDARDS FOR FURNISHING THE STATEMENTS U/S. 200(3) OF THE ACT IN PLACE OF CBDT AND TO ADMINISTER THE PROCESS ON A DAY TO DAY BASIS IN ASSOCIATION WITH NSDL, BUT IT DOES NOT TAKE AWAY THE POWERS OF THE ASSESSING OFFICER TO PROCESS THE STATEMENTS U/S. 200(3) OF THE ACT AN D TO ISSUE REFUNDS OR DEMAND NOTICE, IT DOES NOT CONFER ANY JURISDICTION TO THE DGIT(SYSTEMS) OR HIS SUBORDINATE OFFICERS TO INITIATE PROCEEDINGS U/ S. 201(1) OF THE ACT WHICH REMAINS WITH THE CONCERNED TDS OFFICERS BY VIRTUE A ND STRENGTH OF NOTIFICATION ORDER U/S. 120 OF THE ACT. THEREFORE THE ASSESSEE WHO HAS DEFAULTED IN PAYMENT OF DEDUCTED TAX AND NOT FILED QUARTERLY STATEMENTS U/S. 200(3) OF THE ACT FOR THE RELEVANT PERIOD IS MERELY DISPLAYING THE GUMPTION TO QUESTION THE JURISDICTION, THEREFORE THE ORDER U /S. 201(1) PASSED BY THE AO IS NOT FOR THE FAILURE TO COMPLY WITH SECTION 20 0(3) OF THE ACT, BUT FOR ITA NO.369 TO 371 /BANG/12 PAGE 20 OF 31 DEFAULT OF SECTIONS 200(1) AND 200(2) OF THE ACT IN TERMS OF NON-PAYMENT OF DEDUCTED TAX. THE LD. CIT(DR) ACCORDINGLY SUBMITTE D THAT THERE ARE NO INCONSISTENCIES, INFIRMITY OR ILLEGALITY IN THE ORD ERS OF THE AO OR THE LD. CIT(A), THEREFORE, THE ASSESSEES APPEALS AND GROUN DS ARE WITHOUT FACTUAL AND LEGAL MERIT AND HENCE NOT SUSTAINABLE AND MAY B E DISMISSED. 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOT H THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT A SURVEY U/S. 133 A OF THE ACT WAS CONDUCTED IN THE ASSESSEES PREMISES ON 18.03.2011 AND DURING THE COURSE OF SAID SURVEY, CERTAIN DOCUMENTS RELATING T O THE TAX DEDUCTED AT SOURCE WERE FOUND. ON THE BASIS OF THOSE DOCUMENTS , THE AO HELD THE ASSESSEE IN DEFAULT U/S. 201(1) OF THE ACT AND ALSO LEVIED INTEREST U/S. 201(1A) OF THE ACT. 26. AS REGARDS TO THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ORDER PASSED BY THE AO WAS WITHOUT JURISDICTION BECAUSE AS PER THE PROVISIONS CONTAINED IN SUB-SECTION (3) OF SECTION 200 OF THE ACT, THE AUTHORIZED PERSON IS DGIT(SYSTEMS)/NSDL, IT IS RELE VANT TO DISCUSS THE PROVISIONS CONTAINED IN SUB-SECTION (3) OF SECTION 200 WHICH ARE INSERTED BY THE FINANCE (NO.2) ACT, 2004 W.E.F. 1.4.2005 READS AS UNDER:- 200(3) ANY PERSON DEDUCTING ANY SUM ON OR AFTER TH E 1ST DAY OF APRIL, 2005 IN ACCORDANCE WITH THE FOREGOING PROVIS IONS OF THIS CHAPTER OR, AS THE CASE MAY BE, ANY PERSON BEING AN EMPLOYER REFERRED TO IN SUB-SECTION (1A) OF SECTION 192 SHAL L, AFTER PAYING THE TAX DEDUCTED TO THE CREDIT OF THE CENTRAL GOVER NMENT WITHIN THE PRESCRIBED TIME, PREPARE SUCH STATEMENTS FOR SU CH PERIOD AS MAY BE PRESCRIBED AND DELIVER OR CAUSE TO BE DELIVE RED TO THE PRESCRIBED INCOME-TAX AUTHORITY OR THE PERSON AUTHO RISED BY SUCH AUTHORITY SUCH STATEMENT IN SUCH FORM AND VERIFIED IN SUCH ITA NO.369 TO 371 /BANG/12 PAGE 21 OF 31 MANNER AND SETTING FORTH SUCH PARTICULARS AND WITHI N SUCH TIME AS MAY BE PRESCRIBED. 27. FROM THE ABOVE PROVISIONS, IT IS CLEAR THAT ANY PERSON BEING AN EMPLOYER REFERRED TO IN SUB-SECTION (1A) OF SECTION 192, I.E., ANY PERSON RESPONSIBLE FOR PAYING ANY INCOME IN THE NATURE OF PERQUISITES WHICH IS NOT PROVIDED FOR BY WAY OF MONETARY PAYMENT, REFERRED T O IN SECTION 17(2) OF THE ACT, SHALL AFTER PAYING THE TAX DEDUCTED TO CREDIT OF CENTRAL GOVERNMENT HAS TO SUBMIT SUCH STATEMENT IN SUCH FORM TO THE PRESCR IBED AUTHORITY I.E., DGIT(SYSTEMS)/NSDL. THIS SECTION IS A PROCEDURAL S ECTION TO STREAMLINE THE PROCESS OF STATEMENTS IN THE COMPUTERIZED SET U P, BUT THIS SECTION DOES NOT TAKE AWAY THE POWERS OF THE AO TO INITIATE PROC EEDINGS U/S. 201(1) OF THE ACT. WE THEREFORE DO NOT FIND MERIT IN THE AFO RESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 28. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THA T THE AO INITIATED PROCEEDINGS U/S. 201(1) AND 201(1A) OF THE ACT. TH E PROVISIONS CONTAINED IN SECTION 201(1) OF THE ACT READ AS UNDER:- 201. [(1) WHERE ANY PERSON, INCLUDING THE PRINCIPAL OFFI CER OF A COMPANY, ( A ) WHO IS REQUIRED TO DEDUCT ANY SUM IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT; OR ( B ) REFERRED TO IN SUB-SECTION (1A) OF SECTION 192, B EING AN EMPLOYER, DOES NOT DEDUCT, OR DOES NOT PAY, OR AFTER SO DEDUC TING FAILS TO PAY, THE WHOLE OR ANY PART OF THE TAX, AS REQUIRED BY OR UNDER THIS ACT, THEN, SUCH PERSON, SHALL, WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH HE MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX: ITA NO.369 TO 371 /BANG/12 PAGE 22 OF 31 PROVIDED THAT NO PENALTY SHALL BE CHARGED UNDER SECTION 221 FROM SUCH PERSON, UNLESS THE ASSESSING OFFICER IS SATISF IED THAT SUCH PERSON, WITHOUT GOOD AND SUFFICIENT REASONS, HAS FA ILED TO DEDUCT AND PAY SUCH TAX. 29. FROM THE ABOVE PROVISIONS, IT IS CLEAR THAT THI S SECTION IS PENAL IN NATURE AND PROVIDES THAT THE PERSON WHO DOES NOT DE DUCT OR AFTER SO DEDUCTING FAILS TO PAY THE WHOLE OR ANY PART OF THE TAX AS REQUIRED BY OR UNDER THIS ACT, THEN SUCH PERSON SHALL WITHOUT PREJ UDICE TO ANY OTHER CONSEQUENCES WHICH HE MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX. NOW THE QUESTION A RISES AS TO WHETHER THE PERSON IS TO BE DEEMED TO BE ASSESSEE IN DEFAULT IN ALL CIRCUMSTANCES OR SOME LIBERTY IS GIVEN TO THE SAID PERSON IN THE ACT ITSELF. THE PROCESSING OF THE STATEMENTS OF TAX DEDUCTED AT SOURCE IS PRESCRI BED IN SECTION 200A(1) OF THE ACT WHICH READS AS UNDER:- 200A. (1) WHERE A STATEMENT OF TAX DEDUCTION AT SOURCE HA S BEEN MADE BY A PERSON DEDUCTING ANY SUM (HEREAFTER REFERRED T O IN THIS SECTION AS DEDUCTOR) UNDER SECTION 200, SUCH STATEMENT SHALL BE PROCESSED IN THE FOLLOWING MANNER, NAMELY: ( A ) THE SUMS DEDUCTIBLE UNDER THIS CHAPTER SHALL BE COMPUTED AFTER MAKING THE FOLLOWING ADJUSTMENTS, NAMELY: ( I ) ANY ARITHMETICAL ERROR IN THE STATEMENT; OR ( II ) AN INCORRECT CLAIM, APPARENT FROM ANY INFORMATIO N IN THE STATEMENT; ( B ) THE INTEREST, IF ANY, SHALL BE COMPUTED ON THE BA SIS OF THE SUMS DEDUCTIBLE AS COMPUTED IN THE STATEMENT; ( C ) THE SUM PAYABLE BY, OR THE AMOUNT OF REFUND DUE T O, THE DEDUCTOR SHALL BE DETERMINED AFTER ADJUSTMENT OF AMOUNT COMP UTED UNDER CLAUSE ( B ) AGAINST ANY AMOUNT PAID UNDER SECTION 200 AND SECTION 201, AND ANY AMOUNT PAID OTHERWISE BY WAY O F TAX OR INTEREST; ( D ) AN INTIMATION SHALL BE PREPARED OR GENERATED AND SENT TO THE DEDUCTOR SPECIFYING THE SUM DETERMINED TO BE PAYABL E BY, OR THE AMOUNT OF REFUND DUE TO, HIM UNDER CLAUSE ( C ); AND ITA NO.369 TO 371 /BANG/12 PAGE 23 OF 31 ( E ) THE AMOUNT OF REFUND DUE TO THE DEDUCTOR IN PURSU ANCE OF THE DETERMINATION UNDER CLAUSE ( C ) SHALL BE GRANTED TO THE DEDUCTOR : 30. THE SAID SECTION HAS BEEN INSERTED BY THE FINAN CE (NO.2) ACT, 2009 W.E.F. 1.4.2010, THE PRESENT ASSESSMENT YEAR IS A. Y. 2010-11, SO THIS SECTION IS APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION BECAUSE THE ASSESSMENT YEAR STARTS W.E.F. 1.4.2010 AND MORE OVER THE SURVEY U/S. 133A TOOK PLACE ON 18.03.2011 AND ONLY ON THE BASIS OF THE DOCUMENTS AND STATEMENTS WHICH WERE OUTCOME OF THAT SURVEY, T HE AO TOOK ACTION U/S. 201(1) & 201(1A) OF THE ACT, THEREFORE THE PROVISIO NS CONTAINED IN SECTION 200A(1) OF THE ACT ARE APPLICABLE TO THE PRESENT CA SE. CLAUSE (C) OF SUB- SECTION (1) OF SECTION 200A PROVIDES THAT THE SUM P AYABLE OR THE REFUND DUE TO THE DEDUCTOR SHALL BE DETERMINED AFTER ADJUSTMEN T OF AMOUNT COMPUTED UNDER CLAUSE (B) AGAINST ANY AMOUNT PAID UNDER SECT ION 200 & 201 OF THE ACT AND ANY AMOUNT PAID OTHERWISE BY WAY OF TAX OR INTEREST. SIMILARLY THE PROVISIONS CONTAINED IN SUB-SECTION (3) OF SECTION 192 OF THE ACT PROVIDES FOR ADJUSTMENT, THE SAID PROVISIONS READ AS UNDER:- 3) THE PERSON RESPONSIBLE FOR MAKING THE PAYMENT REFERRED TO IN SUB-SECTION (1) OR SUB-SECTION (1A) OR SUB-SECTI ON (2) OR SUB- SECTION (2A) OR SUB-SECTION (2B) MAY, AT THE TIME O F MAKING ANY DEDUCTION, INCREASE OR REDUCE THE AMOUNT TO BE DEDU CTED UNDER THIS SECTION FOR THE PURPOSE OF ADJUSTING ANY EXCES S OR DEFICIENCY ARISING OUT OF ANY PREVIOUS DEDUCTION OR FAILURE TO DEDUCT DURING THE FINANCIAL YEAR. FROM THE ABOVE PROVISIONS, IT IS CLEAR THAT ADJUSTM ENT HAS TO BE MADE FOR MAKING ANY DEDUCTION FOR TAX ON ACCOUNT OF EXCESS O R DEFICIENCY ARISING OUT OF ANY PREVIOUS DEDUCTION OR FAILURE TO DEDUCT DURI NG THE FINANCIAL YEAR, IT MEANS THAT THE ADJUSTMENT HAS TO BE MADE ONLY AT TH E END OF THE YEAR AND ITA NO.369 TO 371 /BANG/12 PAGE 24 OF 31 FOR THAT PURPOSE EVERY STATEMENT/DETAIL RELATING TO THE EARLIER EXCESS OR SHORT DEDUCTION IS REQUIRED. 31. IN THE PRESENT CASE, THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE WAS THAT THE RECIPIENT PAID THE TAX, BUT N O CREDIT HAS BEEN GIVEN. WHEN DURING THE COURSE OF HEARING A QUESTION WAS AS KED TO THE LD. COUNSEL FOR THE ASSESSEE WHETHER THE DETAILS WERE PROVIDED FOR SUCH ADJUSTMENT, IT WAS STATED THAT SUFFICIENT TIME WAS NOT GRANTED BY THE AO FOR THE SAME. IT WAS ALSO STATED THAT THERE WAS SUFFICIENT REASON FO R NOT MAKING THE PAYMENT BECAUSE THE ASSESSEE WAS HAVING FINANCIAL CRUNCH AN D EVEN TO SOME OF THE EMPLOYEES, SALARY WAS NOT PAID, SO THERE WAS NO QUESTION OF DEDUCTING THE TDS. THE LD. COUNSEL FOR THE ASSESSEE PLACED T HE RELIANCE ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF MITTAL STEEL LTD. V. ACIT & ANR. [1999] 240 ITR 707 . IN THE SAID CASE, IT HAS BEEN HELD AS UNDER:- SECTION 201 OF THE INCOME-TAX ACT, 1061, IS A PEN AL PROVISION TO TREAT A PERSON AS AN ASSESSEE IN DEFAU LT IF THERE IS A FAILURE TO DEDUCT THE TAX, OR AFTER DEDUCTING THE T AX IT IS NOT PAID. THE PROVISO MAKES IT CLEAR, THAT THE ASSESSING OFFI CER MUST BE SATISFIED THAT SUCH FAILURE WAS WITHOUT GOOD AND SU FFICIENT REASON. THIS CONTEMPLATES AN ADJUDICATION BY THE ASSESSING OFFICER, TO PROVIDE AN OPPORTUNITY TO THE PERSON WHO IS DEEMED TO BE AN ASSESSEE IN DEFAULT FOR WHICH AN ORDER HAS TO BE PA SSED WHICH IS APPEALABLE UNDER SECTION 246 OF THE ACT. THE ASSESS ING OFFICER THEREFORE IS TO FIX THE LIABILITY AND COMPUTE THE A MOUNT OF TAX WHICH WAS LIABLE TO BE DEDUCTED OR LIABLE TO BE PAI D AND HAS NOT BEEN PAID AND THEREAFTER HAS TO SERVE A NOTICE OF D EMAND CALLING UPON THE ASSESSEE TO MAKE SUCH PAYMENT. SUFFICIENT SAFEGUARDS HAVE BEEN PROVIDED IN THE SECTION ITSELF AND AS SUC H IT CANNOT BE CONSIDERED THAT THE PROVISIONS ARE ULTRA VIRES THE CONSTITUTION. THE CONTENTION THAT UNDER SECTION 191, THERE COULD BE A DIRECT PAYMENT OF TAX BY THE ASSESSEE TO THE DEPARTMENT, H AS NO RELEVANCE FOR THE OFFENCE WHICH THE ASSESSEE HAS CO MMITTED IN NOT DEDUCTING THE TAX UNDER VARIOUS SECTIONS OF THE ACT , PARTICULARLY, IN CHAPTER XVII. THE FINDING THAT THERE WAS A FAILU RE TO DEDUCT ITA NO.369 TO 371 /BANG/12 PAGE 25 OF 31 THE TAX HAS TO BE ON THE BASIS OF EITHER THE ASSESS MENT OR OTHER RECORDS AVAILABLE WITH THE ASSESSEE AND, THEREFORE, THE CONTENTION THAT NO PROCESS OR PROCEDURE HAS BEEN STIPULATED, H AS NO FORCE. THE ASSESSING OFFICER, HAS TO PROVIDE AN OPPORTUNIT Y AND, THEREFORE, THERE IS SUFFICIENT GUIDELINE PROTECTING THE RIGHT OF INNOCENT ASSESSEES. THE PROVISIONS OF SECTION 201, THEREFORE, CANNOT BE CONSIDERED TO BE ULTRA VIRES. 32. FROM THE RATIO LAID DOWN IN THE AFORESAID REFER RED TO CASE, IT IS CLEAR THAT THE PROVISIONS CONTAINED IN SECTION 201 OF THE ACT ARE PENAL IN NATURE TO TREAT A PERSON AS AN ASSESSEE IN DEFAULT, BUT THE PROVISO TO THE SAID SECTION MAKES IT CLEAR THAT THE AO MUST BE SATISFIE D THAT SUCH FAILURE WAS WITHOUT GOOD AND SUFFICIENT REASON AND FOR THAT PUR POSE, DUE AND REASONABLE TIME IS REQUIRED TO BE GIVEN TO THE ASSE SSEE TO EXPLAIN ITS CASE. IN THE AFORESAID REFERRED TO CASE, THE HONBLE JURI SDICTIONAL HIGH COURT CLEARLY HELD THAT THE AO HAS TO PROVIDE OPPORTUNITY AND THEREFORE THERE IS SUFFICIENT GUIDELINE PROTECTING THE RIGHT OF INNOCE NT ASSESSEES. 33. SIMILARLY, THE HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT & ANR. V. INTEL TECH INDIA PVT. LTD. [2011] 55 DTR (K AR) 173 HELD THAT ONCE THE PAYEE ACKNOWLEDGES THE RECEIPTS, FILED THE RETU RN ASSESSING THE SAID AMOUNTS IN HIS HANDS AND PAYS THE TAX WHICH IS ACCE PTED BY THE DEPARTMENT, PAYER CEASES TO BE ASSESSEE IN DEFAULT, HE IS NOT LIABLE TO PAY TAX U/S. 201(1) OF THE ACT. HOWEVER IN THE PRESENT CASE, NO EFFORTS HAVE BEEN MADE TO BRING ON RECORD AS TO WHETHER THE RECI PIENTS HAD PAID THE TAX AND FILED THE RETURN ASSESSING THE AMOUNT IN QUESTI ON IN THEIR HANDS. THE CLAIM OF THE LD. COUNSEL FOR THE ASSESSEE WAS THAT PROPER OPPORTUNITY WAS NOT GIVEN TO SUBSTANTIATE THE SAID CLAIM SINCE THE TIME ALLOWED BY THE AO WAS NOT SUFFICIENT TO COLLECT THOSE INFORMATIONS. ITA NO.369 TO 371 /BANG/12 PAGE 26 OF 31 34. THE MAIN GRIEVANCE OF THE ASSESSEE IN THIS APP EAL IS THAT PROPER OPPORTUNITY OF BEING HEARD WAS NOT GIVEN TO THE ASS ESSEE. IN THE PRESENT CASE, THE AO ISSUED THE NOTICE DATED 21.12.2011 AND CLAIMED THAT THE SAME WAS SERVED ON THE ASSESSEE ON THE SAME DAY. IN THE SAID NOTICE THE ASSESSEE WAS ASKED TO FURNISH ITS EXPLANATION/SUBMI SSIONS IF ANY BY 26.12.2011. THE CLAIM OF THE ASSESSEE IS THAT THE SAID NOTICE WAS RECEIVED ON 29.12.2011. IN THIS REGARD OUR ATTENTION WAS DR AWN TOWARDS THE COPY OF THE LETTER NO.BLRDOO795E/2011 DATED 21.12.2011 WHIC H WAS FURNISHED ON 12.04.2012 DURING THE COURSE OF HEARING, THE CO PY OF THE AFORESAID NOTICE DATED 21.12.2011 IS PLACED ON RECORD. IN TH E COPY OF THE SAID NOTICE, IT IS MENTIONED THAT RECEIVED ON 29.12.2011, HOWE VER NOTHING IS BROUGHT ON RECORD THAT IN FACT THE SAID NOTICE WAS RECEIVED ON 29.12.2011 BECAUSE NO OTHER INDEPENDENT DOCUMENT LIKE POSTAL ENVELOPE OR COPY OF THE ACKNOWLEDGEMENT WAS PRODUCED BEFORE US TO SUBSTANTI ATE THAT CLAIM. WE THEREFORE, IN THE ABSENCE OF PROPER EVIDENCE, ARE U NABLE TO CONCLUDE AS TO WHETHER THE SAID NOTICE WAS RECEIVED BY THE ASSESSE E ON 21.12.2011 AS CLAIMED BY THE DEPARTMENT OR ON 29.12.2011 AS CLAIM ED BY THE ASSESSEE. HOWEVER, THE FACTS REMAIN THAT THE ORDERS U/S. 201( 1) & 201(1A) OF THE ACT HAVE BEEN PASSED ON 30.12.2011. NOW WE HAVE TO SEE AS TO WHETHER THE TIME ALLOWED BY THE AO WAS SUFFICIENT AND REASONABL E WHILE DECIDING THE PRESENT CONTROVERSY. IN THE PRESENT CASE, IT IS AL SO NOTICED THAT THE ASSESSEE VIDE LETTER DATED 19.12.2011 WRITTEN TO TH E AO (COPY OF WHICH IS PLACED AT PAGE 18 OF THE ASSESSEES COMPILATION) SO UGHT AN ADJOURNMENT AND REQUESTED TO ADJOURN THE CASE TO SOME TIME AFTE R 05.01.2012, HOWEVER NOTHING IS BROUGHT ON RECORD AS TO WHETHER THE SAID REQUEST WAS REJECTED OR ITA NO.369 TO 371 /BANG/12 PAGE 27 OF 31 ACCEPTED BY THE AO. IT IS WELL SETTLED THAT NOBODY SHOULD BE CONDEMNED UNHEARD AS PER THE MAXIM AUDI ALTERAM PARTEM . IN THE INSTANT CASE, NOTHING IS AVAILABLE ON RECORD AS TO WHETHER THE AF ORESAID REQUEST VIDE LETTER DATED 19.12.2011 WHICH WAS RECEIVED ON 19.12 .2011 VIDE RECEIPT NO.872 BY THE INCOME-TAX DEPARTMENT, RANGE 16, BANG ALORE (THIS FACT IS CLEAR FROM THE COPY OF THE SAID LETTER PLACED AT PA GE 18 OF THE ASSESSEES COMPILATION). 35. IN THE PRESENT CASE IT IS NOT IN DISPUTE THAT A SURVEY TOOK PLACE IN THE ASSESSEES PREMISES ON 18.03.2011 AND THE AO INITIA TED ASSESSMENT PROCEEDINGS U/S. 201 OF THE ACT. THE LD. COUNSEL F OR THE ASSESSEE VIDE LETTER DATED 19.12.2011 (COPY OF WHICH IS PLACED AT PAGE 18 OF THE ASSESSEES COMPILATION) REQUESTED FOR ADJOURNMENT S TATING THEREIN AS UNDER;- THE HEARING OF THE ABOVE CASE IS POSTED BEFORE YOU R HONOURS FOR TODAY. AS WE ARE PROFESSIONALLY PREOCCUPIED WITH TI ME BARRING ASSESSMENTS, HENCE WE REQUEST YOUR HONOURS TO KINDL Y ADJOURN THE CASE TO SOMETIME AFTER 5 TH JANUARY 2012 AND OBLIGE. WE ARE EXTREMELY SORRY FOR THE INCONVENIENCE CAUSED TO YOUR HONOURS. 36. IN THE ABOVE SAID ADJOURNMENT LETTER, THE LD. C OUNSEL FOR THE ASSESSEE SOUGHT TIME, HOWEVER NOTHING IS BROUGHT ON RECORD AS TO WHETHER THAT REQUEST WAS ACCEPTED OR REJECTED. THE CLAIM O F THE DEPARTMENT IS THAT THE NOTICE DATED 21.12.2011 WAS ISSUED AND SERVED T O THE ASSESSEE ON THE SAME DAY AND ASSESSEE WAS ASKED TO FURNISH/EXPLAIN SUBMISSIONS BY 26.12.2011. THE CLAIM OF THE ASSESSEE IS THAT THE SAID NOTICE WAS RECEIVED ONLY ON 29.12.2011. AS WE HAVE POINTED OUT IN THE FORMER PART OF THIS ORDER ITA NO.369 TO 371 /BANG/12 PAGE 28 OF 31 AT PARA 24 THAT NOTHING WAS BROUGHT ON RECORD AS TO WHETHER THE SAID NOTICE WAS RECEIVED BY THE ASSESSEE ON 21.12.2011 AS CLAIM ED BY THE DEPARTMENT OR ON 29.12.2011 AS CLAIMED BY THE ASSESSEE, HOWEVE R IN OUR OPINION, REASONABLE TIME FOR OPPORTUNITY OF BEING HEARD WAS REQUIRED TO BE GIVEN TO THE ASSESSEE AS HAS BEEN HELD BY THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF MITTAL STEEL LTD. V. ACIT (SUPRA) AND WHERE NO EFFECTIVE OPPORTUNITY OF BEING HEARD WAS BEING GIVEN, THE ORD ER IS NOT MAINTAINABLE. ON THIS ISSUE RELATING TO THE OPPORTUNITY OF BEING HEARD TO BE GIVEN, THE HONBLE ORISSA HIGH COURT IN THE CASE OF RADHIKA CHARAN BANERJEE V. SAMBHALPUR MUNICIPALITY AND OTHERS REPORTED AT 1979 AIR 69 (ORISSA) HAS HELD AS UNDER:- A RIGHT OF APPEAL WHEREVER CONFERRED INCLUDES A RIGHT OF BEING AFFORDED AN OPPORTUNITY OF BEING HEARD, IRRES PECTIVE OF THE LANGUAGE USED IN CONFERRING SUCH A RIGHT. THAT IS A PART AND PARCEL OF THE PRINCIPLE OF NATURAL JUSTICE. WHERE AN AUTHO RITY IS REQUIRED TO ACT IN A QUASI JUDICIAL CAPACITY, IT IS IMPERATI VE TO GIVE THE APPELLANT AN ADEQUATE OPPORTUNITY OF BEING HEARD BE FORE DECIDING THE APPEAL. OPPORTUNITY OF HEARING DOES NOT ALWAYS NECESSARILY MEAN GIVING A PERSONAL HEARING. A WRITTEN REPRESENT ATION, IF COMPLETE AND ELABORATE IN ALL RESPECTS FULLY EXPLAI NING THE POINTS OF VIEW OF THE APPELLANT, WHEN ACCEPTED, MAY, IN SO ME CASES AMOUNT TO AFFORDING EFFECTIVE OPPORTUNITY OF HEARIN G. WHAT PARTICULARS OF NATURAL JUSTICE SHOULD APPLY TO A GI VEN CASE MUST ALSO DEPEND TO A GREAT EXTENT ON THE FACTS AND CIRC UMSTANCES OF THAT CASE. HONBLE HIGH COURT FURTHER OBSERVED THAT - WHERE NO EFFECTIVE OPPORTUNITY OF BEING HEARD HAS BEEN GIVEN TO THE APPELLANT IN DISPOSING OF HIS APPEAL IN SPITE O F HIS EXPRESS REQUEST THAT THIS COUNSEL SHOULD BE HEARD, THE ORDE R MUST BE QUASHED. ITA NO.369 TO 371 /BANG/12 PAGE 29 OF 31 37. IN THE PRESENT CASE ALSO, THE AO WHILE INVOKING THE PENAL PROVISIONS OF SECTION 201 OF THE ACT, WAS ACTING IN A QUASI-JU DICIAL CAPACITY, THEREFORE HE WAS REQUIRED TO GIVE ADEQUATE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. IT IS USUALLY SAID THAT JUSTICE DELAYE D IS JUSTICE DENIED, IN OTHER WORDS, IF THERE IS DELAY IN GIVING THE JUSTICE IT I S PRESUMED THAT JUSTICE IS DENIED THEREFORE DECISION IS TO BE TAKEN EXPEDITIOU SLY, BUT AT THE SAME TIME IT IS ALSO TRUE THAT JUSTICE HURRIED IS JUSTICE BU RIED. IN THE PRESENT CASE, IN OUR OPINION, THE AO DECIDED THE ISSUE IN HASTE AND THE TIME ALLOWED TO THE ASSESSEE WAS NOT SUFFICIENT, PARTICULARLY WHEN AN A DJOURNMENT WAS SOUGHT BY THE LD. COUNSEL FOR THE ASSESSEE FOR 05.01.2012 VIDE LETTER DATED 19.12.2011. HOWEVER, THE ORDERS U/S. 201(1) & 201( 1A) OF THE ACT HAVE BEEN PASSED ON 30.12.2011, EVEN WHEN THE PRESENT CA SE WAS NOT A TIME BARRING CASE WHERE ORDERS WERE TO BE PASSED WITHIN A SHORT PERIOD. WE THEREFORE ARE OF THE OPINION THAT THE TIME ALLOWED BY THE AO TO THE ASSESSEE BEFORE PASSING THE AFORESAID REFERRED TO O RDERS DATED 30.12.2011 WAS NOT SUFFICIENT. MORE OVER, IN THE PRESENT CASE , IT IS NOT CLEAR HOW THE LIABILITY FOR THE DEFAULT IN TERMS OF SECTION 201(1 ) AND LEVY OF INTEREST U/S. 201(1A) OF THE ACT HAS BEEN DETERMINED AND AS TO WH ETHER THE REMEDIES AVAILABLE TO THE ASSESSEE FOR MAKING THE ADJUSTMENT S HAD BEEN EXHAUSTED. WE THEREFORE ARE OF THE VIEW THAT THE ORDER DATED 3 0.12.2011 PASSED BY THE AO U/S. 201(1) & 201(1A) OF THE ACT AS WITHOUT PROV IDING REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE LD. CIT(A) HAD ALSO PASSED THE IMPUGNED ORDER WITHOUT CONSIDERING THE AFORESAID FACTS I.E., REASONABLE OPPORTUNITY OF BEING HEARD WAS NOT PROVIDED TO THE ASSESSEE AND THAT NO ADJUSTMENT AS PROVIDED IN THE ACT HAS BEEN MADE ITA NO.369 TO 371 /BANG/12 PAGE 30 OF 31 RELATING TO THE PAYMENT OF TAXES DIRECTLY BY THE RE CIPIENT, FROM THE TAX DEPOSITED IF ANY BY THE ASSESSEE. IN THE PRESENT CASE, IT IS ALSO NOT CLEAR AS TO WHETHER THE ASSESSEE DEDUCTED THE TDS ONLY FO R THE PAYMENTS OF SALARIES TO THE EMPLOYEES OR FOR OTHER PAYMENTS OF EXPENSES ALSO. WE THEREFORE DEEM IT APPROPRIATE TO SET ASIDE THE IMPU GNED ORDER AND REMAND THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR F RESH ADJUDICATION IN ACCORDANCE WITH LAW, AFTER PROVIDING DUE AND REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO COOPERATE FOR EXPEDITIOUS DISPOSAL AND NOT TO SEEK UNDUE AND UNWARRANTED ADJOURNMENTS. 38. IN THE ITA NO.370/BANG/2011 FOR THE A.Y. 2011-1 2, THE GROUNDS RAISED BY THE ASSESSEE AND THE FACTS OF THE CASE AR E SIMILAR AS WERE FOR THE A.Y. 2010-11, THE ONLY DIFFERENCE IS IN THE AMOUNT QUANTIFIED U/S. 201(1) & 201(1A) OF THE ACT, THEREFORE OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER RELATING TO A.Y. 2010-11 SHALL APPLY MUTATIS MUTANDIS FOR THIS YEAR ALSO. 39. IN ITA NO.371/BANG/2011 FOR THE A.Y. 2012-13, S IMILAR IS THE POSITION AS IN THE EARLIER YEARS, THE ONLY DIFFERENCE IS THA T THE ORDER DATED 30.12.2011 U/S. 201(1) & 201(1A) OF THE ACT HAS BEE N PASSED BEFORE COMPLETION OF THE ASSESSMENT YEAR, OTHERWISE THE FA CTS ARE SIMILAR AND EVEN THE RIVAL CONTENTIONS ARE SIMILAR. FOR THE RE LEVANT FINANCIAL YEAR 2011- 12, THE ASSESSMENT YEAR IS A.Y. 2012-13 WHICH ENDS ON 31.3.2013 AND THE ORDER U/S. 201(1) & 201(1A) OF THE ACT HAS BEEN PAS SED ON 30.12.2011, THEREFORE THE TIME FOR MAKING THE ADJUSTMENTS AND T HE PAYMENTS WAS STILL AVAILABLE WITH THE ASSESSEE. OTHERWISE ALL OTHER F ACTS WERE SIMILAR AS ARE ITA NO.369 TO 371 /BANG/12 PAGE 31 OF 31 INVOLVED IN THE PRECEDING YEARS I.E. A.YS. 2010-11 & 2011-12, WHICH WE HAVE ALREADY DISCUSSED IN THE FORMER PART OF THIS O RDER. THEREFORE OUR FINDINGS GIVEN IN THE EARLIER PART OF THIS ORDER SH ALL APPLY MUTATIS MUTANDIS FOR THIS YEAR ALSO. 40. IN THE RESULT, ALL THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF MAY, 2012. SD/- SD/- ( SMT. P. MADHAVI DEVI ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 25 TH MAY , 2012. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.