Executive Engineer, Dehradun V. ITO (TDS)-II, Dehradun

ITA 4044/DEL/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65305 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-07-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 05-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S AHLAWAT
• Assessee Lawyers: GIRISH K SHUKLA
• Keywords: Opportunity of being heard; Assessment record
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI SHAMIM YAHYA ITA NO. 4044 & 4045/DEL/2009 A.YR: 2004-05 EXECUTIVE ENGINEER, VS. INCOME TAX OFFICER, CIVIL CONSTRUCTION DIVISION-II, (TDS)-II, DEHRADU N. DHALIPUR. ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI GIRISH K. SHUKLA ADV. RESPONDENT BY : SHRI J.S. AHLAWAT SR. DR O R D E R PER R.P. TOLANI, J.M: : THESE ARE TWO ASSESSEES APPEALS AGAINST RESPECTIVE ORDERS OF CIT(A). BOTH THE APPEALS ARE HEARD TOGETHER AND BEING DISPO SED OF BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. RESPECTIVE GROUN DS TAKEN ARE AS UNDER: ITA NO. 4044/DEL/2009 [U/S 201(1)/201(1A)]: THAT THE LEARNED COMMISSIONER (APPEALS) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE INCOME TAX OF FICER (TDS), TREATING THE APPELLANT AS ASSESSEE IN DEFAUL T IN RESPECT OF TAX AND INTEREST AMOUNTING TO RS. 42,4,102/- UNDER SECTION 201(1)/201(1A) OF THE I.T. ACT, 1961. ITA NO. 4045/DEL/2009 [U/S 271C]: THAT THE LEARNED COMMISSIONER (APPEALS) ERRED ON F ACTS AND IN LAW IN CONFIRMING THE PENALTY AMOUNTING TO RS. 39,9 2,201/- IMPOSED ON THE APPELLANT BY THE ADDL. COMMISSIONER OF INCOME TAX UNDER SECTION 271C OF THE I.T. ACT, 1961. 2 2. ITA NO. 4044/DEL/09 IS AGAINST THE DEMAND RAISED BY TREATING THE ASSESSEE IN DEFAULT U/S 201(1)/201(1A) OF THE I.T. ACT AND ITA NO. 4045/DEL/09 IS CONSEQUENT PENALTY U/S 271C OF THE I .T. ACT. IT SHALL BE PERTINENT TO NOTE THAT APPEAL NO. 4044/DEL/09 IS BA RRED BY LIMITATION BY 1562 DAYS. THE ASSESSEE HAS FILED AN APPLICATION FOR CO NDONATION OF DELAY IN FILING THIS APPEAL. ITA NO. 4045/DEL/09 HAS BEEN FILED IN TIME. 2.1. BRIEF FACTS ARE: SURVEY PROCEEDINGS U/S 133AW ERE CONDUCTED BY INCOME-TAX DEPARTMENT ON 29-1-2004 IN THE OFFICE PR EMISES OF EXECUTIVE ENGINEER, CIVIL CONSTRUCTION DIVISION-II, DHALIPUR, DEHRADUN. IT WAS FOUND THAT VIDE HONBLE SUPREME COURT ORDER, ASSESSEE HAD PAID FOLLOWING AMOUNTS TO A CONTRACTOR FIRM M/S HARISH CHANDRA & C O. UPON A DISPUTE ABOUT CIVIL CONSTRUCTION. TOWARDS CONTRACTUAL PAYMENT RS. 80,99,176 TOWARDS INTEREST RS. 4,47,26,279 2.2. IT WAS FOUND THAT TDS @ 2.1% U/S 194C WAS DEDU CTED ON WHOLE PAYMENT WHEREAS ON THE INTEREST COMPONENT THE ASSES SEE WAS LIABLE TO PAY TDS @ 11% U/S 194A. SHOW CAUSE NOTICES WERE ISSUED AS TO WHY THE ASSESSEE SHOULD NOT ACCORDINGLY BE TREATED IN DEFAU LT U/S 201(1) FOR THE SHORT DEDUCTION OF TDS. DURING THE COURSE OF THESE PROCEE DINGS, ON 25-2-2004 THE ASSESSEE STATED THAT THIS CONTRACTOR HAD FILED A CE RTIFICATE OF LOW DEDUCTION OF TAX FROM DCIT CIR. ROHTAK U/S 194C(4) MENTIONING TH AT TAX ON THE PAYMENT MAY BE DEDUCTED @ 0.50%. THIS CERTIFICATE WAS IN T HE NAME OF M/S HARISH CHANDRA (INDIA) LTD., 834/2 JHUNG COLONY ROHTAK. IT WAS STATED THAT THE BUSINESS OF M/S HARISH CHANDRA & CO. WAS TAKEN OVER BY M/S HARISH CHANDRA (INDIA) LTD. ASSESSING OFFICE, HOWEVER, HEL D THE ASSESSEE TO BE IN DEFAULT BY FOLLOWING OBSERVATIONS: 3 WITHOUT PREJUDICE TO THE ABOVE, IT IS CLEAR THAT B OTH THESE CERTIFICATES ISSUED BY THE DCIT, CIRCLE, ROHTAK ARE IN THE NAME OF M/S HARISH CHANDRA & CO. OF NEW DELHI. THE RECOR D FURTHER MAKES IT CLEAR THAT THE PAYMENT WAS DUE TO M/S HARI SH CHANDRA & CO. AN AGREEMENT WAS ENTERED ON 26-10-1979 BY M/ S HARISH CHANDRA & CO. RESPONDENT TO THE CIVIL APPEAL NO. 7643 OF 1995. ACCORDING TO THE AGREEMENT THE WORK OF CON STRUCTION WAS TO BE STARTED ON 1-12-1979 AND WAS TO BE COMPLE TED BY 31.5.1983. THE WORK WAS NOT COMPLETED BY THE DUE DA TE AS WELL AS BY EXTENDED TIME AND THE CONTRACTING PARTIES I.E . STATE OF U.P (APPELLANT) AND M/S HARISH CHANDRA & CO. (RESPONDEN T) WERE THE PARTIES TO THE CIVIL APPEAL BEFORE THE HONBLE SUPREME COURT. FINALLY THE HONBLE SUPREME COURT DELIVERED THE ORDER ON 11.11.2003 AND THE AFORESAID PAYMENTS HAVE BEEN MADE TO M/S HARISH CHANDRA & CO. NEW DELHI. ALL THESE FACTS REVEALS THAT THE COMPANY M/S HARISH CHANDRA (INDIA) LTD. HAS NEVER BEEN A PARTY TO THE AGREEMEN T DATED 26- 10-1979 AND ALSO BEFORE THE HONBLE SUPREME COURT I N THE CIVIL APPEAL. FINALLY THE PAYMENTS HAVE BEEN MADE B Y THE DEPARTMENT TO M/S HARISH CHANDRA & CO. AND NOT TO M /S HARISH CHANDRA (INDIA) LTD.. THEREFORE, THE CONTENT ION ON THE POINT OF CERTIFICATE OF LOWER DEDUCTION IS REJECTED AS THE SAME DO NOT PERTAIN TO M/S HARISH CHANDRA & CO. NEW DELHI. MOREOVER, THE MATTER BEFORE ME IS WITH REGARD TO NON DEDUCTIO N OF TAX ON INTEREST AMOUNT AS REQUIRED U/S 194A OF THE I.T. AC T AND NOT U/S 194C. THE PERSON RESPONSIBLE FOR MAKING THE PAYMENT WAS REQUIRED TO DEDUCT TAX ON CONTRACTUAL PAYMENTS U/S 194C @ 2.1% AND ON THE AMOUNT OF INTEREST U/S 194A @ 11%. THUS, THEREFORE, TDS AMOUNTING TO RS. 39,92,201/- U/S 194 A WAS SHORT DEDUCTED. ACCORDINGLY, I HOLD THE EXECUTIVE E NGINEER, CIVIL CONSTRUCTION DIVISION-II, DHALIPUR, DISTT. DE HRADUN AS AN ASSESSEE IN DEFAULT U/S 201(1) WITH REGARD TO THE SHORT TDS AMOUNTING TO RS. 39,92,201/- OF I.T. ACT 1961 ACCOR DINGLY ORDER U/S 201(1) IS MADE WITH THESE OBSERVATIONS. S IMILARLY ORDER U/S 201(1A) IS MADE FOR INTEREST . 4 2.3. ASSESSEE FILED FIRST APPEAL, HOWEVER, NONE APP EARED ON BEHALF OF THE ASSESSEE IN APPEAL BEFORE THE CIT(A), WHICH RESUL TED IN AN EX PARTE ORDER UPHOLDING THE ASSESSING OFFICERS ORDER, TREATING T HE ASSESSEE IN DEFAULT. IN THE MEANWHILE ASSESSING OFFICER ISSUED PENALTY NOT ICE U/S 271C. THE ASSESSEE FILED WRITTEN SUBMISSIONS, EXPLAINING THE FACTS. ASSESSING OFFICER , HOWEVER, IMPOSED THE PENALTY VIDE ORDER DATED 23-4- 2007, MAKING FOLLOWING OBSERVATIONS: 3. ON RECEIPT OF PROPOSAL FROM THE ITO(TDS)-2, DEH RADUN, A SHOW CAUSE NOTICE U/S 271C WAS ISSUED TO THE PERS ON RESPONSIBLE ON 9-10-2006 FIXING THE DATE OF HEARING ON 26-10- 2006. ON THE DATE FIXED NEITHER ANYBODY ATTENDED NO R ANY WRITTEN REPLY WAS RECEIVED. AGAIN A NOTICE WAS ISSU ED ON 5-12- 2006, FIXING THE HEARING FOR 19-12-2006. IN COMPLIA NCE TO THIS, A LETTER DATED 14-12-2006 WAS RECEIVED IN WHICH IT WAS MENTIONED THAT THE PERSON RESPONSIBLE IS OUT OF STA TION AND REQUESTED FOR ADJUSTMENT AFTER 20-12-2006. ACCORDIN GLY, ON THE REQUEST OF THE PERSON RESPONSIBLE, CASE WAS ADJOURN ED FOR 26- 12-2006. IN RESPONSE TO THE SAME, VIDE LETTER DATED 27-12-2006, PERSON RESPONSIBLE HAS STATED THAT THE PROJECT UNDE R WHICH THE PAYMENT WAS MADE HAS BEEN TRANSFERRED TO SAHARANPUR IN U.P. AND THE AMOUNT OF TAX SHORT DEDUCTED HAS ALREADY BE EN RECOVERED BY THE ITO(TDS), THEREFORE, IT HAS BEEN R EQUESTED TO TRANSFER THE PENALTY TO THAT PROJECT AT SAHARANPUR. SUBSEQUENT TO IT, ANOTHER WRITTEN EXPLANATION DATED 22-01-2007 WA S FILED BY THE AUTHORISED REPRESENTATIVE FOR THE PERSON RESPON SIBLE IN WHICH IT HAS BEEN CONTENDED ON BEHALF OF THE PERSON RESPONSIBLE THAT M/S HARISH CHANDRA & CO. HAS FILED ITS RETURN FOR THE RELEVANT YEAR AT INCOME-TAX OFFICE, ROHTAK INCLUDIN G THEREIN THE RECEIPTS ALONG WITH INTEREST RECEIVED FROM THE PERS ON RESPONSIBLE IN HIS TOTAL RECEIPTS AND HAS PAID THE TAX ON SUCH RECEIPTS. IT HAS ALSO BEEN CONTENDED ON BEHALF OF T HE PERSON RESPONSIBLE THAT ITO(TDS)-II HAS ALSO CHARGED INCOM E-TAX ON THE SAME RECEIPTS PAID TO M/S HARISH CHANDRA & CO. AND HAS CLAIMED THAT TAX HAS BEEN CHARGED TWICE ON THE SAME INCOME. 5 RELIANCE HAS BEEN PLACED BY THE AUTHORIZED PERSON O N THE DECISION OF HONBLE M.P. HIGH COURT. 4. I HAVE CONSIDERED VERY CAREFULLY THE WRITTEN SUB MISSIONS FILED BY THE PERSON RESPONSIBLE AND SUBSEQUENTLY FI LED BY THE AUTHORIZED REPRESENTATIVE ON BEHALF OF THE PERSON R ESPONSIBLE. I HAVE ALSO PERUSED THE CASE RECORDS OF THE PERSON RE SPONSIBLE. THE CLAIM OF THE PERSON RESPONSIBLE THAT M/S HARISH CHA NDRA & CO. HAS ALREADY DECLARED THE CONTRACTUAL WAS WELL AS IN TEREST INCOME IN ITS RETURN OF INCOME AND PAID TAX ON THE SAME IN SUPPORT OF THE SAME, COPIES OF ORDER U/S 143(3), INTIMATION U/S 14 3(1) P&L A/C AND COPY OF LEDGER ACCOUNT OF CONTRACTOR IN RESPECT OF M/S HARISH CHANDRA & CO. FOR THE A.Y. 2004-05 HAVE BEEN FILED. A PERUSAL OF THE SAME REVEALS THAT THE ASSESSEE HAS SHOWN IN COME OF RS. 2,11,51,372/- IN ITS RETURN OF INCOME. THIS INCOME HAS BEEN WORKED OUT AGAINST THE GROSS CONTRACTUAL RECEIPT OF RS. 95,86,31,615/- AND THIS GROSS CONTRACTUAL RECEIPT I NCLUDE RECEIPT OF RS. 5,04,87,404/- SHOWN AS RECEIVED FROM DHALIPU R A/C. THUS, IT IS SEEN THAT IN RESPECT OF ITS CONTRACT WITH DHA LIPUR PROJECT, M/S HARISH CHANDRA & CO. HAS INCLUDED GROSS CONTRACTUAL ; RECEIPT OF RS. 5,04,87,404/- WHEREAS DURING THE YEAR UNDER CON SIDERATION IN RESPECT OF DHALIPUR PROJECT, GROSS RECEIPTS WERE RS . 5,28,25,855/- OUT OF WHICH RS. 80,99,176/- WAS THE CONTRACT RECEI PT AND BALANCE RS. 4,47,26,279/- WAS THE INTEREST INCOME AWARDED T O THE CONTRACTOR CONSEQUENT UPON DECISION OF HONBLE SUPR EME COURT. THIS INTEREST INCOME IS TAXABLE UNDER THE HEAD INCO ME FROM OTHER SOURCES. HOWEVER, THE CONTRACTOR HAS INCLUDED IT IN ITS RETURN OF INCOME RECEIPTS OF RS. 5,04,87,404/- AS CONTRACTUAL RECEIPTS AND AFTER REDUCING VARIOUS EXPENSES, NET INCOME OF RS. 2,11,51,373/- HAS BEEN DISCLOSED IN HIS RETURN OF INCOME. THUS TH E CLAIM OF THE AUTHORIZED REPRESENTATIVE FOR THE PERSON RESPONSIBL E THAT M/S HARISH CHANDRA & CO. HAS INCLUDED THIS INTEREST INC OME IN ITS RETURN OF INCOME IS INCORRECT. BY NOT DEDUCTING TAX AS PER PROVISIONS OF SEC. 194A ON THE AMOUNT OF INTEREST P AID BY THE PERSON RESPONSIBLE LED HIM TO BE TREAT ED AS A PERS ON RESPONSIBLE IN DEFAULT ACCORDINGLY, ITO(TDS)-II, DEHRADUN, HAS PASSED ORDER U/S 201(1) TREATING HIM AS A PERSON RESPONSIBLE IN DEFAULT FOR SHORT DEDUCTION OF TAX U/S 194A BY AN AMOUNT OF RS. 39,92,201/- AFTER GIVING HIM THE CREDIT FOR THE TAX DEDUCTED U/ S 194C.THE ORDER OF THE ITO(TDS)-II, DEHRADUN HAS BEEN CONTEST ED IN APPEAL 6 FILED BY THE PERSON RESPONSIBLE AND THE LEARNED COM MISSIONER OF INCOME TAX ((APPEALS)-I, DEHRADUN, HAS BEEN PLEASED TO DISMISS THE APPEAL OF THE PERSON RESPONSIBLE VIDE HIS ORDE R DATED 28-3- 2005 IN APPEAL NO. 79/DDN/2004-05. 5. FROM THE FACTS DISCUSSED ABOVE, IT IS EVIDENTLY CLEAR THAT THE PERSON RESPONSIBLE HAS DEDUCTED TAX SHORT BY RS . 39,92,201/- WHICH WAS REQUIRED TO BE DEDUCTED BY HIM UNDER THE PROVISIONS OF SEC. 194A AND THUS HAS RENDERED HIMSELF LIABLE F OR IMPOSITION OF PENALTY U/S 271C OF THE I.T. ACT, 1961. PENALTY IMPOSABLE UNDER SEC. 271C IS THE SUM EQUAL TO THE AMOUNT OF T AX WHICH THE PERSON RESPONSIBLE HAS FAILED TO DEDUCT. SINCE IN T HIS CASE, AMOUNT OF TAX DEDUCTED SHORT IS RS. 39,92,201/-, PE NALTY OF RS. 39,92,201/- (RUPEES THIRTY NINE LACS NINETY TWO THO USAND TWO HUNDRED AND ONE ONLY) IS HEREBY IMPOSED UNDER SEC. 271C OF THE I.T. ACT, 1961. 2.4. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL AGA INST THIS ORDER LEVYING PENALTY U/S 271C. CIT(A) VIDE ORDER DATED 15-7-200 9 CONFIRMED THE PENALTY, OBSERVING AS UNDER: 6. I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE REPRESENTATIVES OF THE APPELLANT AND THE FACTS INDI CATED IN THE PENALTY ORDER OF THE ASSESSING OFFICER . IT IS OBSE RVED THAT AS A RESULT OF SURVEY CONDUCTED AT THE OFFICE PREMISES O F EXECUTIVE ENGINEER, CIVIL CONSTRUCTION DIVISION-II, DHALIPUR, DEHRADUN (PERSON RESPONSIBLE) ON 29-01-2004, IT WAS NOTICED THAT A PAYMENT OF RS. 5,28,25,855/- WAS MADE BY THE PERSON RESPONSIBLE ON 21.11.2003 TO M/S HARISH CHANDRA & C O., IN CONSEQUENCE OF DECISION OF HONBLE SUPREME COURT. T HE AGGREGATE AMOUNT OF PAYMENT INCLUDED RS. 80,99,176/ - ON ACCOUNT OF CONTRACTUAL WORK AND THE BALANCE OF RS. 4,47,26,279/- IS THE COMPONENT OF INTEREST, AS WORK ED OUT BY THE PERSON RESPONSIBLE. THE PERSON RESPONSIBLE HAD DEDU CTED TAX AT SOURCE ON THE WHOLE PAYMENT OF RS. 5,28,25,855/- @ 2.1% CONSIDERING IT AS CONTRACTUAL PAYMENT COVERED U/S 1 94C OF THE ACT. HOWEVER, THE TAX WAS REQUIRED TO BE DEDUCTED @ 11% ON THE PORTION OF PAYMENT RELATING TO INTEREST IN ACCO RDANCE WITH 7 THE PROVISIONS OF SEC. 194A OF THE ACT AND NOT U/S 194C OF THE ACT. ACCORDINGLY, THERE WAS A SHORT DEDUCTION OF TA X AT SOURCE AT RS. 39,22,201/-, WHICH WAS REQUIRED TO BE DEDUCT ED UNDER THE PROVISIONS OF SEC. 194C OF THE ACT AND IN ABSENCE O F SUCH DEDUCTION, THE ASSESSING OFFICER HAS PASSED AN ORD ER U/S 201(1) OF THE IT ACT BY TREATING THE APPELLANT, AS PERSON IN DEFAULT FOR SHORT DEDUCTION OF TAX BY AN AMOUNT OF RS. 39,92,20 1/-. THE ORDER OF THE ITO(TDS)-II, DEHRADUN WAS CONTESTED IN APPEAL BEFORE LD. CIT(A)-I, DEHRADUN AND THE SAID APPEAL HAS BEEN DISMISSED VIDE ORDER DATED 28.03.2005 IN A.NO. 79/D DN/2004- 05. IN CONSEQUENCE OF THE ORDER OF THE LD. CIT(A)- I, DEHRADUN, THE DEFAULT FOR SHORT DEDUCTION OF TAX AT SOURCE U/ S 194A OF THE ACT BECOMES CLEARLY ESTABLISHED AND THE PENALTY IS EXIGIBLE U/S 271C OF THE IT ACT, IN ABSENCE OF ANY PLAUSIBLE EXP LANATION FOR THE SAME. THEREFORE, I UPHOLD THE ACTION OF THE ASS ESSING OFFICER IN LEVYING PENALTY U/S 271C OF THE IT ACT TO THE TUNE OF RS. 39,92,2101/- AND NO INTERFERENCE IS CALLED FOR IN THIS RESPECT. 3. AGGRIEVED, ASSESSEE IS BEFORE US. AS MENTIONED A BOVE, ITA NO. 4044/DEL/2009 I.E. IN RESPECT OF PROCEEDINGS U/S 20 1(1)/201(1A) IS FILED LATE BY 1562 DAYS. LEARNED COUNSEL FOR THE ASSESSEE DRE W OUR ATTENTION TO THE DETAILED CONDONATION APPLICATION AND AFFIDAVIT FIL ED IN THIS RESPECT. IT IS ARGUED THAT THE CONTRACT GIVEN TO M/S HARISH CHANDR A & CO. WAS AWARDED UNDER THE REGIME OF UNDIVIDED STATE OF U.P. I.E. W HEN THE DISTRICTS OF UTTRAKHAND STATE WERE PART OF U.P. THE IRRIGATION P ROJECT WAS KNOWN AS KHARA PROJECT OF U.P. STATE IRRIGATION DEPARTMENT. THE DISPUTE AROSE WITH SAID M/S HARISH CHANDRA & CO. AND ERSTWHILE EXECUTI VE ENGINEER, YAMUNA LINK CHANNEL CONSTRUCTION DIVISION, SAHARANPUR. THE DISPUTE ENSUED ABOUT THE IMPLEMENTATION OF TERMS OF CONTRACT, WHICH WENT RIGHT UP TO THE SUPREME COURT. IN THE MEANWHILE THE STATE OF U.P. WAS BIFUR CATED AND THE PART OF KHARA PROJECT RECORD PERTAINING TO UTTRAKHAND WAS T RANSFERRED TO DEHRADUN. 8 3.1. IT SHALL BE PERTINENT TO OBSERVE THAT THE ORIG INAL DEFAULT IS NOT COMMITTED BY THE INCUMBENT IN QUESTION BUT BY THE E RSTWHILE EXECUTIVE ENGINEER, SAHARANPUR OF UNDIVIDED U.P. THE PARTITI ON OF U.P. TOOK PLACE UNDER TUMULTUOUSCIRCUMSTANCES AND THE CONCERNED REC ORD WAS BELATEDLY TRANSFERRED FROM SAHARANPUR TO DEHRAUN, WHICH TOOK ITS OWN TIME. THE ASSESSEE COULD BECOME AWARE OF THE CIT(A)S ORDER U/S 201(1)/ 201(1A) ONLY WHEN THE PENALTY ORDER U/S 271C WAS PASSED. T HIS IS A UNIQUE SITUATION WHEN THE PART OF RECORD WAS TRANSFERRED FROM ONE S TATE AGENCY TO REORGANIZED OTHER STATE AGENCY I.E. IRRIGATION DEPA RTMENT. IT WAS NOT ONLY TDS RECORD BUT COPIOUS WORK OF PROJECT ALSO WERE TR ANSFERRED. IT WAS HUMANLY NOT POSSIBLE TO TRACK EACH ISSUE AND LOOK U NFORESEEN TIME TO STREAMLINE THE AFFAIRS. ONLY WHEN THE PENALTY ORDER U/S 271C WAS PASSED, THE ASSESSEE BECAME AWARE THAT THREE WAS AN EX PARTE OR DER OF CIT(A) IN RESPECT OF TDS LIABILITY U/S 201(1)/201(1A). 3.2. IN THESE CIRCUMSTANCES, ASSESSEE WAS LEFT WITH NO CHOICE BUT TO FILE A BELATED APPEAL AS PER THE PROFESSIONAL ADVICE ALONG WITH CONDONATION APPLICATION. IT IS PLEADED THAT THE CIRCUMSTANCES W ERE BEYOND THE CONTROL OF THE INCUMBENT WHICH WERE MADE DIFFICULT BY THE REOR GANIZATION OF STATES, TRANSFER OF MASSIVE RECORDS OF KHARA PROJECT AND IN SUFFICIENCY OF HUMAN RESOURCES. THE IRRIGATION DEPARTMENT IS A STATE GOV ERNMENT UNDERTAKING AND WORKS IN PUBLIC INTEREST. THE DELAY HAS BEEN CAUSED BY THESE UNFORTUNATE CIRCUMSTANCES AND IT WILL BE TRAVESTY OF JUSTICE T HAT IT IS SADDLED WITH HUGE TDS LIABILITIES WHICH ARE OTHERWISE NOT LEVIABLE. T HE SAID M/S HARISH CHANDRA & CO. AND ITS TRANSFEREE ARE ALREADY ASSESS ED TO TAX AND HAVE OFFERED THIS AMOUNT OF COMPENSATION IN THEIR RETURN OF INCOME AND PAID DUE TAXES IN THIS BEHALF. 9 3.3. RELIANCE IS PLACED ON HONBLE SUPREME COURT JU DGMENT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LTD. VS. CIT 293 I TR 226 (SC), WHICH HAS HELD THAT IF THE PAYEE IS ASSESSED TO TAX AND H AS PAID ALL THE DUE TAXES, THE PAYER AGAIN CANNOT BE HELD TO BE AN ASSESSEE IN DE FAULT. FURTHER RELIANCE IS PLACED ON HONBLE SUPREME COURT JUDGMENT IN THE CAS E OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI & ORS. 167 ITR 471(SC) FOR THE PROPOSITION THAT WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIO NS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED. 3.4. IT IS PLEADED THAT DELAY IS NOT DELIBERATE. NO GOVT. DEPARTMENT WILL ABDICATE THE DUTY OF FILING APPEAL IN TIME UNLESS IT IS CAUSED BY SOME CIRCUMSTANCES WHICH IN THIS CASE ARE DIVISION OF S TATE; THE CONSEQUENT DELAYED MOVEMENT OF RECORD; ALLOCATION OF ACCOUNTA BILITIES TO THE NEW STATE PERSONNEL AND STREAMLINING THE RECORD. IF THE CONDO NATION PETITION IS NOT ALLOWED THEN THE PRESENT INCUMBENT MAY BE HELD LIA BLE FOR THE DEFAULT, IF ANY, COMMITTED BY SOME OTHER INCUMBENT. THIS WILL L EAD TO A VERY ANOMALOUS SITUATION OF RECOVERY WHEN THE PAYEE STAN DS ASSESSED UNDER INCOME TAX. IN THE INTEREST OF JUSTICE THE CONDONAT ION PETITION MAY BE ALLOWED. 4. LD. DR IS HEARD WHO CONTENDS THAT THE GOVT. DEPA RTMENTS ARE EXPECTED TO WORK DILIGENTLY. THE DELAY OF ABOUT FIVE YEARS I S NOT ON ACCOUNT OF ANY SUFFICIENT CAUSE BUT CALLUS ATTITUDE OF THE PETITIO NER. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE FACT OF REORGANIZ ATION OF STATE OF U.P. IS PUBLIC KNOWLEDGE. IT HAS NOT BEEN CONTROVERTED THAT THE ORIGINAL CONTRACT WAS 10 EXECUTED BY THE IRRIGATION DEPARTMENT, KHARA PROJEC T MUCH EARLIER IN UNDIVIDED U.P. WHILE JUDGING THE CIRCUMSTANCES OF D ELAY, THE LAW OF LIMITATION AND SUFFICIENT CAUSE FOR DELAY IN FILIN G THE APPEAL, THE CONSIDERATION OF SUFFICIENT CAUSE DEPENDS UPON THE FACTS OF EACH CASE. THE ASSESSEE IS A GOVT. DEPARTMENT. THE EXECUTIVE ENGIN EER INCUMBENT IN SUCH PROJECTS CHANGE FROM TIME TO TIME. THE REORGANIZATI ON OF STATE DOES INVOLVE MASSIVE MOVEMENT OF RECORD, ASSIGNMENT OF DUTIES, D EPLOYMENT OF PERSONNEL AND TAKING STEPS FOR CONTROL OVER ALL ADMINISTRATIO N. WE FIND MERIT IN THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE A ND RELYING ON THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF MST. KATIJI & ORS. (SUPRA), WE ARE OF THE VIEW THAT ASSESSEE INCUMBENT WAS PREVENTED BY S UFFICIENT CAUSE IN FILING THE APPEAL IN TIME. ACCORDINGLY, WE CONDONE THE DEL AY IN FILING OF THE APPEAL. 5.1. COMING TO THE MERITS OF THE ISSUE, IT HAS BEEN PLEADED BY THE LD. COUNSEL THAT M/S HARISH CHANDRA & CO. HAS ALREADY BEEN ASSESSED TO TAX. ACCORDING TO ASSESSEE PROCUREMENT OF THESE PAPERS I S BEYOND THE CAPACITY OF THE ASSESSEE EXECUTIVE ENGINEER TO PROCURE AS HE DOES NOT HAVE ANY CONTROL OR AUTHORITY TO CALL FOR THIS RECORD FROM THE SAID CONCERN BECAUSE OF THE DISPUTES AND FROM INCOME TAX OFFICE. UNDER THESE CI RCUMSTANCES, IT WILL BE DESIRABLE THAT THE CONCERNED ASSESSING OFFICER GOE S THROUGH THE ASSESSMENT RECORD OF M/S HARISH CHANDRA & CO. AND THE MANNER I N WHICH THE INTEREST INCOME PAID HAS BEEN ASSESSED. IT IS EARNESTLY PLEA DED THAT THE MATER MAYBE SET ASIDE, RESTORED BACK TO THE FILE OF ASSESSING O FFICER TO DECIDE THE ISSUE OF LIABILITY IN THE LIGHT OF ASSESSMENT RECORD OF M/S HARISH CHANDRA & CO., TO BE OBTAINED FROM THE INCOME-TAX OFFICE ROHTAK AND H ONBLE SUPREME COURT JUDGMENT IN THE CASE OF HINDUSTAN COCA COLA BEVERA GE (P) LTD. (SUPRA). 11 6. LD. D.R. IS HEARD. 7. IN OUR CONSIDERED OPINION, THE FACTS OF THE ASSE SSEES CASE GIVE RISE TO A SITUATION WHERE THE PAYEE IS ALREADY ASSESSED TO TAX AND AS PER INCOME TAX RECORD NO TAXES ARE PENDING AGAINST HIM WHICH IS A MATTER OF VERIFICATION. BESIDES, HONBLE SUPREME COURT IN THE CASE OF HINDU STAN COCA COLA BEVERAGE (P) LTD. (SUPRA) HAS TAKEN A VIEW THAT WHE RE NO DUES ARE PENDING AGAINST PAYEE, TDS PAYER I.E. ASSESSEE CANNOT BE H ELD IN DEFAULT. CONSEQUENTLY, WE ARE OF THE VIEW THAT THE CASE NEED S PROPER VERIFICATION ABOUT THE TAX LIABILITY OF THE PAYEE, CONSIDERATION OF CBDT CIRCULAR NO. 275/201/95-IT(B) DATED 29-1-1997, AND HONBLE SUPRE ME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LTD. (SUPRA). I N THE INTEREST OF JUSTICE IT IS DESIRABLE THAT BOTH THE APPEALS ARE SET ASIDE, R ESTORED BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN THE LIGHT OF ABOVE OBSERVATIONS AND IN ACCORDANCE WITH LAW, AFTER AFF ORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ORDE R ACCORDINGLY. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 24-08-2012. SD/- SD/- ( SHAMIM YAHYA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED: 24-08-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 12