Director of state lotteries, Ernakulam V. ITO, Trivandrum

ITA 411/COCH/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64930 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-10-2012
• Assessment Year: misc
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN GEORGE VARGHESE
• Assessee Lawyers: S SUDEESH KUMAR
• Keywords: Principle of natural justice

Judgement Text

1 ITA NO.410 & 411/COCH/2011 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 410 & 411/COCH/2011 (ASSESSMENT YEARS 1985-86 TO 1988-89) DIRECTOR OF STATE LOTTERIES VS ITO, WD.1 GOVERNMENT OF KERALA THIRUVANANTHAPURAM VIKAS BHAVAN, THIRUVANANTHAPURAM PAN : TVDDO0241D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S SUDEESH KUMAR RESPONDENT BY : SMT. SUSAN GEORGE VARGHESE DATE OF HEARING : 17-10-2012 DATE OF PRONOUNCEMENT : 16-11-2012 O R D E R PER N.R.S. GANESAN (JM) THESE APPEALS OF THE TAXPAYER ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX(A)-III, KOCHI DATED 31-0 1-2011 CONFIRMING THE ORDERS OF THE ASSESSING OFFICER TREATING THE TAXPAY ER AS TAXPAYER IN DEFAULT AND LEVYING INTEREST U/S 201(1A) OF THE ACT. 2. SHRI S SUDEESH KUMAR, THE LD.GOVERNMENT PLEADER FOR THE TAXPAYER SUBMITTED THAT THE ASSESSING AUTHORITY LEVIED TAX A ND INTEREST IN RESPECT OF PRIZES GIVEN TO THE SUCCESSFUL WINNERS OF THE LOTTE RY IN KIND. ACCORDING TO 2 ITA NO.410 & 411/COCH/2011 THE LD.GOVERNMENT PLEADER IN RESPECT OF CASH PRIZES TDS HAS BEEN MADE AND IT WAS REMITTED TO THE CENTRAL GOVERNMENT ACCOUNT. HOWEVER, IN RESPECT OF PRIZES WHICH WERE DELIVERED IN KIND, THE LOTTERY DE PARTMENT HAS NOT DEDUCTED ANY TAX SINCE THE LAW WAS MADE CLEAR ONLY WITH EFFECT FROM 1997. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THER E IS NO LIABILITY ON THE PART OF THE TAXPAYER FOR DEDUCTION OF TAX. THE LD. GOVERNMENT PLEADER SUBMITTED THAT ONLY BY FINANCE ACT, 1997 THE TAXPAY ER IS EXPECTED TO DEDUCT TAX IN RESPECT OF PRIZES WHICH WERE GIVEN IN KIND ALSO. THEREFORE, THERE WAS NO OBLIGATION FOR DEDUCTION OF TAX IN RES PECT OF ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, THERE CANNOT BE AN ORDER TREATING THE TAXPAYER AS TAXPAYER IN DEFAULT U/S 201 OF THE ACT. THE LD.GOVERNMENT PLEADER FURTHER SUBMITTED THAT THE TAXPAYER CANNOT BE TERMED AS PERSON RESPONSIBLE FOR DEDUCTING TAX AT SOURCE IN RESPECT OF PRIZES IN KIND. THE LD.GOVERNMENT PLEADER FURTHER SUBMITTED THAT THE TA XPAYER HAD NO OCCASION TO EXPLAIN ALL THESE DETAILS BEFORE THE AS SESSING AUTHORITY. ACCORDING TO THE LD.GOVERNMENT PLEADER, PROCEEDINGS U/S 201, 201A ARE QUASI JUDICIAL IN NATURE, THEREFORE, THE ASSESSING A UTHORITY IS EXPECTED TO GIVE SUFFICIENT OPPORTUNITY TO THE TAXPAYER TO EXPL AIN ITS POSITION. ACCORDING TO THE LD.GOVERNMENT PLEADER, THERE WAS A GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 3. ON THE CONTRARY, SMT. SUSAN GEORGE VARGHESE, THE LD.DR SUBMITTED THAT THE TAXPAYER IS BOUND TO DEDUCT TAX U/S 197 OF THE ACT EVEN IN RESPECT OF PRIZES GIVEN IN KIND. ACCORDING TO THE LD.DR, T HE PRIZES DISTRIBUTED IN LOTTERY IS INCOME OF THE RECIPIENT, THEREFORE, THE PERSONS RESPONSIBLE FOR 3 ITA NO.410 & 411/COCH/2011 GIVING THE PRIZES EITHER IN CASH OR IN KIND HAS TO DEDUCT TAX FROM THE YEAR 1997. THE LOTTERY DEPARTMENT BEING A WING OF THE S TATE GOVERNMENT CANNOT NOW CLAIM THAT THEY ARE IGNORANT OF THE LAW. ACCORDING TO THE LD.DR THE ASSESSING AUTHORITY HAS RIGHTLY TREATED THE TAX PAYER AS TAXPAYER IN DEFAULT AND LEVIED INTEREST ALSO. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE MATERIAL AVAILABLE ON RECORD. THE MAIN GRIEVANCE O F THE TAXPAYER IS THAT AFTER ISSUING SHOW CAUSE NOTICE NO OPPORTUNITY OF P ERSONAL HEARING WAS GIVEN TO THE TAXPAYER. THE ASSESSING AUTHORITY HAS PASSED AN ORDER WITHOUT HEARING THE TAXPAYER. AS RIGHTLY SUBMITTED BY THE LD.GOVERNMENT PLEADER, THE PROCEEDINGS U/S 201 AND 201(1A) ARE QUASI JUDICI AL IN NATURE. THEREFORE, THE ASSESSING OFFICER IS BOUND TO GIVE P ERSONAL HEARING ON THE BASIS OF THE DETAILS FURNISHED BY THE TAXPAYER. TH E CLAIM OF THE TAXPAYER APPEARS TO BE THAT THEY WERE NOT BOUND TO DEDUCT TA X BEFORE 1997. BUT THIS FACT HAS TO BE EXAMINED ON THE BASIS OF THE ST ATUTORY PROVISION WHICH WAS IN EXISTENCE. THE TAXPAYER BEING THE LIMB OF T HE STATE GOVERNMENT CANNOT SAY THAT THEY ARE NOT AWARE OF THE PROVISION S OF INCOME-TAX ACT. MOREOVER, EQUITY HAS NO ROLE TO PLAY IN THE INCOME- TAX PROCEEDINGS. IRRESPECTIVE OF THE HARDSHIP CAUSED TO THE TAXPAYER , THE PROVISIONS OF THE INCOME-TAX ACT HAS TO BE APPLIED AS IT WAS IN EXIST ENCE AT THE RELEVANT POINT OF TIME. IT DOES NOT MEAN THAT NO OPPORTUNITY NEED S TO BE GIVEN TO THE TAXPAYER. SINCE SUCH AN OPPORTUNITY WAS NOT GIVEN TO THE TAXPAYER, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSE SSING OFFICER HAS TO GIVE AN OPPORTUNITY OF PERSONAL HEARING BEFORE PASSING A NY ORDER. THEREFORE, 4 ITA NO.410 & 411/COCH/2011 THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN VIOLATED IN NOT GIVING AN OPPORTUN ITY OF PERSONAL HEARING. ACCORDINGLY, THE ORDERS OF LOWER AUTHORITIES ARE SE T ASIDE AND THE ISSUE OF DEDUCTION OF TAX IS REMITTED BACK TO THE FILE OF TH E ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE IN THE LIGHT OF THE EXPLANATION THAT MAY BE FURNISHED BY THE TAXPAYER AND THEREAFTE R DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPOR TUNITY OF HEARING. 5. WITH THE ABOVE OBSERVATIONS, BOTH THE APPEALS OF THE TAXPAYER ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH NOVEMBER, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 16 TH NOVEMBER, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH