ACIT, New Delhi V. M/s. Samsung India Electronics (P) Ltd., Gurgaon

ITA 4853/DEL/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6967 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 12-01-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL
• Keywords: Period of limitation; Competent authority
• Section: 201(1); 147; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SRI G.D. AGARWAL, HONBLE VICE PRESIDENT SRI C.M.GARG, JUDICIAL MEMBER ITA NO. 4853/DEL./2011 : ASSTT. YEAR : 2001-02 ACIT 51(1), NEW DELHI VS SAMSUNG INDIA ELECTRONICS (P) LTD., GOLF COURSE ROAD, SECTOR-43, GURGAON (APPELLANT) (RESPONDENT) PAN NO. AAACS5123K ASSESSEE BY : SH. RUPESH JA IN, CA, MS. BHAVITA KUMAR, ADV. REVENUE BY : SH. ANIMA BAR NWAL, SR. DR DATE OF HEARING : 12.01.2016 DATE OF PRONOUNCEMEN T :19 .02.2016 ORDER PER C.M.GARG, J.M. THIS APPEAL BY THE REVENUE HAS BEEN FILED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) XXX NEW DELHI DATED 26.08.2011 IN FIRST APPEAL NO. 1316/11-12 FOR AY 2002-03. 2. THE SOLE GROUNDS RAISED BY THE REVENUE READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN (A) DELETING THE DEMAND RAISED U/S 201(1) ON ACCOUNT OF NON- DEDUCTION OF TAX AT SOURCE U/S 194H ON NON-CASH PAY MENT TO DEALERS TREATING THE SAME AS INCENTIVES AND DISCOUN TS. (B) IN HOLDING THAT THE INITIATION OF PROCEEDINGS U/S 2 01 OF THE IT ACT AGAINST THE ASSESSEE IN RESPECT OF FY 2001-0 2 WAS BARRED BY ITA NO. 4853/DEL/2011 SAMSUNG INDIA ELECTRONICS (P) LTD. 2 LIMITATION HAVING BEEN INITIATED BEYOND A REASONABL E PERIOD OF TIME OF FOUR YEARS. 3. WE HAVE HEARD ARGUMENT OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFO RE US, INTER ALIA, IMPUGNED ASSESSMENT ORDER, FIRST APPELLATE ORDER PA PER BOOK OF THE ASSESSEE SEPARATE OVER 124 PAGES AND COPIES OF THE DECISIONS/ ORDERS RELIED BY THE LD AR. THE LD. DEPARTMENTAL REPRESENT ATIVE (DR) SUPPORTING ACTION OF THE AO SUBMITTED THAT THE ASSE SSEE HAS NOT INVOKED THE PROVISION OF SECTION 194H OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) ON THE EXPENDITURE OF RS. 2,11, 01,212/- ON ACCOUNT OF THE COST OF 75 VEHICLES PROVIDED TO THE DEALERS AS INCENTIVE REWARDS THEN THE ASSESSEE WAS RIGHTLY HEL D AS A ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX PAYABLE TO THE DEPAR TMENT. THE LD DR STRONGLY CONTENDED THAT THE TOTAL AMOUNT OF TDS LIA BILITY AND INTEREST THEREON U/S 201(1) AND 201(1A) OF THE ACT WAS RIGHTLY DETERMINED BY THE AO IN THIS REGARD. THE LD. DR CHA LLENGING THE RELIEF GRANTED TO THE ASSESSEE BY THE FIRST APPELLA TE AUTHORITY VEHEMENTLY CONTENDED THAT THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE WITHOUT ANY REASONABLE BASIS MERELY ON THE SURMISES AND CONJECTURES. THEREFORE, IMPUGNED ORDER MAY BE SET A SIDE BY RESTORING THAT OF THE AO. 4. REPLYING TO THE ABOVE THE LD. AR PLACING RELIAN CE ON THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. NHK JAPAN BROADCASTING CORPORATION LTD. 305 ITR 137(DEL HI) AND DECISION IN THE CASE OF CIT VS. HUTCHINSON ESSAR TE LECOM LTD. (2010) 323 ITR 230 (DELHI) SUBMITTED THAT WHEN PROCEEDINGS U/S 201(1)/201(1A) OF THE ACT WAS INITIATED AFTER 4 YEA RS FROM THE END OF RELEVANT FY THEN THE SAME ARE BARRED BY LIMITATI ON. THE LD. AR STRONGLY SUPPORTING THE CONCLUSION OF THE CIT(A) SU BMITTED THAT THE REVENUE AUTHORITIES HAVE NO POWER TO PASS AN ORDER BEYOND PRESCRIBED LIMIT AND IN THE PRESENT CASE ORDER HAS BEEN PASSED BEYOND 4 YEARS AND IF THE AO (TDS) IS NOT TAKING AN Y ACTION WITHIN A REASONABLE TIME OF 4 YEARS FROM THE END OF RELEVA NT FINANCIAL YEAR THEN HE SHOULD NOT OPEN SUCH OLD CASES, WHERE THE ASSESSEE - ITA NO. 4853/DEL/2011 SAMSUNG INDIA ELECTRONICS (P) LTD. 3 COMPANY CANNOT GET RECORDS/ INFORMATION FROM THE DEDUCTEE/COMPANIES DUE TO NON-AVAILIBILITY OF SUCH OLD RECORD. 5. THE LD. DR ALSO PLACED REJOINDER TO THE ABOVE NOTED CONTENTIONS OF THE LD. AR ON BEHALF OF THE REVENUE AND SHE SUBM ITTED THAT NOTICE WAS ISSUED TO THE ASSESSEE ON 9.2.2011 FOR AY 2002- 03 AND NO LIMITATION HAS BEEN FIXED BY THE ACT FOR INITIATION OF PROCEEDINGS U/S 201(1)/201(1A) OF THE ACT. THE LD. DR POINTED OUT THAT IT IS BY THE COURTS WHO HAVE LAID DOWN 4 YEARS AND 6 YEARS LIMIT ATION WITHOUT ANY BASIS, THEREFORE, THE CIT(A) WAS NOT JUSTIFIED IN GRANTING RELIEF FOR THE ASSESSEE. THE LD DR ALSO POINTED OUT AT THE TIME OF INITIATION OF PROCEEDINGS AND ISSUANCE OF NOTICE TO THE ASSESS EE ON 9.2.2011, THERE WAS SPECIFIC INFORMATION WITH THE AO FOR THIS VALID ACTION THEREFORE ORDER OF THE CIT(A) ALSO NOT SUSTAINABLE ON THIS COUNT. 6. ON CAREFUL CONSIDERATION ON RIVAL SUBMISSIONS AT THE VERY OUTSET, FROM THE OPERATIVE PART OF THE IMPUGNED ORDER OF TH E FIRST APPELLATE AUTHORITY. WE OBSERVE THAT THE CIT(A) GRANTED RELIE F TO THE ASSESSEE ON MERITS WITH FOLLOWING CONCLUSION AND FINDING :- THE ISSUE NO. 1 IS REOPENING OF CASE U/S 201(1)/ 2 01(1A) IS DECIDED BY ITAT (SB), PUNE BENCH IN THE CASE OF MAHINDRA & MAHINDRA VS. DCIT(2009) 313 ITR(AT) 263. AS EARLIER, THERE WAS N O TIME LIMIT U/S 153/201(1)/201(1A), THE VARIOUS COURTS HAD EXPR ESSED THE MAXIMUM LIMIT SHOULD BE 4 YEARS FOR REOPENING A CAS E, COMPARING THE CASE WITH THAT OF REOPENING A CASE U/S 148 OF T HE I.T.ACT. AGAIN IN THIS CASE THERE IS NO PROCEEDINGS PENDING AS ON 01-4/2007 IN THIS CASE. THE NATIONAL DISTRIBUTORS, REDISTRIBUTORS, DE ALERS IN VARIOUS PLACES HAD FILED THEIR I.T. RETURNS AND PAID TAXES FOR A.Y.2002-03, HENCE CREATING A DEMAND ON APPELLANT COMPANY IN 201 0-11 F.Y. UNDER TDS PROVISIONS THE DEPARTMENT CANNOT COLLECT TAX AGAIN WHICH MIGHT HAVE BEEN PAID BY DEALERS EARLIER. AS THE SALES FROM APPELLANT COMPANY TO NDS, RDS DEA LER ARE FROM PRINCIPAL TO PRINCIPAL ACCORDING TO RECENT DECISION OF DHC IN THE CASE OF JAYA DRINKS(P) LTD., THE SECTION 144-H ON T DS ON BROKERAGE/COMMISSION PAID TO AGENT FOR SERVICES ON SELLING/BUYING ITA NO. 4853/DEL/2011 SAMSUNG INDIA ELECTRONICS (P) LTD. 4 GOODS FOR PRINCIPAL COMPANY IS NOT APPLICABLE HERE. TDS IS LIKE OTHER ADVANCE TAX PROVISIONS, FOR COLLECTION OF TAX FROM ASSESSES IN ADVANCE. IF THE AO(TDS) IS NOT TAKING ACTION WITHIN A REASONABLE TIME LIMIT OF FOUR YEARS, FROM THE END OF FY THEN T HE HE SHOULD NOT REOPEN SUCH OLD CASES, WHERE ASSESSEE COMPANY CANNO T GET RECORDS/INFORMATION FROM DEDUCTEE COMPANIES, DUE TO NON- AVAILABILITY OF SUCH OLD RECORDS. THE DEPARTMENT SHOULD INCREASE COMPUTERIZATION PROC ESS OF TDS PROVISIONS SO THAT AO (TDS) CAN VERIFY FROM PAN OF DEDUCTEE COMPANIES, WHETHER SUCH PAYMENTS AND CORRESPONDING TDS ARE SHOWN IN THEIR RETURN OR NOT. HENCE THE ASSESSMENT ORDER OF AO IS ANNULLED. 7. IN THE PRESENT CASE, UNDISPUTEDLY AND ADMITTED LY THE ASSESSING OFFICER INITIATED PROCEEDINGS BY WAY OF ISSUING A L ETTER / NOTICE DATED 09.02.2011 AND THEREBY ASKING THE ASSESSEE TO SHOW CAUSE AS TO WHY IT SHOULD NOT BE TREATED AS AN ASSESSEE IN DEFAULT WITHIN THE MEANING OF SECTION 201(1) OF THE ACT FOR AY 2002-03. 8. AS PER PREPOSITION LAID DOWN BY HONBLE JURIS DICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS. NHK JAPAN BRO ADCASTING CORPORATION (SUPRA) THE DATE OF KNOWLEDGE IS NOT RE LEVANT FOR THE PURPOSE OF EXERCISING JURISDICTION U/S 201(1)(1A) O F THE ACT. THEIR LORDSHIP FURTHER HELD THAT THE TIME LIMIT OF 4 YEAR S PRESCRIBED BY THE TRIBUNAL CALLED FOR NO INTERFERENCE AND THE ACTION WAS TO BE INITIATED BY THE COMPETENT AUTHORITY UNDER THE ACT, WHERE NO LIMITATION WAS PRESCRIBED, WITHIN THE PERIOD OF 4 YEARS. THEIR LOR DSHIP EXPLICITLY HOLD THAT THE ACCEPTANCE OF LIABILITY BY THE ASSESS EE WOULD NOT BY ITSELF EXTENT THE PERIOD OF LIMITATION NOR IT WOULD EXTENT THE REASONABLE TIME THAT WAS POSTULATED BY THE SCHEME O F THE ACT AND MERELY BECAUSE THE ASSESSEE HAD ADMITTED ITS LIABIL ITY AND AGREED TO PAY TAX VOLUNTARILY, THE ASSESSEE COULD NOT BE PUT IN A SITUATION WORSE THEN IF IT HAD CONTESTED ITS LIABILITY. THIS PREPOSITION WAS AGAIN REITERATED BY HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. HUTCHINSON ESSAR TELECOM LTD. (SUPRA) WHEREIN R EFERRING TO ITS ITA NO. 4853/DEL/2011 SAMSUNG INDIA ELECTRONICS (P) LTD. 5 EARLIER DECISION IN THE CASE OF NHK JAPAN(SUPRA) TH EIR LORDSHIP HELD AS FOLLOWS :- 4. WE HAVE EXAMINED THE IMPUGNED DECISION AS WELL AS THE DECISION OF THIS COURT IN THE CASE OF NHK JAPAN BROADCASTING CORPORATION ( SUPRA), WHEREIN IT HAS BEEN CLEARLY INDICATED THAT ALTHOUGH NO SPECIFIC PERIOD OF LIMITATION HAS BEEN PRESCRIBED OR INDICATED UNDER SECTION 201 AND 201(A ), A REASONABLE TIME LIMIT HAS TO BE ADOPTED. IN THAT CONTEXT, IT EXAMINED THE PROVISIONS OF SECTION 153(1)(A) AND CAME TO THE CONCLUSION :- ' 18. IN SO FAR AS THE INCOME-TAX ACT IS CONCERNED, OUR ATTENTION HAS BEEN DRAWN TO SECTION 153(1)(A) THEREOF WHICH PRESCRIBES THE TIME LIMIT FOR COMPLE TING THE ASSESEMENT, WHICH IS TWO YEAR FROM THE END OF THE A SSESSMENT YEAR IN WHICH THE INCOME WAS FIRST ASSESSABLE. IT IS WELL KNOWN THAT THE ASSESSMENT YEAR FOLLOWS THE PREVIOUS YEAR AND, THEREFORE, THE TIME LIMIT WOULD BE THREE YEARS FROM THE END OF THE FINANCIAL YEARS. THIS SEEMS TO BE A REASONABLE PERIOD AS ACCEPTED UNDER SECTION 153 OF THE ACT, THOUGH FOR COMPLETION OF ASSESSMENT PR OCEEDINGS. THE PROVISIONS OF REASSESSMENT ARE UNDER SECTIONS 147 AND 148 OF THE ACT AND THEY ARE ON A COMPLETELY DIFFERENT FOOTING AND, THEREFORE, D O NOT MERIT CONSIDERATION FOR THE PURPOSE OF THIS CASE. 19. EVEN THOUGH THE PERIOD OF THREE YEARS WOULD BE A REASONABLE PERIOD AS PRESCRIBED BY SECTION 153 OF THE ACT FOR COMPLETION OF PROCEEDINGS, WE HAVE BEEN TOLD THAT THE INCOME-TAX APPELLATE TRIBUNAL HAS, IN A SERIES OF DECISIONS, SOME OF WHICH HAVE BEEN MENTIONED IN THE ORDER WHICH IS UND ER CHALLENGE BEFORE US, TAKEN THE VIEW THAT FOUR YEARS WOULD BE A REASONABLE PERI OD OF TIME FOR INITIATING ACTION, IN A CASE WHERE NO LIMITATION IS PRESCRIBED. 20. THE RATIONALE FOR THIS SEEMS TO BE QUITE CLEAR- IF THERE IS A TIME LIMIT FOR COMPLETING THE ASSESSMENT, THEN THE TIME LIMIT FOR INITIATING THE PROCEEDINGS MUCH BE THE SAME, IF NOT LESS. NEVERTHELESS, THE TRIBUNA L HAS GIVEN A GREATER PERIOD FOR COMMENCEMENT OR INITIATION OF PROCEEDINGS. 21. WE ARE NOT INCLINED TO DISTURB THE TIME LIMIT O F FOUR YEARS PRESCRIBED BY THE TRIBUNAL AND ARE OF THE VIEW THAT IN TERMS OF THE D ECISION OF THE SUPREME COURT IN BHATINDA DISTRICT CO-OP. MILK PRODUCERS UNION LTD. [2007] 9RC 637; 11SCC 363 ACTION MUST BE INITIATED BY THE COMPETENT AUTHORITY UNDER THE INCOME-TAX ACT , WHERE NO LIMITATION IS PRESCRIBED AS IN SECTION 201 OF THE ACT WITHIN THAT PERIOD OF FOUR YEARS.' (UNDERLINING ADDED) 5. FROM THE ABOVE, IT IS CLEAR THAT THE PROCEEDINGS UNDER SECTION 201 / 201(A) OF THE INCOME TAX ACT, 1961 CAN BE INITIATED ONLY WITH IN THREE YEARS FROM THE END OF ITA NO. 4853/DEL/2011 SAMSUNG INDIA ELECTRONICS (P) LTD. 6 THE ASSESSMENT YEAR OR WITHIN FOUR YEARS FROM THE E ND OF THE RELEVANT FINANCIAL YEAR. 6. IN THE PRESENT CASE, WE ARE CONCERNED WITH THE F INANCIAL YEAR 2001-02 OR THE ASSESSMENT YEAR 2002-03. THE PROCEEDINGS UNDER SECTIONS 201 / 201(A) WERE ADMITTEDLY INITIATED BEYOND THE PERIOD OF THREE YEA RS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AS ALSO BEYOND THE PERIOD OF FOUR Y EARS FROM THE END OF THE FINANCIAL YEAR. CONSEQUENTLY, THE TRIBUNAL HAS CORR ECTLY CONCLUDED THAT THE PROCEEDINGS WERE BEYOND TIME. NO SUBSTANTIAL QUESTI ON OF LAW ARISES FOR OUR CONSIDERATION. THE APPEALS ARE DISMISSED. 9. IN VIEW OF ABOVE , WE ARE INCLINED TO HOLD THAT THE PRESENT CASE OF THE ASSESSEE IS ALSO CONCERNED WITH THE FY 2001-02 PERT AINING TO ASSESSMENT YEAR 2002-03 WHEREIN NOTICE FOR INITIATION OF PROCEEDING S U/S 201(1) OF THE ACT WAS ISSUED ON 9.2.2011 WHICH WERE ADMITTEDLY INITIATED BEYOND EIGHT YEARS AND 10 MONTHS FROM THE END OF FY 2001-02 AND OBVIOUSLY MUC H BEYOND THE PERIOD OF 3 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR AN D ALSO BEYOND THE PERIOD OF 4 YEARS FROM THE END OF RELEVANT FINANCIAL YEAR 200 1-02. IN THIS SITUATION, WE ARE INCLINED TO HOLD THAT THE CONCLUSION OF THE CIT (A) ALSO GETS STRONG SUPPORT FROM THE DICTA LAID DOWN BY THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT VS. HUTCHINSON ESSAR TELECOM LTD. (SUPRA) A ND IT WAS RIGHTLY CONCLUDED BY THE FIRST APPELLATE AUTHORITY THAT IMPUGNED PROCEEDINGS WERE BEYOND PRESCRIBED TIME LIMITATION AND THUS THE SAME DESERVE TO BE ANNULLED. THEREFORE, WE ARE UNA BLE TO SEE ANY AMBIGUITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER. CONSEQUENTLY, GROUND NO. 1 (B) OF T HE REVENUE BEING DEVOID OF MERITS IS DISMISSED. 10. SINCE BY THE EARLIER PART OF THIS ORDER, WE HA VE DISMISSED GROUND OF THE REVENUE CHALLENGING THE CONCLUSION OF THE CIT(A), THEREFORE, GROUND NO. 1(A) OF THE REVENUE ON MERITS BECOMES ITA NO. 4853/DEL/2011 SAMSUNG INDIA ELECTRONICS (P) LTD. 7 ACADEMIC AND WE DISMISS THE SAME WITHOUT ANY FURTHE R DELIBERATIONS HAVING BECOME INFRUCTUOUS. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE COURT ON 19/02/2016. SD/- SD/- ( G.D.AGARWAL ) (C.M.GARG) VICE PRESIDENT J UDICIAL MEMBER DATED: 19 / 02/2016 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) ITA NO. 4853/DEL/2011 SAMSUNG INDIA ELECTRONICS (P) LTD. 8 DATE INITIAL 1. DRAFT DICTATED ON 13.02.2016 2. DRAFT PLACED BEFORE AUTHOR 13.02.2016 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON 19.02.2016 PS 7. FILE SENT TO THE BENCH CLERK 19.02.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.