State Bank Of India, V. Addl. CIT,

ITA 58/PAT/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1025 (ITAT-PATNA)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 12-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARCHANA PRASAD JR S C
• Assessee Lawyers: D V PATHY
• Keywords: Rectification of order; Competent authority
• Section: 133(6); 12; 154; 15

Judgement Text

, PATNA IN THE INCOME TAX APPELLATE TRIBUNAL , PATNA BENCH, PATNA . . . , , BEFORE SHRI A.D. JAIN (JM) AND SHRI SANJAY ARORA (AM) ./ I.T.A. NO S . 58 & 59 /PAT/201 2 ( / ASSESSMENT YEAR: 200 4 - 0 5 ) STATE BANK OF INDIA, RAJ BHAWAN BRANCH, PATNA / VS. A DDL. CIT, RANGE - 2, PATNA ./ ./ PAN/GIR NO. ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI D. V. PATHY, ADV. / RESPONDENT BY : SMT. ARCHANA PRASAD, J R. S.C. / DATE OF HEARING : 23.04. 2015 / DATE OF PRONOUNCEMENT : 28 .05.2015 / O R D E R PER SANJAY ARORA , A. M.: THIS IS A SET OF TWO APPEALS ARISING OUT OF THE SEPARATE ORDERS U/S. 264 R/W SECTION 154 DATED 15.03.2012, WHICH IN TURN STAND PASSED IN PURSUANCE TO ORDER U/S.201 (DATED 06.07.2004) AND 271 C (DATED 31.03.2005) OF THE INCOME TAX ACT, 1961 (THE A CT HEREINAFTER) FOR THE FINANCIAL YEAR ( F .Y.) 200 3 - 0 4 , I.E., THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR ( A.Y. ) 200 4 - 0 5 . 2. AT THE VERY OUTSET, IT WAS OBSERVED BY THE BENCH THAT WHILE THE PARENT ORDERS, I.E., U/SS.201 AND 271C, ARE FOR FINANCIAL YEAR 2003 - 04, IMPLYING ASSESSMENT YEAR 2004 - 05, THE 2 ITA NO. 58 & 59 /PAT/2012 (A.Y. 200 4 - 0 5 ) STATE BANK O F INDIA VS. ACIT IMPUGNED ORDERS U/S. 264 R/W S. 154 ARE FOR FINANCIAL YEAR 2002 - 03 (I.E., A.Y. 2003 - 04). THE LD. COUNSEL, ON THIS BEING POINTED OUT, AFTER VERIFICATION OF HIS RECORD, CONFIRMED THE IMPUGNED APPEALS TO INVOLVE ONLY ONE YEAR, I.E., FY 2003 - 04, ALSO ADDUCING THE ORDER U/S. 264 (COPY ON RECORD) TOWARD THE SAME, SO THAT THERE HAD BEEN A TYPOGRAPHICAL ERROR IN THE ORDERS U/S. 264/154, LEADING TO A CORRESPONDING MISTAKE IN THE RELEVANT FORM/S 36 AS WELL . THE HEARING WAS PROCEEDED WITH ON THIS BASIS, ADOPTING HIS STATEMENT MADE AT BAR. 3 . IT SHALL BE RELEVANT TO RECOUNT THE BACKGROUND FACTS OF THE CASE , AS GATHERED FROM THE MATERIAL ON RECORD, AND WHICH WOULD ALSO ENABLE US TO DELINEATE THE ISSUE/S ARISING IN APPEAL. IT WAS, ON THE BASIS OF THE INFORMATION CALLED FOR U/S. 133(6) OF THE ACT , FOUND BY THE ASSESSING OFFICER (A.O.) THAT THE ASSESSEE HAD SHORT DEDUCTED TAX AT SOURCE (TDS) ON INTEREST (OTHER THAN INTEREST ON SECURITIES) U/S.194A OF THE ACT, AT RS.1,27,49,66 8/ - , HOLDING THE ASSESSEE - BANK AS IN DEFAULT FOR THE SAID AMOUNT. THE ASSESSEE MOVED AN APPLICATION U/S. 264 OF THE ACT WITH COMMISSIONER OF INCOME TAX, PATNA ( CI T FOR SHORT) , SEEKING MODIFICATION OF THE SAID ORDER IN - AS - MUCH AS THE A.O. HAD NOT PROVIDED THE ASSESSEE AN OPPORTUNITY TO CURE THE DEFECTS IN THE FORM S 15H FILED WITH IT, I.E., THE DECLARATION BY THE PAYEE (OF INTEREST) TO THE PAYER TO THE E F FE CT THAT NO TAX AT SOURCE BE DEDUCTED ON THE INCOME BEING CREDITED/PAID IN VIEW OF NO TAX LIABILITY ARI SING ON HIS INCOME FOR THE RELEVANT YEAR. ACCORDINGLY, IT HAD NOT BEEN ALLOWED CREDIT IN RESPECT THEREOF, I.E., SUCH DEFECTIVE F ORM S 1 5 H, LIABLE , OR REMAINING , TO BE CURED, INFLATING THE AMOUNT IN DEFAULT TO THAT EXTENT. THE LD. CIT ALLOWED THE ASSESSEE AN OPPORTUNITY TO REMOVE THE DEFECT/S , ALSO TAKING NOTE OF THE CORRECT INTEREST AS PER THE REVISED F /1 5H, EVEN AS HE REJECTED THE ASSESSEES PLEA TO FILE ADDITIONAL F /15H IN - AS - MUCH AS ONLY THE FORMS, DULY FILLED UP AND SIGNED BY THE DEPOS I T OR S , AS FURNISHED TO THE LEND E R - PAYE E (OF INTEREST) BY THE END OF THE YEAR, 31.03.2004 IN THE INSTANT CASE, THAT COULD BE TAKEN INTO ACCOUNT OR RECKONED FOR THE PURPOSE OF DEDUCTION OR, AS THE CASE MAY BE, NON - DEDUCTION OF TAX AT SOURCE . CORRESPONDING MODIFICATION WAS ALSO DIRECTED IN RESPECT OF AN APPLICATION, SIMILARLY MOVED, QU A THE PENALTY ORDER U/S.271C OF THE ACT, I M PO SING PENALTY THERE - UNDER FOR SHORT DEDUCTION OF TAX AT SOURCE. THE ASSESSEE MOVED APPLICATIONS U/S.154 AGAINST BOTH 3 ITA NO. 58 & 59 /PAT/2012 (A.Y. 200 4 - 0 5 ) STATE BANK O F INDIA VS. ACIT THE ORDERS U/S.264, SEEKING DIRECTIO N FOR EXCLUDING THE INTEREST WHERE THE PAYEE WAS THE GOVERNMENT OF BIHAR, IN ITS VARIOUS DEPARTMENTS, OR ITS VARIOUS CONSTITUENTS , FROM THE AMBIT OF THE ORDERS BY THE REVENUE DECLARING THE ASSESSEE - DEDUCTOR TO BE IN DEFAULT AND, CORRESPONDINGLY , PENALIZING IT QUA THE SAME. THE COMPETENT AUTHORITY, DESIGNATED AS CIT(TDS), PATNA, RESPOND ING ONLY AFTER, AS STATED, REPEATED REMINDERS, AND FINALLY REJECTING THE ASSESSEES APPLICATION S U/S.154 VIDE ORDER/S DATED 25.08.2010, THE ASSESSEE APPROACHED THE HONBLE HIG H COURT UNDER ITS WRIT JURISDICTION , WHICH QUASHED THE ORDERS U/S. 154 AND DIRECTED THE COMPETENT AUTHORITY TO PASS FRESH ORDERS ON MERITS AFTER ALLOWING THE ASSESSEE AN OPPORTUNITY TO PRESENT ITS CASE (IN CWJ NO. 19260 OF 2010 AND 19390 OF 2010). IN THE RECTIFICATION ORDERS, OF EVEN DATE, SINCE PASSED, THE COMPETENT AUTHORITY HAS, IN FIN E , DECL INED ANY IN T ER FER ENCE. THE CREDIT FOR THE INTEREST TO G OVERNMENT, THROUGH ITS VARIOUS DEPARTMENTS, AND TO WHICH THEREFORE THE PRIVILEGE OF ARTICLE 289 OF THE CONSTI TUTION OF INDIA (COI) EXTEND S , HAD BEEN ALREADY ALLOWED (AT RS.5,42,470/ - ) . FOR OTHERS, VIZ. SR. NO. NAME OF CUSTOMER 1 CHIEF MINISTER EARTH QUAKE RELIEF FUND ; 2 INDIAN RED CROSS SOCIETY, INDIAN RED CROSS SOCIETY BIHAR STATE BRANCH ; 3 BIHAR STATE COUNC IL FOR CHILD WELFARE ; 4 BIHAR STATE WELFARE FUND ; 5 BIHAR RELIEF FUND ; 6 INDIRA GANDHI I NSTITUTE OF M EDICAL SCIENCES; 7 NALANDA OPEN U NIVERSITY ; 8 BIHAR STATE MINORITIES F INANCIAL CORPORATION ; 9 SOUTH INDIAN CULTURAL ASSOCIATION ; AND 10 CHIEF MINIST ER RELIEF FUND , T HE SAID ENTITIES WERE NOT A PART OF THE GOVERNMENT N OR STOOD NOTIFIED U/S. 194A( 3) OF THE ACT , EXEMPTING THEM FROM THE OPERATION OF S. 194A . THERE WAS ALSO NO F / 15H F R OM THESE PAYEES. THERE WAS, ACCORDINGLY, NO BASIS IN LAW TO EXCLUD E THE INTEREST ALLOWED TO THEM FROM THE OBLIGATION ON THE ASSESSEE TO DEDUCT TAX AT SOURCE U/S. 194A. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 4 ITA NO. 58 & 59 /PAT/2012 (A.Y. 200 4 - 0 5 ) STATE BANK O F INDIA VS. ACIT 4 . WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. 4 .1 WE ARE , TO BEGIN WITH, AT A LOSS TO UNDERSTAND AS TO WHAT IS THE MISTAKE AND, FURTHER, APPARENT FROM THE RECORD , IN THE ORDERS U/S. 264 , FOR THE ASSESSEE TO HAVE MOVED APPLICATION S U/S.1 5 4. THE ASSESSEE PLEAD ING FOR MODIFICAT ION OF THE ORDER RAISING DEMAND U N DER REFERENCE FOR OPPORTUNITY TO CURE THE DEFECT /S IN FORM /S 15H, THE COMPETENT AUTHORITY DIRECTED ACCORDINGLY IN EXERCISE OF THE REVISIONARY POWER U/S. 264 OF THE ACT. THE ISSUE OF A FURTHER DIRECTION FOR EXCLUSION OF CERTAIN ENTITIES , OR THE SAME BEING NOT CONSIDERED BY THE A.O. FOR EX CLUSION , DESPITE THE SAME BEING FIRSTLY NOT RAISED BEFORE THE A.O. AND , FURTHER , THE SAID ENTITIES BEING NOT, AS IS ADMITTEDLY THE CASE, NOTIFIED U/S. 194A(3), WE WONDER AS TO WHAT IS THE MISTAKE, MUCH LESS APPARENT FROM RECORD , FOR THE ASSESSEE TO HAVE SO CONTENDED. OR, WOULD THE SAME, QUALIFY FOR BEING A MISTAKE, EVEN ASSUMING THE ASSESSEE TO HAVE, WHICH WE HAVE FOUND IT AS NOT, AN ARGUABLE CASE ? THE LD. CIT, IN OUR VIEW, HAS CLEARLY TRAVELLED OUTSIDE THE SCOPE OF RECTIFICATION IN, FIRSTLY , ADMIT TING THE ASSESSEES CLAIM AND, TWO, RENDER ING HIS DECISION ON THE MERITS OF THE ASSESSEES PLEA. THE SAID ADMISSION AND DECISION BY THE LD. CIT WOULD THOUGH NOT CONSTRAIN US TO RESTRICT THE SCOPE OF THE INSTANT PROCEEDINGS ONLY T O MISTAKE /S APPARENT FROM THE RECORD ARISING FROM THE ORDER S U/S. 264 . THERE IS NO BASIS TO SAY THAT THE ORDERS U/ S . 264 SUFFERED FROM ANY MISTAKE APPARENT FROM RECORD NOR HAS ANY BEEN CITED OR SHOWN, AND WHICH POSITION OBTAINED EVEN BEFORE US . WE, ACCORDINGLY, HOLD SO, I.E., TH ERE IS NO MIS TAKE APPARENT FROM RECORD, WHICH WOULD IN FACT REQUIRE AFORTIORI, A STATEMENT OF THE SAID MISTAKES. WE DECIDE ACCORDINGLY. 4 .2 BE THAT AS IT MAY, WE SH ALL , WI THOUT PREJUDICE , ALSO ISSUE OUR FINDINGS ON THE MERIT S OF THE CASE; THE LD. CIT HAVING ADMITTED T HE ASSESSEES PLEA FOR CONSIDERATION OF THE ASSESSEES CLAIM FOR EXCLUSION OF THE STATED ENTITIES IN DETERMINING THE AMOUNT FOR WHICH THE ASSESSEE IS DEEMED TO BE IN DEF AULT FOR HAVING NOT DEDUCTED TAX AT SOURCE ON INTEREST ALLOWED THERETO. THIS IS, BESIDE S FOR THE SAKE OF COMPLETENESS OF OUR ORDER , ALSO BECOMES RELEVANT IN - AS - MUCH AS THE ARGUMENTS WERE RAISED BEFORE US ON THIS ISSUE AS WELL. NONE OF THE ENTITIES IS LIABLE FOR EXCLUSION OF ITS INCOME U/S.10, AT LEAST ON THE BASIS OF THE MATERIAL 5 ITA NO. 58 & 59 /PAT/2012 (A.Y. 200 4 - 0 5 ) STATE BANK O F INDIA VS. ACIT ON RECORD, EVEN AS AGREED TO BY THE LD. C OUNSEL DURING HEARING. THE EXEMPTION U/S.11 R/W SECTION 12 IS ONLY UPON THE APPLICATION OF INCOME , SO THAT THERE IS NO EXEMPTION PER SE . T HE APPLICATION OF INCOME WOULD ONLY BE ON THE BASIS OF THE RETURN OF INCOME, TO BE FILED SUBSEQUENTLY. NO F / 15H OR EVEN A CERTIFICATE FROM A.O. U/S.197 , FOR DEDUCTION OF TAX AT A LOWER RATE, HAS BEEN SUBMITTED TO SUPPLEMENT THE ASSESSEES CLAIM FOR NON OR LOWER DEDUCTION OF TAX AT SOURCE , BY THE END OF THE PREVIOUS YEAR, FOLLOWING WHICH THE A SSESSEE AS A PAYEE IS OBLIGED TO DEDUCT THE TAX AT SOURCE AT THE NORMAL RATE . THE ENTITIES, AS SHALL BE APPARENT, HAVE NO ATTRIBUTE OF GOVERNMENT, EVEN AS THEY MAY ENJOY PATR O N AGE THERE - FROM , AND NEITHER DO THEY STAND NOTIFIED U/S. 194A(3). SHRI D. V. PATH Y, ADVOCATE WAS ALSO APPRI S ED OF THIS POSITION IN LAW BY THE B ENCH, B ESIDES BEING ALSO QUESTIONED WITH REFERENCE TO THE GROUND/S RAISING THE ISSUE OF THE NON - GRANT OF PROPER OPPORTUNITY WHILE PASSING THE IMPUGNED ORDERS. THIS, BESIDES BEING OTHERWISE INCUM BENT ON THE TRIBUNAL IN - AS - MUCH AS IT IS SU P P O SED TO ANSWER ALL THE GROUNDS , WAS ALSO CONSIDERED PROPER IN VIEW OF THE CLEAR DIRECTION BY THE HONBLE HIGH COURT FOR DECIDING THE ASSESSEE - PETITIONER S APPLICATION S U/S. 154 AFTER GIVING OPPORTUNITY TO THE PE TITIONER - BANK , AND WHICH WOULD ONLY IMPLY REASONABLE/DUE OPPORTUNITY. HE CONCEDED NOT TO PRESS THE SAID GROUNDS , AND ALSO TO THE INSTANT APPEAL S BE ING DECIDED ON THE BASIS OF THE ASSESSEE S CONTENTION, COMMON FOR BOTH THE APPEALS, OF THE COMPETENT AUTHORIT Y BEING NOT CORRECT IN DENYING THE ASSESSEES CLAIM FOR EXCLUSION OF ENTITIES, AS LISTED AT PAGE 5 / 6 OF THE ORDER S , NOTED HEREIN BEFORE, IN COMPUTING THE INTEREST LIAB LE FOR DEDUCTION OF TAX AT SOURCE U/S.194A. THIS, WE ALSO OBSERVE TO THE PRINCIP A L CONTEN TION BEFORE THE LD. CIT, AS WELL AS TO BE THE ISSUE , ON MERITS. THE HEARING, THOUGH WITH A CAV EA T OF THE SAME BEING OUTSIDE THE SCOPE OF SECTION 154 , WAS ALSO PROCEEDED WITH ON THIS BASIS, WHICH WE ALSO DISCERN TO BE THE SOLE ISSUE, I.E., ON MERITS OF THE CASE, AND WHICH THEREFORE EXPLAINS OUR DELIBERAT ING THE SAME. 4 .3 WE, FOR THE REASONS AFORE - STATED, AND WHICH ARE THE SAME AS THAT PREVAILED WITH THE LD. CIT, FIND NO ERROR , I.E., EVEN ON MERITS, IN HIS REFUSING TO AMEND T HE ORDERS U/S. 264 FOR EXCLUSION OF THE INTEREST ALLOWED TO THE STATED ENTITIES IN COMPUTING THE ASSESSEES LIABILITY U/S. 20 1 , QUA WHICH PENALTY U/S. 271C STANDS LEVIED. NO SEPARATE OR INDEPENDENT 6 ITA NO. 58 & 59 /PAT/2012 (A.Y. 200 4 - 0 5 ) STATE BANK O F INDIA VS. ACIT ARGUMENT/ S FOR NON - LEVY OF PENALTY U/S.271C WAS ADVANCED, I.E., APART FROM CONTENDING OF NO N - LIABILITY TO DEDUCT TAX AT SOURCE - THE ISSUE ON MERITS, AS WE OBSERVE TO BE ALSO THE CASE BEFORE THE AUTHORITIES BELOW. THE IMPUGNED ORDER S U/S. 264 R/W SE CTION 154 ARE, RESULTANTLY, UPHE LD. WE REITERATE THAT OUR DECISION ON MERITS OF THE ISSUE RAISED , IS IN ADDITION AND WITHOUT P REJUDICE TO OUR CLEAR DECISION OF THE ISSUE RAISED PER SECTION 154 APPLICATIONS AS BEING OUTSIDE THE PURVIEW OF THE SAID SECTION AND, THUS, INADMISSIBLE IN LAW , SO THAT THE ASSESSEES APPEAL DESERVES A DISMISSAL AT THE THRESHO LD. WE DECIDE ACCORDINGLY. 5 . IN THE RESULT, THE ASSESSEES APPEAL S ARE DISMISSED. ORDER PRONOUNCED BY LISTING THE RESULT ON THE NOTICE BOARD OF THE BENCH UNDER RULE 34(4) OF THE APPELLATE TRIBUNAL RULES, 1963. SD/ - SD/ - ( A. D. JAIN ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER DATED : 28 . 0 5 .201 5 . . ./ ROSH ANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - PATNA 5. , , / DR , ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRA R) , ITAT, PATNA