ITO, Bangalore V. Shri. T.G. Rangashamaiah, Bangalore

ITA 999/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63757 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 04-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A SUNDARARAJAN
• Assessee Lawyers: RAVI PRASAD
• Keywords: Non-deduction of tax
• Section: 201(1); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO.999/BANG/2011 (ASSESSMENT YEAR : 2005-06) INCOME TAX OFFICER (INTERNATIONAL TAXATION), WARD 1(3), BANGALORE. VS. SHRI T.G. RANGASHAMAIAH, NO.861, G CROSS, 8 TH MAIN, III STAGE, III BLOCK, BASAVESHWARANAGAR, BANGALORE. PAN APPELLANT RESPONDENT. APPELLANT BY : SHRI A. SUNDARARAJAN. RESPONDENT BY : SHRI RAVI PRASAD. DATE OF HEARING : 5.10.2012. DATE OF PRONOUNCEMENT : 19.10.2012. O R D E R PER SHRI JASON P. BOAZ, A.M . : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-IV, BANGALORE DT.16.8.2011 FOR ASSESSMENT YEAR 2007-08. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE IN THE PREVIOUS YEAR RELEVANT TO A SSESSMENT YEAR 2005-06 PURCHASED AN IMMOVABLE PROPERTY SITUATED AT NO.594, BLOCK NO.3, WEST OF CHORD ROAD, 3 RD STAGE, BANGALORE BY ABSOLUTE SALE DEED DT.15.10.2004 FROM SRI K.C. RAJA SHEKARIAH FOR A SUM OF RS. 60 LAKHS. IT WAS NOTICED THAT THE VENDOR, SRI K.C. RAJASHEKARAIAH WA S A NON-RESIDENT INDIAN (HEREIN AFTER REFERRED TO AS NRI) AND AS PER THE SALE DEED, WAS RESIDING AT NO.7 , YENGO COURT, WATTLE GROVE NSW 2173, SYDNEY, AUSTRALIA, WHICH CONFIRMED THIS FACT. THE ASSESSIN G OFFICER NOTICING THAT THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 195 OF THE INCOME TA X ACT, 1961 (HEREIN AFTER REFERRED AS 'THE ACT') OUGHT TO HAVE DEDUCTED TAX AT SOURCE @ 20% OF THE S ALE CONSIDERATION AND REMITTED THE SAME TO THE GOVT. OF INDIA BEFORE MAKING PAYMENT TO THE SELLER OF THE PROPERTY, SRI K.C. RAJASHEKARAIAH AS HE WAS AN NRI, HAD FAILED TO DO SO. AS THE ASSESSEE HAD N OT COMPLIED WITH THE PROVISIONS OF SECTION 195 OF THE ACT, THE ASSESSING OFFICER ISSUED HIM A LET TER DT. 31.10.2009 CALLING ON HIM TO SHOW CAUSE AS TO WHY HE SHOULD NOT BE TREATED AS AN ASSESSEE IN DEFA ULT UNDER SECTION 201(1) 2 ITA NO.999/BANG/11 OF THE ACT IN RESPECT OF NON-DEDUCTION OF TAX AT SO URCE IN RESPECT OF THE PAYMENT IN QUESTION. THERE WAS NO RESPONSE FROM THE ASSESSEE TO THIS LETTER AN D ALSO TO FURTHER REMINDER DT.23.12.2008, INSPITE O F HAVING ACKNOWLEDGED RECEIPT OF THE SAME. IN THIS V IEW OF THE MATTER, THE ASSESSING OFFICER NOTED THAT SINCE THE ASSESSEE HAD FAILED TO DISCHARGE HIS OBLI GATION TO DEDUCT TAX AT SOURCE @ 20% OF THE SALE CONSIDERATION OF RS.60 LAKHS AS STIPULATED BY THE P ROVISIONS OF SECTION 195 OF THE ACT WHILE MAKING PAYMENT TO AN NRI HELD THE ASSESSEE TO BE AN ASSESS EE IN DEFAULT IN ACCORDANCE WITH SECTION 201(1) OF THE ACT AND CONSEQUENTLY WAS CHARGED INTEREST UN DER SECTION 201(1A) OF THE ACT AND PASSED ORDERS KNOWN ACCORDINGLY. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DT.28.1.2 009, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS). THE LEARNED CIT(APPEALS) DISPOSED T HE APPEAL BY AN ORDER DT.16.8.2011 HOLDING THE APPEAL TO BE PARTLY ALLOWED FOR STATISTICAL PURPOSE S. 3. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEAL S) DT.16.8.2011, REVENUE IS NOW IN APPEAL BEFORE US. IN THE GROUNDS OF APPEAL RAISED, IT HAS BEEN CONTENDED AS UNDER : 1. THE LEARNED CIT (APPEALS) HAS ERRED IN INVOKI NG THE PROVISIONS OF SECTION 251(1)( C ) OF THE ACT AND DIRECTING THE ASSESSING OFFICER TO D ETERMINE THE TAX LIABILITY UNDER SECTION 201(1) AND INTEREST UNDER SECTION 201(1A) WHICH IS BAD IN LAW. 2. THE LEARNED CIT (APPEALS) HAS ERRED IN NOT FOL LOWING THE JUDICIAL PRINCIPLE LAID DOWN BY THE HON'BLE ITAT, MUMBAI BENCH IN THE CASE OF MAHIN DRA & MAHINDRA LTD VS. DCIT, TDS RANGE 1(1), MUMBAI (2009) 30 SOT 374 (MUM) (SB) AND ORDERS OF THE HON'BLE APEX COURT IN ITO VS. DELHI DEVELOPMENT AUTHORITY (2001) 252 I TR 772 (2002) WHEREBY THE ORDERS UNDER SECTION 201 ARE TO BE HELD AS ORDER OF ASSESS MENT AND DEALT WITH ACCORDINGLY. 3.2 THE LEARNED DEPARTMENTAL REPRESENTATIVE, AT THE OUTSET, STRONGLY CONTENDED THAT THE LEARNED CIT (APPEALS) HAD GROSSLY ERRED IN INVOKING THE PRO VISIONS OF SECTION 251(1)(C) OF THE ACT AT PARA 2.4 ON PAGE 9 OF THE APPELLATE ORDER IN SETTING ASIDE T HE ORDER BY DIRECTING THE ASSESSING OFFICER TO DETERMINE THE TAX LIABILITY UNDER SECTION 201(1) AN D INTEREST UNDER SECTION 201(1A) OF THE ACT. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 201(1) AND 201(1A) OF THE ACT IS AN ORDER O F ASSESSMENT. FOR THE ABOVE PROPOSITION, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE D ECISION OF THE SPECIAL BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF MAHINDRA AND MAHINDRA LTD. VS. DCIT REPORTED IN 313 ITR 263 (SB) (MUM) AND IN (2009) 30 SOT 374 (MUM) (SB). IT WAS CONTENDED THAT IF THE ORDER PASSED UNDER SECTION 201(1) AND 3 ITA NO.999/BANG/11 201(1A) OF THE ACT IS AN ORDER OF ASSESSMENT, THEN THE LEARNED CIT (APPEALS) HAS TO DISPOSE OFF THE SAME UNDER SECTION 251(1)(A) AND NOT UNDER SECTION 251(1)( C ) OF THE ACT. UNDER SECTION 251(1)( A ) OF THE ACT, THE CIT (APPEALS) DOES NOT HAVE THE POW ER TO SET ASIDE THE MATTER TO THE ASSESSING OFFICER FOR MAKING THE ASSESSMENT AFRESH. IT WAS SUBMITTE D BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT WHILE THE LEARNED CIT (APPEALS) AT PAGE 7 OF HIS OR DER HAS HELD THAT IN THE CASE OF THE ASSESSEE IT I S CLEAR THAT ACCORDING TO SECTION 195 OF THE ACT, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE ON THE ENTIRE PAYMENT OF RS. 60 LAKHS, IN PARA 2.4 AT PAGE 9 OF THE ORDER THE LEARNED CIT (APPEALS) INVOKING THE PROVISION OF SECTION 251(1)( C ) WRONGLY HAS SE T ASIDE THE ISSUE OF DETERMINING THE TAX LIABILITY UNDER SECTION 201(1) AND INTEREST UNDER SECTION 201(1A) O F THE ACT TO THE ASSESSING OFFICER WHICH HE WAS NOT EMPOWERED TO DO. IT WAS SUBMITTED BY THE LEARNED D EPARTMENTAL REPRESENTATIVE THAT THE LEARNED CIT (APPEALS) HAS TO NECESSARILY CONSIDER THE ISSUE OF THE ASSESSEE BEING LIABLE TO TAX UNDER SECTION 201(1) BEING AN ASSESSEE IN DEFAULT AND INTEREST CH ARGEABLE UNDER SECTION 201(1A) OF THE ACT AND ADJUDICATE THEREON GIVING A CLEAR FINDING RATHER TH AN REMANDING THE MATTER TO THE FILE OF THE ASSESSIN G OFFICER. HE PRAYED THAT SUITABLE DIRECTION BE ISSU ED IN THIS REGARD. 3.3 THE LEARNED COUNSEL FOR THE ASSESSEE WAS DULY H EARD. 3.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIAL ON RECORD. THE HON'BLE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE O F MAHINDRA & MAHINDRA (SUPRA), FOLLOWING HE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF I TO VS. DELHI DEVELOPMENT AUTHORITY, HELD THAT THE ORDER PASSED UNDER SECTION 201 OF THE ACT IS TO BE TREATED AS AN ORDER OF ASSESSMENT OR AT LEAST AKIN TO THE ASSESSMENT ORDER. THE RELEVANT FINDING OF T HE HON'BLE SPECIAL BENCH (313 ITR 263 AT PAGE 297) READS AS FOLLOWS : IN VIEW OF THE FOREGOING DISCUSSION WE FIND THAT W HEREAS IN SOME CASES IT HAS BEEN HELD THAT THE ORDER UNDER SECTION 201(1) IS NOT AN ORDER OF ASSESSMENT, ON THE OTHER HAND, THE HONBLE SUPREME COURT IN THE CASE OF DELHI DEVELOPM ENT AUTHORITY (2001) 252 ITR 772 HAS APPROVED THE VIEW TAKEN BY THE HONBLE DELHI HI GH COURT HOLDING THAT IT IS AN ORDER OF ASSESSMENT. AS PER ARTICLE 141 OF THE CONSTITUTION OF INDIA THE LAW DECLARED BY THE SUPREME COURT SHALL BE BINDING ON ALL COURTS WITHIN THE TERRITORY OF INDIA. IT IS MORE THAN OBVIOUS THAT THE ENUNCIATION OF LAW BY THE APEX COU RT IS BINDING ON ALL THE HIGH COURTS AND THE LOWER AUTHORITIES. NO ONE CAN DATE TO BRUSH ASI DE THE VERDICT OF THE SUPREME COURT BY A SIMPLE ASSERTION THAT IT DOES NOT CONFORM TO STAT UTORY PROVISION AS HAS BEEN HELD IN THE CASE OF LT. COL. P R CHAUDHARY V MUNICIPAL CORPORAT ION OF DELHI (2000) 4 SCC 577. IT IS, THEREFORE, VIVID THAT ANY JUDGMENT RENDERED BY THE HONBLE SUPREME COURT HAS THE BINDING 4 ITA NO.999/BANG/11 FORCE ON ALL THE LOWER COURTS, AUTHORITIES OR FOR T HAT MATTER ANYBODY ELSE IN INDIA. IT IS TRITE LAW THAT THE COURTS DECLARE THE LAW AND DO NOT LEGI SLATE. HENCE PRONOUNCEMENT OF LAW BY THE COURTS IS ALWAYS RETROSPECTIVE AND IS CONSIDERE D AS THE INTERPRETATION SINCE INCEPTION. IN THAT VIEW OF THE MATTER, IT IS MANIFEST THAT ONC E A PARTICULAR VIEW HAS BEEN EXPRESSED BY THE HONBLE SUPREME COURT ON AN ISSUE, THEN ANY CON TRARY VIEW TAKEN BY THE OTHER HIGH COURTS HAS TO BE CONSIDERED AS EXPRESSLY OR IMPLIED LY OVERRULED. WE ARE THUS OF THE CONSIDERED OPINION THAT THE ORDER UNDER SECTION 201 (1) IS TO BE TREATED AS AN ORDER OF ASSESSMENT OR AT LEAST AKIN TO THE ASSESSMENT ORDER . 3.5 WE FIND FROM THE RECORD THAT THE LEARNED CIT (A PPEALS) IN REMITTING THE ISSUE OF DETERMINING ASSESSEE'S THE TAX LIABILITY UNDER SECTION 201(1) A ND INTEREST CHARGEABLE UNDER SECTION 201(1A), PROCEEDED BY EXERCISING HIS POWER UNDER SECTION 251 (1)( C ) OF THE ACT. THE ORDERS OF THE SPECIAL BENCH OF THE MUMBAI TRIBUNAL (SUPRA) WAS NOT CONSID ERED BY THE LEARNED CIT (APPEALS). THE HON'BLE SPECIAL BENCH IN ITS ORDER HAS CATEGORICALLY HELD T HAT THE ORDERS PASSED UNDER SECTION 201(1) AND 201(1A) OF THE ACT ARE ORDERS OF ASSESSMENT. THER EFORE, THE LEARNED CIT (APPEALS) OUGHT TO HAVE CONSIDERED THESE ISSUES AND ADJUDICATED THEREON UND ER SECTION 251(1(A) OF THE ACT. WE ARE OF THE CONSIDERED VIEW THAT THE LEARNED CIT (APPEALS) HAVI NG NO POWERS OF SETTING ASIDE OR REMITTING THE ASSESSMENT ORDER UNDER SECTION 201(1) AND 201(1A) O F THE ACT TO THE ASSESSING OFFICER UNDER SECTION 251(1)( A ) FOR DETERMINATION OF LIABILITY OF THE A SSESSEE AND CHARGEABILITY OF INTEREST RESPECTIVELY, HAS ERRED IN DOING SO. WE, THEREFORE, REMIT TO THE FIL E OF THE LEARNED CIT (APPEALS) FOR ADJUDICATION, TH E ISSUES ON WHETHER THE ASSESSEE IS TO BE HELD LIABLE AS AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) AND CHARGED TAX THEREON AND WHETHER INTEREST UNDER SECTION 201(1A) IS TO BE CHARGED IN THE INSTANT CASE FOLLOWING THE PRINCIPLES LAID DOWN BY THE HON' BLE SPECIAL BENCH OF THE ITAT, MUMBAI IN THE CASE OF MAHINDRA & MAHINDRA LTD (SUPRA). IT IS ORDERED ACCORDINGLY. 4. IN THE RESULT, REVENUES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 .10.2012. SD/- SD/- (P. MADHAVI DEVI) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER *REDDY GP