MS JHARKHAND BIJILI VITRAN NIGAM LIMITED REPRESENTED THROUGH ITS FINANCE CONTROLLER SRI UMESH KUMAR V. PRINCIPAL COMMISSIONER OF INCOME TAX

WPC/612/2021

AI Insights

The case involves M/S Jharkhand Bijili Vitran Nigam Limited, the petitioner, who approached the High Court challenging the jurisdiction of the Assistant Commissioner of Income Tax, TDS Circle, Ranchi, in rejecting their refund application for TDS amounting to Rs.14.95 crores. The petitioner argued that the rejection was inconsistent with a prior notice from the Principal Chief Commissioner of Income Tax, New Delhi, and that the Assistant Commissioner lacked the authority to decide on the refund application. The Income Tax Department contended that the Assistant Commissioner had the jurisdiction based on the interpretation of Circular No.2/2011. However, the court found that the Assistant Commissioner did not have the necessary pecuniary jurisdiction to handle the refund claim, leading to the quashing of the rejection order and remitting the matter to the CBDT for a fresh decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 748222 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 18-01-2023
• Assessment Year: misc
• Laws Referred To: Electricity Act, 2003, Income Tax Act, 1961, Article 265 of the Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RATNESH SAHAY
• Assessee Lawyers: NITIN PASARI; SIDHI JALAN
• Keywords: Jurisdiction; Pecuniary Jurisdiction; Refund application; TDS; Manual application
• Section: 131; 201(1); 2(39); 133; 14(b); 194(C); 133-A

Judgement Text

"1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(T) No. 612 of 2021 M/S Jharkhand Bijili Vitran Nigam Limited ..… Petitioner Versus 1. Principal Commissioner of Income Tax, having its office at Central Avenue (Annexe) Building, 5 Main Road, Ranchi. 2. The Assistant Commissioner of Income Tax, TDS Circle, 3rd Floor, Central Avenue (Annexe) Building, 5 Main Road, Ranchi. ..... Respondents -------- CORAM: HON’BLE THE ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE DEEPAK ROSHAN --------- For the Petitioner : M/s Nitin Kumar Pasari, Sidhi Jalan, Adv. For the Respondent : Mr. Ratnesh Nandan Sahay, Sr.S.C. --------- 9/18.01.2023 The Petitioner approached this Court with the following prayers. (a) For issuance of an appropriate writ, order or direction upon the respondent no.2 to show cause as to how and under what authority of law, he has usurped the jurisdiction to decide an application filed for grant of refund of Rs.14.95 crores, which is contrary to the jurisdiction vested in the said authority. (b) For issuance of an appropriate writ, order or direction, holding and declaring that the action of the respondent no.2 in rejecting the application of the petitioner is inconsistent to notice dated 10.12.2020, issued by the Office of the Principal Chief Commissioner of the Income Tax, New Delhi. (c) Consequent upon showing cause, if any, and on being satisfied that the said authority does not have the jurisdiction to deal with the refund application for an amount of Rs.14.95 crores, (being restricted in terms of pecuniary jurisdiction) the purported order / communication dated 09.12.2020, passed by the said authority be quashed and set aside. 2. The brief fact of the case as revealed in the instant writ application is that the petitioner-assessee is a licensee as defined under Section 2(39) of the Electricity Act, 2003 and is having license under Section 14(b) of the Electricity Act, 2003. The petitioner invited tenders for supply of cables for complete execution of Rural Electrification on Turnkey basis under 10th Plan of Rajiv Gandhi Gramin Vikas Yojna (RGGVY). Various bidders participated in the bid and after finalization of the tender the works were awarded to various companies for supply & erection of rural electrification works for which various contracts were 2 entered into. In January, 2009, the TDS circle, Ranchi, Jharkhand had carried out a survey in exercise of power under Section 133 A of the Income Tax Act, 1961 (hereinafter to be referred as ‘Act’) and during the survey the petitioner-assessee was threatened of coercive action, if TDS amount on supply contract is not deposited, suo moto. The assesse under threat of coercive action, deposited an amount of Rs.14.95 crores out of its own funds in March, 2009, although no deduction had been made from the bills of the contractors. After the survey was concluded, on 15.4.2009 a show-cause notice was issued to the petitioner-assessee under Section 201(1) of the Act to show cause as to why proceeding be not initiated against the petitioner-assessee for non-compliance of Section 194 C of the Act. As against the said show cause, the petitioner-assessee filed its reply on 29.4.2009, but till date no order against the said show cause and reply has been received by the petitioner-assessee either rejecting or accepting the contention of the petitioner-assessee, inasmuch as, neither any hearing nor any order has ever been communicated to the petitioner. On 06.1.2014, the Government of Jharkhand exercising its power under Section 131 & 133 of the Electricity Act, 2003 unbundled the erstwhile Jharkhand State Electricity Board (depositor) and the Jharkhand State Electricity Reforms Transfer Scheme, 2013 was notified vide Notification No.18. On 20.10.2016, while the petitioner-assessee was pursuing for finalization of the proceedings, the then DCIT (TDS), Ranchi Circle issued a certificate that the challan of Rs.14.95 crores is still unclaimed as per TRACES. Having received the certificate on 20.12.2016, the petitioner-assessee nullified the demand standing as against the Assessee communicated by DCIT-TDS, Ranchi Circle, for a sum of Rs.13.19 lakhs. Having received the certificate and after nullifying the claim/outstanding liability, the Assessee sought to make application for refund of the amount deposited with the Department. However, in view of the restriction imposed in Circular No.02/2011 dated 24.4.2011, the 3 Assessee was barred from making online refund application, hence the Assessee was left with no other alternative but to make manual application. Since the manual application of the Assessee was not being entertained or processed, the Assessee was left with no other alternative, but to prefer writ application being W.P.(T) No.2027/2018. In the said writ petition, after exchange of affidavits and during the pendency of the writ petition, certain developments took place viz., TRACES CPC (TDS) Gaziabad issued a letter dated 22.01.2020 to the DCIT (TDS), Ranchi Circle, Ranchi requesting to process the refund claim manually, inasmuch as, for the period prior to 01.04.2010 online application, cannot be processed through TRACES and for such cases the TDS Assessing Officer may issue the refund manually, after due verification/procedure in view of the Circular No.2/2011. The Assessee yet again filed an Interlocutory Application being I.A. No.931/2020 and the matter was taken up before this Court on 29.6.2020, when the counsel for the Income Tax Department sought adjournment and on 20.07.2020, issues were framed by this Court. (a) Whether the returns filed by the petitioner refers to the deduction of this amount as TDS in the name of their contractors/sub-contractors? (b) Whether the contractors/ sub-contractors have availed of its credit in their tax returns? Finally, the writ petition was heard on 19.08.2020 and in view of two letters issued to the petitioner-assessee dated 20.10.2016 & 22.01.2020 and the claim having never been rejected, this Court issued necessary direction to the competent authority to pass appropriate orders on the refund application within 12 weeks from the date of receipt of the copy of the order. Pursuant to the order passed by this Court, the petitioner filed the application manually as also through registered AD before the Board. The claim of the petitioner was rejected vide letter / communication dated 09.12.2020, passed by the respondent no.2. The petitioner was served with yet another notice dated 10.12.2020 by which the Principal Chief Commissioner of Income Tax, New Delhi has referred the matter to the Principal Chief Commissioner of Income Tax, 4 Bihar & Jharkhand, Patna, but the grievance of the petitioner has not been redressed, hence, this writ petition has been preferred. 3. The specific case of the petitioner is that the respondent no.2. is not even authorized/ competent to deal with the application for refund of the petitioner in view of the restriction under the Act itself, read with the circulars issued from time to time. 4. Mr. Nitin Pasari, learned counsel for the petitioner made following submissions:- (i) The exercise of jurisdiction and the order dated 09.12.2020 passed by the respondent no.2 is beyond jurisdiction and is in conflict with the circular of the CBDT, which is binding as also the National Litigation Policy. (ii) Learned counsel for the petitioner submits that a proceeding once initiated has to meet the fate of conclusion and cannot be left unattended. In the instant case, a show cause notice was issued on 15.04.2009, however no final order was passed on the said notice and when the application for refund was made, the respondent took ground of limitation and rejected the claim of refund. (iii) No tax can be collected beyond jurisdiction and even if at all it has been collected or deposited suo-moto by an assessee without there being any liability, then the same cannot be retained by the department in view of Article 265 of the Constitution of India which expressly says that “Taxes not to be imposed save by authority of law. No tax shall be levied or collected except by authority of law.” He further contended that Section 194 C of the Income Tax Act read with Circular No.13/2006 dated 13.12.2006 clarifies the situation where on contract for sale or supply, there is no liability to tax deducted at source and if on a wrong notion of law or otherwise any such deposit has been made, the same would fall within the ambit of the tax collected beyond Article 265. (iv) The action of the respondent Department is directly in conflict with the National Litigation Policy. 5 5. Mr. Ratnesh Nandan Sahay, Sr.S.C submits that the ground raised by the petitioner contending that the respondent no.2 had no jurisdiction to decide the refund of TDS is based on presumption on an incorrect interpretation of the Circular No.2/2011 dated 27.4.2011 of the Income Tax Department. In the present case it is an undisputed fact that the respondent no.2 in terms of the said Circular No.2/2011 has the jurisdiction to examine the said application of refund of alleged TDS made by the petitioner. He further submits that the Petitioner is relying on paragraph 5.2 of the said Circular No. 2/2011 to allege that the jurisdiction, to examine the said application for refund of the alleged TDS amount of Rs. 14.95 crores, is with the Commissioner (TDS) and not with the Respondent No. 2. It is submitted that the paragraph 5.2 only provides that a prior administrative approval of the Commissioner (TDS) is required to be obtained for granting the refund of TDS of a value of more than Rs. 10 lakhs. He further submitted that a harmonious reading of the Circular No. 2/2011 would show that the Assessing Officer (TDS), Respondent No. 2 in this case, shall have the jurisdiction to examine the claim of refund of TDS. However, if the Assessing Officer decides to allow the application for refund, then the Assessing Officer before refunding the amount of TDS will have to take prior administrative approval of the Commissioner (TDS) if the refund claim is more than Rs. 10 lakhs. He further submitted, there is no inconsistency in the action of the Respondent No. 2 in rejecting the application of refund made by the petitioner vis-à-vis the letter dated 10.12.2020 issued by the Office of the Principal Chief Commissioner of Income Tax, New Delhi. In order to appreciate that there is no such alleged inconsistency, it is pertinent to consider the background in which the said letter dated 10.12.2020 was issued by the Office of the Principal Chief Commissioner of Income Tax, New Delhi. Learned counsel for the respondents further submitted that the petitioner has alleged that he has filed the refund application before the Board i.e., Central Board of Direct Taxes at Delhi. But in fact, the 6 petitioner had sent the said refund application to the Office of Principal Chief Commissioner of Income Tax located at I.P. Estate, New Delhi - 110002. Realizing his mistake the Petitioner rectified the given address and sent the said application to the address being Room No. 354, Central Revenue Building, I.P. Estate, New Delhi – 110002 and ultimately, the said application of the petitioner had reached to the Office of the Principal Chief Commissioner of Income Tax, New Delhi which is located at Central Revenue Building, I.P. Estate, New Delhi-110002. Subsequently, as the Principal Chief Commissioner of Income Tax, New Delhi has the limited territorial jurisdiction of New Delhi concerning the income tax matters, the office of the Principal Chief Commissioner of Income Tax, New Delhi had forwarded, vide its letter dated 10.12.2020 the said refund application of the petitioner to the Principal Chief Commissioner of Income Tax, Bihar & Jharkhand since he has the territorial jurisdiction over the income tax matter in relation to the State of Jharkhand and the said refund application of the Petitioner was concerning with the TDS, Circle-Ranchi which comes under the territorial jurisdiction of Principal Chief Commissioner of Income Tax, Bihar & Jharkhand. The said letter dated 10.12.2020 of the Principal Chief Commissioner of Income Tax, New Delhi does not state that the Assessing Officer of the Petitioner, who is Respondent No. 2 herein and also the Assistant Commissioner of Income Tax, TDS Circle, Ranchi, cannot decide the said refund application of the Petitioner. The said letter dated 10.12.2020 only forwards the said refund application of the Petitioner to the administrative head of the Income Tax Department in the State of Bihar & Jharkhand. Thus, there is no inconsistency in the action of the Respondent No. 2 in rejecting the application of the Petitioner with the letter dated 10.12.2020 issued by the office of the Principal Chief Commissioner of Income Tax, New Delhi. He further submits that the Petitioner filed the said refund application with the Respondent No.2 on 09.11.2020. Subsequently, the Respondent No.2, in terms of the circular no. 2/2011 and dated 27.04.2011, had examined the said refund application of the Petitioner 7 and as the said refund application was barred by the period of limitation, the Respondent No.2 had rejected the same vide its letter dated 09.12.2020. The circular, which deals with the claim of refund of TDS amount, is the Circular No. 2 of 2011 and dated 27.04.2011. Paragraph 4.2 of the said circular provides that no claim of refund can be made after two years from the end of the financial year in which tax was deductible at source. Paragraph 4.2 of the said circular is reproduced herein below for ready reference: \"In case, the detection of such excess amount is made beyond the financial year concerned, such claim can be made to the Assessing Officer (TDS) concerned. However, no claim of refund can be made after two years from the end of financial year in which tax was deductible at source.\" In the instant case, since the concerned year of TDS deposit was Financial Year 2008-09 and end of the Financial Year was 31.03.2009; as such any claim made after 31.03.2011 is barred by limitation and not maintainable in law. The said application of refund of the Petitioner was made on 09.11.2020 and thus the same is ex-facie barred by limitation and not maintainable in law. 6. Having heard learned counsel for the parties and after going through the averments made in the respective affidavits and the documents annexed therein it is necessary to look into the Circular No.9/2015 dated 9.6.2015 issued by the Income Tax Department itself in order to deal with the argument on the point of jurisdiction. For brevity relevant portion of the Circular is quoted herein below:- (1) In supersession of all earlier Instructions /Circulars/Guidelines issued by the Central Board of Direct Taxes (the Board) from time to time deal with the applications for condonation of delay in filing returns claiming refund and returns claiming carry forward of loss and set-off thereof under section 119(2)(b) of the Income Tax Act, (the Act) the present Circular is being issued containing comprehensive guidelines on the conditions for condonation and the procedure to be followed for deciding such matters. (2) The Principal Commissioners of Income Tax/Commissioners of Income-tax (Pr.CsIT/CsIT) shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of 8 such claims is not more than Rs.10 lakhs for any one assessment year. The Principal Chief Commissioners of Income-tax/Chief Commissioners of Income-tax (Pr.CCsIt/CCsIT) shall be vested with the powers of acceptance/rejection of such application/claims if the amount of such claims exceeds of Rs.10 lakhs but is not more than Rs.50 lakhs for any one assessment year. The applications/claims for amount exceeding Rs.50 lakhs shall be considered by the Board. (3) No condonation application for claim of refund/loss shall be entertained beyond six years from the end of the assessment year for which such application/claim is made. This limit of six years shall be applicable to all authorities having powers to condone the delay as per the above prescribed monetary limits, including the Board. A condonation application should be disposed of within six months from the end of the month in which the application is received by the competent authority, as far as possible. 7. From bare perusal of the aforesaid Circular No.9/2015 dated 9.6.2015 issued by the Income Tax Department itself, it clearly transpires that it was in supersession of all earlier Instructions /Circulars/Guidelines issued by the Central Board of Direct Taxes (the Board) from time to time dealing with the applications for condonation of delay in filing returns claiming refund. Thus, the reliance of Circular No. 2 of 2011 dated 27.04.2011 by the counsel for the revenue had lost its force on issuance of the Circular No. 9/2015 on the subject. Further, in the Circular No.9/2015, pecuniary limit is specifically indicated in clause No.2 wherein it is specifically stated that the application/claims for amount exceeding Rs.50 lakhs shall be considered by the Board. It is further specifically indicated that the Principal Commissioners of Income Tax/Commissioners of Income-tax shall be vested with the powers of acceptance/rejection of such applications/claims if the amount of such claims is not more than Rs.10 lakhs for any one assessment year and the Principal Chief Commissioners of Income- tax/Chief Commissioners of Income-tax shall be vested with the powers of acceptance/rejection of such application/claims if the amount of such claims exceeds of Rs.10 lakhs but is not more than Rs.50 lakhs for any one assessment year. 9 Looking to the pecuniary jurisdiction, it clearly transpires that the Assessing Officer who was ACIT (TDS); who passed the impugned order of rejection was not having any pecuniary jurisdiction. Further, the letter dated 10.12.2020 by which the Principal Chief Commissioner of Income Tax, New Delhi has referred the matter to the Principal Chief Commissioner of Income Tax, Bihar & Jharkhand, Patna cannot be ignored, inasmuch as, the competent authority to pass the refund order was CBDT and it is only due to this reason the Principal Chief Commissioner of Income Tax, New Delhi has referred the matter to the Principal Chief Commissioner of Income Tax, Bihar & Jharkhand, Patna; as it fell within territorial jurisdiction to process the application. It is but obvious that to pass any order by the Board, they will require the documents. Thereafter, this Court is of the firm opinion that in order to pass a final order as per Circular No.9/2015, the Board was the Competent Authority. In any view of the matter, the ACIT (TDS) who passed the impugned order was having no jurisdiction in view of the pecuniary limit fixed vide Circular No.9/2015. At the cost of repetition, it is stated that the Circular No.9/2015 was in supersession of all earlier Instructions /Circulars/Guidelines issued by the Central Board of Direct Taxes from time-to-time to deal with the applications for condonation of delay in filing returns claiming refund. 8. In view of the aforesaid discussion, and the reasons recorded the impugned order is quashed on the point of lack of jurisdiction and the case of the petitioner is remitted to the Board to pass a fresh order of refund in accordance with law. Consequently, the order / communication dated 09.12.2020, passed by Respondent No.2, is hereby, quashed and set aside. The matter is remitted to Central Board of Direct Taxes (CBDT), to pass an order on the claim of Refund after going through the relevant documents of the Case also taking in consideration the show-cause Notice dated 15.04.2009 issued by the Revenue which according to the petitioner remained unadjudicated. The Respondent No.1 shall forward the entire documents to the competent authority of the Board along with copy of this order to enable 10 the Board to take a decision on the claim of refund. Let the entire exercise be completed within twelve weeks from the date of receipt/production of copy of this order by the Respondent No.1. In the event the claim of refund is allowed the admissible amount be refunded with statutory interest within a period of four weeks thereafter. 9. With the aforesaid directions, the instant writ application stands allowed. (Aparesh Kumar Singh, ACJ.) (Deepak Roshan, J.) Fahim/- "