TMI Blog2014 (11) TMI 952X X X X Extracts X X X X X X X X Extracts X X X X ..... on the AO u/s 220(6) is not an arbitrary power, but a power coupled with responsibility and the assessing officer concerned should take all the circumstances into account and all the considerations that could be urged by the assessee as to why he should not be treated as "not being in default" and then make an order as is provided to the facts of the case. Though the reasoning of the first respondent while rejecting the Stay Petition cannot be faulted in its entirety, but the fact that on the date when the order was passed, the CIT(A) ought to have noted that the appeal arising out of the assessment orders for the years 2007-08 and 2008-09, has been entertained and interim order has also been granted - If the legal issue is now pending before the Hon'ble Division Bench of the Court and order of interim stay has been granted, subject to certain conditions, that should have been considered by the first respondent while passing the impugned order dated 17.10.2014 – certain questions of law admitted for consideration – Assessee is directed to deposit 50% of the entire demand in respect of all the three AYs viz. 2012-13, 2013-14 and 2014-15 and the remaining amount demanded shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.02.2014. Thereupon the petitioner filed a Petition before the first respondent praying for stay of demand till the disposal of the Appeals, which were pending as Appeal Nos. 305/13-14 and 308/13-14, for the financial years 2012-13 and 2013-14. (e) With regard to the assessment year 2012-13, the second respondent passed order of assessment on 29.03.2014, confirming the proposal and a notice of demand was issued on 29.3.2014, demanding a sum of ₹ 10,05,75,866/- for the assessment year 2012-13. The petitioner preferred an appeal to the first respondent against the said order of assessment dated 29.03.2014 for the assessment year 2012-13. On 30.4.2014, the petitioner filed a Stay Petition under section 220(6) of the Act in respect of the demand made in terms of the assessment order for the assessment year 2012-13. The second respondent by an order dated 20.6.2014, following its earlier order dated 07.02.2014, for the assessments years 2013-14 and 2014-15, rejected the Stay Petition. Thereupon, the petitioner filed a Stay Petition before the first respondent on 01.07.2014. The Stay Petition filed by the petitioner for the three assessment years were considered by the first r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AND ORS [ 282 ITR 7], however, without reference to those decisions, the first respondent mechanically rejected the Stay Petition, without considering the three essential requirements viz. prima facie case, balance of convenience and irreparable hardship. 6. Further it is submitted that the issue with regard to liability to effect TDS on discount on prepaid coupons is pending before the Hon'ble Supreme Court in the case of other telecom operators and the Hon'ble Supreme Court has also granted interim relief in those cases. 7. Further the decision of the Gujarat High Court in the case of AHMEDABAD STAMP VENDORS ASSN.(supra), has been confimed by the Hon'ble Supreme Court in the case of COMMISSIONER OF INCOME TAX AND ORS. v. AHMEDABAD STAMP VENDORS ASSOCIATION [(2012) 348 ITR 378 (SC)], which was delivered by the Hon'ble Supreme Court on 06.0.2012 and that should have been taken note by the authority while considering the Stay Petition. Further, it is submitted that in respect of Stamp Vendors Association, in respect of Milk Vendors Association and transactions relating to Soft Drinks, the Hon'ble Supreme Court has taken a view that there is no requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to pass an order on the Stay Petition to stay the demand pursuant to the assessment orders relevant to these Writ Petitions. 13. Before considering this issue, it has to be noted that a notice was issued to the petitioner on 19.9.2014, calling upon the petitioner to produce copies of Books of Accounts maintained by them, to verify the balances/fund available as on date. The petitioner did not produce the same and even after expiry of two weeks, the petitioner did not produce the cash position so as to examine the matter regarding their financial constraint claimed by the petitioner for non-payment TDS. The first respondent appears to have drawn an adverse inference and in my view, rightly so. Learned Senior counsel appearing for the petitioner also states that all was not well as to the manner in which the petitioner seeks to justify the non production of Accounts. 14. Be that as it may, unless and until the petitioner places materials before the first respondent, pleading financial incapacity or inability to pay the demand, pending decision of the Appeal, the authority who is consider the Stay Petition cannot be faulted for having taken a decision that the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts wherein this court held that the commission given by way of discount at the time of sale of lottery tickets is not a commission on which tax is deductible under Section 194G of the Act. The second decision of this court pertains to sale of stamp paper by the licensed stamp vendors wherein also the finding of this court following the decision of the Gujarat High Court in AHMEDABAD STAMP VENDORS' case is that the transaction is sale of goods and so much so, no deduction of tax is called for under Section 194G of the Act. So far as the lottery ticket is concerned, the transaction is different and the Supreme Court has held that the transaction is sale of goods and so much so, the decision rendered by this court has no application in regard to commission paid by the assessee to the distributors in the form of discount which we have found to be in essence and substance for rendering services. The next judgment relied on by the petitioner which is in KERALA STAMP VENDORS ASSOCIATION case rendered by one of us (C.N.Ramachandran Nair, J.), relates to sale of stamp paper by the licensed vendors. Here again, this court by relying on decision of the Gujarat High Court in AHMEDABAD STAM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The very scheme of deduction of tax at source under the Income Tax Act is to trace recipients of income and their accountability to the department for payment of tax on various transactions. In fact, major portion of the income tax collection is through recovery of tax at source and but for the mechanism, there would have been massive evasion of tax by the recipients of various kinds of income. The trend in legislation is to increase coverage for recovery of tax at source and on a steady basis various services are brought under the TDS scheme so that tax evasion is avoided. We have already taken note of the provision under Section 197 of the Act which mitigates against hardship if any in recovery of tax in as much as a payee is entitled to approach the department and apply for certificate to receive any amount which would be otherwise subject to deduction of tax at source without recovery of any tax or on recovery at lesser rates. We are of the view that the grievance if any against recovery of tax by the assessee is on the distributors, and they are already on the roles of the department because assessee is making deduction of tax at source for payment of commission made under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espite opportunity, the petitioner did not produce the records nor there was any attempt made by the assessee to seek for further time to produce the records and it appears that there was no specific pleading in the Stay Petition about the financial capacity, even before the second respondent when the first petition for stay was presented on 31.12.2014. 19. Section 220 of the act would treat an assessee to be an assessee in default when he does not meet the tax liability in respect of the demand raised by demand notice under section 156 of the Act. The discretion conferred on the Assessing Officer under sub section (6) of Section 220 of the Act, is not an arbitrary power, but a power coupled with responsibility and the assessing officer concerned should take all the circumstances into account and all the considerations that could be urged by the assessee as to why he should not be treated as not being in default and then make an order as is provided to the facts of the case. [see Mahalingam Chettiyar (MLM) vs. ITO [(1967) 66 ITR (Madras)]. 20. The other principle which has to be borne in mind is with regard to the fair chance of success of the assessee in its appeal, apart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions, that should have been considered by the first respondent while passing the impugned order dated 17.10.2014. 24. In the light of the above discussion, this Court is not inclined to interfere with the impugned order on the grounds raised by the petitioner stating that the decision of the Gujarat High Court ought to have been taken note of by the Commissioner of Income Tax (Appeals), despite the fact that in the assessee's own case, the Division Bench of the Kerala High Court has held against the assessee. However, considering the fact that in respect of the earlier assessment year 2007-08 and 2008-09, in respect of the identical transaction TCA Nos. 308 309 of 2011 are pending before the Hon'ble Division Bench of this Court and have been admitted on the following questions of law viz. 1.Whether the Tribunal was right in holding that the transaction between the appellant and the distributors of its prepaid SIM cards and recharge coupons was a contract of agency and not on a principal-to-principal basis ? 2. Whether the Tribunal was right in holding that the discount offered on provision of Prepaid SIM cards and pre-paid recharge coupons (refill/recharge sli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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