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Branch Manager, The Muzaffarpur Central Co-operative Bank Ltd. Versus ITO (TDS) , Muzaffarpur

2015 (8) TMI 913 - ITAT PATNA

Non deduction of TDS u/s.194A on the interest credited/paid by the assessee to the some depositors - time limit for initiating proceedings u/ss. 201(1) and 201(1A) - Held that:- Revenue has not brought on record any outstanding demand on the deductee/s, so that time limitation of six years from the end of the relevant assessment year shall obtain, i.e. for the purpose of initiation of recovery proceedings. Further, for all the years, the proceedings were initiated on 15.02.2008, following a surv .....

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fers from the legal infirmity of being barred by time. The assessee’s case, accordingly, fails for all the years.

On the merits of the demand raised, on which no arguments were made and, consequently, not urged or responded to by the other side as well, the matter stands squarely covered by the decision by the co-ordinate Bench in the assessee’s case (to which both of us are incidentally a party), confirming the impugned order. It is, however, as afore-stated, open for the assessee t .....

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I 33 - SUPREME COURT]. We decide accordingly. - I.T.A. Nos.111 to 114/Pat/2012 - Dated:- 22-7-2015 - SHRI A. D. JAIN AND SHRI SANJAY ARORA, JJ. For The Appellant : Shri Sanjeev Kr. Anwar, Adv. For The Respondent : Shri. Suman Kr. Mishra, Jr. S. C. ORDER Per Sanjay Arora, AM: This is a set of four Appeals by the Assessee arising out of a common Order dated 29.05.2012 for the assessment years (A. Ys.) 2001-02 to 2004-05 (even as only the first four years were posted for hearing and, accordingly, h .....

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at source had not been, as required u/s.194A, deducted on the interest credited/paid by the assessee to the some depositors, i. E., for the relevant years. Form 15H, i. E., a declaration by the depositor that no tax is payable in respect of the interest allowed, precluding deduction of tax at source (TDS), had not been obtained from the deductees, nor filed, as required, with the Office of the concerned Commissioner of Income Tax, much less within the time stipulated there-for. There were in fac .....

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f interest credit/paid whichever is earlier (Rs.) Rate of TDS Income tax deductible at source u/s.194A Amount of interest u/s. 201(1A) Period of default (months) From 1st April to July 08 Total Amount 2000-01 5,22,985 10% 52,299 57,529 88 1st April 01 1,09,828 2001-02 6,96,021 10 69,602 66,122 76 1st April 02 1,35,724 2002-03 8,95,621 10 89,562 58,663 64 1st April 03 1,48,225 2003-04 8,21,243 10 82,124 42,704 52 1st April 04 1,24,828 Total 2,93,587 2,25,018 5,18,605 The ld. CIT(A), in appeal, he .....

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considering the facts, it is. observed that in the case of CIT Vs M/s Ell Lilly and Company (India) (P) Ltd., 178 Taxman 505, the Apex Court has observed that sub-section 1 and sub-section 1A of Section 201 of the I. T. Act, operate in independent spheres and one is not dependent upon the other i. E. provisions of one sub section can be applied irrespective of the other sub section. In view of this decision and decision in the case of Hindustan Coca Cola Beverage 293 ITR 226 (Supreme Court), it .....

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TDS till the date of payments of taxes by such deductors/date of filing of returns by such deductees. Accordingly, this ground of the appeal of the appellant is partly allowed as above. 3. Before us, the assessee cited decisions by the Hon ble High Court, as under, while the Revenue relied on the decision in CIT vs. H. M. T. Ltd. [2012] 340 ITR 219 (P & H), both the parties limiting their arguments to the legal issue of the application or otherwise of the time limit for framing assessment, .....

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both rendered relying on the decisions by the Hon ble Apex Court, it was pointed out by them that the decision in H. M. T. Ltd. (supra) was following the decision in Hindustan Times Ltd. vs. Union of India [1998] AIR 1998 SC 688, which is qua recovery under the Employees Provident Fund, while the decisions in favour of the assessee are based on the decisions rendered under the taxing statutes. The Bench, at this stage, pointed out that the relevant provisions fall under Chapter XVII of the Act, .....

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ugned order (in ITA Nos. 121 to 124/Pat/2012), which stand decided by us vide order dated 24.04.2015 (copy on record). This, though admittedly not the proper course, so that cross appeals ought to have been heard together, we may emphatically clarify is due to the factum of these being cross appeals being not brought to the notice of the Bench during hearing. The tribunal decided the matter; the Revenue challenging the decision by the ld. CIT(A) on merits; thus: 6. On consideration of the rival .....

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ependent spheres and the one is not dependant upon the other and the provisions of one sub-section can be applied irrespective of the other sub-section. It is this law, as settled by the Hon ble Supreme Court, which stands irrefuted by the department. Therefore, the grievance of the department is rejected and the order of the ld. CIT(A) is confirmed. 7. Our above observations shall apply equal to all other cases, the facts and circumstances in all these cases being, mutatis mutandis, in parimate .....

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, as contended and, thus, legally not valid. 4.2 We shall begin by reviewing the judicial precedents, with a view to ascertain or cull out their ratio or the legal principle/s underlying the same. This is as the applicability or otherwise of a particular decision could be determined only after ascertaining its ratio, which alone has precedent value. This is particularly considering that the decisions relied upon are based on the decisions by the Apex Court. Further, where faced with contrary dec .....

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the scheme of the Act, and is of no consequence; b) the admission of liability does not restore legality to the proceedings or confer jurisdiction, which has to be as per the law. It cannot, at any rate, put the assessee in a condition worse than he would be if he had chosen to contest the liability; c) for the purpose of sections 201(1) and 201(1A), it is the date of the initiation of the proceedings, or the exercise of the jurisdiction, that is relevant, and not of completion of the said proce .....

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g the provisions of the relevant Act, i. E., the nature of the statute, the rights and liabilities there-under and other relevant factors, as held by the Apex Court in State of Punjab vs. Bhatinda District Co-op. Milk Producer Union Ltd. [2007] 9 RC 637 (11 SC 363). The Hon ble High Court, accordingly, upheld a time limit of four years, i. E., as stipulated by the tribunal, even as in its view a period of three years (from the end of the relevant previous year), was a reasonable period. (2) Hutc .....

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ld that the delay and laches cannot annul the proceedings where no time limitation in their respect was consciously provided by the Act, noting omission of section 231 of the Act, which specifically provided for a time limit for the commencement of the recovery proceedings under Chapter XVII of the Act (by Direct Tax Laws (Amendment) Act, 1987, w. E. F. 01.04.1989). Support was also drawn by it from the other decisions by the Apex Court. The demand raised in the case of Hindustan Times Ltd. case .....

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cted. The defaulter held the funds in trust, which are due to a trust fund. The legal principles in the matter are, thus, as can be readily seen, stated by the Apex Court in Bharat Steel Tubes Ltd. (supra); Bhatinda District Co-op. Milk Producer Union Ltd. (supra); and Hindustan Times Ltd. (supra). A reasonable period shall govern the exercise of the statutory power. What is reasonable would depend on the facts of the case, which has been further clarified as depending upon the nature of the sta .....

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ngs under the Act, is, thus, in agreement with the clear and settled principle of law enunciated by the Apex Court per its various decisions referred to in HMT Ltd. (supra), including and not limited to Hindustan Times Ltd. (supra). Even otherwise, the principle of casus omissus cannot be lightly inferred, as explained in, among others, Padmasundara Rao (Decd.) vs. State of Tamil Nadu [2002] 255 ITR 147 (SC). Continuing further, again, without doubt, the charge of tax and the crystallization of .....

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to 196D). The said charge of tax would, thus, not abate with time, and the tax due (which becomes payable within a defined period of the taxable event), cannot be held as not payable or recoverable by the Central Government, to whose credit the same is to be paid, upon non action by it toward recovery, i. E., for a particular period of time. In other words, the tax liability (qua TDS) shall not get extinguished upon lapse of certain period of time, which may be considered as reasonable . There i .....

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time limit statutorily provided. There could, thus, be no time limitation, where none stands provided, toward recovery as per TDs provisions under Chapter XVII-B. Section 201(1), it may be appreciated, is not a charging section or toward a levy of tax - which is in the instant case per sections 4(2) r/w section 194A, but only qua its recovery. At the same time, we cannot but help notice that the TDS liability of the deductor, though recoverable from him and in respect of which he can be, followi .....

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and 191 of the Act. This introduces a complexity to the matter. The tax, under Article 265 of the Constitution of India, can only be levied or recovered under the authority of law. The tax in the form of TDS, so collected, is that levied (by law) on the deductee. That is, collection of tax could only be of that levied, which, where of TDS, is of another, i. E., the deductee. Collection of tax can even otherwise be neither in vacuum nor independent or de hors that levied, i. E., is rendered witho .....

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hereof. The same requires determination of income, which is to be in terms of the relevant provisions of the law, and following the procedure of assessment laid down under Chapter XIV of the Act. The same, per section 139, requires the deductee to furnish the return of income, and vide section 140A to pay self-assessment tax along with, reckoning the same by taking into account all the taxes already paid, including the tax deducted at source. The assessee s return is, though, not binding on the .....

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st the deductees tax liability (to that extent). The Revenue is in such a case required to show that some determined tax is payable by the deductee on income assessable for the year, tax at source on which has not been deducted, or after deduction, paid (also see section 199). The interest liability on TDS, which is sought to be collected per section 201(1A) follows, being compensatory, i. E., is consequential or concomitant. However, where there is no such outstanding demand, i. E., of determin .....

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under reference, is set at a maximum of six years from the end of the relevant assessment year. This, then, would become a reasonable period up to which tax recovery proceedings qua TDS could be initiated, i. E., where there is no outstanding tax demand against the deductee for the relevant year. This is as the proceedings in the case of the deductee, against whose tax liability the said TDS would stand to be adjusted, could in law be initiated only up to that time limit. Two, as afore-discusse .....

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ion of tax at source on the income chargeable to tax for the year, the same can yet not be recovered in view of the tax on the relevant income having been paid or otherwise recovered by the Revenue. That is, though the orders u/ss. 201(1) and 201(1A) would in such a case, i. E., initiation of proceedings in its respect within six years from the relevant assessment year, is valid, actual recovery shall abate on the satisfaction of the tax liability on the corresponding income. Decision 5. In sum, .....

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in Bhatinda District Co-op. Milk Producer Union Ltd. (supra). Order u/s. 201(1) is not toward levy of any tax, but only toward its recovery, with the interest u/s. 201(1A) being, as is well settled, compensatory. In our view, therefore, where the tax stands determined and is outstanding against the deductee, i. E., against whose tax liability the tax deductible is to be adjusted, the same is only a recovery of the tax levied and no time limit, in view of the conscious omission of any time limit .....

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st the impugned income. The assessee is though, at any rate, entitled to show that no tax liability against the corresponding income is outstanding, so that the tax could not be recovered. This would also harmonize the two sets of decision. We may, further, clarify that we have consciously limited our discussion to the decisions by the higher courts of law, in preference to that by the tribunal, also relied upon before us, in view of the issue being legal, so that the former would in any case pr .....

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