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BANK OF BARODA Versus THE INCOME TAX OFFICER (TDS) FK COMMERCIAL COMPLEX AND THE COMMISSIONER OF INCOME TAX (APPEALS)

2015 (12) TMI 1546 - KARNATAKA HIGH COURT

Right to be exempted from depositing the tax (TDS) liability on assessee bank before filing an appeal - whether the petitioner-Bank had raised the contention before the ITO with regard to the benefit granted to the petitioner Bank under the proviso attached to Section 201 (1) of the Act or not? - Held that:- The demand can be stayed by the learned Commissioner, provided that demand in dispute relates to issues that have been decided in assessee’s favour by an Appellate Authority, or the Court ea .....

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s to face the consequences as mentioned in Section 201 of the Act. Since Section 249(4) of the Act imposes a duty upon the assessee to deposit the entire amount, before that appeal can be admitted, the Bank cannot escape from its liability to follow the mandate of Section 249(4) of the Act. Although Instruction No.1914 does create exception to Section 249(4) of the Act, as mentioned above, the petitioner-Bank cannot take any benefit from Instruction No.1914, as it does not come within the ambit .....

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f the case are that the Income Tax Officer, respondent No.1 (the ITO', for short), had issued summons on 15.12.2014 under Section 131 along with notice under Section 133(6) of the Income Tax Act, 1961 ( the Act , for short), calling upon the petitioner-Bank to submit details of the Fixed Deposits held by the Visveswarayya Technological University, Belagavi ( the VTU , for short) and the interest paid on such deposits during the financial years 2010-2011 to 2013-2014, and the Tax Deducted at .....

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Act. The Bank further claimed that since it had no reason to disbelieve the assertion made by the payee-VTU, it did not deduct the TDS. 3. Not satisfied by the explanation offered by the petitioner-Bank, on 29.12.2014, the ITO issued a show cause notice to the petitioner, calling upon it to explain why it should not be considered as an assessee in default, for failing to make the TDS under Section 194A of the Act. Subsequently, on 16.01.2015, the ITO issued summons under Section 131 of the Act, .....

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n given by the petitioner-Bank, on 19.02.2015, the Income Tax Officer passed four separate, but identical orders, and treated the petitioner- Bank as an assessee in default, and raised an aggregate interest payment of ₹ 15,22,963/- under Section 201(1)/(1A) of the Act, for the assessment year 2011-12 to 2014-2015. 5. Since the petitioner-Bank was aggrieved by the assessment order dated 19.02.2015, it filed an appeal under Section 246A(1)(ha) and filed the petition under Section 220(6) of t .....

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0.04.2015, the petitioner- Bank filed two written submissions before the Commissioner (Appeals) and prayed that the disputed demand be stayed and that the ITO should be directed not to treat the petitioner as an assessee in default until disposal of the appeals pending before the Commissioner (Appeals). However, by order dated 15.04.2015, the learned Commissioner (Appeals) has rejected the application for stay, but has assured the petitioner-Bank that its appeal would be considered on priority b .....

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impugned order, the learned Commissioner (Appeals) is unjustified in claiming that the petitioner-Bank does not fall within the illustrations enumerated in para-C of the Instruction No.1914. According to the learned counsel, the petitioner-Bank clearly falls within the first illustration, namely if the demand in dispute relates to issues that have been decided in assessee s favour by an Appellate Authority or the Court earlier , then the demand should be stayed by the learned Commissioner. Howe .....

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o Section 201 (1) of the Act or not? To this pointed query, the learned counsel has given a very evasive answer. According to him, the said contention was, indeed, raised before the Income Tax Officer. However, when this Court asked him to point out where the said contention was recorded in the Assessment Order, the learned counsel could not show that such contention had, indeed, been raised before the ITO. Therefore, this Court is of the opinion that the said contention was not raised before th .....

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hat since they were informed by the VTU that they were exempted from filing the return under Section 10(23C)(iiiab) Section 139 of the Act, the Bank never deducted the TDS. 12. The issue whether the VTU is exempted under Section 10(23C)(iiiab) of the Act or not, the issue whether the petitioner-Bank was statutorily bound to deduct the TDS, has been discussed threadbare by the ITO. Since it would not be correct for this Court to express any opinion about the findings of the ITO, this Court restra .....

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an appeal, the assessee has paid an amount equal to the amount of advance tax, which was payable by him. Thus, Section 249(4) of the Act clearly stipulates that the assessee is duty bound to pay the amount equal to the amount of advance tax. However, the proviso bestows a discretionary power upon the Commissioner (Appeals) to exempt the assessee from the portion of the provisions of clause-B mentioned above. 15. Therefore, the question before this Court is whether the Commissioner(Appeals) has e .....

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he demand cannot be given to the petitioner-Bank. 17. Of course the learned counsel for the petitioner has pleaded that the petitioner-Bank does fall within the illustration (a) of para C of instruction No.1914 which is as under: C………….. (a) if the demand in dispute relates to issues that have been decided in assessee s favour by an appellate authority or court earlier;………………. (b) ……………&helli .....

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