TMI Blog2018 (4) TMI 1596X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be answered in favour of assessee. On question No.1, the assessee-University has come into existence in the year 2013 and it has never made the payment during the assessment year under consideration as it was not in existence. In that view of the matter, the view taken by both the authorities is not correct. In that view of the matter, finding arrived at by the original authority is required to be accepted. The issue is answered in favour of assessee. Demand of interest u/s 201(1A) - recipient of such income had discharged the applicable tax - Held that:- If the tax was duly paid and that too at the time when it had become due, it would not be proper on the part of the Revenue to levy any interest under Section 201(1A) of the Act especially when Builder had paid more amount of tax by way of advance tax than what was payable by it. As the amount of tax payable by the contractor had already been paid by it and that too in excess of the amount which was payable by way of advance tax, in our opinion, the Tribunal was absolutely right in holding that the tax paid by the contractor in its own case, by way of advance tax and self-assessment tax, should be deducted from the gros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agriculture University, Bikaner. On 10.12.2013 by an office order issued by the Registrar of the assessee appellant University, it was decided to shift the Sub-Treasury office along with staff located at Rajasthan Agriculture Research Institute, Durgapura, Jaipur to the assessee appellant University. On 17.03.2015 the controversy arose and came to light when the officials of the TDS Wing of the Income-tax department visited the premises of the assessee appellant University and on perusal of records, it was alleged that though pension was paid by the assessee appellant University for the financial year 2007-2008, i.e., assessment year 2008-2009 but TDS was not deducted on such pension paid as per the mandatory requirement of section 192 of the Act and immediately on the same date, i.e., on 17.03.2015 a show cause notice was issued to the assessee appellant University asking as to why TDS was not deducted by it for the financial year 2007-2008, i.e., assessment year 2008-2009 on pension paid. The ld. Assessing Officer granted a short date of one week to file reply to the show cause notice as the matter was getting time barred by 31st March 2015 and accordingly the matter was fixed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer while considering the matter has held that the amount was required to be treated penalty, and therefore, he has invited our attention to provisions regarding TDS for not deducting the TDS for the relevant year 2007-2008, which is reflected in the order of AO: a. During the course of Spot Verification proceedings, it is noticed that the Drawing Disbursement Officer/Treasury Officer has made payment under the head Salary/Pension to the Pensioners of the University which falls under the section 192(1) of the Income tax Act, 1961. It is also found that the deductor has neither deducted TDS nor deposited in the Government account. Thus, TDS on this payment should have been deducted at average basis of Income tax as per section 192(1) of the Income tax Act, 1961 but the deductor has not deducted TDS as per under section 192(1) of the Income tax Act, 1961. On examination of the details of records of the deductor, the following discrepancies were found:- b. During the course of spot verification, the deductor was asked to explain the reason of non deduction of TDS and an opportunity was given to furnish the details of declaration certificates receipts of 80C etc. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the first appellate authority. This is particularly so as the appellant had submitted to the jurisdiction of the Assessing Officer and had made no grievance with regard to lack of jurisdiction of the Assessing Officer. Even otherwise it is submitted the fact that income chargeable to tax has escaped assessment need not necessarily flow out to examination of return of income and the same could be from any other source. Thus, the requirement of having a return of income available at the time of issuing of the notice is not necessary. So far as the questions nos. 1 to 3 as admitted, it is submitted that the same would depend upon the view taken by the Court on the issue of jurisdiction. Therefore, at this stage no submissions were made with regard to questions nos.1 to 3 with liberty to make the same in case the Court is of the view that the issue of impugned notice dated 13/11/2000 was a notice within jurisdiction of the Assessing Officer. 13. We have considered the rival contentions. The jurisdiction under Section 147/148 of the Act is an extra ordinary jurisdiction and can only be exercised when condition precedent as provided in Sections 147/148 of the Act are satisfied. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Venkatarama Ayyar, J. in Kiran Singh v. Chaman Paswan [MANU/SC/0116/1954 : AIR 1954 SC 340 :(1955) 1 SCR 117], which would be worthwhile to be extracted as under: (Sushil Kumar Mehta case [Sushil Kumar Mehta v. Gobind Ram Bohra, MANU/SC/0593/1989 : (1990) 1 SCC 193], SCC p. 199) 6. 10. ... '6. ... It is a fundamental principle well established that a decree passed by a court without jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non judice, and that its judgment and decree would be nullities.' (Kiran Singh case [MANU/SC/0116/1954 : AIR 1954 SC 340 : (1955) 1 SCR 117], ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Show Cause Notice. It is submitted that it is well settled proposition of law that ordinarily the petition against the Show Cause notice would not be entertained particularly when the petitioners are having adequate statutory remedy under the Income Tax Act itself. In support of his above submission he has heavily relied upon the decision of this Court in the case of INOX AIR PRODUCTS LTD Versus Union of India and others, rendered in Special Civil Application No. 16725 of 2013. It is submitted that in the aforesaid decision, relying upon the decision of the Hon'ble Supreme Court reported in the case of Bellary Steels Alloys Ltd. Versus CCT, reported in (2009) 17 SCC 547 as well as in the case of Indo Asahi Glass Co. Ltd. Versus ITO, reported in MANU/SC/0306/2002 : (2002) 10 SCC 444, this court has not entertained the petitions which were filed against the Show Cause Notice. 10.02. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that the contention on behalf of the petitioners that the impugned notices under section 201(1) are barred by proviso to section 201(3) of the Act, is untenable in law. It is submitted that section 201(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996 (5) SCC 626 (CTO Versus Bishwanath Jhunjhunwala). 10.06. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that in the present case section 201(3) does not provide that the period is available only where limitation has not expired. It is submitted that as such the law that prevailed at the time of issuance of notice is required to be applied. It is submitted that section 201(3) provides for issuance of notice within 7 years. It is submitted that the language of section 201(3) as amended by Finance Act (No.2) 2014 being plain, unambiguous, literal, the same is required to be applied while giving liberal meaning to to it. 10.07. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that in the present case larger period of limitation as provided under section 201(3) as amended by Finance Act (No.2) which provides for 7 years time is not applied, in that case, the purpose and object of amendment in section 201(3) of the Act would be frustrated. 10.08. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that as such similar provision is also incorporated in Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h take note of the aforesaid Constitutional Bench decision, are required to be applied. 10.11. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that even in the decision in the case of Thirumalai Chemicals Ltd. (supra), it is held that the aspect of limitation is a procedural matter. Making above submissions and heavily relied upon the statement and objects of amendment in Section 201(3) of the Act and relying upon the above decisions, it is requested to dismiss the present petitions. 12. While considering the aforesaid question, provisions of section 201 of the Income Tax Act, as amended from time to time, are required to be considered. 12.01. Section 201 of the Act provides for consequences of failure to deduct tax in accordance with the provisions of the Act. Section 201 of the Act as amended by Finance Act of 2008 with retrospective effect from 1/6/2002 reads as under : Consequences of failure to deduct or pay. 201. (1) Where any person, including the principal officer of a company,- (a) who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (IA) of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , without good and sufficient reasons, has failed to deduct and pay such tax. (1A) Without prejudice to the provisions of sub- section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest, - (i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) at one and one half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200. (2). Where the tax has not been paid as aforesaid after it is deducted, the amount of the tax together with the amount of simple interest thereon referred to in sub-section (1A) shall be a charge upon all the assets of the person, or the company, as the case may be, referred to in sub- sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efault for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given. As stated hereinabove, question posed before this Court is whether section 201(3) of the Income Tax Act as amended by Finance Act No. 2 of 2014 would be applicable prospectively or retrospectively. 12.06. From the aforesaid chronological events and section 201 as amended from time to time, it emerges that prior to section 201 came to be amended by Finance Act No. 2 of 2009, Income Tax Act did not provide for any limitation of time for passing an order under section 201(1) holding a person to be an assessee in default. It appears that in absence of such a time limit, dispute arose when the proceedings were taken up or completed after substantial time has elapsed. Therefore, by Finance Act No. 2 of 2009 sub- sections (3) and (4) came to be introduced w.e.f. 1/4/2010 and it provided that an order under section 201(1) for failure to deduct the whole or any part of the tax as required under the Act, if the deductee is a resident payer, shall be passed within two ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f defalcation of government dues; (b). the employer has failed to pay the tax wholly or partly, under sub-section (1A) of section 192, as the employee would not have paid tax on such perquisites; (c). the deductee is a non-resident as it may not be administratively possible to recover the tax from the non-resident. It is proposed to make these amendments effective from 1st April, 2010. Accordingly it will apply to such orders passed on or after the 1st April, 2010. From the aforesaid chronological events, it appears that section 201(3)(iii) of the Act came to be further amended by Finance Act of 2012, however, with retrospective effect from 1/4/2010 whereby in sub-section (3) in clause (ii), further words four years came to be substituted by words six years . Thus, period for passing order in respect of cases where statement referred to in section 200 of the Act were not filed, was extended from four years to six years. 12.09. It is also required to be noted that other provisions of section 201(3) clause (1) and proviso thereof remain same including last date for passing order for F.Y. 2007-08. 12.10. At this stage, it is required to be noted that in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing of correction statement filed. The existing provisions of section 201(1) of the Act provide for passing of an order deeming a payer as assessee in default if he does not deduct or does not pay or after deduction fails to pay the whole or part of the tax as per the provisions of Chapter XVII-B of the Act. Section 201 (3) of the Act provides for time limit for passing of order under section 201(1) of the Act for deeming a payer as assessee in default for failure to deduct tax from payments made to a resident. Clause 201(3) of the Act provides that no order under section 201(1) of the Act shall be passed after expiry of two years from the end of the financial year in which TDS statement has been filed. Currently. the processing of TDS statement is done in the computerized environment and mainly focuses on the transactions reported in the TDS statement filed by the deductor. Therefore, there there is no rationale for not treating the deductor as assessee in default in respect of the TDS default after two years only on the basis that the deductor has filed TDS statement as TDS defaults are generally in respect of the transaction not reported in the TDS statement. It is, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 201(3) of the Act by Finance Act No. 2 of 2014, does not so specifically provide that the said amendment shall be made applicable retrospectively. 12.16. On the other-hand, it is specifically stated that the said amendment will take effect from 1/10/2014. As observed hereinabove, in the present cases, limitations provided for passing order under section 201(1) of the Act for A.Y. 2007-08 and 2008-09 had already been expired on 31/3/2011 and 31/3/2012, respectively, i.e. prior to section 201(3) came to be amended by Finance Act No. 2 of 2014. 15. Considering the law laid down by the Hon'ble Supreme Court in the aforesaid decisions, to the facts of the case on hand and more particularly considering the fact that while amending section 201 by Finance Act, 2014, it has been specifically mentioned that the same shall be applicable w.e.f. 1/10/2014 and even considering the fact that proceedings for F.Y. 2007-08 and 2008-09 had become time barred and/or for the aforesaid financial years, limitation under section 201(3)(i) of the Act had already expired on 31/3/2011 and 31/3/2012, respectively, much prior to the amendment in section 201 as amended by Finance Act, 2014 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of decisions in Tata Teleservices (supra) which was followed in Mtroikaa Pharmaceuticals Ltd. Vs. Union of India ors., (2016) 68 taxman.com 229 (Gujarat), we are of the opinion that question No.2 is required to be answered in favour of assessee. 10. On question No.1, the assessee-University has come into existence in the year 2013 and it has never made the payment during the assessment year under consideration as it was not in existence. In that view of the matter, the view taken by both the authorities is not correct. In that view of the matter, finding arrived at by the original authority is required to be accepted. The issue is answered in favour of assessee. 11. With regard to question No.3, in view of decision of this Court in DCIT (International Taxation) Jaipur Vs. M/s. National Highway Authority of India, D.B. Income Tax Appeal No. 25/2016 and other connected appeal decided on 29.11.2017, wherein it has been held as under: 5. Counsel for the respondent has relied upon the decision of this Court in case of Commissioner of Income Tax vs. Rajasthan Rajya Vidyut Prasaran Nigam Ltd. [2006] 287 ITR 354 (Raj.) wherein it has been held as under:- After perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance tax than what was payable and had also paid tax on self-assessment. Thus, it is not at all in dispute that for the relevant two years the amount of tax was paid by Ravi Builder on its income as per the provisions of the Act, and for the other two years, tax was paid by Ravi Builder a little late. So far as the late payment is concerned, the Appellate Assistant Commissioner held that the assessee had to pay interest under Section 201(1A) for the said years and the assessee accepted the said finding. Thus, it can very well be seen that the facts of the case which has been relied upon by Mr. Qureshi cannot help the Revenue for the reason that in the said case it was not known whether the person on whose behalf the tax was to be paid to the Revenue had in fact paid the tax payable by him. In the instant case, the contractor, viz., Ravi Builder, had admittedly paid the amount of tax payable by it and thus no loss of whatsoever nature had been caused to the Revenue on account of non-deduction of tax at source by the assessee. From the legal provisions discussed hereinabove, it is crystal clear that in the instant case Ravi Builder, on whose behalf the tax was to be paid by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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