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TMI Blog2020 (12) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... margin of petitioner is @ 0.26%. It is further averred that in the case of petitioner, the ratio of tax deduction at source (hereinafter referred to as 'TDS') to profits has been as high as 1758% in the recent past and the petitioner company has refunds due and payable totalling to Rs. 128 crores, which have arisen essentially on account of high rate of TDS. 3. It is stated that for the financial year 2020-2021, the petitioner vide application dated 28th February, 2020 under Section 197 of the Act, gave a detailed representation to the respondent no.2 for issuance of low tax deduction certificate [hereinafter referred to as 'LTDC' ] at 'Nil' rate. The said application was decided vide order dated 29th June, 2020 (impugned order) wherein the petitioner's request for 'Nil' rate certificate was rejected. The petitioner challenged the said order before this Court by way of WP(C) 4511/2020 which was disposed of vide order dated 24th July, 2020 with a direction to the respondent to furnish reasons for the impugned order. In pursuance to the order dated 24th July, 2020 passed by this Court, the respondent vide letter dated 31st July, 2020 (impugned reasons) supplied the detailed reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the aforesaid, we are not inclined to entertain the writ petition at present. However, we state that if the petitioner would file a revision within a period of two weeks challenging the order passed by the Assessing Officer on all grounds including that the said authority could not have taken recourse qua the Act, the revisional authority, namely, the Commissioner, Income-tax, shall decide the revision adverting to all the issues within a period of three weeks positively...." 7. She further submitted that the scope of judicial review of an order passed under Section 197 of the Act is limited as it is directed not against the rate prescribed in the certificate, but against the decision making process. She submitted that it is settled law that till there is a patent illegality and/or error apparent on the face of the decision or non-application of mind by the Officer, this Court would not interfere with the decision arrived at by such officer. In support of her submission, she relied upon the judgment dated 20th December, 2019 passed by this Court in National Petroleum Construction Company vs. Deputy Commissioner of Income Tax, Circle- 2(2)(2). 8. Learned senior standing coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 09.05.2019 Revised Order u/s 264 Dated 07.11.2019 Average Rate for the year (approx) FY 2019-20 1% u/s 194C 0.50% u/s 194C 0.78% 1% 194I(a) 0.50% u/s 194I(a) 0.78% 4% 194IJ 0.50% u/s 194J 2.45% 2% 194I(b) 0.50% u/s 19I(b) 1.35% 13. She lastly stated, without prejudice to aforesaid, that if the petitioner applies afresh with correct description of nature of service, the Department will expeditiously issue a certificate within two weeks, keeping in view peculiar facts of the present case. REJOINDER ARGUMENTS ON BEHALF OF THE PETITIONER 14. In rejoinder, Mr. Piyush Kaushik, learned counsel for petitioner stated that an order under Section 197 of the Act is to be passed after a final decision is taken by the CIT on the application. He pointed out that in para No.7 of the impugned order it was stated that the approval from CIT had been sought on the TRACES Portal. Consequently, according to him, the order under Section 197 of the Act cannot be subject to revision under Section 264 of the Act by the CIT. In support of his submission, he relied upon the judgment of the Karnataka High Court in CIT vs. Smt. Annapoornama Chandrashekar, 17 taxmann.com 120 (Kar) wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a revision petition before the CIT under Section 264 of the Act. To hold otherwise, would amount to directing the petitioner to file an 'appeal from Caesar to Caesar'. 20. The Karnataka High Court in CIT vs. Smt. Annapoornama Chandrashekar (supra), while discussing the scope of revisional jurisdiction of the CIT with respect to an order passed after approval of CIT under Section 158BC read with Section 158BG, held as under:- "11. It was contended that it is an administrative order. Even the order of assessment is an administrative order and therefore the previous approval to make such an order valid cannot be other than an administrative approval. But, the question is, once an approval is accorded by the Commissioner can he sit in judgment over such an order and find fault with such order on the ground that it is erroneous and is prejudicial to the interest of the revenue. The question arises if to make the said order, previous approval of the Commissioner is a condition precedent, was Commissioner not expected to look into the draft block assessment order placed before him for approval to find out whether the said order is lawful and whether the said order is prejudicial to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the assessment order would have no value at all. Therefore, when previous approval is a condition precedent and approval means to 'agree', i.e., to concur, to give mutual assent, to come into harmony, it is possible only after application of mind by the authority according approval. xxx xxx xxx 17. Therefore, this power conferred on the Commissioner is in the nature of supervisory power. If he finds that the order passed by the Assessing Officer is erroneous and also prejudicial to the interest of the Revenue, after examining the record or any proceedings under the Act to rectify such error and to protect the interest of the Revenue he can exercise the said power, because, the Commissioner becomes aware of such erroneous orders prejudicial to the revenue after looking into the record. But, if he has looked into the record, applied his mind and agreed with the order of the Assessing Authority, this power of revision under Section 263 is not available to him after according approval to such order............... (emphasis supplied) 21. The Bombay High Court in Tata Teleservices (Maharashtra) Vs. The Deputy Commissioner of Income tax, (Writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICH HAVE BEEN SET-ASIDE/SUPERSEDED, TO DETERMINE THE AVERAGE RATE OF TDS. FURTHER, RESPONDENTS' RELIANCE ON PARA 4 OF THE IMPUGNED ORDER IS MISPLACED AS THE BASIS/REASONING FOR THE IMPUGNED ORDER IS TO BE FOUND IN PARA 7. 24. This Court is also of the view that the reliance placed by the respondent upon para no.4 of the impugned reasons is misplaced inasmuch as the rates mentioned therein have been superseded by the subsequent order dated 7th November, 2019 passed by the CIT under Section 264 of the Act. Accordingly, the respondent could not have relied upon the initial rates of 2019-20, which have been set-aside/superseded, to determine the average rate of TDS. Further, respondents' reliance on para 4 of the impugned order is misplaced as the basis/reasoning for the impugned order is to be found in para 7 and not para 4. Para 7 of the impugned order reads as under:- "7. Thus on the basis of the above mentioned analysis of the facts and circumstances of the business by the Assessing Officer at his level, the following was recommended separately to the higher authorities on the TRACES portal for grant of approval of LTDC certificate against the request of the applicant : "M/s M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LTDC issued was @ 1% u/s 194C, 1% 1941(a) and 4% u/s 194J and 2% for 1941(b) for FY 2019-20. However, revenue foregone was Rs. 106,14,44,080/-. * Order u/s 264 was passed u/s 1941(a), 1941(b) & 194C @ 0.50% for FY 2019-20. 7.Revenue forgone: * Proposed rate by AO is @ 0.50% u/s 194C, @ 1.50% 194J & 1941(b) for FY 2020-21. * The revenue foregone as per propose rate will be Rs. 2426403350/- The case of the applicant has been selected under scrutiny for AY 18-19 with CASS reasons which include claim of large value refund and substantial deduction under Chapter VI-A/ The propose rate will protect revenue interest and it is proposed after consideration of facts of the case. So, the application is being forwarded for your kind consideration and direction." For your kind information. Your's sincerely Sd/- ACIT C-75(1) TDS, Delhi" THE ASSESSING OFFICER CANNOT IGNORE THE MANDATE OF RULE 28AA AND PROCEED ON ANY OTHER BASIS AS THE GOVERNMENT IS BOUND TO FOLLOW THE RULES AND STANDARDS THEY THEMSELVES HAD SET ON PAIN OF THEIR ACTION BEING INVALIDATED. CONSEQUENTLY, THE IMPUGNED ORDER IS QUASHED ON THE GROUND THAT THE DECISION MAKING PROCESS IN THE PRESENT CASE IS CONTRARY TO L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, the assessing officer has not followed the aforesaid rule as there is no reference in the impugned reason to any computation carried out under Rule 28AA. 29. In fact, this Court vide order dated 8th December, 2020 had granted time to the respondent to place on record the computation of TDS rates under Rule 28AA, if any. Despite the said opportunity, neither any computation was filed nor was any reasonable explanation given as to why the computation under Rule 28AA was not carried out. Consequently, this Court is of the opinion that the impugned order is liable to be quashed on the ground that the decision making process in the present case is contrary to law. RELIEF 30. In view of the aforesaid discussion, this Court finds that there is nonapplication of mind which vitiates the impugned order and reasons. Accordingly, we set aside the impugned order and reasons and remand the matter to respondent no.2 for fresh determination in accordance with law as expeditiously as possible preferably within a period of two weeks. 31. In the interim, we direct that the benefit of revised TDS rates prescribed for financial year 2019-2020 (by respondent no.1 vide order dated 7th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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