Delhi High Court
Mitsubishi Corpn. vs Dy. Cit on 29 November, 2002
Equivalent citations: [2003]85ITD414(DELHI)
ORDER
UNDER SECTION 201Letter issued by Joint Commissioner Catch Note:
On deducting tax at source under section 195A assessed filed Form No. 24--Joint Commissioner issued letter to assessed that on verification of Form No. 24 it is found in order--However, Deputy Commissioner, TDS, reopened assessed's case on ground that the letter issued by Joint Commissioner was not an order--Was not justified-- Perusal of letter shows that neither assessed was declared as an assessed in default nor any demand was raised--On the contrary, according to assessed, liability computed by assessed was already paid before issue of such letter--Hence, impugned order of Joint Commissioner cannot be considered as an order under section 201(1) .
Ratio:
Perusal of letter shows that neither assessed was declared as an assessed in default nor any demand was raised--On the contrary, according to the assessed, liability computed by assessed was already paid before issue of such letter--Hence, impugned order of Joint Commissioner cannot be considered as an order under section 201(1).
Held:
Letter issued by Joint Commissioner cannot be considered as an order under section 201(1). Firstly, no notice was issued by Joint Commissioner for commencing any proceeding under section 201 (1). Secondly, the assessed has not been declared an assessed in default, which is a condition precedent for passing such order. Thirdly, the order under section 201(1) must result in raising of demand of tax which the assessed failed to deduct. The perusal of the letter shows that neither the assessed was declared as an assessed in default nor any demand was raised. On the contrary, according to the assessed, the liability computed by the assessed was already paid before issue of such letter. Hence, the impugned order of the Joint Commissioner cannot be considered as an order under section 201(1).
Application:
Also to current assessment year.
Decision:
In favor of revenue.
Income Tax Act 1961 s.201 Tax deduction at source--INTEREST UNDER SECTINO 201(1A)Allowance paid abroad by assessed to its employees--Non-deduction of tax at source on bona fide ground that same not taxable in India Catch Note:
assessed contended that it was under bona fide belief that allowances paid abroad to its employees were not taxable in India--Further, conduct of assessed was accepted by Joint Commissioner while dropping the penalty under section 271C--Contention of assessed is not acceptable-- Conduct of assessed may be relevant regarding issue of levy of penalty under section 271C because of the import of reasonable cause in section 273B but same is not relevant for levying interest under section 201(1A) since such provisions are mandatory .
Ratio:
Conduct of assessed may be relevant regarding issue of levy of penalty under section 271C because of the import of reasonable cause in section 273B but same is not relevant for levying interest under section 201(1A) since such provisions are mandatory.
Held:
Case Law Analysis:
CIT v. Prem Nath Motors (P) Ltd. (2002) 253 ITR 705 (Del) followed.
Application:
Also to current assessment year.
Decision:
In favor of revenue.
Income Tax Act 1961 s.201(1A) In the ITAT, Delhi Bench C Keshav Prasad, A.M. & K.C. Singhal, J.M. ORDER Singhal, J.M. Since common issue is involved in these appeals, the same are being disposed of by the common order for the sake of convenience. The issue involved in these appeals relate to the liability arising out of the impugned orders under section 201(1) and 201(1A) pertaining to financial years 1988-89 to 1997-98.
2. The brief facts as gathered from the impugned order under the aforesaid sections, materials placed before us as well as the statement of facts filed before the Commissioner (Appeals) are these : The assessed is a non-resident company incorporated in Japan. It had a liaison office at New Delhi. It employs Indian staff as well as Japanese expatriate staff which has been referred to by the assessed as rotating staff. Tax has been duly deducted at source against payment of salaries to Indian staff and there is no dispute in this regard. However, the salary was being paid to Japanese expatriate staff at two places, i.e., in India as well as in Japan. The tax was duly deducted at source from the salary paid in India to such staff and the same was paid to the Central Government. However, tax on salary paid to such staff in Japan was paid by the assessed on tax on tax basis, i.e., by grossing up method.
3. A survey under section 133A was carried out on 24-1-1998 at the premises of the assessed at New Delhi under the authorization issued by Joint Commissioner Range-23, New Delhi in the course of which statements of S/Shri Tario Katoh (GM), Y. Saito (AGM) and Naoki Saito (DGM) were recorded. Shri Y. Saito, in his statement, stated that his employer was paying tax on his behalf. Subsequently, the assessed of its own appeared before Joint Commissioner, Range-23 Along with the details of salary paid to its Japanese staff relating to financial years 1988-89 to 1997-98. According to the assessed, it was advised that certain allowances like hardship allowance, separation allowance, GM allowance, medical allowance etc. paid outside India to the Japanese staff were taxable in India. Accordingly, assessed agreed to pay tax on such allowances for the last 10 years and worked out the tax liability and interest thereon at the rate of 15 per cent which amounted to Rs. 52,79,76,749. The said amount was paid suo motu without raising any demand by the department. According to the assessed, this was done to buy peace and avoid litigation and harassment and on clear understanding that no penalty or other proceedings shall commence against the assessed. The aforesaid amount was paid as under :
Rs. 12,75,30,000 on 10-12-1998 vide receipt No. 18033.
Rs. 40,04,46,749 on 26-12-1998 vide receipt No. 24390.
Rs. 52,79,76,749 After the aforesaid payments, the Joint Commissioner, Range-23 wrote a letter dated 24-12-1998 stating as under :
"The revised returns filed by you in Form No. 24 for the financial years 1988-89 to 1997-98 have been verified and accepted."
4. Subsequently, the details filed by the assessed were processed by the Deputy Commissioner of Income Tax (in short Deputy Commissioner), TDS Circle 23(1), who vide letter dated 1-2-1999 asked the assessed to file the necessary documentary evidences on the basis of which TDS liability had been revised. The assessed vide letter dated 4-3-1999 forwarded the certified salary statements of the rotating staff in India for the aforesaid 10 years as received from head office and further submitted that the liability for assessment years 1988-89 to 1989-90 was computed on the basis of the income for the financial year 1990-91. It was further stated that on the basis of these statements the tax and interest liability aggregating Rs. 52,79,76,749 was worked out.
5. The Joint Commissioner Range-23 also issued notices under section 271C dated 5-7-1999 asking the assessed to show-cause as to why should penalty be not levied on account of short deduction of tax of Rs. 52.79 crores and odd. After the detailed reply of the assessed dated 8-7-1999, the penalty proceedings were dropped by him vide order dated 12-8-1999.
6. The Deputy Commissioner, TDS Circle 23(1) again issued a letter dated 1-2-2000 asking the assessed to substantiate the amount of tax and the interest paid by documentary evidence. The assessed vide letter dated 7-2-2000 submitted that all the revised returns filed by the assessed had already been verified and accepted by the Joint Commissioner, Range-23 and, therefore, the matter should be closed. Some further correspondence took place between the assessed and Deputy Commissioner. The assessed vide letter dated 6-3-2000 submitted as under :
"3. What was stated in paras 3 to 5 of our letter dated 7-2-2000 is reiterated. Documentary evidence by way of salaries in respect of the personnel employed in India year-wise have been submitted along with a forwarding letter dated 4-3-1999 (received by your predecessor on 5-3-1999). We presume that the same would be on your record. However, we may have no objection to once again enclose photocopies of the certificates. In this regard we may submit that the copies of these papers are being requisitioned from the assesseds Head Office at Tokyo, Japan. These shall be submitted as soon as these are received here for which time of a fortnight be allowed.
4. As regards the clarification sought by your honour as to how the tax liability was initially worked out at Rs. 44, 32,27,983 against the actual deposit of Rs. 52,79,76,749 we draw your honours kind attention to the assesseds letter dated 21-12-1998 addressed to Joint Commissioner, Range-23, Mayur Bhavan, New Delhi a copy of which is once again enclosed herewith for facility of reference and for your kind perusal (Annexure III). The net position of the two figures Rs. 44,32,27,983 and Rs. 52,79,76,749 is summarized in Annexure IV,"
ANNEXURE-IV Mitsubishi Corporation Reconciliation of the amount of total tax and interest as computed by learned Deputy Commissioner, TDS Circle 23(1), Mayur Bhavan, New Delhi with the amount deposited Rs.
Amount computed by learned Deputy Commissioner 443,227,983 Less : Deductions claimed from gross tax liability on Account of excess value of rent perk taken 29,817,363 413,410,620 Add : Tax Liability (including interest) calculated on tax on Basis on special allowances equal to the amount of Tax for the financial years 1988-89 to 1994-95 101,376,941 Add : Tax (including interest) on Golf & Other perquisites 13,189,188 Total 527,976,749 Details of Payment Amount paid by challan dated 10-12-1998 videNo.18033 127,530,000 Amount paid by challan dated 26-12-1998 vide No.24370 400,446,749 527,976,749
5. You have pointed out that the assesseds attention has probably escaped in not grossing up the salary of the expatriates for the financial years 1988-89 to 1994-95. It is submitted that there was no liability of the assessed to have grossed up the salaries of the expatriates for the financial years 1988-89 to 1994-95 and if all the same had to be grossed up, it was to be grossed up in the financial year 1998-99 for such the maximum rate of tax was 30 per cent. However, with a view to settle the matter amicably and to buy peace of mind the assessed agreed to pay tax at the rate of 40 per cent which was leviable in March, 1995. This was also on the specific direction of the then learned Joint Commissioner Range-23, New Delhi. This specific direction by the then learned Joint Commissioner, Range 23, New Delhi is clearly evidence from the letters dated 18-12-1998 and 21-12-1998 filed by the assessed."
The Deputy Commissioner vide letter dated 15-3-2000 further asked the assessed to furnish details of the perquisite and the basis of the calculation of its value for which the sum of Rs. 11,45,66,129 was added in Annexure 4 mentioned above and also furnish evidence to prove that value of rent free accommodation was wrongly calculated in excess by Rs. 2,98,17,363. According to the assessing officer, no further evidence was furnished by the assessed.
7. After considering the details and replies furnished by the assessed, the Deputy Commissioner rejected the contention of the assessed that the matter was concluded by the letter dated 24-12-1998 issued by the Joint Commissioner, Range-23, New Delhi by holding that the jurisdiction over the implementation of section 201(1) and 201(1A) vested with the assessing officer, TDS Circle 23(1), New Delhi and none else. Accordingly, he accepted the figures of income of Japanese staff for all the years but did not accept the method of grossing up of the tax. According to him, grossing up had to be done on the basis of maximum marginal rate of tax prevalent in the respective years and not 40 per cent as taken by the assessed. He also rejected the claim of deduction on account of excess value of rent-free accommodation. However, the figures of perquisite value of golf and other perquisites as given by the assessed was accepted. Hence, he worked out the tax liability at Rs. 41,03,49,352 and interest liability under section 201(1A) at Rs. 33,39,27,546. After adjusting the amount of tax and interest paid by the assessed already, he worked out the net demand of tax and interest at Rs. 8,02,78,168 and Rs. 15,00,91,350 respectively for all these years.
8. On appeal, various submissions were raised before the Commissioner (Appeals), who has dealt with the same in detail. The contention of the assessed regarding the jurisdiction of the Joint Commissioner was dealt with by him in para 13 as under :
"The letter dated 24-12-1998 is a one fine communication to the assessed company that the revised returns filed for Financial Years 1988-89 to 1997-98 have been verified and accepted. This communication no doubt conveys that the Joint Commissioner was satisfied about the correctness of the revised TDS statements filed by the appellant. That itself does not make this communication an order under section 201. Much less, would it erode the Deputy Commissioner of his jurisdiction and authority under the Act. It is undisputed that the proper statutory functionary for the purpose of verification of TDS returns is IT0/Asstt. Commissioner/Deputy Commissioner TDS. The TDS returns in form No. 24 are required to be filed before him. The superior of the controlling officer can neither deprive Income Tax Officer/A Commissioner/Deputy Commissioner of his jurisdiction nor can he assume the same himself. This is not a case where the Joint Commissioner had even concurrent jurisdiction with the assessing officer. This has been clarified by the Commissioner-VI, New Delhi in his affidavit filed before the Honble Delhi High Court in the matter of the Writ Petition CPW 1823/2000 in the case of the appellant. Under these circumstances the order dated 30-3-2000 of the Deputy Commissioner TDS 23(1) is the only order under section 201 of the Act. Appeal on Grounds 1 to 5 are dismissed."
On merits, It was held by him (i) that assessed should have paid the tax by grossing up the rate of tax applicable to the respective years and there was no sanctity under the law to adopt the rate of tax at 40 per cent; (ii) that in the absence of any detail, the contention of the assessed that actual rent paid should be taken as value of the rent-free accommodation could not be accepted; (iii) that charging of interest under section 201(1A) was consequential and the plea of good and reasonable cause was irrelevant for deciding the issue. Aggrieved by the same, the assessed has preferred these appeals before the Tribunal.
9. At this stage, it would be appropriate to mention that assessed had also filed writ petition on 17-4-2000 before the Honble Delhi High Court challenging the jurisdiction of Deputy Commissioner to re-open the matter which, according to the assessed, had already been concluded by letter dated 24-12-1998 issued by Joint Commissioner, who had concurrent jurisdiction over the assessed. It had also challenged the tax and interest liability created by the Deputy Commissioner on account of excess valuation of certain perquisites and grossing up of tax rate. In reply, the department had strongly opposed the contentions of the assessed and had also filed affidavits deposing that Joint Commissioner, Range-23 had not been vested with the concurrent jurisdiction over the assessed regarding TDS or assessment matters. We have been informed by the learned counsel for the assessed that the said writ petition has been disposed of by the Honble High Court on 25-9-2001 by observing that the matter should first be decided by the Tribunal and the assessed shall be permitted to raise all the points before the Tribunal in accordance with law.
10. The first and foremost contention of Mr. Sharma, the learned counsel for the assessed, is that the impugned order under section 201(1)/201 (1A) is illegal and without jurisdiction inasmuch as Deputy Commissioner, TDS Circle 23(1) had no jurisdiction to re-open the matter which was concluded by the order dated 24-12-1998 under section 201/201(1A) passed by the Joint Commissioner, Range23 having concurrent jurisdiction over the assessed. To elaborate his contention, it was argued by him that after the survey under section 133A authorized by Joint Commissioner, Range-23, the assessed, had filed all the requisite informations before the said Joint Commissioner relating to the payments of salary to expatriate staff in India and abroad and paid the tax and interest amounting to Rs. 52.79 crores and odd which was worked out in consultation with him. All this happened under the arrangement/agreement between the assessed and the said Joint Commissioner with a view to conclude the matter forever in order to avoid future litigation and to buy peace with the department. Accordingly, Joint Commissioner passed an order dated 24-12-1998 accepting the informations supplied by the assessed and the working of the tax and interest. According to the learned counsel for the assessed, such an order was an order of assessment under section 201/201(1A) and consequently, Deputy Commissioner, TDS Circle 23(1) had no jurisdiction to re-open the concluded matter as there was no provision to re-open such assessment.
11. The learned Commissioner Departmental Representative Mrs. Anita Kapur has strongly opposed the contentions of assesseds counsel by contending that Joint Commissioner, Range-23 had no jurisdiction to pass an order under section 201/201(1A). Further, the letter dated 24-12-1998 issued by the Joint Commissioner could not be considered as an order under section 201(1). It was argued by her that an assessing officer is one, who is vested with the relevant jurisdiction under section 120(1) or 120(2) as well as Joint Commissioner or Joint Director, who are directed under section 120(4)(b) to exercise or perform all or any of the powers and functions conferred on or assign to an assessing officer in this Act. In this connection, she drew our attention to section 2(7A). Proceeding further, it was forcefully submitted that no such order under section 120(4)(b) was passed conferring the powers and functions on Joint Commissioner which are actually vested with assessing officer. She also drew our attention to the affidavit filed by the department in August, 2000 before the Honble High Court of Delhi in connection with the writ petition filed by the assessed wherein it was deposed clearly that Joint Commissioner Range-23 had no jurisdiction to pass an order under section 201(1)/201(1A) in the case of an assessed and no such order was passed by him. Further, it was averred in the affidavit filed in October, 2000 before the Honble High Court that no order under section 120(4)(b) was passed conferring or assigning powers/functions of assessing officer over the Joint Commissioner, Range-23. Accordingly, it was submitted that Joint Commissioner, Range-23 had no jurisdiction to pass an order under section 201 (1)/201(1A). Hence, the order passed by the Deputy Commissioner, TDS Circle 23(1) was a valid order.
12. Proceeding further, it was contended by him that letter dated 24-12-1998 issued by Joint Commissioner could not be considered as an order under section 201 (1) as the assessed was never declared to be in default which is the sine qua non for passing such order. Further, she relied on the judgment of Supreme Court in the case of CIT v. Dhadi Sahu (1993) 199 ITR 610 (SC) and the decision of Delhi High Court in the case of D.K. Naulakha 246 ITR 537 (Sic) for the proposition that an order can be passed only by an authority, who is vested with the power to pass such order and if any other authority, even though senior in the rank, passes such an order then such order would be without jurisdiction. It was further submitted that onus to prove the existence of a fact is upon a person who asserts the existence of the same. Non existence of a fact can be proved only by denial and nothing else. According to her, the department has already filed an affidavit before the Honble Delhi High Court in the writ proceedings to the effect that no order or direction was issued to confer jurisdiction to pass an order under section 201 on Joint Commissioner, Range-23.
13. In reply, it was submitted by the learned counsel for the assessed that Joint Commissioner would not have passed such order if he had no such authority. He also requested the Bench to ask the Departmental Representative to place on record the letter of appointment of Joint Commissioner so that his powers could be identified.
14. Rival submissions of the parties have been considered carefully. There is no dispute to the legal position that (i) order under section 201 (1)/201(1A) is an order of assessment in view of Delhi High Court judgment reported as Delhi Development Authority v. ITO (1998) 230 ITR 9 (Del); (ii) the order under section 201 can be passed only by an assessing officer; (iii) the Deputy Commissioner, TDS Circle 23(1) had valid jurisdiction to pass an order under section 201(1)/201(1A). The only dispute before us is whether Joint Commissioner, Range-23 had concurrent jurisdiction over the assessed for passing an order under section 201. We have gone through the scheme of the Act. Section 119 enumerates the taxing authorities for implementing the provisions of the Income Tax Act, 1961. Clause (7A) of section 2 defines the words "assessing officer". The perusal of this clause shows that all the authorities mentioned in section 119 are not vested with the powers of an assessing officer. According to this clause, the assessing officer means Deputy Commissioner or Assistant Commissioner or Assistant Director or Deputy Director or Income Tax Officer, who are vested with the relevant jurisdiction under section 120(1) or 120(2). It also includes Joint Commissioner or Joint Director, who is directed under section 120(4)(b) to perform the powers/functions of an assessing officer. It clearly shows that general orders issued under section 120(1) or 120(2) do not cover the Joint Commissioner. Joint Commissioner can exercise the powers/functions of an assessing officer only if he is specifically directed under section 120(4)(b) to exercise such powers/functions. There is no material before us on the basis of which it can be said that Joint Commissioner, Range-23 had concurrent jurisdiction to pass an order tinder section 201. It is well settled legal position that the onus to prove the existence of a fact is upon a person, who asserts the existence of such fact and not on the person who denies the existence of such fact. The department had filed two affidavits before the Honble High Court at Delhi in the course of proceedings of writ petition filed by assessed wherein it has been clearly deposed that no notification under section 120(4)(b) was issued conferring jurisdiction on Joint Commissioner, Range-23 for passing an order under section 201. In such a situation, the affidavits filed by the department have to be accepted unless proved to the contrary by the assessed. The onus, in our opinion, was on the assessed to prove the existence of the order/direction/notification conferring jurisdiction on Joint Commissioner, Range-23 for passing an order under section 201 but the same has not been discharged by it. Therefore, it is held that Joint Commissioner, Range-23 had no jurisdiction to pass an order under section 201. Consequently, the contention of the assesseds counsel that the Deputy Commissioner could not re-open the concluded material has become infructuous.
15. We are also in agreement with the contention of the learned Commissioner Departmental Representative that letter dated 24-12-1998 issued by Joint Commissioner cannot be considered as an order under section 201(1). Firstly, no notice was issued by Commissioner for commencing any proceeding under section 201 (1). Secondly, the assessed has not been declared an assessed in default, which is a condition precedent for passing such order. Thirdly, the order under section 201(1) must result in raising of demand of tax which the assessed failed to deduct. The perusal of the letter shows that neither the assessed was declared as an assessed in default nor any demand was raised. On the contrary, according to the assessed, the liability computed by the assessed was already paid before issue of such letter. Hence, the impugned order of the Joint Commissioner cannot be considered as an order under section 201(1).
16. The next contention of the learned counsel for the assessed is that letter dated 24-12-1998 issued by Joint Commissioner was purported to be the direction within the meaning of section 144A to the assessing officer to accept the quantum of default (including interest). The gist of his arguments, as stated in his written submissions, is as under :
"It was urged that the communication dated 24-12-1998 was certainly purported to be direction or guidance to the assessing officer to accept the quantum of tax which the assessed was required to deduct in respect of certain perquisites granted outside India to its employees but failed to deduct the same and yet paid the determined amount on 24-12-1998. To repeat, the direction was that the Joint Commissioner having asked the assessed to prepare statements working the quantum of default had asked the assessing officer to accept them as such. The default, being of the order of Rs. 52.79 crores, worked out at the instance of the Joint Commissioner himself had to be paid immediately before the assessed could be handed over the communication dated 24-12-1998 and consequently the assessed could not be deemed in default after full payment was made."
To elaborate his arguments, he submitted that proceedings under section 201 were pending since such proceedings commence from the day the returns under section 206 are filed and culminate when final order under section 201 is passed. According to him, the words "any proceedings in which an assessment is pending" used by the legislature in section 144A are wide enough to cover even the assessment proceedings relating to TDS returns and not necessarily restricted to returns under section 139. It was further submitted that such direction may be at the instance of the assessed or the assessing officer or suo motu where the facts are complex and capable of being twisted in favor of either party. According to him all correspondences to Joint Commissioner were made under section 144A as and when required by him from time to time. All the computations regarding tax and interest liability were made at the behest of JCIT himself. If was only after verification of these details that letter dated 24-12-1998 was issued accepting the returns and working furnished by the assessed. Hence, these directions were binding on the assessing officer and no further liability could be created.
17. On the other hand, the learned Departmental Representative strongly opposed the aforesaid contentions of the learned counsel for the assessed. Firstly, it was submitted that no such plea was raised before the assessing officer or before the Commissioner (Appeals). Secondly, no proceedings were pending before the assessing officer when the letter dated 24-12-1998 was issued by Joint Commissioner since all the letters issued by the assessed and papers enclosed therewith were furnished before Joint Commissioner. Further, no revised returns were filed in Form No.24. The assessed had only filed the necessary details and working of tax and interest. No evidence has been filed before the Tribunal to show that revised returns in Form No. 24 were ever filed before 24-12-1998. The assessed knew about the jurisdiction of Deputy Commissioner, TDS Circle 23(1) and, therefore, revised returns, if any, should have been filed before the Deputy Commissioner and not Joint Commissioner. Proceeding further, it was submitted that the two line letter dated 24-12-1998 was neither addressed to assessing officer nor any direction was issued through this letter for the guidance of the assessing officer. Further, in all the correspondences made by the assessed before Joint Commissioner, there was no reference for seeking any direction under section 144A.
18. It was then contended that section 144A figures in Chapter XIV-Procedure for assessment. The term "assessment" used in section 144A has to be understood in the context in which it appears. According to her, the assessment has been used in different senses at different places in the Act. Reliance was placed on certain decisions as CIT v. Khemchand Ramdas (1938) 6 ITR 414 (PC), A.N. Lakshman Shenoy v. ITO (1958) 34 ITR 275 (SC), 17 ITR 203 (PC) (Sic) and Keshavdeo Shrinivas Morarka v. CIT (1963) 48 ITR 404 (Bom). It was also argued by her that decision of Delhi High Court in Delhi Development Authoritys case (supra) relied upon by the assesseds counsel has to be confined to its own facts for the purpose of order under section 201 and the same cannot be extended to word .assessment" under section 144A. She also referred to the judgment in ITO v. Delhi Development Authority (2001) 252 ITR 772 (SC) wherein the Honble Supreme Court refused to deal with the meaning of the word "assessment". According to her, section 144A is meant for proceedings of assessment determining the income and tax thereon while section 201 is a proceeding relating to collection and recovery of the tax in advance under a different chapter and, therefore, the term "assessment" in section 144A cannot be extended to include the proceeding under section 201. It was also submitted that no direction can be issued which are contrary to law. Further, the Joint Commissioner cannot arrogate to itself the powers to make an assessment. Reliance was placed on the decision of Rajasthan High Court as 204 ITR 807 (Sic).
19. After considering the submissions of the parties, we are unable to accept the contention of the learned counsel for the assessed. Firstly, because it is the settled legal position that provisions of a section are to be construed in the context in which these are enacted. Section 144A find its place in Chapter XIV-Procedure for assessment. This chapter relates to the assessment of income of the assessed and the matters relating to TDS are covered under a different Chapter-XVII-Collection and Recovery of Tax. The powers to implement the provisions under these chapters are conferred independently on certain income-tax authorities. The provisions like section 144A are not enacted in Chapter XVI. Both the chapters relate to the procedure-one for assessment and the other for collection of tax in advance. The legislature could have enacted the provisions of section like 144A in Chapter XVII if it had intended to do so. The fact that section 144A refers to the proceedings in which assessment is pending and the fact that this section was inserted by Taxation Laws (amendment) Act in Chapter XIV titled as Procedure for Assessment, if considered together, compel us to take the view that the legislature provided the powers to Deputy Commissioner (now Joint Commissioner) under section 144A vis-a-vis the proceedings of assessment under Chapter XIV and, therefore, scope of section 144A cannot be extended beyond this chapter. Hence, it is held that provisions of section 144A are restricted to assessments to be made in Chapter XIV.
20. Secondly, there is nothing on the record to suggest that Joint Commissioner assumed jurisdiction under section 144A. Neither the assessed made an application nor the assessing officer referred the matter to the Joint Commissioner for seeking any guidance/directions. The original folder of Joint Commissioner was also produced before us in the course of hearing but we do not find anything on the basis of which it could be said that he exercised the jurisdiction suo motu under section 144A. No order sheet had been made by him. He has also given a certificate that he did not maintain any order sheet during his tenure as Joint Commissioner in the case of assessed. The copy of such certificate is placed on record. Accordingly, it has to be held that no jurisdiction under section 144A was assumed by Joint Commissioner.
21. Thirdly, even presuming for the sake of argument that section 144A applies to TDS matters, in our opinion, the communication dated 24-12-1998 does not tantamount to direction in terms of section 144A. The direction is required to be issued to the assessing officer in order to help him in completing the assessment of the assessed. The aforesaid letter was addressed to the assessed and not to the assessing officer. Section 144A in clear terms provides for issue of directions for the guidance of the assessing officer. Hence, such directions have to be issued to the assessing officer and consequently, any communication addressed to assessed cannot be considered as direction under section 144A. Accordingly, we hold that letter dated 24-12-1998 addressed to assessed does not tantamount to direction under section 144A and consequently, the contents of this letter is not binding on assessing officer.
22. It had also been contended by the learned counsel for the assessed that the letter dated 24-12-1998 was issued as a result of mutual agreement between Joint Commissioner and assessed to resolve the dispute forever and to avoid the future litigation. It was submitted by him that though legally the assessed was not liable to pay such huge demand yet it agreed to pay the same which was worked out in consultation with Joint Commissioner and the same had been accepted by it also. Therefore, both the parties were bound by the agreement and consequently, neither of the parties could get away from such agreement. We are unable to accept such contention of the assesseds counsel. It is well settled law that there cannot be any estoppel against statute. Reference can be made to the judgment of Honble Delhi High Court in the case of Tube Fabrico (I) Ltd. v. CIT (1994) 210 ITR 1035 (Del). The authorities constituted under the Act are to implement the provisions of the Act and cannot go against such provisions. Reference can be made to the recent judgment of the Honble Supreme Court in the case of CIT v. Anjum MH. Ghaswala (2001) 252 ITR 1(SC) wherein it has been held that even the Settlement Commission could not waive the interest liability under section 234B since such provisions are mandatory. Similarly in the case of Union of India v. Banwari Lal Agarwal (1999) 238 ITR 461 (SC), it was observed by the Honble Supreme Court that assessing officer had no power to enter into any agreement with the assessed. Accordingly, it has to be held that in the absence of any specific provisions, the Joint Commissioner had no power to enter into any agreement with the assessed contrary to the provisions of the Act. If there is any liability, the assessed has to pay the same and simultaneously if there is no liability to pay then it cannot be recovered even though assessed might have agreed to pay wrongly. Even otherwise, we do not find any material on the record to suggest that any agreement was reached between the parties. The original folder of Joint Commissioner produced before us contained only the details filed by the assessed. Even no order sheet was maintained by the assessed. Therefore, it cannot be said that any agreement was reached between the parties. In view of the above discussion, the contention of the assesseds counsel is rejected.
23. Now coming to the merits of the case, it has been vehemently contended that there was no agreement or arrangement between the assessed and its employees to pay any tax in respect of various allowances paid by the assessed outside India and consequently, the provisions of grossing up under section 195A could not be invoked while computing the assesseds liabilities to deduct the tax at source. According to him, the assessed was under the bona fide belief that such allowances were not taxable in view of the Gujarat High Court judgment in the case of CIT v. S.G. Pgnatale (1980) 124 ITR 391(Guj) and, therefore, deduction of tax at source was not made by the assessed. However, the assessed agreed to bear the tax liability in respect of such allowance paid to its expatriate staff by treating the same as special allowances only in the financial year 1998-99 in order to avoid litigation and to buy peace with the department. Therefore, at the most, liability to pay the tax accrued only in financial year 1998-99 and consequently, the provisions of section 195A regarding grossing up could be applied as per the rate of tax in force in financial year 1998-99. Even though the maximum marginal rate of tax was 30 per cent in this year, the assessed agreed for computing its liability for grossing up under the provisions of section 195A by treating the maximum marginal rate at 40 per cent at the behest of Joint Commissioner. According to him, if the agreement was not acceptable to the department, then no liability could be saddled upon the assessed on this account since it has not been established by the revenue that assessed had any agreement/arrangement to pay the tax of the employees in respect of such allowances paid outside India to its expatriate staff. Alternatively, if any liability is to be saddled upon the assessed then the liability to pay the tax on the special allowance can be said to accrue only in the year 1998-99 on the basis of the arrangement with the department and that too, considering the maximum marginal rate of 30 per cent. Reliance was placed on the judgment of Madras High Court in the case of CIT v. Simpson & Co. Ltd. (1998) 230 ITR 794 (Mad). Reliance was also placed on section 17(2)(iv) along with the decision of Delhi High Court in the case of Frank Beaten v. CIT (1985) 156 ITR 16 (Del), Hence, according to him, grossing up done by Joint Commissioner is illegal, being contrary to provisions of section 195A.
24. On the other hand, the learned Commissioner Departmental Representative has strongly opposed such contention of the learned counsel for the assessed by submitting that the salary and allowances paid to expatriate staff outside India are chargeable to tax in view of section 9(1)(ii) read with Explanation appended thereto and consequently, the assessed was liable to deduct the tax at source under section 192. Further, there is no ground in the memo of appeal disputing such liability. The decision of Gujarat High Court relied upon by assesseds counsel cannot be the basis of bona fide belief in view of the clear provisions of section 9(1)(ii). She also relied on the decision of the Tribunal in the case of Earl W. Tallant v. Second IT0 (1987) 20 ITD 512 (Bom), in the case of ITO v. S.A. Hareford (1985) 11 ITD 569 (Delhi) and the judgment of Calcutta High Court in the case of Grindlays Bank Ltd. v. CIT (1992) 193 ITR 457 (Cal) for the proposition that the judgment of Gujarat High Court stands nullified after insertion of Explanation to section 9(1)(ii) by Finance Act, 1983. Further, the assessed of its own has worked out the liability in respect of various allowances in accordance with the rates in force in the respective years. She also submitted that by insertion of the words "the whole or any part of the tax in section 201 with retrospective effect from 1-4-1962 by Finance Act, 2001, the assessed has become liable to deduct the tax at source on such allowance. The only dispute is with reference to the grossing up of such tax liability under section 195A. According to her, the assessed has not raised any ground of appeal challenging the applicability of grossing up provisions and the ground of appeal raised by the assessed is confined to the claim of the assessed that rate of 30 per cent for grossing up should be taken. According to her, once the liability to pay the tax is accepted by the assessed, the grossing up provisions becomes applicable. Reliance was placed on the Rajasthan High Court judgment in CIT v. Hermann & Breaun (1995) 216 ITR 226 (Raj), Kerala High Court judgment 237 ITR 112 (sic), Delhi High Court judgment 115 ITR 382 (sic) and 193 ITR 439 at 450-51 (sic). She further submitted that section 195A is a statutory recognition to the established principle that if the tax is paid by the employer, then for the tax purpose the salary income is to be increased to such amount as would after deduction be equal to the net amount paid. According to her, the payment of salary outside India free of tax was itself an arrangement and there need not be any special agreement in writing. The legislature has used both the words agreement or arrangement and, therefore, the interpretation which would render the word arrangement as meaningless cannot be accepted. Further, it was submitted that assessed has not proved that there was no such arrangement or agreement. She relied on Delhi High Court decision in the case of CIT v. Motor General Finance Ltd. (2002) 254 ITR 449 (Del) for the proposition that if the assessed does not disclose the facts within his knowledge then the adverse inference could be drawn. In view of these submissions, it has been concluded by her that assessed was liable to pay tax in accordance with the provisions of section 195A.
25. Rival submissions of the parties have been carefully considered in the light of material placed on record and the case law referred to by the parties. There is no dispute to the legal position that various allowances paid by the assessed to its expatriate staff outside India are taxable under section 9(1)(ii). It is also corroborated by the fact that assessed of its own has computed its liability of tax under section 192 with reference to such allowances for all the years under consideration. Such liability to pay tax is also not in dispute. Therefore, the aspect of bona fide belief canvassed by the counsel for the assessed is not relevant vis-a-vis the determination of liability of assessed under section 192. This aspect is only relevant for the issue of grossing up since, according to the learned counsel for the assessed, the assessed agreed to pay such tax liability in the financial year 1998-99 by treating such allowances as special allowance and consequently grossing up should be done by taking 30 per cent rate of tax which was the rate in force in that year. We are unable to accept this contention of the learned counsel for the assessed. The question whether a person was under bona fide belief or not is always a question of fact which has to be adjudicated upon with reference to the materials which were before the assessed for forming such belief. The only basis for such belief, according to the assesseds counsel, was the judgment of Gujarat High Court in the case of S.G. Pgnatale (supra) which was rendered on 25-2-1980. The legislature, in order to clarify its intention, inserted the Explanation to section 9(1)(ii) by Finance Act, 1983 with retrospective effect from 1-4-1979. According to this explanation, any income chargeable under the head "salaries" which is payable for the services rendered in India shall be regarded as income earned in India for the purpose of section 9(1)(ii). Therefore, the decision of Gujarat High Court was nullified by Finance Act, 1983. This is also apparent from Circular No. 372 dated 8-12-1983 reported in 146 ITR 9 (Statute). There is no other judgment after this amendment which could fortify such bona fide belief. On the other hand, various decisions relied upon by the learned Departmental Representative supports the stand of the revenue that various allowances paid by the assessed outside India to its expatriate staff for the services rendered in India were clearly taxable under section 9(1)(ii). If the assessed was well aware of the decision of Gujarat High Court then it must also have been aware of the insertion of Explanation to section 9(1)(ii). Since this explanation was inserted by Finance Act, 1983, it is unbelievable that assessed might not have known about such enactment even in 1989 particularly when it had all the infrastructure to know about the legal decisions. Therefore, we reject the contention of the learned counsel for the assessed that assessed was under bona fide belief that such allowances were not taxable.
26. As far as application of section 195A is concerned, we find that these provisions are substantive provisions which determines the liability of the employer to pay the tax of its employees on enhanced amount of income. Therefore, these provisions must be construed strictly and the onus would be on the revenue to prove that the conditions for its applicability are satisfied. For the benefit of this order, the provisions of section 195A are reproduced as under :
"Section 195(A) : Where under an agreement or other arrangement, the tax chargeable on any income referred to in the foregoing provisions of this Chapter is to be borne by the person by whom the income is payable, then, for the purposes of deduction of tax under those provisions such income shall be increased to such amount as would, after deduction of tax thereon at the rates in force for the financial year in which such income is payable, be equal to the net amount payable under such agreement or arrangement."
The perusal of the above section shows that before invoking such provisions, it must be established that there was an agreement or other arrangement between the employer and the employee on the basis of which it can be said that the employer agreed to bear the tax payable by its employee. We are in agreement with the learned counsel for the assessed that existence of such agreement/arrangement must be proved by the revenue. The arguments advanced by the learned Commissioner Departmental Representative to the contrary are, therefore, rejected. She had herself argued with reference to the jurisdiction issue that non existence of a fact can be proved by simple denial. The decision of Delhi High Court in the case of Motor General Finance Ltd. (supra) relied upon by her is quite distinguishable as in that case the assessed was claiming deduction of interest payable where the onus was on the assessed to prove the allowability of the same. It is in this context the Honble High Court held that where facts, which are in the special knowledge of the assessed, are not disclosed then adverse inference can be drawn. Therefore, the said judgment cannot be applied where the onus to establish a fact is upon the revenue.
27. Let us now examine the materials on the record to ascertain as to whether there was any such agreement or arrangement. There is nothing on the record to suggest any written agreement or an arrangement. However, such agreement /arrangement can be oral which can be established by the other evidence, whether direct or circumstantial. On going through the record placed before us, we find the existence of such agreement/arrangement. There is no dispute that salary paid by the assessed to its expatriate staff outside India was net of tax and as such the tax on salary was paid by the assessed. The only dispute between the parties relates to the various allowances paid outside India which were not included in the total income of such staff and consequently, tax on such portion of income remained to be taxed. The payment of tax and interest amounting to Rs. 52.79 crores and odd related to such allowances only. This shows that there was arrangement between the assessed and its expatriate staff to the effect that tax on remuneration paid by assessed shall be borne by the assessed. This is further corroborated by the statement of facts furnished by the assessed before the Commissioner (Appeals) along with grounds of appeal. The relevant portion of the same is reproduced as under :
"The rotating staff receives salary at two places viz., salary received in India in Indian Rupees and salary received in Japan. Salary paid in India is subject to tax deduction at source and is paid after deducting tax at the prescribed rates in force. Tax on salary paid in Japan is paid by the employer and thus tax is paid on tax on tax basis."
The last sentence of the above portion clearly shows that tax on salary paid in Japan was paid on tax on tax basis, i.e., by grossing up. What is true to salary must be true to the allowances paid by the assessed. This is further corroborated by the statement of Mr. Y. Saito (expatriate employee) recorded at the time of survey wherein it was answered in response to Question No. 27 as under :
"I think my employer Mitsubhishi Corporation pay tax on behalf of me."
All these circumstances taken together leads to the only conclusion that there was an arrangement to pay the tax of its expatriate employees within the meaning of section 195A. Accordingly, we reject the contention of the learned counsel of the assessed in this regard by holding that section 195A was applicable to the allowances paid outside India by assessed to its expatriate staff.
28. Regarding the rate of tax for grossing up under section 195A, we are of the considered view that the language of the section is very clear which provides that rate will be the rate in force for the financial year in which income is payable. Considering the settled legal position that there cannot be estoppel against statute, we hold that grossing up has to be made in accordance with the rates in force for each financial year for which such allowances were paid. Accordingly, the stand of the assessed for application of 30 per cent/40 per cent rate of tax for grossing up is hereby rejected.
29. However, in our opinion, the method of grossing up adopted by, the revenue is erroneous. What the department has done is to gross up the maximum marginal rate of tax, which is not the criteria for grossing up under the provisions of section 195A. According to this section, it is the net income paid by the employer free of tax, which is to be enhanced by grossing up in the manner that after deducting the tax on enhanced income, the net income should be the same, which was paid by the assessed. There is no provision for grossing up of the maximum marginal rate of tax as understood by both the parties. The principle of estoppel against the statute equally applies both to the revenue as well as assessed. Therefore, nothing more than the tax due can be recovered from the assessed. The error in the method adopted by the revenue can be illustrated as under :
"Take for example assessment year 1996-97 where the maximum rate of tax was 40 per cent. Suppose, an employee was paid Rs. 84,000 as salary net of tax. According to the revenue, the tax liability of Rs. 84,000 at the rate in force was Rs. 11,200 which was grossed up as under :
11,200 x 40 x 100 = 7466 60 The sum of Rs. 11,200 was enhanced by Rs. 7,466 and the total tax liability of Rs. 18,666 was determined by the assessing officer. That means the total gross salary of the employee should have been Rs. 1,02,666 (Rs. 84,000 + Rs. 18,666) but the tax of Rs. 1,02,666 as per rate in force amounted to Rs. 16,800 only. If this sum is deducted from the gross salary mentioned above then the net salary should have been Rs. 85,866 (Rs. 1,02,666-Rs. 16,800) while the net salary paid was Rs. 84,000 only. In fact, net salary of Rs. 84,000 was against gross salary of Rs. 1 lakh since tax of Rs. 1 lakh was Rs. 16,000 only. Thus, according to this example, there was excess grossing up by Rs. 2,666 (Rs. 18,666 minus Rs. 16,000)."
In view of the above example, it is clear that revenue has determined the excess tax liability which had also resulted in charging of excess interest under section 201(1 A). Interest of justice demands that tax and interest liability should be recomputed correctly in accordance with law. In view of the above discussion, the order of the Commissioner (Appeals) is set aside on the issue of computation of tax and interest liability and the matter is restored to the file of the assessing officer for fresh computation of the liability of the tax and interest thereon. All the details of the income of expatriate employees are already on record. The assessing officer is, therefore, directed to recomputed the tax and interest liability after enhancing the income in accordance with section 195A.
30. The next issue relates to the valuation of perquisite on account of rent free accommodation allowed to its expatriate employees. According to the assessing officer and Commissioner (Appeals), such perquisite is to be valued at the rate of 10 per cent of the salary as per rule 3 of Income Tax Rules, 1962. However, the contention of the learned counsel for the assessed is that 10 per cent of the salary is not the thumb rule in view of the word ordinarily used in rule 3(a)(iii). He relied on the Second proviso to clause (A) of rule 3(a)(iii) to submit that value of rent-free accommodation could be less than 10 per cent of the salary. On facts, it was submitted that assessed had paid rent by cheques to the landlords and all the details were furnished before the Joint Commissioner Depouty Commissioner in this regard. Reference was made to pages 120, 121, 245 of the Paper Book 11.
31. On the other hand, the learned Commissioner Departmental Representative strongly opposed such contention put forth on behalf of the assessed by contending that the aspect of the actual rent cannot be imported in rule 3, which is mandatory. She relied on the judgment of Madras High Court in the case of CIT v. K.S. Sundaram (1999) 239 ITR 851 (Mad) which has been affirmed by the Supreme Court in its judgment in K. S. Sundaram v. CIT (2001) 251 ITR 781 (SC). She further stated that second proviso relied on by the learned counsel for the assessed was not applicable to the present case.
32. After considering the rival submissions of the parties, we are inclined to uphold the stand of the learned Commissioner Departmental Representative to the effect that the aspect of actual rent paid by the employer cannot be imported in rule 3 in view of the Madras High Court in KS. Sundarams case (supra) which was affirmed by the Supreme Court. It has been held in that judgment that rule 3 is mandatory for valuing the perquisite regarding rent free accommodation. It has been further held that actual rent paid cannot be the basis for valuing the perquisite. For the benefit of this order, the relevant portion of the judgment of the Madras High Court is extracted below :
"Rule 3 of the Income Tax Rules, provides that the value of the property shall be determined in accordance with the rules and the expression, "shall" used in rule 3 clearly indicates that the rule 3 should be applied in the cases covered by the said rules. The Appellate Tribunal placed reliance on the expression, "ordinarily" in rule 3(a)(iii)(A) to come to the conclusion that the rule is only directory in nature and, therefore, the rule has no application where a house was taken on lease by the employer and provided to the employee free of rent. In our opinion, the view of the Appellate Tribunal is clearly erroneous in law"
"The object of the rule is to determine the value of the perquisite in all situations. It is an immaterial consideration whether the building was owned by the employer or taken on rent by the employer for the proper application of rule 3 of the Income Tax Rules, and in our view, in both the situations, rule 3(a)(iii) will apply as there are no limiting expressions found in rule 3 to make it applicable only in the case of a property, let out by an employer to its employee of the property owned by the employer and in the absence of any restriction found in rule 3, we are of the opinion that the provisions of rule 3 would cover both the situations and rule 3 has strictly to be followed in determining the value of the perquisite."
The above observations which have become the law of the land clearly supports the stand of the revenue.
33. Reliance placed by the learned counsel for the assessed on the second proviso to rule 3(a)(iii)(A) is misplaced. Firstly, this proviso does not speak of actual rent. Secondly, this proviso applies only when the assessed claims and the assessing officer is satisfied that fair rental value is less than 10 per cent of the salary. In the present case, neither the assessed claimed nor any evidence was furnished before the assessing officer on the basis of which assessing officer could be satisfied that fair rental value of the rent free accommodation was less than 10 per cent of the salary. The only submission of the assessed before the lower authorities was that actual rent should be adopted for valuing such perquisite. The assessed never claimed before the assessing officer that fair rental value was less than 10 per cent of the salary. The actual rent may be equal to the fair rental value but that has to be claimed and established by the assessed by furnishing the evidence which was never done in the present case by the assessed. Therefore, in our opinion, assessed cannot get any benefit of the aforesaid Second proviso.
34. During the course of hearing on this issue, the learned Commissioner Departmental Representative drew our attention to the fact that assessing officer failed to include the tax perquisite in computing the gross salary for the purpose of computing the value of the rent-free accommodation. Accordingly, it was contended that matter be remanded to the assessing officer to re-compute the value of such perquisite, after including the tax element in the gross salary. She relied on the decision of Delhi High Court in the case of T.P. S. Scott v. CIT (1998) 232 ITR 475 for the proposition that tax perquisite is the part of gross salary. She also relied on the Supreme Court judgment in the case of CIT v. Assam Travels Shipping Service (1993) 199 ITR 1(SC) for the proposition that the Tribunal has the power to remand in such case. We are unable to accept this contention of the learned Commissioner Departmental Representative. There is no doubt that the Tribunal has the power to remand the matters to the file of assessing officer but such powers are to be exercised vis-a-vis subject matter of the appeal filed by the appellant as held by the larger bench of the Supreme Court in the case of Hukarnchand Mills Ltd. v. CIT (1967) 63 ITR 232 (SC) wherein it has been clearly held that the powers of the Tribunal are restricted to the subject-matter of appeal and further there is no power of enhancement. The judgment of Supreme Court in the aforesaid case relied upon by the learned Departmental Representative is distinguishable on facts of the case and has to be understood in the context in which the judgment was delivered. In that case, the penalty under section 271(1)(a) was levied by assessing officer which was challenged by the assessed before the Appellate Assistant Commissioner but found that penalty levied by assessing officer was much less than the penalty leviable under the law. In view of such finding it was held that the penalty levied was not in accordance with law and consequently, the Appellate Assistant Commissioner cancelled the penalty. On appeal by the department, the Tribunal was of the view that it had no option except to uphold the order of Appellate Assistant Commissioner since it had no power of enhancement. The order of the Tribunal was also upheld by the High Court. However, the Supreme Court reversed the order of High Court and held that Appellate Assistant Commissioner had the power of enhancement and, therefore, the Tribunal in such cases had the power to remand the matter to the assessing officer for recomputing the penalty in accordance with law. From the above discussion, it appears that in that case the revenue was in appeal before the Tribunal and the subject-matter of appeal was the levy of penalty and, therefore, it could exercise its powers with reference to such subject-matter. In our opinion, this judgment can be applied only where the Tribunal is required to adjudicate upon the subject-matter which has been raised by the appellant and the respondent is only entitled to support the order of the assessing officer and the Commissioner (Appeals) and not beyond that. If such contention of the learned Departmental Representative is accepted then the provisions of cross appeals and cross objections would become redundant. Such construction of the statute, in our opinion, is not permissible. Therefore, we reject such contention of the learned Commissioner Departmental Representative.
35. In the course of his arguments, the learned counsel for the assessed has raised an additional ground that action of the assessing officer is time barred inasmuch as the order was passed after the period of four years with reference to certain financial years and the reliance was placed on the decision of the Tribunal in the case of Raymond Woollen Mills Ltd. v. IT0 (1996) 57 ITD 536 (Bom) followed by Delhi Bench of the Tribunal in the case of Sahara Airlines, copy of which is placed on the file. This additional ground was admitted by us by separate order dated 29-7-2002. It was pointed out that the impugned order was passed on 30-3-2000 which was beyond four years from the end of financial years 1988-89 to 1994-95 as such period was held by the Tribunal to be reasonable period for passing order under section 201 in view of Supreme Court judgment in the case of Gurbux Singh v. Union of India AIR 1976 SC 1115 (SC).
36. On the other hand, the learned Commissioner Departmental Representative has opposed such contention by arguing that no period of limitation has been prescribed by the legislature for passing order under section 201 and consequently, such order could be passed at any time. Reliance was also placed on the judgment of Calcutta High Court in the case of British Airways v. CIT (1992) 193 ITR 439 (Cal) and in the case of CIT v. Blackwood Hodge (India) (P) Ltd. (1971) 81 ITR 807 (Cal). She further submitted that section 231, which was interpreted by the courts as laying down a time limit, has been omitted from the statute book from 1-4-1989. According to her, such omission shows the intention of the legislature that no time limit is required. It was also submitted that it is a well settled legal position that nothing can be read into the provisions where such provisions are clear and unambiguous. Reliance was placed on Supreme Court as 254 ITR 154 and Smt. Tarulata Shyam v. CIT (1977) 108 ITR 345 (SC). It was alternatively submitted that period of 4 years should be counted from the end of the year in which necessary details were filed by the assessed, Since all the details were filed in 1998, the impugned order was in time. It was also submitted that the decision of the Tribunal relied upon by the assessed is distinguishable on facts.
37. After considering the rival submissions, we are of the view that this issue is squarely covered by the decision of the Tribunal in the case of Raymond Woollen Mills Ltd. (supra), which was followed by Delhi Bench in the case of Sahara Airlines (supra). It is to be noted that the Tribunal had decided the issue after considering two judgments of Supreme Court in the case of State of Gujarat v. Patel Raghavnath. AIR 1969 SC 1297 and Gurbux Singh's case (supra). Therefore, all the submissions of the learned Commissioner Departmental Representative are to be rejected. As far as omission of section 231 is concerned, it has no relevance since that section was for recovery of the tax or interest levied by the assessing officer for which demand notice had already been issued or for which assessed was deemed to be in default. Section 231 could be applied only if any tax was to be recovered and thereafter limitation provided in that section did not control the action of assessing officer under section 201 which was anterior to section 231. Therefore, in our opinion, such plea of learned Commissioner Departmental Representative cannot be accepted.
At this stage, it would be appropriate to mention that earlier there was some confusion as to whether period of 4 years was to be counted from the end of the assessment year or the financial year due to certain discrepancy regarding date of order under section 201(1) in the case of Raymond Woollen Mills Ltd. (supra). However, such confusion has been removed by the Delhi Bench in the case of Pepsi Foods [ITA Nos. 542 & 543 (Del) 96] after ascertaining the factual aspects in the case of Raymond Woollen Mills Ltd. (supra). It has been clarified by the Bench vide order dated 8-8-2002 that period of four years laid down by the Bombay Bench was to be counted from the end of the financial year and not the assessment year. The relevant portion of the order in the case of Pepsi Foods (supra) is in para 32, which is reproduced as under :
"However, we find force in the alternative plea of the assesseds counsel that the impugned orders under section 201(1) and 201(1A) are illegal being time barred in view of the decision of the Tribunal in the case of Raymond Woollen Mills 57 ITD 536 (Bom) inasmuch as these orders were passed after the expiry of four years from the end of the financial year 1989-90. However, in the course of hearing, a dispute arose between the parties as to whether the period of four years was to be counted from the end of the assessment year or the financial year, since the order of the Tribunal in Raymond Woollen Mills (supra) states in para 11 as four years from the end of the assessment year. We have gone through the said decision of the Tribunal very carefully, to resolve this dispute. The confusion had arisen because of two different dates from the orders under section 201(1A) mentioned in para 2 and para 11 of the order inasmuch as the date in para 2 was mentioned as 21-5-1990 while the date in para 11 was mentioned as 25-1-1990. The learned counsel for the assessed vide order dated 27-4-2002 has stated that on inspection of the record it was found that the correct date of the orders under section 201(1A) in that case was 25-1-1990. To substantiate the same, he has filed the copies of such orders. The copy of the said letter along with copies of such letters were given to the learned Commissioner Departmental Representative for comments but no reply has been received so far, even after two months. Hence, there is no reason for not accepting the correct date of the orders under section 201(1A) in the case of Raymond Woollen Mills (supra) as 25-1-1990. The perusal of the said order of the Tribunal also shows that assessment years involved were 1978-79 to 1986-87. The Tribunal had held that orders up to assessment year 1985-86 were time-barred. In our opinion, assessment year 1985-86 could not have been declared as time-barred unless period of four years was counted from the end of the financial year. If the period of four years is counted from the end of the assessment year, then order for assessment year 1985-86 would have been in time. Considering the facts of the case on the basis of which decision was taken by the Tribunal in the case of Raymond Woollen Mills, we are of the view that period of limitation of 4 years was declared by the Tribunal to be counted from the end of the financial year. We hold accordingly."
In view of the above discussion, it is held that impugned orders under section 201/201(1A) pertaining to financial years 1988-89 to 1994-95 are illegal, being-time barred since the orders were passed on 30-3-2000. Consequently, the orders under section 201/201(1A) for these years are quashed.
38. The last issue relates to the levy of interest under section 201(1A). The only plea of the learned counsel for the assessed is that assessed was under bona fide belief that allowances paid abroad to its employees were not taxable in India. Further, conduct of the assessed was accepted by the Joint Commissioner while dropping the penalty under section 271C. This contention of assesseds counsel is unacceptable. This aspect of the matter may be relevant regarding issue of the levy of penalty under section 271C because of the import of reasonable cause in section 273B but the same is not relevant for levying interest under section 201(1A) since such provisions are mandatory as held by Delhi High Court in the case of CIT v. Prem Nath Motors (P) Ltd. (2002) 253 ITR 705 (Del). In view of this binding judgment, the contention of assesseds counsel is rejected.
39. The counsel for the assessed has also submitted that assessing officer at page 6 of his order had taken the figure of Rs. 1,31,89,188 under the head "tax" while the actual figure of tax was only Rs. 83,61,160 and the balance amount of Rs. 48,28,028 was attributable to interest. The learned Commissioner Departmental Representative has no objection to substitute the above figures under respective heads. If the amount of tax is to be reduced to Rs. 83,61,160 then the sum of Rs. 48,28,028 should be taken under the head "interest" and it could not make any difference as far as total liability of the assessed is concerned. This is only a clerical mistake and, therefore, assessing officer is directed to bifurcate the above figure and to take the relevant figures in the separate heads.
40. In the result, appeals for financial years 1988-89 to 1994-95 are allowed while the other appeals are partly allowed.