Income Tax Appellate Tribunal - Chandigarh
Assistant Excise & Taxation ... vs Assessee
Author: G.S.Pannu
Bench: G.S.Pannu
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'A' CHANDIGARH
BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER
AND MS SUSHMA CHOWLA, JUDICIAL MEMBER
ITA Nos. 1015 to 1017/Chd/2010
Assessment Years: 2005-06 to 2007-08
The Assistant Excise & Taxation Vs. The ITO (TDS).
Commissioner, Kangra at Palampur (H.P.)
Dharamshala (H.P.)
PAN No. PTLAI2024F
(Appellant) (Respondent)
Appellant By : Shri Harry Rikhy
Respondent By: Sh N.K.Saini
ORDER
PER SUSHMA CHOWLA, JM
These three appeals by the assessee are against the common order of CIT(A), Shimla dated 27.4.2009 relating to assessment years 2005-06 to 2007-08 against the orders passed under section 206C (6A) / 206C (7) of the I.T. Act. All these appeals having identical grounds were heard together and are being disposed off by this consolidated order for the sake of convenience
2. The common grounds raised in all the appeals are as under:-
1. That the order of the learned CIT(A) Shimla is defective both in law and facts of the case.
2. That the learned CIT(A) Shimla is not justified in upholding the order of the learned Assessing Officer as the provisions of section 206C (1C) of the I.T. Act, 1961 are not applicable on the appellant and such an order is erroneous and deserves to be quashed.
3. That the learned CIT(A) is not justified in upholding the order of learned Assessing Officer passed u/s 206C(6A) of the I.T. Act, 1961 which is erroneous and deserves to be quashed as the sub section 206C(6A) has been 2 inserted by the Finance Act, 2006 w.e.f. Assessment Year 2007-08.
4. That the learned CIT(A) is not justified in upholding the order of learned Assessing Officer as the provisions of section 206C(7) of the I.T. Act, 1961 regarding charging of interest are not applicable on the appellant and such an order is erroneous and deserves to be quashed.
5. That the learned CIT(A) is not justified in upholding the order of the learned Assessing Officer in view of the judgment of the Hon'ble Supreme court in the case of Hindustan Coca Cola (P) Ltd Vs. CIT (293 ITR 226) and the CBDT Circular No. 275/201/95-IT(B) dated 29.1.1997 the demand cannot be created against the Licensor where the Licensees from whom the tax, if any, was to be collected have already paid the income tax and so on the same analogy the demand created against the appellant deserves to be deleted.
3. The aforesaid three appeals by the assessee were filed after a delay of 367 days. The assessee has moved an application for condonation of delay in filing the present appeals supported by affidavit of Shri Hitesh Sharma, Asstt. Excise & Taxation Commissioner, Kangra at Dharamshala (H.P.). The consolidated order of the CIT(A) dated 27.4.2009 relating to Assessment Years 2005-06 to 2007-08 was received on 15.5.2009. The appeals before the Tribunal in all the orders has been filed on 16.7.2010.
The reasons for delay in furnishing the appeals after a delay of about one year is explained as under:-
1 That the Ld. Income Tax Officer (TDS), Palampur conducted an inspection at the office of the Assistant Excise and Taxation Commissioner, Kangra at Dharamshala (H.P) on 22.02.2008 and passed the order u/s 260C(6A)/206(7) of the I.T. Act, 1961 on 29.8.2008 for the Financial Year 2005- 06 creating a demand of Rs. 3,70,783/-.
2 That the Assistant Excise and Taxation Commissioner, Kangra at Dharamshala (H.P) filed an appeal before the Ld. CIT(A), Shimla on 7.10.2008 which was dismissed vide order dated 27.4.2009.
3 That Shri Rajinder Behl, Advocate informed vide his office letter No. AK/602/09 dated 5.5.2009 received in the office of Assistant Excise and Taxation Commissioner, 3 Kangra at Dharamshala on 12.5.2009 that he was filing amended grounds of appeal before the Ld. CIT(A), Shimla for which amended grounds of appeals were enclosed for the signature of Assistant Excise and Taxation Commissioner, Kangra at Dharamshala (Annx 2).
4 That the amended grounds of appeal duly signed by the Assistant Excise and Taxation Commissioner, Kangra at Dharamshala were sent back to the Advocate on the same date 12.5.2009 (Annx - 3).
5 That it came to the knowledge of the deponent for the first time in the second week of November, 2009 when the Ld. Income Tax Officer, Palampur telephonically asked the Assistant Excise & Taxation Commissioner, Kangra at Dharamshala to deposit the demand as the order had been passed by the Ld. CIT(A), Shimla against the appellant.
6 That the deponent immediately on the same day called up the Ld. Counsel for the assessee Shri Rajinder Behl to apprise him about the latest position of the case and to provide the certified copy of the Ld. CIT(A) order.
7 That Shri Rajinder Behl Advocate applied for a certified copy of the Ld. CIT(A), Shimla on 11.11.2009.
8 That after repeated reminders by Shri Rajinder Behl, Advocate the office of the Ld. CIT(A), Shimla issued the certified copy of the order on 13.4.2010.
9 That certified copy of the Ld. CIT(A), Shimla order was handed over to the Excise and Taxation Inspector (Legal Cell), office of the Excise and Taxation Commissioner, Shimla on 17.4.2010.
10 That the certified copy of the Ld. CIT(A), Shimla order was received through the Excise and Taxation Commissioner, HP Shimla in the o/o Assistant Excise and Taxation Commissioner, Kangra at Dharamshala on 10.5.2010 with a letter in which it was directed to contact Shri Harry Rikhy, Advocate at Chandigarh engaged for filing appeals before the Hon'ble Income Tax Appellate Tribunal, Chandigarh (Annx .4).
11 That after receipt of the certified copy of the Ld. CIT(A) order on 10.5.2010 the Excise and Taxation Officer, Dharamshala was directed to do the needful for filing the appeal.
12 That in compliance to the direction the Excise and Taxation Officer, Dharamshala on 13..5.2010 telephonically discussed with Shri Harry Rikhy, Advocate Chandigarh regarding the formalities to be completed by the department for filing appeal.4
13 That the Assistant Excise and Taxation Commissioner, Kangra at Dharamshala then went on leave from 17.5.2010 upto 23..6.2010.
14 That Shri Harry Rikhy, Advocate intimated to the Excise and Taxation Officer, Dharamshala on 22.5.2010 that the case file was received by him from Shri Rajinder Behl, Advocate and further desired papers be completed and sent to him at Chandigarh at the earliest.
15 That the deponent joined back the office on 24..6.2010 and directed the Excise and Taxation Officer, Dharamshala to complete all the papers required for filing appeal and also in meet Shri Harry Rikhy, Advocate at Chandigarh. In compliance to the direction the Excise and Taxation Officer, Dharamshala contacted Shri Harry Rikhyy, Advocate at Chandigarh telephonically who intimated that the case file be produced before him for perusal at Chandigarh on 2.7.2010.
16 That after collecting the desired documents the Excise and Taxation Officer, Dharamshala met Shri Harry Rikhy, Advocate at Chandigarh on 2.7.2010.
17 That on 2.7.10, Shri Harry Rikhy, Advocate after going through all the documents prepared the appeal and handed it over to the Excise and Taxation Officer, Dharamshala for signatures and also directed to file some more documents.
18 That while collecting the documents it was noticed in the Dairy and Dispatch register of the office of the Assistant Excise and Taxation Commissioner, Kangra at Dharamshala (H.P) that the above said Ld. CIT(A) order was received on 15.5.2009.
19 That due to the deployment of maximum staff of the Assistant Excise and Taxation Commissioner, Kangra at Dharamshala in the Lok Sabha election duty the Dairy and Dispatch register were handed by an official under temporary make shift arrangements who did not put the Ld. CIT(A) order before the Assistant Excise and Taxation Commissioner, Kangra at Dharamshala and the same is still not traceable.
20 That now the deponent is filing an appeal before the Hon'ble Income Tax Appellate Tribunal, Chandigarh on The fact was not in knowledge of Asstt. Excise & Taxation Commissioner, Kangra at Dharmasha that the order dated 27.4.2009 was passed by CIT(A), Shimla so the Appellant was under this bonafide impression that the matter was still sub-judice as submitted above."
54. The learned AR for the assessee prayed for the condonation of the delay in filing the present appeals. The affidavit of Shri Hitesh Sharma, Asstt. Excise & Taxation Commissioner, Kangra at Dharamshala, (H.P.) declaring and affirming the above said reasons for delay in furnishing the appeals before the Tribunal have been filed in respect of each of the year under appeal. The contention of the learned AR for the assessee was that the assessee was prevented by a sufficient case for not furnishing the appeal in time and the delay in filing the appeals may be condoned.
5. We find that the similar application for condonation of delay in filing the appeals arose before the Tribunal in the case of Assistant Excise & Taxation Commissioner, Nahan (H.P.) Vs. ITO in ITA Nos. 353 to 356/Chd/2010 relating to Assessment Years 2004-05 to 2007-08. The Tribunal vide order dated 18.6.2010 observed as under:-
"6. We have heard the rival contentions and perused the records. Under Section 253 of the I.T. Act, 1961, if the assessee is aggrieved by the order/s enlisted at clause (a) to
(c) u/s 253(1) of the Act, he/she may file an appeal before the appellate Tribunal, against such order/s. The assessee aggrieved by the order of the CIT(A), may appeal against said order, by filing an appeal before the Appellate Tribunal. Under section (2) to 253 of the Act, the Assessing Officer is also authorized to file an appeal before the Tribunal if he objects to an order passed by the CIT(A) u/s 154 or 250. Under the provisions of sub section (3) to section 253 of the Act, every appeal shall be filed before the Tribunal within 60 days of the date of communication of the order, sought to be appealed against. Under sub section (4), both the Assessing Officer or the assessee is empowered to file the Cross objections within 30 days of receipt of notice of an appeal filed against such order. Further, under sub section (5) to section 253 of the Act, the Tribunal is empowered to admit an appeal and / or Cross objection, after the expiry of the relevant period specified therein in case it is satisfied that there was sufficient cause for not presenting it within time period. Section 263(6) of the Act lays down the procedure of filing the appeal i.e. the appeal is to be filed in the prescribed form and is to be verified in the prescribed manner and is to be further accompanied by prescribed fee.
67. Under the provisions of the Act i.e. section 253 of the Act, the procedure for filing an appeal before the Appellate Tribunal are provided and the period for furnishing the appeals against the order of the CIT(A) are also prescribed within this section. However, the Tribunal is empowered under the provisions of the Act itself to admit an appeal or permit filing of cross objection even after expiry of the relevant period, wherein it is satisfied that there was reasonable cause for not presenting the appeal within prescribed period. The assessee before us had filed the appeals against the order of the Assessing Officer for all the years in question and the CIT(A) had dismissed the appeals of the assessee vide order dated 15.5.2009. The said orders were served upon the assessee i.e. Assistant Excise and Taxation Commissioner, Sirmour at Nahan on 27.5.2009. The assessee fairly admitted to have received the said orders in its office on 27.5.2009. "
6. In the present appeals, the assessee before us has furnished the appeals after delay of 367 days. The delay in filing the present appeals is attributed to the various reasons incorporated in the condonation application moved by the assessee in turn supported by an Affidavit of the Asstt. Excise and Taxation Commissioner, Kangra at Dharamshala. The original affidavits for the respective years are available on record. In the entiret y of facts and circumstances, we are of the view that the assessee was prevented by a sufficient case for not filing the appeals in time and accordingl y we condone the delay in furnishing the appeals and proceed to take the appeals on record.
7. Both the learned AR for the assessee and DR for the Revenue fairl y conceded that the issues arising in the present appeals are covered by the order of the Tribunal in the case of Assistant Excise & Taxation Commissioner, Nahan (H.P.) Vs. ITO in ITA Nos. 353 to 356/Chd/2010 (Supra), which in turn following the order of the Tribunal dated 28.5.2009 in the case of Asstt. Excise and taxation Commissioner, Bilaspur (H.P.) in ITA Nos 273 to 277/Chd/2009 had decided the issues against the assessee.7
8. The assessee before us has raised ground Nos 1 to 5 in all the captioned appeals which are identical to the ground of appeals raised before the Tribunal in Assistant Excise & Taxation Commissioner, Nahan (H.P.) Vs. ITO in ITA Nos. 353 to 356/Chd/2010 relating to Assessment Years 2004-05 to 2007-08. The issues were decided following the ratio laid down in the case of Asstt. Excise & Taxation Commissioner, Bilaspur (H.P.) Vs. ITO (TDS), Palampur in ITA Nos. 273 to 277/Chd/2009. We proceed to decide the present grounds of appeal in turn relying on the ratio laid down by us vide order dated 18.6.2010.
9. The ground No.1 raised by the assessee being general is dismissed.
10. The ground No.2 raised by the assessee in all the appeals is against the applicabilit y of provisions of section 206C (1C) of the Act. Similar issue arose before the Tribunal in the case of Asstt. Excise & Taxation Commissioner, Bilaspur H.P. Vs. ITO (TDS), Palampur (ITA Nos. 273 to 277/Chandi/2009 and Asstt. Excise & Taxation Commissioner, Una Vs. ITO (TDS) Palampur (ITA Nos. 293 to 296/Chandi/2009) and wherein vide order dated 28.5.2009 vide para 9, 10 & 11 it was held as under:-
"9. On a perusal of the above, it is evident that every person, who grants a lease or a licence or enters into a contract or otherwise transfers any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry to another person for the use of such parking lot or toll plaza or mine or quarry for the purpose of business shall at the time of debiting of the amount payable by the licensee or lessee to the account of the licensee of lessee or at the time of receipt of such amount from the licensee or lessee in cash or by issue of cheque or draft or by any other mode, whichever is earlier, shall collect from the licensee or lessee of any such licence, lease or contract, a sum equal to the specified percentage as income-tax. The amount of income-tax to be collected, has been prescribed in the table annexed to section 206C(IC) of the Act. In other words, section 206C(IC) requires collection of tax at 8 source by a person who grants a lease or licence, where there is a transfer of a right or interest in any parking lot or toll plaza or mine or quarry to the concerned licensee or lessee for the purpose of business. The case set up by the Assessing Officer is that the State Government has awarded lease to collect toll under the Tolls Act to the Private Licensee and the appellant, was required to collect the tax at source s mandatory by section 206C(IC) of the Act. For the financial year under consideration, the Assessing Officer has pointed out that the lease was granted in favour of M/s Gulzar and Co. and payments have been received from such concern as per Annexure A of the assessment order. On receipt of such payments, the assessee was required to collect the tax in terms of section 206C(IC) of the Act, which the assessee has failed to do. Therefore, the assessee is in default. The assessee has contended that the provisions of section 206C(IC) of the Act are not applicable in the instant case. The reasons for the same have noted by us in para 5 earlier. On consideration of the arguments put- forth by the assessee and the bare provisions of the Act, we are unable to uphold the stand of the assessee. Quite clearly, here is a case where the licensee has been granted the right to collect the toll payable under the Tolls Act on behalf of the State Government. There is no denying the fact that the State Government has granted the lease to the licensee whereby the licensee is to collect the toll as per the Tolls Act. The emphasis laid by the appellant on the presence of expression "toll plaza" and "for the purposes of business" in section 206C(IC), in our view, does not defeat the invoking of section 206C(IC) in the present case. The claim made out by the appellant is that the lease granted should cover the use of toll plaza for the purpose of business and in this case there is no question of doing any business and hence inapplicability of section 20-6C(1C) of the Act, in our view, the licensee or lessee here is utilizing the toll plaza to conduct its business of collecting toll in terms of the right granted by the State Government. Pertinently, the lessee is in the business of assisting the State Government in collection of toll. Thus the aforesaid view of the appellant is erroneous. The mere awarding of a contract to collect toll by the State Government, does not cloth the lessee with the power of State to collect the tax enshrined under the Tolls Act. The Toll Act itself provides a mechanism of collecting the toll by way of section 3A of the Tolls Act. Further, interpretation placed by the appellant on the expression "Toll Plaza"
for the purposes of section 206C(1C) of the Act, in our view is also too narrow and cannot be accepted.
10. In our considered opinion, the provisions of section 206C(IC) of the Act have been correctly invoked by the Assessing Officer with respect to the impugned transactions and in the absence of the assessee having 9 collected the requisite tax at source, the assessee has been rightly treated to be an assessee in default u/s 206C(6A) of the Act. At this point, we may also refer to the observation of the Assessing Officer in para-5 of his order to point out that the AETC, Nahan, H.P. was collecting the requisite tax u/s 206C(IC) of the Act for the financial year 2005-06 on account of toll collected under the Tolls Act. There is no denial to the aforesaid factual point stated by the Assessing Officer.
11. For the above reasons, in so far as the first plea of the assessee regarding the applicability of section 206C(IC) of the Act is concerned, the same is hereby dismissed.
11. The facts of the present case are identical to the facts before the Tribunal in the aforesaid cases (supra) and respectfull y following the ratio laid down by the Tribunal, we hold that the provisions of section 206C(1C) of the Act are applicable and hence the ground No.2 raised by the assessee is dismissed.
12. The issue in ground No.3 is against the applicabilit y of the provisions of section 206C (6A) of the Act which has been inserted by Finance Act,2006 w.e.f. Assessment Year 2007-08. Identical issue arose before the Tribunal in the aforesaid case (supra) and the Tribunal vide order dated 28.5.2009, held as under:-
"12. The second plea raised by the assessee is that the Assessing Officer has passed his order for the captioned years u/s 206C(6A) of the Act, which was introduced by the Finance Act 2006 w.e.f. 1.4.2007 and, therefore, the impugned order passed for the financial years 2004-05 to 2006-07 are without jurisdiction. It is submitted that the assessee has bee held to be an assessee in default in terms of section 206C(6A) of the Act for the Financial Year during the period when section 206C(6a) was not on the statute. Therefore, the levy has to fail for such financial years from 2004-05 to 2006-07.
13. On the other hand, the learned D.R. has pointed out that section 206C(IC) was introduced w.e.f. 1.10.2004 providing for collection of taxes at source on 10 grant of lease/licence of toll plaza and such a provision covers all the years under consideration. The order passed by the Assessing Officer is valid in as much as the default committed by the assessee was for an action provided in section 206C(IC) of the Act which was on the Statute during the relevant period.
14. We have considered the rival submissions carefully. In the context of the present controversy, we have carefully perused the provisions of section 206C(IC) inserted by the Finance (No.2) Act, 2004 w.e.f. 1.10.2004. Section 206C(IC) provides for collection of the requisite tax at the time of debiting of the amount payable by the licensee or lessee to the account of the licensee or lessee or at the time of receipt of such amount from the licensee or lessee. Section 206C(2) provides for power to recover tax by collection under sub-section (1C) of section 206C of the Act inserted w.e.f. 1.10.2004. Similarly, sub-section (6A) of section 206C of the Act has been inserted w.e.f.
1.4.2007, which provides that if any person responsible for collecting the whole or part of the tax or after collecting, fails to pay the tax, as required by or under this Act, he shall be deemed to be an assessee in default in respect of such tax. In the case set up by the assessee, sub-section (6A) of section 206C of the Act has been put on the Statute w.e.f. 1.4.2007 and, therefore, prior to such date, the assessee cannot be held to be an assessee in default if it does not collect the tax in accordance with the provisions of section 206C of the Act. In our view, the responsibility of collecting the tax at source is provided in terms of section 206C(IC) of the Act, which has been inserted by the Finance (No.2) Act 2004 w.e.f. 1.10.2004. Section 206C (6A), in our view, is not the charging section so as to defeat the provisions of section 206C(IC) for the period starting from 1.10.2004 up to 31.3.2007. The Assessing Officer has passed the impugned order on 30.6.2008 and ostensibly at that time, section 206C(6A) was on the statute. Notably, there is no plea that the order passed on 30.6.2008 was barred by limitation vis- à-vis the Financial Years under consideration Therefore, the plea raised by the assessee with regard to the applicability of section 206C(6A) for the impugned Financial Years has to fail, especially when the applicability of section 206C(1C) for the impugned years is not disputed.
13. Respectfull y following the aforesaid ratio laid down by the Tribunal in the case of Asstt. Excise & Taxation Commissioner, Bilaspur & Una H.P. Vs. ITO (TDS), Palampur (supra), we uphold the application of 11 section 206C(6A) of the Act for the impugned financial year in view of the applicabilit y of section 206C(IC) of the Act for the impugned years being not disputed. Ground No.3 raised by the assessee is thus dismissed.
14. The issue in ground No.4 raised by the assessee is against the chargeabilit y of interest u/s 206C(7) of the Act. The Tribunal vide para 15 of its Order in the case of Asstt. Excise & Taxation Commissioner, Bilaspur & Una H.P. Vs. ITO (TDS), Palampur (supra), held as under:-
15. The next Ground raised is against the chargeability of interest u/s 206C(7) of the Act. On this aspect, the learned counsel for assessee quite fairly contended that in case the assessee is held liable for collecting the requisite tax u/s 206C(IC) of the Act, the non-deduction thereafter would result in the consequential levy of interest u/s 206C(7) of the Act. In the instant case, having held that the assessee is an assessee in default for not having collected the requisite tax u/s 206C(IC) of the Act, the interest chargeable for such default as per section 206C(7) of the Act is quite justified.
15. We are in conformity with the order of the Tribunal that where the assessee is held to be in default for not having collected the requisite tax u/s 206C(1C) of the Act, the charging of interest for such default u/s 206C(7) of the Act is justified. The ground of appeal raised by the assessee is dismissed.
16. The last issue raised by way of ground No.5 in all the years is against the recovery to be made from the assessee i.e. licensor, where the Licensees, from whom the tax had to be collected, had already paid the same. Similar issue also arose before the Tribunal in the above said matter and vide para 16 to 19 of its order, it was held as under:-
12"16. The last plea set up by the assessee is that the respective lessees have paid taxes on their incomes and, therefore, the same cannot be recovered from the assessee again in the garb of provisions of section 206C(IC) of the Act. In this connection, reliance has been placed on the judgment of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage P. Ltd. Vs. CIT, 293 ITR 226.
17. On this aspect, the only plea raised by the learned D.R. was that the requisite details of the lessee having paid the tax were not filed before the Assessing Officer but the Commissioner of Income-tax (A) has directed the Assessing Officer to verify the claim in this regard. It was, therefore, contended that necessary relief on this issue have already been granted by the Commissioner of Income-tax (A) in para 5(ii) of the impugned order.
18. We have considered the rival submissions carefully. We have carefully considered the parity of reasoning laid down by the Hon'ble Apex Court in the case of Hindustan Coca Cola Beverage P. Ltd. (supra). In the case before the Hon'ble Supreme Court, the Assessing Officer had treated the assessee in default for not having deducted the requisite tax at source u/s 194-I of the Act and the assessee was called upon to pay the shortfall, and interest on the amount of tax alleged to be short deducted. It was held that since the recipient of income was found to have paid the taxes due, therefore, the same could not be recovered again from the assessee. A reference was also made to the CBDT Circular No.275/201/95-IT(B) dated 29.1.1997 in this regard.
19. Following the aforesaid parity of reasoning, if in the instant case, it is found that the licensee or lessee in question had paid the requisite taxes on the income in question, further tax can not be recovered from the assessee again. We find that the Commissioner of Income-tax (A) has impliedly appreciated the aforesaid position while directing the Assessing Officer to verify such claim of the assessee and allow relief accordingly. Nevertheless, in so far as the charging of interest u/s 206C(7) is concerned, the same is leviable in accordance with law. We hereby affirm the aforesaid direction of the CIT(A) and find no further relief permissible to the assessee on such ground.
17. Following the ratio laid down by the Tribunal, we direct the Assessing Officer to verify the claim of the assessee and if it is found that the licensee in question had paid the requisite taxes in question, no 13 further tax can be recovered from the assessee. However, the interest u/s 206C(7) is to be charged in accordance with law. Accordingl y, we direct the Assessing Officer to verify the claim of the assessee in this regard and allow the relief accordingl y. The ground No.5 raised by the assessee in all the appeals is allowed for statistical purposes.
18. In the result, appeals of the assessee are partl y allowed.
Order Pronounced in the Open Court on this 20 t h day of August, 2010.
Sd/- Sd/-
(G.S.PANNU) (SUSHMA CHOWLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : 20 t h August, 2010
Rkk
Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR