Jharkhand High Court
Central Coalfield Ltd. vs Commissioner Of Income Tax(Tds on 1 February, 2012
Author: Prakash Tatia
Bench: Chief Justice, P.P.Bhatt
IN THE HIGH COURT OF JHARKHAND,RANCHI
WPT No. 7788 of 2011
Central Coal Fields Ltd .. ..Petitioner
Versus
1.Commissioner of Income Tax(TDS),Patna
2. Deputy Commissioner of Income Tax,TDS Circle,Bokaro
3. Assistant Commissioner of Income Tax TDSCircle Bokaro
4.Bank of India,Rajappa Project, Branch
5. Union of India .. ... .. .. Respondents
with
WPT No. 7801 of 2011
Central Coal Fields Ltd .. ..Petitioner
Versus
1.Commissioner of Income Tax(TDS),Patna
2. Deputy Commissioner of Income Tax,TDS Circle,Bokaro
3. Assistant Commissioner of Income Tax TDSCircle Bokaro
4.Bank of India,Rajappa Project, Branch
5. Union of India .. ... .. .. Respondents
with
WPT No. 7810 of 2011
Central Coal Fields Ltd .. ..Petitioner
Versus
1.Commissioner of Income Tax(TDS),Patna
2. Deputy Commissioner of Income Tax,TDS Circle,Bokaro
3. Assistant Commissioner of Income Tax TDSCircle Bokaro
4.Bank of India,Rajappa Project, Branch
5. Union of India .. ... .. .. Respondents
with
WPT No. 7814 of 2011
Central Coal Fields Ltd .. ..Petitioner
Versus
1.Commissioner of Income Tax(TDS),Patna
2. Deputy Commissioner of Income Tax,TDS Circle,Bokaro
3. Assistant Commissioner of Income Tax TDSCircle Bokaro
4.Bank of India,Rajappa Project, Branch
5. Union of India .. ... .. .. Respondents
with
WPT No. 7779 of 2011
Central Coal Fields Ltd .. ..Petitioner
Versus
1.Commissioner of Income Tax(TDS),Patna
2. Deputy Commissioner of Income Tax,TDS Circle,Bokaro
3. Assistant Commissioner of Income Tax TDSCircle Bokaro
4.Bank of India,Rajappa Project, Branch
5. Union of India .. ... .. .. Respondents
with
WPT No. 7789 of 2011
Central Coal Fields Ltd .. ..Petitioner
Versus
1.Commissioner of Income Tax(TDS),Patna
2. Deputy Commissioner of Income Tax,TDS Circle,Bokaro
3. Assistant Commissioner of Income Tax TDSCircle Bokaro
4.Bank of India,Rajappa Project, Branch
5. Union of India .. ... .. .. Respondents
with
WPT No. 7794 of 2011
Central Coal Fields Ltd .. ..Petitioner
Versus
1.Commissioner of Income Tax(TDS),Patna
2. Deputy Commissioner of Income Tax,TDS Circle,Bokaro
3. Assistant Commissioner of Income Tax TDSCircle Bokaro
4.Bank of India,Rajappa Project, Branch
5. Union of India .. ... .. .. Respondents
CORAM :- HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE P.P.BHATT
For the Petitioner : Mr. Debi Pal, Sr. Advocate
Mr. N.K.Pasari Advocate,
For the Respondents No.1-3 : Mr. Deepak Roshan,Sr.S.C.I(Tax)
Mr. Amit Kumar J.C to Sr.S.C I
.
Order No. 3 Dated 1st February,2012
Reportable
1. Heard the learned counsel for the parties.
2. Defects are ignored.
3. All the above mentioned cases have been heard together and are being
disposed of by this common order.
4. The grievance of the writ petitioner is that one consolidated garnishing
order was passed in pursuance of the orders passed against the writ petitioner by the
Assessing Officer , the Deputy Commissioner, TDS Circle, Bokaro, for different
years in spite of the fact that the said orders are subject matter in the appeal before
the Commissioner of Income Tax and not only that garnishing order was passed
but in fact the money lying in the bank account of the writ petitioner has been
taken away by the department.
5. The learned Sr. Counsel for the writ petitioner vehemently submitted that
the appellate authority, Commissioner of Income Tax did not pass any order on
pending stay petition filed by the writ petitioner before the Income Tax
Commissioner. It is submitted that the petitioner has a very good case in view of
the fact that the tax amount has been paid by the deductee, from whose amount, it
has been alleged that the writ petitioner should have deducted the tax at source i e
at the time of payment to the said r assesses(deductee).
6. According to the learned Sr. counsel, the Hon'ble Supreme Court in the
case of Hindustan Coca Cola Beverage(P) Ltd. Vs. CIT, reported in (2007) 293
ITR 0226 held that the Central Board of Direct Taxes issued Circular No.
275/201/95-IT(B) on 29.1.1997 which declares that no demand visualize under section 201(1) of the Income Tax Act should be enforced after the tax deduct or has satisfied the Officer-In-charge of TDS that taxes due have been paid by the deductee-assessee . However, this will not alter the liability to charge under section 201(1A) of the Act till the date of payment of taxes by the deductee- assessee or the liability for penalty under section 271C of the Income Tax Act. Therefore, according to the learned Sr. Counsel for the petitioner, since deductee has paid the tax amount, therefore, the writ petitioner cannot be held liable to pay the tax amount subject to other liability which may be of the interest and penalty under section 271C of the Income Tax Act. In this case, the deductee has paid the tax amount , therefore, garnishing order should not have been issued by the Assessing Officer.
7. The learned Sr. Counsel for the writ petitioner vehemently submitted that the procedure has been totally violated by the Assessing Officer which has denied the petitioner to raise objection against the garnishing order and if that opportunity could have been given to the writ petitioner, the petitioner could have demonstrated that no garnishing order could have been issued in this special circumstances
8. The learned Sr. Counsel for the petitioner also relied upon another judgment of the Hon'ble Supreme Court in K.C.C. Software Ltd and others Vs. Director of Income -Tax(Investigation) and others, reported in [ 2008] 298 ITRI(SC) wherein it has been held that it would be in the interests of the assessee as well as the Revenue if the amount transferred to the PD account of the Commissioner is kept in interest-bearing fixed deposit as ultimately in the event the assessee succeeds, it would be entitled to interest as provided in the statute. The assessment has to be completed within the stipulated period.
9. We considered the submissions of the learned Sr. Counsel for the petitioner and perused section 226 of the Income Tax Act, 1961.
Section 226 of the said Act prescribes other modes of recovery. As per sub-section(3)(i), the Assessing Officer has been given power to give a notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of assessee, to pay to the Assessing Officer or Tax Recovery Officer either forthwith upon the money becoming due or being held or at or within the time specified in the notice. This power can be exercised only when money can be paid after it becomes due.
10. The copy of such garnishing notice is also required to be served upon assessee as provided in sub-clause-(iii) of sub-section(3) of Section 226 of the said Act and as per sub-clause(vi) of sub-section (3) of Section 226 upon receipt of the garnishing notice referred above, objection can be submitted and upon finding substance of the objection the Assessing Officer may revoke the garnishing order. According to the learned Sr. Counsel for the petitioner, copy of the notice was served after about ten days, when the money was taken away back by the department under the garnishing order .
11. Sub-section 3(i) requires a notice by the Assessing Officer to the person who is holding the money of the assessee and that notice may require forthwith payment of the money to the Assessing Officer or Tax Recovery Officer and at the same time as per sub-clause(iii) of sub-section-3 of Section 226 ,copy of the notice is required to be forwarded to the assessee. Sub-clause(i) of sub- section(3) is not depend upon subsequent procedure given in sub-clause(iii) & (iv) of sub-section (3) of Section 226 of the said Act and therefore, specific provision has been made in sub-clause(vii) of sub-section(3) itself of Section 226 that the Assessing Officer or Tax Recovery Officer may at any time or from time to time amend or revoke any notice issued under this sub-section or extend the time for making any payment in pursuance of such notice. The word used in sub-clause(i) of sub-section(3) of section 226 "forthwith" is significant and therefore, so far as power of the Assessing Officer to demand of money "forthwith" is concerned i.e the power given by the statutory provision. Sub-clause(iii) and Sub-clause(iv) only provides that a right has been given to the person whose property is sought to be taken under the garnishing order and therefore, sub-clause(vii) of sub-section(3) of Section 226 of the said Act made it explicitly clear that such notice of garnishing can be withdrawn at any time or from time to time and it can be amended or revoked , obviously even after execution of garnishing order.
12. The apprehension of the learned Sr. Counsel for the writ petitioner is that once the money has been taken away by the department under garnishing order, revocation of the notice will be of no consequence has no legal basis because of the reasons that with the withdrawal of the notice of garnishing, the action taken in furtherance of garnishing order falls down and possession of the property is required to be restored to assessee and if, the Assessing Officer by exercising power under sub-clause(vii) of sub-section(3) of section 226 of the said Act obtains money from the payee of the assessee, he has been given power to withdraw the notice and it cannot be interpreted to mean that the notice can be withdrawn only before giving affect to the garnishing order and receiving of the money by the Assessing Officer . Otherwise the word at any time or from time to time will be of no consequence in sub-clause(vii) of sub-section (3) of Section 226 of the said Act. It goes without saying that in the garnishing order, first money is secured(by attachment) and then it is received by the person, who is entitled to receive. The attachment is only interim arrangement and it also does not attain the finality with the payment to the person who is entitled to receive the amount for whom the garnishing order was passed till liability of that defaulter attains finality and money is adjusted under lawful order. The money in the hands of receiver of money is only an interim arrangement of securing money. Therefore, the writ petitioner can certainly approach the Assessing Officer and seek revocation of the notice with the prayer to refund the money back but the writ petitioner has not availed this remedy and has approached this Court straightway in spite of the fact that there is executable order passed by the original Assessing Officer against which there is no order of stay by the appellate authority. In that situation, the Assessing Officer was under obligation to proceed with the order passed by itself and could have proceeded to recover the amount
13. Therefore, that attachment order upon making of payment by the bank to the Assessing Officer itself will fell if the garnishing order and the notice itself is withdrawn by the Assessing Officer which will require the re-payment of the money by the department to the Bank consequently placing to the account of the writ petitioner, who then has the right to withdraw that amount from the bank, therefore, end of the attachment order in garnishing proceeding and payment of the amount to the department, in the facts and circumstances is of no consequence.
14. The learned Sr. Counsel for the petitioner submitted that the petitioner may be given opportunity to challenge the order if the order goes against the writ petitioner upon his objection to be filed under sub-clause(vii) of sub-section (3) of section 226 of the said Act However, we make it clear that petitioner is free to challenge that order of non-revocation of the garnishing order under sub-clause(vii) of sub-section(3) of Section 226 of the said Act
15. In that situation, the the petitioner may approach the Assessing Officer for revocation of the garnishing order and further we direct the Commissioner of Income Tax to proceed with the appeal preferred by the petitioner expeditiously preferably within the period of one month from today.
(Prakash Tatia, CJ) (P.P. Bhatt,J) SD/SB