Date Of Order 14-11-2017 In W.p v. The Addl. Commissioner Of Income-Tax And Anr

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 14[th]DAY OF NOVEMBER 2017 BEFORE THE HON'BLE Dr.JUSTICE VINEET KOTHARI *WRIT PETITION No.36428/2016 (TIT) BETWEEN: M/s. Gaonkar Mines,Main Road, Tadri Port,Kumta Tq., Ankola |Uttara Kannada District,Karnataka — 581 437. Rep. by its erstwhile partner,sri A.P. Gaonkar,Aged about 309 years,»/o Late Sri Prakash Gaonkar. ...PETITIONE (By Sri. Mallaharao, Adv. for Sri. S. Parthasarathi, Adv.) AND: 1.|The Addl. Commissioner of Income-tax, Udupi Range, Udupi — 976103. 2 |The Chief Commissioner of Income-tax, “Aayakar Bhavan’ Plot No.5, EDC Complex,Patto, Panjim, Goa — 403 OO1.Patto, Panjim, Goa — 403 OO1. RBSPONDENTS This Writ Petition is filed under Articles 226 & 227of the Constitution of India praying to quash the order Date of Order 14-11-2017 in W.P.No.36428/2016 M/s. Gaonkar Mines Vs. The Addl. Commissioner of Income-tax and Anr. 2/8 of the R-2 dated 13.3.2014 under Section 119[2]\a] ofthe Act for the assessment year 2005-06 vide Annex-K_and etc. This Writ Petition coming on for preliminaryhearing this day, the Court made the following:- ORDER Mr.Mallaharao, Adv-, for Mr.S.Parthasarathi, Adv. for|Petitioner Thepetitioner,M/s.GaonkarMineshas.challenged the impugned order passed by therespondent — Chief Commissioner of Income-tax|(CCIT)>Panjim, Goa, refusing to waive interest under Sections 234A, 234B and 234C of the Income-tax Act, 1961(hereinaiter referred to as the‘TIT Ac‘for brevity). 2. Following reasons have been recorded by the.said respondent in the impugned order ofCCITfor theAssessment Year 2005-2006passed on13.3.2014a “IT have carefully considered the facts of thecase, the written submissions made by theassessee and the relevant provisions of law, inthe|lightof|Board’sCircularprescribing Date of Order 14-11-2017 in W.P.No.36428/2016 M/s. Gaonkar Mines Vs. The Addl. Commissioner of Income-tax and Anr. 3/8 conditions for waiver of interest. It is anadmitted fact that there was a clear liability todeduct tax and the same was within theknowledge of the assessee. The disallowanceu/s40(a)(ta)LUGSmade|due.tonon-deduction/ remittanceof|tax|Orlcontractpayment. The contract payments were found tohave been made through out the year andaccordingly TDS is required to be remitted by 7[th]of the subsequent month.lt is also not§disputed that there was a certain TDSliability on the contract payment madewhich 1s evident evenfrom clause 27(b) of theAuditor's Report. In view of the above,tt|cannot be said that the assessee could haveanticipated the disallowance u/s 40(/a}(ia) asliability to pay TDS had already arisenduring the financial year itself and the same didnot accrue as on the last day of the year. The|charge of interest under section 234B and 254C.consequent upon disallowance u/s 40/(a)(ta), istherefore, automatic and mandatory in the given|circumstances. Date of Order 14-11-2017 in W.P.No.36428/2016 M/s. Gaonkar Mines Vs. The Addl. Commissioner of Income-tax and Anr. 4/8 6. Existing instructions on reduction or waiver ofinterest issued by the Board in notification inF’.No.400/7 129/2002-IT(B) dated 26.06.2006 reproduced below -. “2. Ihe class of incomes or class ofcases in which the reduction or waiver of|interest under section Q34A or section 234Bior, as the case may be, section 234C can be|considered, are as follows: Date of Order 14-11-2017 in W.P.No.36428/2016 M/s. Gaonkar Mines Vs. The Addl. Commissioner of Income-tax and Anr. 4/8 6. Existing instructions on reduction or waiver ofinterest issued by the Board in notification inF’.No.400/7 129/2002-IT(B) dated 26.06.2006 reproduced below -. “2. Ihe class of incomes or class ofcases in which the reduction or waiver of|interest under section Q34A or section 234Bior, as the case may be, section 234C can be|considered, are as follows: (a)Where during the course of proceedingsfor search and seizure under section 132of the Income-tax Act, or otherwise, thebooks of account and other incriminatingdocuments have been seized, andtheassessee has been unable to furnish|thereturn of income for the previous year,during which the action under section 132has taken place, within the time specifiedIn|thisbehalf,and.theChief.Commisstoner/DirectorGeneral1S.Satisfied, having regard to the facts andcircumstances of the case, thatthe delayin furnishing such return of tncome|cannot reasonably be attributed to.the assessee. Date of Order 14-11-2017 in W.P.No.36428/2016 M/s. Gaonkar Mines Vs. The Addl. Commissioner of Income-tax and Anr. 5/8 (b}Any income chargeable to income-tax|under anyhead of income, other thanCapital gains is received or accruedafter due date of payment of the firstor subsequent instalments ofadvancetax which was neither anticipated norwas in the contemplation of the assessee, and the advance tax on such income 1s)paid in the remaining instalment or|instalments, andtheChiefCommussioner/DirectorGeneral 1S|satisfied on the facts and circumstances|of the case that this is a fit case for|reductionOLrWAIVEeEof|the|interestchargeable under section 234C of the|Income-tax Act.” 3. The learned Counsel for the petitioner,Mr.Mallaharao has urged before this Court that sincethe petitioner - Company was making payments to thecontractors of the labour, who were poor persons andwere not taxable under the provisions of the IT Act andtherefore, the petitioner- Company did not have any Date of Order 14-11-2017 in W.P.No.36428/2016 M/s. Gaonkar Mines Vs. The Addl. Commissioner of Income-tax and Anr. 6/8 liability to make deduction of tax at source and as far asdisallowance in the hands of the petitioner - assesseeunder Section40(a)(1a)of the IT Act 1s concerned, thematter has been remanded back by the learned Income-Tax Tribunal to the Assessing Authority and thereforeon merits of such disallowance made under the said|section 4QO(a)(ia) of the IT Act, it is still pendingadjudication and therefore the petitioner should bedeemed to have satisfied the conditions of|Clause 2(b)of the Central Board of Direct Taxes (CBDT) Circulardated 26.6.2006,quoted above. — 4. Having heard the learned Counsel for thepetitioner - assessee, this Court is of the opinion thatthere iS no error in the impugned order passed by therespondent — Chief Commissioner of Income-tax. It isclearly and categorically held that he has no discretionunder theCBDTInstructions orCircular~ dated26.6.2006inasmuch as the petitioner during the Date of Order 14-11-2017 in W.P.No.36428/2016 M/s. Gaonkar Mines Vs. The Addl. Commissioner of Income-tax and Anr. 7/8 contemporary period itself very well knew that non-deduction/remittance would be disallowable for want ofdeduction of tax at source under Section40(a)(1a)ot theIT Act. Therefore, such additions to the returnedincome cannot be said to have arisen or accrued after|the due date of payment of first or subsequentinstalment of advance tax which was neither anticipatednor was in contemplation of the assessee and thereforein such circumstances, levy of interest under Sections234A, 234B and 234C was automatic and the samecannot be waived. Date of Order 14-11-2017 in W.P.No.36428/2016 M/s. Gaonkar Mines Vs. The Addl. Commissioner of Income-tax and Anr. 7/8 contemporary period itself very well knew that non-deduction/remittance would be disallowable for want ofdeduction of tax at source under Section40(a)(1a)ot theIT Act. Therefore, such additions to the returnedincome cannot be said to have arisen or accrued after|the due date of payment of first or subsequentinstalment of advance tax which was neither anticipatednor was in contemplation of the assessee and thereforein such circumstances, levy of interest under Sections234A, 234B and 234C was automatic and the samecannot be waived. 5. This Court is satisfied that there is no error orperversity in the order passed by the respondent — ChietCommissioner ot Income-Tax and the same is based on|sound reasoning and in accordance with theCBDTInstructions in the matter. The present petition isfound to be devoid of merits and is liable to be! M/s. Gaonkar Mines Vs. The Addl. Commissioner of Income-tax and Anr. 8/8 dismissed.Writ Petition is accordingly dismissed. No costs. Copy be sent to the respondents. N1V Sd/-. JUDGE|