M/S. Bombardier Transportation India Pvt Ltd v. Deputy Commissioner Of Income-Tax (Tds) ==========================================================

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 12646 of 2019 ========================================================== M/S. BOMBARDIER TRANSPORTATION INDIA PVT LTD Versus DEPUTY COMMISSIONER OF INCOME-TAX (TDS) ========================================================== Appearance: MR B S SOPARKAR(6851) for the Petitioner(s) No. 1MS POOJA ASHAR, AGP for the Respondent(s) No. 1MR.VARUN K.PATEL(3802) for the Respondent(s) No. 1========================================================== CORAM:HONOURABLE MS. JUSTICE SONIA GOKANIandHONOURABLE MR. JUSTICE SANDEEP N. BHATT Date : 23/01/2023 ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) Draft amendment is permitted to be carried 1.Draft amendment is permitted to be carriedout forthwith, on hearing learned counsels for both thesides. 2.The petitioner is before this Court seeking tochallenge the action of the respondent for non-grant ofthe refund which has been withheld with interest andadditional interest under Section 244A of the Income TaxAct. The petitioner is before this Court seeking to 3. Certain accounting entries were passed by the petitioner for the financial year 2004-05 - assessmentyear 2005-06 to the tune of Rs.6,50,62,085/- for provisionof expenses to be made to Bombardier INC Canada andBombardier INC UK. No actual remittance was there inthe financial year 2004-05 and such provision, accordingto the petitioner, was disallowed in return of income asinadmissible under Section 40(a). 4.The petitioner since, later on in October, 2005,received the invoices of Rs.5,17,23,484/-, deducted the taxof Rs.77,58,523/- and deposited the same on 22.10.2005.During the assessment year 2005-06, there wereprovisional accounting entries and the petitioner has notdefaulted, according to its averments, under Section 195or 201. According to the respondent, there was anobligation for deduction of tax at source on the provisionof Rs.6.50 crores (rounded off). Hence, considering that tobe the default under Section 201(1) of the petitioner forthe TDS to be deducted with interest and penalty, theorders came to be passed on 28.2.2006, 2.3.2006 and31.3.2006 respectively. 5. The appeal came to be filed and CIT (appeals) partly in favour of the petitioner on 23.11.2006confirming the penalty of Rs.97,59,312/-. The petitioneralso paid in the year 2006-07 a sum of Rs.90,46,000/-against the demand raised by 11 different challans. It isalso the say of the petitioner that the two challans wereerroneously placed for assessment year 2006-07 and 2007-08 being the sum of Rs.26,40,000/- and Rs.6,00,000/-respectively. In absence of any demand pending, thisdemand could not have been raised. 6.The appeal before ITAT against such dismissalorder was preferred which allowed the assessee’s appealand deleted the penalty on 17.4.2009. The appeal before ITAT against such dismissal 7.The tax appeal was preferred by the revenuebeing 1952 of 2009 which is heard and dismissed on4.8.2016. The tax appeal was preferred by the revenue 8.The department had not been issuing the refund. The petitioner had deposited sum ofRs.90,46,000/-. It is averred that the said amountdeposited by the petitioner is due for refund. Thecommunications on different dates are also reflected,however, no heed is paid. 9.The complaint was preferred before CPGRAMof CBDT on 19.6.2017 for not giving effect to the orderof the ITAT and the High Court and for non-issuance ofthe refund. The complaint was preferred before CPGRAM 10.The complaint came lodged for the assessmentyear 2013-14 as well. The CPGRAM provided the replyon 11.78.2017 and 2.8.2017, however, there is no whisperon the refund of 2005-06. The tax appeal was preferred by the revenue 8.The department had not been issuing the refund. The petitioner had deposited sum ofRs.90,46,000/-. It is averred that the said amountdeposited by the petitioner is due for refund. Thecommunications on different dates are also reflected,however, no heed is paid. 9.The complaint was preferred before CPGRAMof CBDT on 19.6.2017 for not giving effect to the orderof the ITAT and the High Court and for non-issuance ofthe refund. The complaint was preferred before CPGRAM 10.The complaint came lodged for the assessmentyear 2013-14 as well. The CPGRAM provided the replyon 11.78.2017 and 2.8.2017, however, there is no whisperon the refund of 2005-06. 11.Yet another complaint was preferred beforeCPGRAM for assessment year 2005-06 on 16.10.2017. Thepetitioner supplied the details to the respondent for it toprocess the claim of refund. However, due to mismatchof the challan against the system, according to therespondent, it was not possible to grant the refund butto rectify the same with the bank. For the allegedinaction on the part of the respondent, the petitioner haschosen to approach this Court with the following prayers: Yet another complaint was preferred before “6(a) Direct the Respondent to give effect to the order ofITAT dated 17.04.2009. Further direct the Respondent togive the refund due to the Petitioner and the interest and additional interest u/s 244A and the additional compensationdue to the petitioner. (b) any other and further relief deemed just and proper begranted in the interest of justice. (c) to provide for the cost of this petition.” 11. Affidavit-in-reply is filed denying all allegations. According to the respondent, for the refund of theassessment year 2005-06, it had written on 3.12.2019 toCentralized Processing Cell-TDS, Ghanizbad, U.P. (CIT)requesting him for the guidance/directions regardingverification of the challan for payment of Rs.90.46 lacs,the challans since were not TDC Reconciliation Analysisand Correction Enabling System (TRACES) portal forverification. Reply from CIT(CPC-TDS) is received.However, he showed his inability to process it on accountof non-availablity of data. Therefore the TDS-AO has notissued any challan pertaining the assessment year 2005-06 manually. The office had written a letter to the StateBank of India, Vadodara requesting for verification ofchallans amounting to Rs.90.46 lacs. SBI also furnishedthe reply on 5.2.2020 and 7.2.2020, wherein, it has been confirmed that the challans amounting to Rs.90.46 lacshad been received by the bank. In Tax Appeal No.1952of 2009, request is made by the assessee company forissuance of the refund. It is also stated to adjust therefund along with consequential interest subject towritten confirmation from the assessing officer of makingadjustment of refund along with the interest onoutstanding demand of particular assessment year. Thejurisdictional AO (DCIT, Circle-5(1), New Delhi) hasstated that demands for various years adjusted toRs.70,83,92,180/- were outstanding in case of the assesseecompany. The refund claimed and its adjustments is notpossible to be processed on portal. The outstandingdemand, according to the respondent, as per theTRACES portal is Rs.2,74,28,930/- and the otheroutstanding demand for other years has been Rs.70.83crores (rounded off) as on 18.11.2019. The officers hadbeen intimated through e-mail on 6.1.2023 and 11.1.2023and however, no response has been made available sofar. The demand, according to the respondent outstandingagainst the respective TAN/PAN and there are twoseparate portals for day-to-day functioning of thedepartment ITBA (Income Tax Business Application) looks after the processing of Income Tax returns and TRACES after the processing of Income Tax returns and TRACES takes care of processing of TDS returns/statements.TRACES portal and ITBA portal, being independentsystems of the department having independent officers incharge and the officer having territorial jurisdiction overthe same assessee. Hence, automatic inter departmentaladjustment of refund of TDS proceedings and thedepartment of refund TDS proceedings over outstandingdemand of income tax proceedings and vice-a-versa hasnot been made functional till date. Therefore, theadjustment of outstanding demand of TDS/income taxwill be consuming quite some time. 12.We have the heard learned advocates on boththe sides. Reliance is placed on the decision of thisCourt in the case of Nima Specific Family Trust V/sAssistant Commissioner of Income-tax Circle 5(2),reported in [2018] 100 taxmann.com 262 (Gujarat) tourge that not only the interest will be necessary to begiven but the compensation has been given by the Courtearlier for the delay in making payment of interest as itis an exceptional circumstance which shall need to beborne in mind. 13.Learned senior standing counsel Mr.Patelsubmits that there is a huge outstanding dues of thepast years and the adjustment will take a while as thepayment which was made by the assessee was at thetime when the software was not available and it wasdeposited physically because of which its record is notavailable and hence this has caused the delay over andabove the reasons which have been given in paragraph 4of the affidavit-in-reply. Learned senior standing counsel Mr.Patel At the outset, it needs to be specifically mentioned thatafter the revenue’s appeal was dismissed on 4.8.2016confirming the order of the ITAT, which had allowed theappeal of the petitioner quashing the penalty, the refundhad become due. It appears that the first communicationthereafter was on 31.10.2017. Before that, on 19.6.2017,the petitioner filed a complaint before CPGRM, however,the same was closed vide reply dated 11.7.2017 and2.8.2017. Yet another complaint was filed beforeCPGRAM on 16.10.2017, 28.2.2018, 7.3.2018, 12.3.2018,16.3.2018, 10.4.2018 and 11.4.2018. When nothing worked,the present petition being preferred. 14.In such circumstances, the petitioner obviouslyis waiting for the refund after the challenge has beenturned down by this Court in the Tax Appeal No.1952 of2009. The reason of there being two separate portalsavailable for day-to-day functions of ITBA (Income TaxBusiness Application) looking after the processing ofIncome Tax returns and TRACES taking care ofprocessing of TDS returns/statements hardly is thereason for the Court to overlook the period of five yearsthat has been taken after once the tax appeal has beendecided and there had been no further challenge byother side. In the affidavit filed by the respondent on12.1.2023, it is not sure as to what exactly is theoutstanding demand in the instant case. Paragraph 4makes it unequivocally clear that the respondent is stillgroping in dark with regard to the demand. Even ifthere had been a manual deposit and it is prior to theregime when everything went online, there is a sufficienttime taken by the respondent authority of five years.With regard to the refund to be returned with theinterest, sub-section (1A) inserted in Section 244A by theFinance Act of 1.6.2016 needs to be applied prospectivelyas per the decision of Nima Specific Family Trust (supra) for the period of delay after introduction of therelevant statutory provision and the assessee would beentitled to the compensation by way of interest. However,the assessee was held not to be entitled to the intereston interest which was awarded as compensation. In theinstant case, the High Court has finalized the tax appealon 4.8.2016. Considering the fact that both the provisionsof Section 244 and 244A will be given effect to what theassessee is presently seeking is the compensation for thedelay that has been caused in making the refund. It isnot disputed that sub-section (1) of Section 244A requiresthe revenue to grant interest at the statutory rate if therefund becomes due to the assesee. The department sinceis not in a position to take shelter of pendency of theappeal, before this Court also, it is not necessary forthis Court to give any directions with regard to theapplicability of both the provisions and the requirementof the revenue to grant the refund bearing in mind theexisting provisions. 15.With regard to the compensation which isbeing sought for non-payment of the statutory interestfrom the time, this Court decided the appeal. much is insisted upon. This Court in Nima Specific Family Trust (supra) had noted various provisions and also thedecision of the Apex Court rendered in case of GujaratFlourochemicals Ltd.V/s CIT [2015] 377 ITR 207 to holdthat there cannot be any direction for payment ofinterest on interest. The statute provided for interest ondelayed refund under sub-section (1) of Section 244A,then newly inserted sub-section (1A) provides foradditional interest. Therefore, there cannot be anyfurther directions for payment of interest over and abovesuch statutory prescriptions and hence it had directionthe cost of Rs.1 lac to the petitioner by way ofcompensation on the amount of interest which remainedunpaid for long time. 16.On this issue, we notice that the respondent isnot yet clear on the outstanding amount, however, it isvolunteered that within three months, it shall be in aposition to complete the same noticing the fact that thecompany has changed its name with all its past andfuture liabilities. Of course, it has been given e-pannumber and it is the same pan number which was withM/s Bombardier Transportation, however, necessary procedure shall need to be completed by the petitionerand name change with supporting documents shall go tothe concerned officer-ACIT Income Tax Vadodara both e-copies and physical copies through registered letterwithin one week from the date of receipt of this order.Let process be completed in a three months’ period, afterreceipt of such copies. If not done within three months,the amount of compensation to be paid shall be Rs.1lacs. 17.This petition stands disposed off in aboveterms. (SONIA GOKANI, J) SRILATHA (SANDEEP N. BHATT,J)