M/S Esl Steel Limited (Earlier Known As Electrosteel Steels Limited) v. Principal Chief Commissioner Of Income Tax (Tds), Ranchi

IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P (T) No. 319 of 2022 M/s ESL steel Limited (earlier known as Electrosteel Steels Limited) through its Deputy General Manager (Accounts), Rajesh Kumar Pandey --- --- Petitioner Versus 1.Principal Chief Commissioner of Income Tax (TDS), Ranchi 2.Commissioner of Income tax (TDS), Bihar and Jharkhand 3.Deputy Commissioner of Income Tax (TDS), Ranchi --- --- Respondents --- CORAM: Hon’ble Mr. Justice Aparesh Kumar Singh Hon’ble Mr. Justice Deepak Roshan Through: Video Conferencing --- For the Petitioner: M/s Biren Poddar, Sr. Advocate, Deepak Kr. Sinha, Advocate For the Respondents: Ms. Amrita Sinha, Advocate ---- 03 / 02.03.2022 Heard learned senior counsel for the petitioner Mr. Biren Poddar and Ms. Amrita Sinha, learned counsel appearing for the Respondent Income Tax Department. 2. Writ petition was preferred for the following relief (s). a)For issuance and setting aside the ex-parte Rejection Order dated Nil passed by Respondent No. 3, received by the Petitioner on 11.01.2022 (Annexure-7), whereby the Application dated 20.04.2021 (Annexure-2) filed by the Petitioner for issuance of No deduction of Income Tax Certificate u/s 197 of the Income Tax Act, 1961, has been rejected, after more than nine months, mainly on two grounds i.e. (i) total TDS/TCS demand of Rs. 1,61,87,949/- is outstanding for the period 2008-09 to 2017-18 and (ii) estimated profit projection is not acceptable in view of the post COVID situation and resurgence in business activity. dated Nil passed by Respondent No. 3, received by the Petitioner on 11.01.2022 (Annexure-7), whereby the Application dated 20.04.2021 (Annexure-2) filed by the Petitioner for issuance of No deduction of Income Tax Certificate u/s 197 of the Income Tax Act, 1961, has been rejected, after more than nine months, mainly on two grounds i.e. (i) total TDS/TCS demand of Rs. 1,61,87,949/- is outstanding for the period 2008-09 to 2017-18 and (ii) estimated profit projection is not acceptable in view of the post COVID situation and resurgence in business activity. b)For a direction upon the concerned Respondent to immediately issue No deduction of Income Tax Certificate to the Petitioner u/s 197 of the Income Tax Act, 1961, for which the Petitioner has filed application dated 20.04.2021 (Annexure-2) before the Respondent No. 3 (Assessing Officer) alongwith all the relevant papers/documents, as mentioned therein, and demanding personal hearing in the matter and thereafter vide several letters/e-mails such as Letter dated 19.08.2021 (Annexure-4), Letter dated 28.09.2021 (Annexure-5), E-mail dated 22.10.2021 (Annexure-6) repeatedly requested the Concerned Respondents to issue such certificate and subsequently, after lapse of more than nine months, without any notice or opportunity of hearing and without considering the papers/documents submitted by the Petitioner alongwith said applications, the Respondent No. 3 (Assessing Officer), issued the even aforesaid ex-parte rejection Order u/s 197 of the Act, received by the Petitioner on 11.01.2022 (Annexure-7). issue No deduction of Income Tax Certificate to the Petitioner u/s 197 of the Income Tax Act, 1961, for which the Petitioner has filed application dated 20.04.2021 (Annexure-2) before the Respondent No. 3 (Assessing Officer) alongwith all the relevant papers/documents, as mentioned therein, and demanding personal hearing in the matter and thereafter vide several letters/e-mails such as Letter dated 19.08.2021 (Annexure-4), Letter dated 28.09.2021 (Annexure-5), E-mail dated 22.10.2021 (Annexure-6) repeatedly requested the Concerned Respondents to issue such certificate and subsequently, after lapse of more than nine months, without any notice or opportunity of hearing and without considering the papers/documents submitted by the Petitioner alongwith said applications, the Respondent No. 3 (Assessing Officer), issued the even aforesaid ex-parte rejection Order u/s 197 of the Act, received by the Petitioner on 11.01.2022 (Annexure-7). c)For a declaration that the Petitioner is not liable to make payment and the Income Tax Department is not entitled to recover from the Petitioner, any of the demands as mentioned in the Demand Notice No. 734 dated 23.06.2021 (Annexure-3) payment and the Income Tax Department is not entitled to recover from the Petitioner, any of the demands as mentioned in the Demand Notice No. 734 dated 23.06.2021 (Annexure-3) so far as the Periods from 2008-09 to 2017-18 are concerned, however the Petitioner is ready to deposit the demand for the period from 2018-19 onwards, in view of the Judgment dated 13.04.2021 passed by Hon'ble Supreme Court in Civil Appeal No. 7147-7150 of 2020 in the case of the Petitioner reported in (2021) 9 SCC 657 and also in view of the Order dated 10.01.2022 (Annexure-8) passed by this Hon'ble Court in W.P.(T) No. 6631-6632 of 2019 in the case of the Petitioner, wherein, it has been held, interalia, that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution no plan, and shall stand extinguished proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 of the Insolvency and Bankruptcy Code, 2016 could be continued and in the instant case, such approval was granted by NCLT, Kolkata u/s 31 of the said Code of 2016 on 17.04.2018. d)For any other appropriate Writ(s), Order(s), Direction(s) as may be deemed fit and proper by your Lordships for doing substantial and conscionable justice to the Petitioner. may be deemed fit and proper by your Lordships for doing substantial and conscionable justice to the Petitioner. 2. Detailed facts relating to the case need not be gone into because of specific stand of the Respondents brought on record through their counter affidavit. Learned counsel for the Respondent has, in particular, referred to para-4 of the counter affidavit which, at the end, states that the matter is being considered by the incumbent CIT (TDS), Patna and is agreeable to grant administrative approval for a Lower Deduction Certificate provisioning the outstanding demand visible in the system, as was done in F.Y 2020-21 and against which the petitioner had no objection. New application from the petitioner has been received on 26.02.2022 for ‘Nil Deduction Certificate’ and is under consideration. 3. Learned counsel for the Respondent submits, on instruction received through mail yesterday from CIT (TDS), Patna that approval for issuance of ‘Lower / Nil Deduction Certificate’ under section 197 of Income Tax Act, 1961 has been accorded, but due to some technical issues on TRACES Portal, approval could not be uploaded on the Portal. Learned counsel for the Respondent has referred to the relevant extracts of the attachment containing comments of the Deputy Commissioner of Income Tax, TDS Circle, Ranchi, which is quoted hereunder: “The same issues were considered for issuance of lower deduction certificate during F.Y.2020-21 instead of a Nil deduction certificate. For F.Y.2021-22 however till date TDS of Rs. 8.15 crores have already been deducted so there is no need to provision for the demand and a? Nil? deduction certificate may be issued. Comments provided by Range Head:-In the instant case, the estimated income of the assessee is Rs. 508.83 crores for FY 2021-22. However, after the set off previous years loss, the net income is in negative. Further, there is total manual and cpc processed certificate during F.Y.2020-21 instead of a Nil deduction certificate. For F.Y.2021-22 however till date TDS of Rs. 8.15 crores have already been deducted so there is no need to provision for the demand and a? Nil? deduction certificate may be issued. Comments provided by Range Head:-In the instant case, the estimated income of the assessee is Rs. 508.83 crores for FY 2021-22. However, after the set off previous years loss, the net income is in negative. Further, there is total manual and cpc processed outstanding demand for previous years are 1.80 crores altogether, whereas through TDS/TCS, an amount of Rs. 8.15 crores have already been withheld during the year. Considering these facts, NIL deduction certificate u/s 197 of the Income-tax Act, 1961 may be given, if deemed fit.” Learned counsel for the Respondents further states on instruction that approval is likely to be uploaded on TRACES Portal today itself, latest by Friday. 4. Learned senior counsel for the appellant submits that in view of categorical statement made by the Respondents in the counter affidavit and submission by learned counsel for the Respondent on instructions, grievances of the petitioner appear to have been redressed. Let the e-mail containing instruction be taken on record. 5.Having regard to the specific stand of the Respondent relating to issuance of ‘Lower Deduction Certificate’ under section 197 of Income Tax Act, 1961, it appears that the grievances of the petitioner have been satisfied. Writ petition is accordingly disposed of. (Aparesh Kumar Singh, J) Ranjeet/ (Deepak Roshan, J)