M/S.sundaram Spinning Mills (P) Ltd.,Post Box v. The Joint Commissioner Of Income-Tax,Special Range, Salem

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 04.06.2007 Coram : THE HONOURABLE MR.JUSTICE P.D.DINAKARAN AND THE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJA Tax Case (Appeal) No.180 of 2004 M/s.Sundaram Spinning Mills (P) Ltd.,Post Box No.2,Komarapalayam...Appellant Vs The Joint Commissioner of Income-tax,Special Range, Salem. ..Respondent Appeal under Section 260A of the Income Tax Act, 1961 against theorder of the Income Tax Appellate Tribunal, Chennai Bench - 'C' in I.T.A.No.1375(Mds)/1999 dated 08.05.2001 for the assessment year 1985-86 againstthe Order of the Commissioner of Income Tax [Appeals] VII, 121, MahatmaGandhi Road, Chennai 34 dated 22.7.1999 and made in ITA.No.68/99-2000against the proceedings of the Deputy Commissioner of Income Tax, SpecialRange III, Coimbatore 18 dated 29.3.89 and made in S.102/SR.III/85-86/CBEagainst the order of the Income Tax Officer, Company Circle, Salem 7 dated26.3.88 and made in S-98/COM/SLM. For Appellant :Mr.N.Quadir Hoseyn For Respondent : Mr.N.Muralikumaran, Sr.Standing Counsel for Income-tax Dept. This appeal is filed under Section 260A of the Income Tax Act, 1961 bythe assessee, against the order of the Income Tax Appellate Tribunal,Chennai Bench - 'C' in I.T.A. No.1375(Mds)/1999 dated 08.05.2001. On14.06.2004, this Court admitted the appeal and formulated the followingsubstantial question of law:- https://hcservices.ecourts.gov.in/hcservices/ Whether on the facts and in the circumstances of thecase, the Tribunal was justified in holding in effectthat the levy of interest under Section 201 (1A) wasnot subject to any limitation? 2.The facts leading to the above substantial question of law are asunder: The assessee is a Private Limited Company. The relevant assessmentyear is 1985-86 and the corresponding accounting year ended on 31.03.1985.The Return of income was filed on 25.10.1985 claiming a loss ofRs.59,15,418/-. The assessment was completed under Section 143(3) of theIncome-tax Act ("Act" in short) determining the total income atRs.18,93,880/- after making various additions and disallowances.Aggrieved by the order, the assessee filed an appeal to the Commissionerof Income-tax (Appeals). The C.I.T.(A) allowed the appeal partly and theAssessing Officer passed a Consequential Order and determined the loss atRs.31,568/-. Later, the Assessing Officer passed another Revision Orderdated 02.03.1992 by way of giving effect to C.I.T.(A)'s order in which thetotal loss was determined at Rs.56,72,843/- and declared "N.A." for thesaid assessment year. Subsequently, a letter dated 19.10.1995 wasreceived from the Dy.CIT, Salem Range on 02.03.1999 calling for detailsregarding payment of Tax Deducted at Source ("TDS" in short) for the saidassessment year. The assessee by letter dated 15.03.1999, replied that thematter regarding TDS on interest payment was more than 14 years old and isnot possession of details of payments and hence unable to furnish thedetails sought for. Further it was stated that the cone winding chargesare labour charges not attracting the provisions of TDS. The JointCommissioner of Income-tax, Special Range, Salem by order dated31.03.1999, levied interest under Section 201(1A) of the Act and treatedthe assessee as a defaulter for recovery of the tax. The said order readsas follows:- Aggrieved by the order, the assessee filed an appeal to the Commissionerof Income-tax (Appeals). The C.I.T.(A) allowed the appeal partly and https://hcservices.ecourts.gov.in/hcservices/ Aggrieved by the order, the assessee filed an appeal to the Commissionerof Income-tax (Appeals). The C.I.T.(A) allowed the appeal partly and https://hcservices.ecourts.gov.in/hcservices/ confirmed the amounts relating to TDS on interest and salary and theinterest thereon, while accepting the assessee's contentions regardingcone winding charges and allowed the appeal. Aggrieved, the assesseefiled an appeal to the Income-tax Appellate Tribunal ("Tribunal" in short)contending the inability of furnishing the details after a long lapse oftime could not be equated to a finding that there was default on the partof the assessee warranting levy of interest u/s.201(1A) of the Act. TheTribunal dismissed the appeal and confirmed the order of the lowerauthorities. Hence the present tax case. 3.Learned counsel appearing for the assessee submitted that theTribunal failed to appreciate that the absence of a specific period oflimitation in Section 201(1A) of the Act does not entitle the revenueauthorities to initiate action at any point of time. Further it is statedthat eventhough the petitioner paid the amount, he could not produce theevidence before the authorities and hence the petitioner is not subject tolevy of interest under Section 201(1A) of the Act. Now the counselproduced evidence regarding the payment of tax and fairly stated that thesame was not filed before the lower authorities. 4.Learned Sr.Standing Counsel appearing for the Revenue submittedthat the assessee had deducted tax at source on interest and salarytotalling to Rs.3,66,302/- but had not remitted the same to the GovernmentAccount for the Financial Year 1984-85. It is also submitted that theassessee was asked to produce the details of the payment of the same.Further a number of opportunities were given to the assessee to submit andproduce evidence regarding the payment of tax which was deducted atsource, but the assessee did not produce the payment details till date.Hence the authorities are right in levying interest under Section 201(1A)of the Act and treating the assessee as a defaulter for the recovery oftax. It is not proper for the assessee to produce the evidence first timebefore the Court and hence, the same should be disregarded. 5.Heard the counsel. It is not in dispute that the evidence whichis now produced was not filed before any of the authorities below, by theassessee. But the fact remains that the Tax Deducted at Source was paidby the assessee. Due to strike and other reasons, the said details werenot produced before the authorities. Later the assessee found out thedetails and filed a petition dated 21.10.1999 before the JointCommissioner of Income-tax, Salem stating the details regarding paymentsof tax deducted at source, which are as under:- Further, it is also seen that the bank also confirmed the said payment oftax. The said details were produced before the concerned AssessingOfficer on 21.10.1999, which is after the date of C.I.T.(A)'s order dated22.07.1999. The counsel also fairly stated that he ought to have producedthe information before the Tribunal, but due to some reason, the same wasnot furnished. Even though the said petition is pending, the AssessingOfficer had not taken up the petition and passed any order till today.The fact now is that the assessee had produced evidence to show that heremitted the amount. Hence the authorities ought to have considered thesame. Non-consideration of the particulars amount to double taxation andit also causes irreparable financial hardship to the assessee. Further, it is also seen that the bank also confirmed the said payment oftax. The said details were produced before the concerned AssessingOfficer on 21.10.1999, which is after the date of C.I.T.(A)'s order dated22.07.1999. The counsel also fairly stated that he ought to have producedthe information before the Tribunal, but due to some reason, the same wasnot furnished. Even though the said petition is pending, the AssessingOfficer had not taken up the petition and passed any order till today.The fact now is that the assessee had produced evidence to show that heremitted the amount. Hence the authorities ought to have considered thesame. Non-consideration of the particulars amount to double taxation andit also causes irreparable financial hardship to the assessee. 6.Under the circumstances, in the interest of justice, it is properfor the authorities to consider the matter. Hence we set aside the orderof the Tribunal as well as the lower authorities, with a direction to theAssessing Authority to consider the matter afresh after giving properopportunity to the assessee and pass orders in accordance with law, asexpeditiously as possible. It is for the assessee to file furtherevidence or materials if it is necessary before the Assessing Officer,regarding the proof of making payment and raise all contentions to supporthis case and cooperate with the Department in completing the proceedingswithout any further delay. km To 1. The Assistant Registrar, Income-tax Appellate Tribunal, Chennai Bench-C, Rajaji Bhavan, III Floor, Besant Nagar, Chennai 90. 2. The Commissioner of Income Tax, Special Range III, Coimbatore 18. Special Range III, Coimbatore 18. 3. The Commissioner of Income-tax (Appeals) VII, Chennai-600 034. Chennai-600 034. 4. The Joint Commissioner of Income-tax, Special Range, Salem-636 007. Special Range, Salem-636 007. 5. The Deputy Commissioner of Income-tax, Special Range, Salem-7. Special Range, Salem-7. 6. The Income-tax Officer, Company Circle, Salem-7. Company Circle, Salem-7. + 1 CC To Mr.N.Quadir Hoseyn, Advocate SR NO.32145+ 1 CC To Mr. N.Muralikumaran, Advocate SR NO.31589+ 1 CC To Mr. N.Muralikumaran, Advocate SR NO.31589 T.C.(A) No.180 of 2004 ng[co]Gp/20.6Gp/20.6