Ssuance Of A Lower Deduction Of Taxcertificate. During The Course Of Proceeding, The Respondents Passedorders Annexure P-5 And P-7, Which Are Subject Matter Of v. Deputy Commissioner Of Income

IN THE HIGH COURT OF MADHYA PRADESHAT JABALPUR BEFOREJUSTICE SUJOY PAUL &JUSTICE VIVEK JAINON THE 10[th] OF JANUARY, 2024 WRIT PETITION No. 27328 OF 2023 BETWEEN:- GOEL CARGO PRIVATE LIMITEDTHROUGH ITS DIRECTOR SUNNY GOYALS/O SHRI MOTILAL GOEL AGE ABOUT 33YEARS OCCUPATION BUSINESS R/OHARAYANA BHAWAN, PANNA ROAD,SATNA (MADHYA PRADESH) .…PETITIONER (BY SHRI SAPAN USRETHE -ADVOCATE ) AND .….RESPONDENTS (BY SHRI SIDDHARTH SHARMA – ADVOCATE) ------------------------------------------------------------------------------------------------------- This writ petition coming on for hearing this day, JUSTICESUJOY PAUL passed the following: O R D E R 1.The petitioner preferred an application under Section 197 of theIncome Tax Act, 1961 for issuance of a Lower Deduction of TaxCertificate. During the course of proceeding, the respondents passedorders Annexure P-5 and P-7, which are subject matter of challenge inthis petition. 2.The bone of contention of learned counsel for the petitioner isthat the petitioner intended to submit an online document dated 1[st]April, 2023 (Page-35). Said document was not loaded because messagewas too large. Faced with this, the petitioner preferred acommunication on April 3, 2023 at 12 PM (Page-36) in the TracesPortal. It is submitted that while passing the impugned order,(Annexure P-5), it is mentioned that the applicant has not submittedany explanation regarding queries raised whereas the document datedApril 3, 2023 aforesaid was loaded on Traces Portal. Thus, theimpugned order Annexure P-5 is passed without application of mind. 3. Criticism of Annexure P-7 is founded upon Rule 28-AA of theIncome Tax Rules. Learned counsel for the petitioner submits that theapplication is rejected by holding that the applicant declared very lownet profit ratio, which is not at par with similar transport business. It isargued that the respondent no. 2 was competent only to examine theaspect of TDS and had no authority, jurisdiction and competence tolook into the aspect of net profit which is within the province ofjurisdictional Assessing Officer. By placing reliance on two DivisionBench judgments of Delhi High Court in W.P.(C)11877/2023Shreyash Retail Private Ltd. Vs. Deputy Commissioner of Income Tax TDS Circle 77 (1) & anr. and in W.P. (C) 8041/2021 CloudtailIndia Private Limited Vs. The Commissioner Of Income Tax (TDS)Delhi & Anr, it is argued that decision taken by the respondent is incomplete ignorance of Rule 28-AA of the Income Tax Rule. Thenecessary factors mentioned in Rule 28-AA of the said Rule have notbeen considered. 4.Shri Siddharth Sharma, learned Junior Standing Counsel for therespondents supported the impugned orders. In support of hissubmission, he also placed reliance on written submissions. It issubmitted that as mentioned in Para-3 of the written submissions, it isthe satisfaction of the Assessing Officer (A.O.) whether said certificateis to be issued or not. In order to arrive at a satisfaction, one suchimportant factor is veracity of existing and estimated tax liability of anapplicant which is net profit ratio. Thus, net profit ratio was rightlytaken into account while passing the impugned order Annexure P-7and, therefore, no fault can be found in the impugned order AnnexureP-7. 5. So far document page 35 and 36 aforesaid are concerned, it issubmitted that these documents were never received/served throughany mode to the department. Thus, the petitioner cannot claim anybrowny points on the basis of these two documents. 6.Learned counsel for the parties confined their arguments to theextent indicated above. 7.We have heard learned counsel for the parties at length andperused the record. 5. So far document page 35 and 36 aforesaid are concerned, it issubmitted that these documents were never received/served throughany mode to the department. Thus, the petitioner cannot claim anybrowny points on the basis of these two documents. 6.Learned counsel for the parties confined their arguments to theextent indicated above. 7.We have heard learned counsel for the parties at length andperused the record. 8.As noticed above, the parties have taken a diametrically oppositestand regarding furnishing/receiving of document dated 01.04.2023(page 35) and 3[rd] April, 2023 (page 36). We have carefully gonethrough the pleadings of the petition and do not find any categoricalpleading about submission of document dated 3[rd] April, 2023 in thepleadings. Since specific pleading is absent and parties have takendiametrically opposite stand on submission of these documents, it isclear that the same is a disputed question of fact. Since disputedquestion of fact cannot be gone into in a writ petition, we are unable togive any finding based upon the aforesaid two documents. 9.Before dealing with the remaining contention of the parties, it isapposite to quote Rule 28 AA of the Income Tax Rules. The same readsas under:- "28AA. (1) Where the Assessing Officer, on anapplication made by a person under sub-rule (1) ofrule 28 is satisfied that existing and estimated taxliability of a person justifies the deduction of tax atlower rate or no deduction of tax, as the case maybe, the Assessing Officer shall issue a certificate inaccordance with the provisions of sub-section (1)of section 197 for deduction of tax at such lowerrate or no deduction of tax. (2) The existing and estimated liability referred toin sub-rule (1) shall be determined by theAssessing Officer after taking into considerationthe following :— (i) tax payable on estimated income of theprevious year relevant to the assessment year ; (ii) tax payable on the assessed or returned orestimated income, as the case may be, of last fourprevious years ; (iii) existing liability under the Income-tax Act,1961 and Wealth- tax Act, 1957 ; (iv) advance tax payment tax deducted at sourceand tax collected at source for the assessment yearrelevant to the previous year till the date ofmaking application under sub-rule (1) of rule 28.” (Emphasis Supplied) 10.The Delhi High Court in the case of Cloudtail India PrivateLimited (supra) opined that Rule 28 AA is a statutory and mandatoryprovision. The revenue is under a statutory obligation to act inaccordance with the mandate of Rule 28 AA. Even otherwise, this istrite that if a statute prescribes a thing to be done in a particularmanner, it has to be done in the same manner and other methods areforbidden. [See : Baru Ram v. Prasanni AIR 1959 SC 93,Dhanajaya Reddy v. State of Karnataka (2001) 4 SCC page 9 andjudgment of this Court reported in (2011) 2 MPLJ 690, Satyanjay Tripathi v. Banarsi Devi]. 11.A plain reading of Rule 28 AA makes it clear that the‘satisfaction’ needs to be recorded/determined by A.O. after taking intoconsideration the four factors mentioned in sub-rule (2) of Rule 28-AA. Thus, it is not the subjective satisfaction of A.O., but an objectivesatisfaction which must be based on Clauses (i), (ii), (iii) and (iv) ofsub-rule (2) of Rule 28 AA. 12.If impugned order Annexure P-5 and more particularly AnnexureP-7 is examined, it shows that all those four factors have not beentaken into account. Pertinently, the factum of receiving Annexure P-3and P-8 is not in dispute in the instant case. bks/rj 13.Since impugned orders are passed in clear violation of Rule 28AA, we are constrained to hold that decision making process adoptedby the respondents runs contrary to the requirement of law, i.e. Rule 28AA. 12.If impugned order Annexure P-5 and more particularly AnnexureP-7 is examined, it shows that all those four factors have not beentaken into account. Pertinently, the factum of receiving Annexure P-3and P-8 is not in dispute in the instant case. bks/rj 13.Since impugned orders are passed in clear violation of Rule 28AA, we are constrained to hold that decision making process adoptedby the respondents runs contrary to the requirement of law, i.e. Rule 28AA. 14.The scope of judicial review in a writ petition is limited.Ordinarily, the Court is not obliged to examine the correctness of thedecision. Instead, the Court is obliged to examine the correctness of thedecision making process. At the cost of repetition, in our opinion, thedecision making process is faulty and impugned order Annexure P-5and P-7 are passed without considering the relevant factors ingrainedin Clause (i), (ii), (iii) and (iv) of sub-rule (2) of Rule 28 AA. 15.Resultantly, both the impugned orders Annexure P-5 and P-7 areset aside. The matter is remitted back to respondent No.2, who shallconsider the claim of petitioner in accordance with law and pass a freshdetailed/speaking order thereupon within 30 days from the date ofcommunication of this order. It is made clear that this Court has notexpressed any opinion on the merits of the case. 16.Petition is disposed of. (SUJOY PAUL)JUDGE (VIVEK JAIN) JUDGE