Uber India Systems Pvt Ltd v. Joint Commissioner Of Income Tax, (Tds),Range -2(3) & Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J. WRIT PETITION NO. 73 OF 2019 Uber India Systems Pvt Ltd..Petitioner Versus Joint Commissioner of Income Tax, (TDS),Range -2(3) & Ors...Respondents ................... Mr. Jehangir Mistri, Sr. Counsel a/w Mr. Nishant Thakkar, Mr. HitenChande & Ms. Jasmine Amalsadvala i/by PDS Legal for thePetitionerMr. Jehangir Mistri, Sr. Counsel a/w Mr. Nishant Thakkar, Mr. HitenChande & Ms. Jasmine Amalsadvala i/by PDS Legal for thePetitioner Mr. Suresh Kumar for the RespondentsMr. Suresh Kumar for the Respondents ................... CORAM : AKIL KURESHI & M.S. SANKLECHA, JJ. DATE : JANUARY 17, 2019. P.C.: 1.Heard learned counsel for the parties for final disposal of the petition. 2.The petitioner has approached this Court at the stagewhere the respondent - Assessing OfÏcer proposes to passorder under Section 271C of the Income Tax Act, 1961 ("the Act" for short). The facts may be recorded in brief:- Petitioner is a company registered under theCompanies Act and claims that it provides marketing and support services to one Uber B.V., a Dutch Company. Thedispute between the petitioner and the department relates tothe question of deducting tax at source ("TDS" for short) bythe petitioner while making payments to Uber BV taxi driversof the fare after deducting commission. It is not necessary togo into the details of such controversy. For our purpose, itwould be sufÏcient to record that in the earlier assessmentyears 2016-17 and 2017-18, the Assessing OfÏcer had heldthat the petitioner was required to deduct TDS which thepetitioner had failed to do. He, therefore, raised demand interms of Section 201 of the Act. The petitioner having failedbefore the Commissioner (Appeals), has now filed appealbefore the Income Tax Appellate Tribunal ("the Tribunal" forshort). Pending this appeal, the petitioner had prayed forstay of the principal tax demands. The Tribunal passedinterim order on 28.9.2018 requiring the petitioner to depositcertain amounts pending appeal subject to which theremaining tax would not be recovered. The Tribunal alsonoted that in the meantime, the Assessing OfÏcer hadinstituted penalty proceedings under Section 271C of theAct. In this context, the Tribunal, in the said order, observed as under: "5.So far as the penalty proceedings are concerned, theassessee has made out a prima facie case in favour of the assesseeproving that the outcome of the appeal before ITAT will directlyimpact the proceedings which are hurriedly being finalized by theauthorities below, which may entail huge liability by way of penalty onthe assessee. In our opinion, so long as the appeal is pending beforethe Tribunal, the Revenue authorities should be restrained frompassing any order imposing penalty on the assessee u/s 271C and206AA of the Act however the proceedings may continue. Whiledeciding so, we are supported by the decision of the JurisdictionalHigh Court in the case of CIT vs Wander Pvt. Ltd., (2014) 44Taxman.com 103 (Bombay) and ACIT vs GE India Technology Pvt.Ltd. (2014) 46 Taxmann.com 374 (Gujarat). We, therefore,respectfully following the decision of the Hon’ble Gujarat High Court,direct the Addl. CIT (TDS)/revenue authorities not to pass ordersimposing penalty for a period of six months from the date of thisorder or disposal of appeal by the tribunal which ever is earlier,however, the proceedings may be continue during this period." In the present case, we are concerned with theassessment for the assessment year 2018-19 in whichsimilar issue is once again raised by the Assessing OfÏcer.Order of assessment is passed on 9.8.2018. The petitionerhas filed appeal against such order which is pending beforethe Commissioner (Appeals). Pending such appeal, thepetitioner applied to the Assessing OfÏcer for stay of therecoveries. The Assessing OfÏcer passed an order on In the present case, we are concerned with theassessment for the assessment year 2018-19 in whichsimilar issue is once again raised by the Assessing OfÏcer.Order of assessment is passed on 9.8.2018. The petitionerhas filed appeal against such order which is pending beforethe Commissioner (Appeals). Pending such appeal, thepetitioner applied to the Assessing OfÏcer for stay of therecoveries. The Assessing OfÏcer passed an order on 6.9.2018 requiring the petitioner to deposit a sum of Rs. 30crores and a further sum of Rs. 1.00 Crore every month forsix months out of the total tax demand of 113.84 crores,subject to payment of which, remaining tax would not berecovered. It is undisputed that the petitioner has depositedthe lump sum amount as required and is also depositing themonthly installment as and when it falls due. 3.In view of such background, when the Assessing OfÏcerinstituted penalty proceedings under Section 211C of the Actin relation to present assessment order, the petitionerrequested for adjournment. By its letter dated 3.12.2018,besides raising other grounds, the petitioner urged that theTribunal has already stayed the passing of final penalty orderfor earlier assessment years and that the appeals before theTribunal are still pending and would come up for hearing on11.12.2018. We are informed that the Assessing OfÏcer hadtaken into account such facts and adjourned the penaltyproceedings to 21.12.2018. We are further informed thatthe appeals came up before the Tribunal on 11.12.2018 onwhich date the department needed time. The appeals were adjourned to 15.1.2019 and thereafter, to 28.1.2019. 4.In the background of such facts, learned counsel for thePetitioner submitted that the Assessing OfÏcer may beprevented from proceeding further with the penaltyproceedings to avoid multiplicty of legal proceedings. On theother hand, learned counsel for the department opposed theprayer contending that the Assessing OfÏcer is well within hisdiscretion to proceed further with the penalty proceedings. 5.In the facts of the present case, when the very questionof levying tax from the petitioner is before the Tribunal,where the Tribunal has required that the Assessing OfÏcernot to pass the order of penalty and that the appeals wouldbe heard out of turn, in order to avoid multiplicity of legalproceedings, we would adopt a formula under which theinterest of the petitioner as well as department are takencare of. As noted, the Tribunal has desired that the AssessingOfÏcer may continue with the penalty proceedings but finalorder thereon may not be passed till disposal of the appeals. In connection with the present assessment order, theAssessing OfÏcer himself has imposed a condition ofdepositing a portion of tax demand subject to fulfillment ofwhich the remaining recovery would be stayed. Consideringsuch facts, we would require that the Assessing OfÏcer in thepresent case also not to pass the final order of penalty tillthe petitioner's appeals before the Tribunal againstassessment for assessment years 2016-17 and 2017-18 aredisposed of. Under such circumstances, the petition isdisposed of with following directions:- i.Respondent No.1 shall not pass final order under Section271C of the Act till the petitioner's appeals before the Tribunalfor assessment years 2016-17 and 2017-18 are decided. Thatwould, however, not preclude him from proceeding further tillthe stage of passing the final order. The petitioner shallcooperate with such proceedings.271C of the Act till the petitioner's appeals before the Tribunalfor assessment years 2016-17 and 2017-18 are decided. Thatwould, however, not preclude him from proceeding further tillthe stage of passing the final order. The petitioner shallcooperate with such proceedings. i.Respondent No.1 shall not pass final order under Section271C of the Act till the petitioner's appeals before the Tribunalfor assessment years 2016-17 and 2017-18 are decided. Thatwould, however, not preclude him from proceeding further tillthe stage of passing the final order. The petitioner shallcooperate with such proceedings.271C of the Act till the petitioner's appeals before the Tribunalfor assessment years 2016-17 and 2017-18 are decided. Thatwould, however, not preclude him from proceeding further tillthe stage of passing the final order. The petitioner shallcooperate with such proceedings. ii.It goes without saying that by virtue of the stay granted by theTribunal and the present further this order passed by thisCourt, the department would have no difficulty on the issue oflimitation in passing the penalty order, If eventually, after theTribunal disposes of the appeals, the question of passing theorder on penalty arises in all or any of the assessment years.Tribunal and the present further this order passed by thisCourt, the department would have no difficulty on the issue oflimitation in passing the penalty order, If eventually, after theTribunal disposes of the appeals, the question of passing theorder on penalty arises in all or any of the assessment years. iii.The petitioner shall cooperate with the prompt disposal of theappeals before the Tribunal.appeals before the Tribunal. 6.With these directions, the petition is disposed of. 7.Nothing stated in this order would hamper thedepartment in pursuing the department's application filedbefore the Tribunal on 11.1.2019. [ M.S. SANKLECHA, J. ] [ AKIL KURESHI, J ]