With Regard To The Said Principle, The Cit(A) Relied Upon The Decision Of Thehon’ble Supreme Court In Radhasoami Satsang v. M/S. Height Insurance Services Ltd

ORDER SHEET IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE IA NO: GA/2/2020(OLD NO: GA/374/2020)INITAT/4/2020PRINCIPAL COMMISSIONER OF INCOME TAX-1, KOLKATAVS.M/S HEIGHT INSURANCE SERVICES LTD. BEFORE:The Hon'ble JUSTICE T. S. SIVAGNANAM AND The Hon’ble JUSTICE HIRANMAY BHATTACHARYYADate : December 16, 2021. [Via Video Conference] Appearance:Mr. D. Chowdhury, Advocate… for the appellant/RevenueMr. J.P. Khaitan, Sr. AdvocateMr. Ananda Sen, AdvocateMr. Arnab Chakraborty, Advocate..for respodnent The Court : This appeal by the revenue filed under Section 260A of theIncome Tax Act (the Act in brevity) is directed against order dated 8[th] June,2018 passed by the Income Tax Appellate Tribunal, “B” Bench, Kolkata in ITA2266/Kol/2016 for the assessment year 2011-12. The Revenue has raised the following substantial questions of law forconsideration: a)Whether the Learned Income Tax Appellate Tribunal, “B” Bench,Kolkata failed to appreciate that M/s. Golden Trust FinancialServices is not a group concern of the assessee. Moreover, theassessee had its own sufficient infrastructure and staff strength forrunning all branches and passing 90% of the receipts to M/s.Golden Trust Financial Services is not at all acceptable in terms ofbusiness ?Kolkata failed to appreciate that M/s. Golden Trust FinancialServices is not a group concern of the assessee. Moreover, theassessee had its own sufficient infrastructure and staff strength forrunning all branches and passing 90% of the receipts to M/s.Golden Trust Financial Services is not at all acceptable in terms ofbusiness ? b)Whether section 40(a)(ia) ought to have been applied by the LearnedCommissioner of Income Tax (Appeal) and the Learned Tribunalsince the assessee had not deducted TDS at the prescribed rate asper tabulation chart extracted forming part of Commissioner ofIncome Tax (Appeal) detailed discussion ?Commissioner of Income Tax (Appeal) and the Learned Tribunalsince the assessee had not deducted TDS at the prescribed rate asper tabulation chart extracted forming part of Commissioner ofIncome Tax (Appeal) detailed discussion ? We have heard Mr. Debashis Chowdhury, learned Standing Counsel forthe appellant and Mr. J. P. Khaitan, learned Senior Counsel for therespondent. We have carefully gone through the order passed by the Commissionerof Income Tax (Appeal) as well as that of the Tribunal. The two issues which have been now been pointed out before us asbeing substantial questions of law were in fact considered by the CIT(A) as We have heard Mr. Debashis Chowdhury, learned Standing Counsel forthe appellant and Mr. J. P. Khaitan, learned Senior Counsel for therespondent. We have carefully gone through the order passed by the Commissionerof Income Tax (Appeal) as well as that of the Tribunal. The two issues which have been now been pointed out before us asbeing substantial questions of law were in fact considered by the CIT(A) as well as the Tribunal in a very inaugurate fashion. The question would bewhether the question of law much less than substantial question of lawarises for consideration. The CIT(A) in its order has noted the submission ofthe assessee and approved the same wherein it was contended that theassessing officer has been inconsistent in a treatment of same kind ofexpenses and identical business arrangement with relevance ensured, theappellant/company and GTFS over the years. Further the CIT(A) approvedthe contention of the appellant that the assessee’s case was scrutinisedunder Section 143(3) for the assessment years 2010-11 and during the yearunder consideration namely 2011-12 in the same facts and circumstancesand business arrangement, the assessing officer has taken a different stand.It was further noted by the CIT(A) that for the assessment year 2010-11 theassessing officer has accepted the same business arrangement and approvedthe payment of service charges by the assessee to GTFS and it was held to bebona fide. Further the assessing officer had made certain disallowancesbased on the fact that assessee was paying large amounts of money asservice charge to GTFS. Thus, the CIT(A) pointed out that though what isdecided in one year may not apply in the following year in an income taxproceedings but where the fundamental aspect permeating through thedifferent assessment year has been found as a fact one way or the other andparties were allowed that position to be sustained, it would not beappropriate to allow the position to be changed in the subsequent years. With regard to the said principle, the CIT(A) relied upon the decision of theHon’ble Supreme Court in RADHASOAMI SATSANG VS. CIT reported in(1992) 193 ITR 321 (SC). Further, the CIT(A) took note of the decision in thecase of CIT VS. L.J. RAMAMURTHY reported in (1977) 110 ITR 453 (Madras)where the Court held what is relevant is not the personality of the officerspresiding over the Tribunal but the Tribunal as an institution and merelybecause of the change in the personnel, who manned the Tribunal does notopen to them to take the contrary conclusion which do not reach earlier onthe same set of facts and if that is done it will not only shake the confidenceof the public in judicial procedure but it will totally discard such confidenceand that will be destructive of the institutional integrity itself. Though thesaid decision pertain to a decision of a Tribunal, the legal principle wasrightly noted by the assessing officer. The Tribunal while testing thecorrectness of the said finding once again reappreciated the facts and pointedout that the Tribunal had made a specific query to the department as towhether the operating expenditure included any commission agency serviceor infrastructure usage service and the reply was that there is no material onrecord to the said effect. Furthermore, the Tribunal had on facts noted thatthe assessee has been following its consistent practice wherein agency andinfrastructural services are being availed by the payee GTFS as accepted bythe assessing officer himself in the preceding and succeeding assessmentyears. Therefore, we find that the entire issue so far as the question No. 1 isfactual. With regard to the second question, the CIT(A) took note of the factthat the case of the payee GTFS was scrutinised under Section 143(3) for theassessment year 2011-12 which was the assessment year and which was thesubject matter in the assessee’s case also. The copy of this scrutiny order ofGTFS was produced before CIT(A) from which it was seen that some additionswere made by the assessing officer but the receipts or transactions withrespect to its business that the assessee before us were accepted as such.Therefore, taking note of this fact CIT(A) accepted the stand taken by theappellant. The Tribunal on its part re-examined the facts and concurred withthe CIT(A) and also took note of the legal position as laid down by this Courtin COMMISSIONER OF INCOME TAX VS. S.K. TEKRIWAL reported in [2014]361 ITR 432 (CAL). In the said case the assessee deducted tax under Section194(C)(2) of the Act from payment made to sub contractors. The revenuepointed out that the payments were in the nature of machinery hire chargesfollowing under the head “rent” and the provision of Section 194-I wereapplicable. On the ground that the assessee had deducted tax at one percentunder Section 194(c)(2) as against the actual deduction to be made at 10%under Section 194-I the payments were disallowed proportionately invokingthe provision of Section 40(a)(ia). The Tribunal held that where tax wasdeducted by the assessee though under a bona fide wrong impression underwrong provisions of 40(a)(ia) could not be invoked and that if there was any shortfall due to any difference of opinion as to the taxability of any item orthe nature of payment falling under various tax deduction at sourceprovisions, the assessee could not be declared as an assessee in defaultunder Section 201 and no disallowance could be made invoking the provisionof Section 40(a)(ia). The Tribunal rightly took note of the said decision anddismissed the appeal filed by the revenue. Thus, we find the second questionis fully factual and there is no question of law involved in the same. In the result, the appeal filed by the revenue is dismissed on theground that no substantial question arises for consideration as the entireaspect is factual, elaborately dealt with by the CIT (A) and confirmed by theTribunal. (T. S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) RS/GH.