Wp/114181/2015 Of Bank Of Baroda v. The Income Tax Officer (Tds)

-]|- IN THE HIGH COURT OF KARNATAKA DATED THIS THE 18[th]DAY OF DECEMBER, 2015 BEFORE THE HON'BLE MR. JUSTICE RAGHVENDRA S. CHAUHAN WRIT PRTITION Nos. 1141811184/2015 (IT) BBRHIWEE BANK OF BARODAREP BY CHIEF MANAGER,BELAGAVI BRANCH, 1568,MARUTI GALLI,BBELAGAVI-59000 _. PRHTITIONBR (BY SRI. BS N PRASAD & SRI.H R KAMBIYAVAR,ADVOCATES) ANT) 1.THE INCOME TAX OFFICER (TDS)HK COMMERCIAL COMPLEX,OPP DISTRICT HOSPITAL,DR.B.R.AMBEDKAR ROAD,BBLAGAVI-560001HK COMMERCIAL COMPLEX,OPP DISTRICT HOSPITAL,DR.B.R.AMBEDKAR ROAD,BBLAGAVI-560001 2.THE COMMISSIONER OF INCOME TAX (APPEALS)KFK COMMERCIAL COMPLEXKFK COMMERCIAL COMPLEX OPP CIVIL HOSPITAL,DR.B.R.AMBEDKAR ROAD,BBELAGAVI-56000DR.B.R.AMBEDKAR ROAD,BBELAGAVI-56000 ... RESPONDENTS -92- THRSEK WRIT PRTITIONS ARB FILED UNDER ARTICLE226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TODIRECI TO THE SKCOND RESPONDENT TO CONSIDER THEPHRHTITIONER's APPLICATIONS DATED: 16.03.2015 BNCLOWITH THIS PETITION AS ANNEXURE-M, AND GRANT STAYORRECOVERYOKTHEDISPUTED.DEMANDS.HORASSESSMENT YEARS (AYs)2011-12 TO 2014-15 UNTILDISPOSAL OF THERE APPEALS FILED BY THR PRTITIONUNDERSECTION246A(1)(ha).,DATEKD:16.03.201BNCLOSBD WITH THIS PRTITION AS ANNBXUREB-L AGAINSTHR ORDERS PASSED BY THE FIRST RESPONDENT ON23.02.2015 UNDER SECTIONS 201(1) AND 201(1A) OF THEACT FOR THE AFORESAID ASSESSMENT YEARS, VIDEANNEXURE-K. THRSK PETITIONS COMING ON FOR PRELIMINARYHEARING THIS DAY, THE COURT MADE THE FOLLOWING: ORD ER The petitioner, Bank of Baroda, has challenged the orderdated 15.04.2015, passed by the Commissioner of Income Tax(Appeals), Belagavi, whereby the learned Commissioner hasrejected the petitioner’s prayer for stay of demand dated16.03.2015. 2.Brietly, the facts of the case are that the Income TaxOfficer, respondent No.1 (the ‘TTO', for short), had issued summons on 19.12.2014 under Section 131 along with noticeunder Section 133(6) of the Income Tax Act, 1961 (‘the Act’, forshort), calling upon the petitioner-Bank to submit details ofthe Fixed Deposits held by the Visveswarayya TechnologicalUniversity, Belagavi (‘the VITU’, for short) and the interest paion such deposits during the financial years 2010-2011 to2013-2014, and the Tax Deducted at Source (‘TDS’, for short)on such payment, and to show reasons as to why thesedeductions have not been made, and quarterly statements filedunder Section 194A of the Act, in respect of such payments.By letter dated 26.12.2014, the petitioner Bank informed theITO that it did not deduct any TDS on the interest paid to theVTU, because by letter dated 03.09.2014,the VTU hadinformed the Bank that the University is exempted from filingthe returns under Section 10(23C)(i1iab) Section 139 of the Act.The Bank further claimed that since it had no reason todisbelieve the assertion made by the payee-VTU, it did notdeduct the TDS. 3,Not satisfied by the explanation offered by thepetitioner-Bank, on 29.12.2014, the ITO issued a show causenotice to the petitioner, calling upon it to explain why it shouldnot be considered as an assessee in default, for failing to makethe TDS under Section 194A of the Act. Subsequently, on16.01.2015, the ITO issued summons under Section 131 of theAct, and also sent a letter to the petitioner-Bank calling uponthe Bank to appear before him on 22.01.2015. The Bank wasdirected to produce the additional documents related tointerest payments made to the VIU, without deducting TDS.Consequently, on 19.01.2015, the Bank filed a_ writtesubmission explaining the reasons why the TDS was not madeon interest paid to the VIU. The Bank further explained thereason why it should not be treated as an assessee in default, 4Notwithstanding|theexplanationgivenby thepetitioner-Bank, on 19.02.2015, the Income Tax Officer passedfour separate, but identical orders, and treated the petitioner-Bank as an assessee in default, and raised an aggregate interest payment of Rs.15,22,963/- under Section 201(1)/(1A)of the Act, for the assessment year 2011-12 to 2014-2015, 4Notwithstanding|theexplanationgivenby thepetitioner-Bank, on 19.02.2015, the Income Tax Officer passedfour separate, but identical orders, and treated the petitioner-Bank as an assessee in default, and raised an aggregate interest payment of Rs.15,22,963/- under Section 201(1)/(1A)of the Act, for the assessment year 2011-12 to 2014-2015, 5.since the petitioner-Bank was aggrieved by theassessment order dated 19.02.2015, it filed an appeal undersection 246A(1)(ha) and filed the petition under Section 220(6)of the Act before the Commissioner of Income Tax (Appeals). 6,On 19.03.2015, the Income Tax Officer issued anorder under Section 220(6) of the Act, directing the petitionerto pay 950% of the disputed demand before 27.03.2015However, by letter dated 27.03.2015, the petitioner-Bankexpressed its strong objections to the said order, andrequested the ITO to grant stay of recovery of the disputeddemand until disposal of the appeal pending before theCommissioner (Appeals). T On 06.04.2015 and on 10.04.2015, the petitioner-Bank filed two written submissions before the Commissioner(Appeals) and prayed that the disputed demand be stayed andthat the ITO should be directed not to treat the petitioner as an assessee in default until disposal of the appeals pending beforethe Commissioner (Appeals). However, by order dated15.04.2015, the learned Commissioner (Appeals) has rejectedthe application for stay, but has assured the petitioner-Bankthat its appeal would be considered on priority basis. Hencethe present petition before this Court. 8.Mr. B. S. N. Prasad, the learned counsel for thepetitioner, has contended that, while Section 201 of the Actlays down the consequence of failure to deduct the tax atsource, the proviso attached to Section 201(1) of the Actcreates an exception in favour of the deductor. According tothe proviso, in case the tax liability imposed upon the VTUwere paid by the VTU, then the petitioner-Bank is not requiredto deduct the TDS. secondly,1n the impugnedorder,the :105418Commissioner (Appeals) is unjustified in claiming that thepetitioner-Bankdoes|notfallwithintheillustrationsenumerated in para-C of the Instruction No.1914. According to the learned counsel, the petitioner-Bank clearly falls withinthe first illustration, namely|“if the demand in dispute relates toissues that have been decided in assessee’s favour by anAppellate Authority or the Court earlier”, then the demandshould be stayed by the learned Commissioner. However, thelearnedCommissionerhas|ignoredtheillustration !0"contained in para-C of Instruction No.1914. Therefore, theimpugned order deserves to be set aside by this Court, QOHeard the learned counsel for the petitioner, andperused the impugned order. 10,This Court has asked a pointed question to thelearned counsel for the petitioner: whether the petitioner-Bankhad raised the contention before the ITO with regard to thebenefit granted to the petitioner Bank under the provisoattached to Section 201 (1) of the Act or not? To this pointedquery, the learned counsel has given a very evasive answer.According to him, the said contention was, indeed, raisedbefore the Income Tax Officer. However, when this Court asked him to point out where the said contention was recordedin the Assessment Order, the learned counsel could not showthat such contention had, indeed, been raised before the ITO.Therefore, this Court is of the opinion that the said contentionwas not raised before the ITO, although it may have beenmentioned in the written submission filed by the Bank. Incatena of cases, the Hon’ble Supreme Court has opined that, ifany contention is contained in the written submission, butunless and until it is recorded and reflected in the impugnedorder, the Court shall presume that the said contention wasnot raised before the concerned authority or the Court, asked him to point out where the said contention was recordedin the Assessment Order, the learned counsel could not showthat such contention had, indeed, been raised before the ITO.Therefore, this Court is of the opinion that the said contentionwas not raised before the ITO, although it may have beenmentioned in the written submission filed by the Bank. Incatena of cases, the Hon’ble Supreme Court has opined that, ifany contention is contained in the written submission, butunless and until it is recorded and reflected in the impugnedorder, the Court shall presume that the said contention wasnot raised before the concerned authority or the Court, 11.A bare perusal of the assessment order clearlyreveals, that the stand taken by the petitioner-Bank was thatsince they were informed by the VTU that they were exemptedfrom filing the return under Section 10(23C)(iiiab) Section 139of the Act, the Bank never deducted the TDS. 12.The issue whether the VTU is exempted undersection 10(23C)(iliab) of the Act or not, the issue whether the petitioner-Bank was statutorily bound to deduct the TDS, hasbeen discussed threadbare by the ITO. Since it would not becorrect for this Court to express any opinion about the findingsof the ITO, this Court restrains itself from expressing anyOpinion on these two issues. For, expression of any opinion onthese two points may adversely alfect the appeal pendingbefore the Commissioner (Appeals). 13.The moot question before this Court is whether thepetitioner-Bank can claim the right to be exempted fromdepositing the tax liability or not, prior to its appeal beingadmitted for hearing? 14,According to Section 249 (4) of the Act, no appealin the chapter shall be admitted, unless at the time of filing anappeal, the assessee has paid an amount equal to the amountof advance tax, which was payable by him. Thus, Section249(4) of the Act clearly stipulates that the assessee is dutybound to pay the amount equal to the amount of advance tax.However, the proviso bestows a discretionary power upon the Commissioner (Appeals) to exempt the assessee from theportion of the provisions of clause-B mentioned above. 15.Therefore, the question before this Court is whetherthe Commissioner(Appeals) has exercised his discretion legallyor illegally? According to the proviso, in_ case|theCommissioner were to grant any exemption from the paymentof the amount equal to the amount of advance tax, he shouldrecord his good and sufficient reason in writing. 16.A bare perusal of the impugned order clearlyreveals that the learned Commissioner has opined that, sincethe petitioner-Bank does not fall within any of the illustrationscontained in para C of the Instruction No.1914, the benefit ofstaying the demand cannot be given to the petitioner-Bank. 17.Of course the learned counsel for the petitioner haspleaded that the petitioner-Bank does fall within theillustration (a) of para C of instruction No.1914 which is asE4815# -]]1- &C (ajuf the demand in dispute relates to issues that havebeen decided in assessee’s favour by an appellateauthority or court CArll€T;.......been decided in assessee’s favour by an appellateauthority or court CArll€T;....... (b}tti#wte#ef (c)ti$uW@e##t+ it is clarified that in these situations also, stay may begranted only in respect of the amount attributable to suchdispute points. Further, where it is subsequently foundthat the assessee has not cooperated in the early disposalof appeal or where a subsequent pronouncement by ahigher appellate authority or court alters the abovesituation, the stay order may be reviewed and modified. “ -]]1- &C (ajuf the demand in dispute relates to issues that havebeen decided in assessee’s favour by an appellateauthority or court CArll€T;.......been decided in assessee’s favour by an appellateauthority or court CArll€T;....... (b}tti#wte#ef (c)ti$uW@e##t+ it is clarified that in these situations also, stay may begranted only in respect of the amount attributable to suchdispute points. Further, where it is subsequently foundthat the assessee has not cooperated in the early disposalof appeal or where a subsequent pronouncement by ahigher appellate authority or court alters the abovesituation, the stay order may be reviewed and modified. “ 18,According to the illustration (a), the demand can bestayed by the learned Commissioner, provided that demand indispute relates to issues that have been decided in assessee’sfavour by an Appellate Authority, or the Court earlier.However, the learned counsel for the petitioner has not beenable to show this Court as to which Appellate Authority, or bywhich Court the issues involved in the present case havealready been decided, that, too, in favour of the petitioner- Bank. Thus, obviously, the petitioner-Bank cannot claim thatit falls under illustration (a) of para-C of Instruction No.1914. 19.The learned counsel has further pleaded that, sincethe petitioner-Bank is a public sector undertaking, it shouldnot be imposed with the hability to deposit the entire taxliability. However, the said contention is unacceptable. Forastatutory duty has been imposed upon the Bank to deduct theTDS. In case the Bank does not deduct the TDS, it has to facethe consequences as mentioned in Section 201 of the Act.since Section 249(4) of the Act imposes a duty upon theassessee to deposit the entire amount, before that appeal canbe admitted, the Bank cannot escape from its liability to followthe mandate of Section 249(4) of the Act. Although InstructionNo.1914 does create exception to Section 249(4) of the Act, asmentioned above, the petitioner-Bank cannot take any benefitfrom Instruction No.1914, as it does not come within the ambitand scope of the said instruction. �����5���1�510��4����0�18�0<�@1����3����E5��8�1��4��7348�04=�3::1;0:3�=��5�215@15�3�=�34���1�3>2E;418��5815����1�121�3�3�4���<134;�81@�38��7�04=�>153���051��151<=�83�>3��18� ��������� ;0< �