G.A. No. 1319 of 2011, I.T.A.T. No. 118 of 2011 and I.T.A. No. 116 of 2011. Case: Bhura Exports Ltd. Vs The Income-tax Officer (TDS). High Court of Calcutta (India)
| Case Number | G.A. No. 1319 of 2011, I.T.A.T. No. 118 of 2011 and I.T.A. No. 116 of 2011 |
| Counsel | For Appellant: R.N. Dutta and Sutapa Roychowdhury, Advs. and For Respondents: Md. Nizamuddin, Adv. |
| Judges | Bhaskar Bhattacharya and Sambuddha Chakrabarti, JJ. |
| Issue | Income-tax Act, 1961 - Sections 2(7), 143(3), 148, 149, 194A, 201, 201(1), 201(3), 201A, 231 and 260A; Pepsu Tenancy Act, 1955 - Section 43; Limitation Act; Punjab General Sales Tax Act - Section 21; Direct Tax Laws (Amendment) Act, 1987 |
| Judgement Date | August 30, 2011 |
| Court | High Court of Calcutta (India) |
|
Judgement: Bhaskar Bhattacharya, J. 1. This appeal under Section 260A of the Income-tax Act, 1961 ("Act") is at the instance of an alleged "deemed Assessee in default" and is directed against an order dated February 18, 2011, passed by the Income-tax Appellate Tribunal, "B" Bench, Kolkata in I.T. A. No. 495/ Kol/ 2010 for the Assessment Year 2002-03 modifying the order of the CIT(A) and partly allowing the appeal preferred by the Appellant before us. 2. Being dissatisfied, the alleged deemed Assessee in default has come up with this appeal. 3. The facts giving rise to filing of this appeal may be summed up thus: a) The Appellant is an Assessee within the meaning of Section 2(7) of the Act and at the material time was engaged in the business of importing and dealing in pulses and edible oil. b) For the Assessment Year 2002-03, relevant to the previous year ending on March 31, 2002, the Appellant filed a return of income disclosing an income of Rs. 4,66,844/- and ultimately the assessment was completed under Section 143(3) of the Act by an order dated March 27, 2006 and the net tax and the interest payable by the Appellant was determined at Rs. 20,607/-. c) In the month of April, 2006 the Appellant received a notice dated April 6, 2006 issued by the Income tax officer, Ward 5(3) alleging, inter alia, that it appeared from record that the Appellant paid interest on loan but had not deducted tax at source from three companies, viz. 1) M/s. MMTC Ltd, 2) M/s. P.G. Foils Ltd. and 3) M/s. Globe International Ltd for the Financial Year 2001-02 relevant to the Assessment Year 2002 03. The Appellant was, thus, directed to appear before the said Income tax officer with the relevant documents for non-deduction of tax at the source. d) The Appellant by a letter through its learned Advocate replied to the said notice stating that the Appellant paid interest of Rs. 2,96,390/- to the MMTC Ltd. which is a Government of India Enterprise and No. TDS was required to be deducted in view of Section 194A (e) of the Act. It was further stated that the Appellant had paid Rs. 7,54,521 to M/s. P.G. Foils Ltd and Rs. 6,05,430/- to M/s. Globe International Ltd. and the documents were sent through Bank and the since the Appellant did not have sufficient Bank Letter of Credit limits ("L.C") for import of materials from foreign countries, it had utilized the L.C. limit of M/s. Globe International and M/s. P.G. Foils Ltd. for which the Appellant paid commission @ 1% on utilized L.C. limits and Bank charges etc.. According to the Appellant, for utilizing the L.C. limits of those two parties, interest had been charged by the Bank which was paid by those two parties to the Bank on behalf of the Appellant. Thus, the amount paid by the Appellant to those two parties was the reimbursement of interest and consequently, No. TDS was liable to be deducted. e) Thereafter a show cause notice dated November 21, 2007 was issued by the Respondent proposing to initiate proceedings under Section 201(1) and 201(1A) of the Act asking the Appellant to show cause why the Appellant should not be treated to be an Assessee in default and order under Section 201(1) and 201(1A) should not be passed and further, why the provisions of penalty under Section 271C should not be applied against the Appellant. f) The Appellant gave reply to the said notice reiterating its stance earlier taken but the Assessing Officer by order dated March 7, 2008 treated the Appellant as an Assessee in default and demanded a sum of Rs. 21,64,471 as total tax payable. g) The Appellant preferred an appeal before the CIT(A) challenging the order dated March 7, 2008 not only on merit but also on the ground that initiation of proceedings was barred by the period of limitation. The appellate authority, however, affirmed the order of assessing officer by overruling the objections taken by the Appellant and further held that the time limit for initiating action for the period in question should be 6 years which is the maximum period available under the Act for reopening an assessment of the amount in question and in this case, it was passed within the said period. h) Being dissatisfied, the Appellant preferred an appeal before the Tribunal. The Tribunal by the order impugned accepted the reasons assigned by the CIT(A) on the question whether the amount paid by the Appellant to the Globe International came within the purview of Section 194A of the Act but reduced the amount of default from Rs. 60,54,301/-to Rs. 49,20,681/- as according to the Tribunal the Appellant was really in default of that amount in deducting the TDS. The Tribunal, accordingly, directed the Assessing Officer to recompute the tax on that amount and to calculate the consequential interest under Section 201(1A). The Tribunal, however, did not deal with the question of the period of limitation raised by the Appellant. i) Against the aforesaid order passed by the Tribunal this appeal has been filed. 4. A Division Bench of this Court at the time of admission of this appeal formulated the following questions of law for determination: (I) Whether the learned Tribunal below committed substantial error of law in not deciding the question raised by the Appellant as to whether the Assessing Officer was competent to initiate proceeding under Section 201(1)/201(1A) of the Income Tax in the year 2007 for the assessment year 2002-03. (II) Whether the learned... |
To continue reading
Request your trial