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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri Nitesh Joshi & Manoj Dixit Revenue by: Shri M. C. Omi Ningshen सुनवाईकीतारीख / Date of Hearing: 10.01.2017 घोषणाकीतारीख /Date of Pronouncement:. 15.02.2017 आदेश / O R D E R PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 22.05.2014 passed by the Commissioner of Income Tax (Appeals)-12, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2003- 04.
The assessee has raised the following grounds:-
ITA No.5190.M.14 A.Y. 2003-04
“1(a) The appellant submits that the learned Commissioner of Income Tax (Appeals) erred in upholding the action of learned Tax Recovery Officer (hereinafter referred to as “the Assessing Officer”) that payment for pay channel cost amounting to Rs.2,40,62,454/- and feed charges amounting to Rs.24,78,250/- made to distributor of signal is a contract for work and liable for deduction under section 194C of the Act and accordingly erred in holding that the assessee is an assessee in default under section 201(1) of the Act. (b) The appellant submits that as regards payments for cost of pay channels, the payees merely distribute signals to the appellant and accordingly, there is no question of any involvement of “work”. The payment of feed charges are for facilitating the relay of signals by appellants group companies to certain areas which could not be relayed by the appellant and under no circumstances can be regarded as payment made for a work so as to attract the provisions of section 194C of the Act. (c) The appellant submits that the payment made for procurement of signals are not to any broadcasters or telecasters and accordingly, the provisions of section 194C are not applicable and therefore no tax was required to be deducted
2(a) The learned Commissioner of Income Tax (Appeals) erred in upholding the action of the Assessing Officer of levying interest under section 201(1A) of the Act amounting to Rs.5,85,269/- on the ground that payment of interest is mandatory. (b) The learned Commissioner of Income Tax (Appeals) erred in law in holding that though the assessee should not be held to be an assessee in default, the appellant would be liable to interest under section 201(1A) of the Act for the period commencing from the date on which tax was deducted to the date on which tax is actually paid.
3. The appellant submits that the Assessing Officer be directed: (i) not to treat the payments made by the appellant to the distributors of signals (which includes payment in ITA No.5190.M.14 A.Y. 2003-04
respect of feed charges) as a contract for work falling within the purview of section 194C of the Act. (ii) to delete the levy of tax under section 201(1) of the Act amounting to a sum of Rs.5,57,355/-. (iii) to delete the interest levied under section 201(1A) of the Act amounting to a sum of Rs.5,85,269/- and to modify the order as per the provisions of the law.
4. Each of the above grounds of appeal are independent and without prejudice to each other.
The appellant craves liberty to add, to alter and /or amend the grounds of appeal as and when given.”
Additional Grounds:-
1. 1. The appellants submits that a survey action under section 133(A) of the Act 1961 was conducted in the case of M/s.Hathway Nasik Cable Network Pvt. Ltd. on 17.09.2003 at their office premises and corporate finance department situated at 4th floor, Raheja, Corner of Main Avenue & V.P.Road, Santacruz West Mumbai – 400054.
2. The appellant submits that the Assessing Officer has passed order under section 201(1)(1A) only on 28th March, 2011.
3. The appellant submits that even if no period of limitation is prescribed, the statutory power must be exercised within a reasonable period. This reasonable period taking into consideration the various provisions of the Income Tax Act, 1961, has been held to be four years in a number of cases. The appellant, in support of its contentions, relies on the following judicial pronouncements:
CIT v. NHK Japan Broadcasting Corporation[(2008) 305 ITR 137 (Del HC)] The Hon’ble court held that, the date of knowledge was not relevant for the purposes of the exercising jurisdiction in so far as the provisions of the Act were concerned. The time limit of four years prescribed by the Tribunal called for no interference and action was to be initiated by the competent authority under the Act where
ITA No.5190.M.14 A.Y. 2003-04 no limitation was prescribed within the period of four years. The acceptance of liability by the assessee would not by itself extend the period of limitation nor would it extend the reasonable time that was postulated by the scheme of the Act.
CIT V. Hutchion Essar Telecom Ltd. [(2010) 323 ITR 230 (Del HC)] The Hon’ble court held dismissing the appeal that, the proceedings under section 201/201(1A) could be initiated only within three years from the end of the assessment year or within four years from the end of the relevant financial year. The proceedings under section 201(1)/201(1A) were admittedly initiated beyond the period of three years from the end of the relevant assessment year as also beyond the period of four years from the end of the financial years. Consequently, the Tribunal had correctly concluded that the proceedings were beyond time.
CIT V. Satluj Jal Vidyut Nigam Ltd. [(2012) 345 ITR 552 (HP HC)] The Hon’ble High court held that, even if no period of limitation is prescribed, the statutory power must be exercised within a reasonable period. This reasonable period taking into consideration the various provisions of the Income Tax Act, 1961, has been held to be four years and accordingly, held that order under section 201(1)/201(1A) of the Act passed by the Assessing Officer beyond four years was barred by time limitation
ADDITIONAL GROUND OF APPEAL
NO.2:
1. A show cause notice dated 23rd September, 2003 was issued by the Assessing Officer on 24th September, 2003 under section 201(1)/(A) of the Act. He has thereafter passed order under section 201(1)/(1A) only on 28th March, 2011.
2. The appellant submits that even if no period of limitation is prescribed, the statutory power of passing the order must be exercised within a reasonable period from issue of show cause notice. This reasonable period taking into consideration the various provisions of the Income Tax
ITA No.5190.M.14 A.Y. 2003-04
Act, 1961, has been held to be one year. The appellant, in support of its contentions, relies on the following judicial pronouncement: Director of Income-tax (International Taxation) v. Mahindra & Mahindra Ltd. [(2014) 365 ITR 560 (Bom HC)] The Hon’ble court held that, even though section 201 does not prescribe any limitation period for assessee being declared as an assessee in default yet revenue will have to exercise power in that regard within a reasonable time. The passing of the order under section 201(1) has to be within one year from the end of the financial year in which proceedings under section 201(1) were initiated.”
The facts of the case are that a survey action u/s.133(1) of the Income Tax Act, 1961 ( in short “the Act”) was conducted in the assessee’s case on 17.09.2003 at their premises situated at 4th floor, Raheja, Corner of Main Avenue and V.P.Road, Santacruz(W), Mumbai – 400054. During the course of survey proceedings, it was found from the assessee company’s P & L account and balance sheet that, the company has failed to deduct tax at source on the expenses claimed under following heads. The details of which are as under:-
S. NAME OF THE COMPANY F.Y. FEED PAY CHANNELS Nos. CHARGES COST 1 M/s. Hathway Nasik Cable 2003-04 24,78,250/- 2,40,62,454/- Network Pvt. Ltd.
As the assessee failed to deduct tax at source on these expenses as required u/s.194C of the Act therefore a show cause notice dated 23.09.2003 was issued and served upon the assessee on 24.09.2004. Thereafter, the assessee filed the reply dated 02.10.2003, 12.02.2004, 05.03.2004 and 08.02.2011
ITA No.5190.M.14 A.Y. 2003-04 and considering the said reply, the Assessing Officer was arrived at this conclusion that the assessee failed to deduct the tax at source required u/s.194C of the Act in respect of feed charges and pay channel cost paid or credited during the financial year relevant to the A.Y.2003-04. The assessee also filed to pay the tax deducted to credit of the Central Government as required u/s.200 of the Act within the specified time. In view of the said circumstances, the assessee was deemed to be in default in respect of the sum of Rs.5,57,355/- being the amount of tax deductible. The interest was also chargeable u/s.201(1A) of the Act amounting to Rs.5,85,269/-. Therefore, an amount of Rs.11,42,624/- was assessed u/s.201(1) and 201(1A) of the Act. Feeling aggrieved, the assessee filed an appeal before CIT(A) who confirmed the order, therefore, the assessee has filed the present appeal before us.
ADDITIONAL GROUNDS:-
Firstly the assessee raised the legal issues to the fact that the Assessing Officer issued show cause notice dated 23.09.2003 and 24.09.2004 u/s.201(1A) of the Act and thereafter, the order was passed u/s.201(1) and 201(1A) of the Act on 28.03.2011 which is wrong because the order u/s.201(1) of the Act was required to be passed within one year from the end of the financial year in which proceeding u/s.201(1) of the Act was initiated and also placed reliance upon the law settled by Hon’ble Bombay High Court in Director of Income Tax (International Taxation) Vs. Mahindra & Mahindra Ltd. [2014] 365 ITR 560, and the case decided by Hon’ble Income Tax Appellate Tribunal, Mumbai bench in to ITA No.5190.M.14 A.Y. 2003-04 3514/Mum/2004 for A.Y.2002-03 to 2004-05 in case of Hatway Cable and Datacom Limited (Formerly known as Hathway Cable and Datacom Pvt. Ltd.) Vs. The Tax Recovery Officer (TDS.) in assessee’s own case dated 07.09.2016. On the other hand, learned representative of the department has refuted the said contentions. By giving careful thoughts of the argument advanced by the Ld representative of the parties and perusing the record carefully, it came into the notice that the Assessing Officer issued the show cause notice dated 23.09.2003 and 24.09.2004 u/s.201(1A) of the Act and subsequently the order was passed on 28.03.2011. It is to be seen whether it is mandatory on the part of the Assessing Officer to pass the order within one year from the end of the financial year for initiating the proceeding u/s.201(1) of the Act. This question has been answered by the Hon’ble Bombay High Court in case titled as Director of Income Tax (International Taxation) Vs. Mahindra & Mahindra Ltd. [2014] 365 ITR 560, and by the case decided by Hon’ble Income Tax Appellate Tribunal, Mumbai bench in to 3514/Mum/2004 for A.Y.2002-03 to 2004-05 in case of Hatway Cable and Datacom Limited (Formerly known as Hathway Cable and Datacom Pvt. Ltd.) Vs. The Tax Recovery Officer (TDS.) passed in assessee’s own case dated 07.09.2016. It is specifically held that after issuance of notice the order should probably passed within one year and the proceeding was held to be time barred. The facts is not in dispute wherein the notice has been issued on 24.09.2003 u/s.201(1)/ 201(1A) of the Act and thereafter the order was passed u/s.201(1)/ 201(1A) of the Act on 28.03.2011 after the expiry of more than seven years . In view of the said circumstances and in view of the above mentioned law, we are of the view
ITA No.5190.M.14 A.Y. 2003-04