2013 (5) TMI 797 - AT - Income Tax

Recovery of tax deducted at source and interest - CIT(A)directing the AO to wait till finality of the order of the Calcutta High Court for recovery of tax deducted at source and interest - Held that - The interim order of the hon ble Calcutta High Court, it is evident that the assessee has opened a separate account for parking the tax deduction at source made by the assessee and the said direction is scrupulously followed by the assessee for all these assessment years. The said direction cannot be ignored in view of the jurisdictional High Court judgment. Therefore, we are of the considered opinion that the direction given in this regard by the Commissioner of Income-tax (Appeals), vide paragraph 5.2 of the impugned order, is fair and reasonable and the same does not call for any interference - Decided against revenue.

Summary

Issues Involved:
- Interpretation of the direction of the Commissioner of Income-tax (Appeals) regarding recovery of tax deducted at source and interest.
- Validity of the direction to wait for finality of the judgment of the Calcutta High Court before recovering tax.
- Consideration of the interim order of the Calcutta High Court and its impact on the recovery process.

Analysis:
1. Interpretation of the Commissioner's Direction: The Commissioner of Income-tax (Appeals) directed the Assessing Officer to wait for the finality of the judgment of the Calcutta High Court before recovering tax deducted at source and interest. The Revenue challenged this direction, arguing that the Assessing Officer should not be stopped from recovering tax and interest without a specific order under section 221. The Commissioner justified the direction based on the interim order of the Calcutta High Court, which required the tax deducted at source to be kept in a separate account until further court orders.

2. Legal Background and Submissions: The assessee explained that the tax deduction at source was made on perquisites for employees, following the Calcutta High Court's directions. The Commissioner considered both the Calcutta High Court's interim order and the Bombay High Court's judgment upholding the validity of the Income-tax Rules. The assessee complied with the Calcutta High Court's order to keep the deducted amount in a separate account. The Revenue contended that the Assessing Officer should proceed with recovery, emphasizing the calculation of amounts with interest.

3. Tribunal's Decision: The Tribunal reviewed the orders of the Revenue authorities, the Calcutta High Court's interim order, and the Delhi Tribunal's decision on a similar issue. The Tribunal noted that the assessee had followed the Calcutta High Court's directive by maintaining a separate account for the deducted tax. Considering the legal obligations and the Calcutta High Court's jurisdiction, the Tribunal upheld the Commissioner's direction to await the final judgment before recovery. The Tribunal dismissed the Revenue's appeals, affirming the fairness and reasonableness of the Commissioner's decision based on the legal framework and court directives.

In conclusion, the Tribunal upheld the Commissioner's direction to wait for the Calcutta High Court's final judgment before recovering tax deducted at source and interest, emphasizing compliance with court orders and legal procedures. The decision highlighted the significance of following court directives and maintaining separate accounts as per legal obligations. The Tribunal's detailed analysis considered the legal background, court orders, and the parties' submissions to arrive at a fair and legally sound decision, ultimately dismissing the Revenue's appeals in all seven cases.