2018 (1) TMI 903 - HC - Income Tax

Certificate issued for lower deduction of tax at 0.39 per cent u/s 197 cancelled - whether the exfacie misstatement and suppression of the hearing having been granted by stating in the petition no personal hearing whatsoever was granted was a material suppression i.e. by making such a statement was the petitioner likely to gain therefrom and whether it was a bona fide mistake / inappropriate drafting? - whether the suppression of the fact of hearing being granted is material in the present facts? Held that - In this case, we find besides stating in the petition that no hearing was given, no mention of meeting the respondent no.1 with regard to these proceedings is even mentioned. We are not impressed by the submission on behalf of the petitioner that even the impugned order does not mention grant of any personal hearing to the petitioner. This does not absolve the petitioner from stating all facts fully and truly. Including the fact that a hearing (howsoever inadequate) was given to the petitioner. This fact of hearing being granted is now admitted even by the petitioner after the note sheet is produced. The affidavit dated 11th December, 2017 of Mr. Mahopatra on behalf of the petitioner, however also does not make any attempt to explain the use of the word No personal hearing whatsoever was granted . The only thing in support of the petitioner is that when the suppression is seen in the context of the fact, it is clear that at no time did the petitioner seek to obtain any adinterim / interim relief on the basis of above averment without notice to the other side, it could be suggestive of a mistake. We have examined the orders passed from time to time, from the 6th November, 2017 onwards, when this petition was first moved and at no time did the petitioner seek any relief without notice to the other side. Therefore, the suppression may have been on account of mistake as it is unlikely to be made deliberately as it would stand exposed on the other side having notice of the same. Admittedly, the petitioner in this case, has always moved the Court after notice to the respondents. Petition dismissed.

Summary

Issues:
Challenge to order cancelling certificate for lower deduction of tax under Section 197 of the Income Tax Act, 1961; Allegations of misstatement and suppression of facts by petitioner; Examination of whether suppression of hearing being granted was material; Consideration of petitioner's request to withdraw petition and file a fresh one.

Analysis:

1. Challenge to Order Cancelling Certificate: The petitioner challenged an order cancelling the certificate for lower deduction of tax issued under Section 197 of the Income Tax Act, 1961. The petition initially sought to prohibit the Revenue from proceeding with the cancellation, but was later amended following the impugned order dated 11th October, 2017.

2. Allegations of Misstatement and Suppression: The petitioner alleged that no opportunity of hearing was granted before the certificate was cancelled. However, the Revenue contended that a hearing did take place, supported by an order sheet noting and affidavit. The petitioner argued that the hearing was inconclusive, and there was a discrepancy in the records regarding the grant of a hearing.

3. Examination of Material Suppression: The Court emphasized the importance of parties approaching with clean hands and providing accurate information. It analyzed whether the petitioner's statement about no hearing being granted was a material suppression, considering the potential impact on the outcome of the case. The Court found that the suppression of the fact of a hearing being granted was significant in the context of the case.

4. Petitioner's Request to Withdraw Petition: The petitioner, acknowledging the mistake in the petition, requested to withdraw it with liberty to file a fresh one. The Court considered the circumstances and granted the petitioner's request to withdraw the petition. However, the Court imposed a condition of payment of costs amounting to ?75,000 to be paid to the "Zonal Account Office, CBDT, Mumbai" as a prerequisite for filing a fresh petition challenging the impugned order.

In conclusion, the Court disposed of the petition as withdrawn with liberty to file a fresh petition upon payment of the specified costs. The judgment highlighted the importance of parties presenting accurate information and maintaining transparency in legal proceedings to prevent abuse of the court process.