2019 (2) TMI 1335 - HC - Income Tax

Territorial jurisdiction of AO Kolkata - TDS liability - power to make the assessment - ITAT decided in favor of assessee, on ground of passage of time, without touching the basic issue of TDS liability of the assessee - TDS on payment of interest - HELD THAT - The order of the tribunal was made on 20th December, 2007. For more than 10 years, this appeal under Section 260A is pending before this Court. Therefore, the fact remains that as far as the Calcutta assessments are concerned, a most unreliable and erroneous one for all practical purposes remains in the file. The tribunal has not touched it on the ground of passage of time. No determination has been made on the real issue as to whether the required tax was not deducted by the assessee in its other 134 branches. It is a most unfortunate state of affairs but from the point of revenue, a determination, even a proper guess work or best judgement assessment should be made in respect of the Calcutta branches. The tribunal should do it itself without remanding the matter to the Assessing Officer. We also caution the tribunal that since nothing has been done by the authority for so long. unnecessary harassment is not caused to the assessee and that the tribunal will proceed on the basis of the available records before it and pass an order which is just and reasonable. It would be open to the revenue to take appropriate action with regard to the other 134 branches outside the Kolkata jurisdiction.

Summary

Issues:
1. Jurisdiction of assessing officer over multiple branches.
2. Proper assessment of interest payments and TDS deduction.
3. Delay in resolving the appeal under Section 260A of the Income Tax Act, 1961.
4. Need for a proper determination by the tribunal regarding tax deduction in branches outside the territorial jurisdiction.

Jurisdiction of Assessing Officer:
The primary issue in this case was the jurisdiction of the assessing officer over multiple branches of the respondent assessee. The tribunal concluded that the assessing officer in Kolkata had the authority to assess only within his territorial jurisdiction, which covered 11 branches. However, the tribunal noted that the assessing officer had not properly assessed the amounts paid as interest, leading to an unreliable assessment remaining unaddressed for over a decade. The tribunal refrained from revisiting the issue due to the passage of time but emphasized the necessity for a proper determination.

Assessment of Interest Payments and TDS Deduction:
The core question revolved around whether the respondent assessee had made payments of interest, excluding interest on securities, exceeding &8377;2,500 and the extent of TDS deduction. The tribunal highlighted the lack of a proper assessment by the Kolkata assessing officer, emphasizing the need for a reliable determination to ensure tax compliance. It urged the tribunal to address the issue without causing unnecessary harassment to the assessee, emphasizing the importance of a just and reasonable order based on available records.

Delay in Resolving the Appeal:
The judgment highlighted the significant delay in resolving the appeal under Section 260A, which had been pending before the court for over a decade since the tribunal's order in 2007. This delay underscored the urgency of addressing the outstanding issues promptly to prevent prolonged uncertainty and ensure effective tax administration.

Proper Determination for Branches Outside Jurisdiction:
Another crucial aspect addressed was the necessity for a proper determination by the tribunal regarding tax deductions in the 134 branches outside the Kolkata jurisdiction. The court emphasized the importance of taking appropriate action in these branches to uphold tax compliance standards and prevent any discrepancies in TDS deductions.

In conclusion, the appeal (ITA 329 of 2008) was disposed of, stressing the need for a thorough and just determination by the tribunal regarding tax deductions, assessment of interest payments, and TDS compliance both within and outside the territorial jurisdiction. The judgment highlighted the imperative of timely and accurate assessments to maintain tax integrity and prevent undue hardship to the assessee.