2019 (8) TMI 642 - AT - Income Tax

Order u/s 201(1) and 201(1A) - default in deduction of TDS - sufficient opportunity - ground of limitation - HELD THAT - The chart giving the details of date of show cause notice, the date of hearing before AO and the date of orders passed by the AO reveal that from the date of issuance of show cause to the date of passing of orders u/s. 201(1) and 201(1A) is less than one month and in some of the cases it is barely two weeks. Undisputedly, the information sought by the AO from the assessee is about six years old. It takes time to retrieve the old information. We find merit in the contentions of the AR of assessee. The CIT(Appeals) has failed to appreciate the fact that to retrieve old information from voluminous physical data is a herculean task. We are of considered view that sufficient opportunity to produce relevant information/data was not afforded to the assessee. Taking into consideration entirety of facts, we deem it appropriate to restore all these appeals back to the file of CIT (Appeals) for de-novo adjudication, after affording reasonable opportunity of hearing to the assessee, in accordance with law. AR during the course of submissions has raised a legal ground challenging the validity of orders passed u/s. 201(1) and 201(1A) on the ground of limitation. This ground was neither raised by assessee before the First Appellate Authority nor was raised before the Tribunal as additional ground of appeal. The assessee is at liberty to raise all legal issues before the First Appellate Authority, if so advised.

Summary

Issues involved:
Appeals against orders of Commissioner of Income Tax (Appeals) under sections 201(1) and 201(1A) of the Income Tax Act, 1961 for assessment years 2009-10 and 2010-11.

Analysis:
1. Information Request and Timely Submission:
The Assessing Officer sought information related to Tax Deducted at Source (TDS) on interest payments from various branches of the assessee bank for assessment years 2009-10 and 2010-11. The information was requested at different times, and the bank faced challenges in retrieving old data stored in a godown. Despite efforts to provide the required information within the given timeframe, the volume of data and time constraints led to a partial submission. The Assessing Officer proceeded to pass orders under sections 201(1) and 201(1A) based on the available information, resulting in additions to tax liability.

2. Lack of Opportunity and Limitation Issue:
The bank contended that it was not given sufficient opportunity to present all relevant information before the Assessing Officer and the Commissioner of Income Tax (Appeals). The bank argued that the orders passed were barred by limitation under section 201(3) of the Act, which sets specific timeframes for issuing such orders. The bank highlighted that the orders were passed without considering the challenges faced in retrieving old data and requested a fair opportunity to demonstrate compliance.

3. Judicial Intervention and Restoration of Appeals:
Upon review, the Appellate Tribunal found merit in the bank's arguments regarding the time constraints and the difficulty in retrieving old information. The Tribunal observed that the bank was not adequately heard and that the Commissioner of Income Tax (Appeals) failed to appreciate the challenges faced by the bank. Consequently, the Tribunal set aside the impugned orders and directed the appeals to be restored to the Commissioner of Income Tax (Appeals) for fresh adjudication, emphasizing the need for a reasonable opportunity to present relevant data.

4. Legal Grounds and Disposal of Appeals:
During the proceedings, the bank raised a legal ground challenging the validity of the orders passed under sections 201(1) and 201(1A) based on limitation, which was not previously raised before the authorities. The Tribunal allowed the bank to raise legal issues before the First Appellate Authority if desired. Ultimately, the Tribunal set aside the impugned orders and allowed the appeals for statistical purposes, providing the bank with an opportunity for a fair hearing and legal recourse.

In conclusion, the judgment addressed the challenges faced by the bank in providing old data, emphasized the importance of affording a fair opportunity for presenting information, and highlighted the significance of adhering to legal limitations in tax proceedings.