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TMI Blog2017 (9) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... for the simple reason that the decision of this Court cannot possibly be contrary to what has been held by the Supreme Court on merits on the question of the liability of the Assessee to pay penalty under Section 271C of the Act.The Court declines to answer the question framed.- The appeals are dismissed - ITA 371/2005, ITA 372/2005, ITA 373/2005, ITA 374/2005, ITA 375/2005, ITA 376/2005, ITA 377/2005, ITA 379/2005, ITA 380/2005, ITA 381/2005, - - - Dated:- 31-8-2017 - S. MURALIDHAR PRATHIBA M. SINGH JJ. Appellant Through: Mr. Raghvendra Singh with Mr. Ashok Manchanda, Advocates. Respondent Through: Mr. Prakash Kumar, Advocate. O R D E R Dr. S. Muralidhar, J. 1. These are ten appeals by the Income Tax Department ( Department ) under Section 260A of the Income Tax Act, 1961 ( Act ) directed against the common order dated 2nd September 2004 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA Nos. 3233 to 3242/Del/2003 for the Financial Years ( FYs ) 1988-89 to 1997-98. 2. While admitting these appeals on 23rd August, 2006 this Court framed the following question of law for consideration: Whether the Income Tax Appellate Tribunal was corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, the Assessee filed an appeal before the Commissioner of Income Tax (Appeals) [ CIT (A) ]. By an order dated 29th January 2003, the CIT (A), after referring to the decisions in the cases of M/s. Subros Limited and M/s. Hyundai Engineering Construction Co. Ltd., held that there is reason to hold the existence of reasonable cause in this case. The CIT (A) further held that the quantum of short deduction has also undergone substantive change involving a variation of more than ₹ 2 crores which would indicate that the quantum of default itself was not known to the JCIT when the penalty was imposed. It was accordingly held that no penalty under Section 271 C was warranted. 8. About three months thereafter, on 1st May 2003, the CIT (A) suo motu passed an order under Section 154 of the Act. The opening lines of the said order stated: in this case action for rectification of mistakes in the appeal order passed on 29th January 2003 was initiated under Section 154 of the Act. The CIT (A) proceeded to observe that subsequent to the order passed on 29th January 2003, eight appeals of the Assessee relating to FYs 1989-90 to 1992-93 and 1994-95 to 1997-98 were taken up for he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the later appeals filed in this case that I had the occasion to see the survey file of the AO which revealed the mistakes that had cropped up earlier. 9. Accordingly, the CIT (A) confirmed the penalty of ₹ 5,74,10,405 levied by the AO. 10. The Assessee filed appeals being ITA Nos. 3233 to 3242/Del/2003 against the order passed by the CIT (A) on 1st May 2003. Thereafter, the Department filed appeals before the ITAT against the earlier order dated 29th January 2003 of the CIT (A). These appeals were numbered as TDSA Nos. 4151 to 4159/Del/2004 for the Assessment Years ( AYs ) 1989-90 to 1997-98. 11. The ITAT, by the impugned order dated 2nd September 2004, allowed the Assessee s appeals against the order dated 1st May 2003 of the CIT (A). The ITAT held that the order of the CIT (A) was without jurisdiction. Since the CIT (A) did not have the power to review its own orders, it cannot do so indirectly. If aggrieved by the order dated 29th January 2003 of the CIT (A), the right course was for the Department to adopt was to challenge it before the ITAT. The CIT (A) could not possibly rehear the same appeal over and over again. 12. The ITAT has in its impugned order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing the view taken by this Court in the cases mentioned above and the orders passed in ITA No. 355/2006 and connected matters decided on 22nd March 2006, these appeals fail and are accordingly dismissed. 16. For some reason, when the said appeals of the Department were heard by this Court on 24th March 2006, the Court was not informed of the pendency of the present appeals against the ITAT s order dated 2nd September 2004 although, as already noticed hereinabove, the vice-versa happened, viz., the Court hearing these appeals was informed on 20th October 2005 of the appellate proceedings emanating of the order dated 29th January 2003 of the CIT (A). 17. When these appeals were thereafter heard on 23rd August 2006, this Court too was not informed that the Department s appeals against the order dated 13th May 2005 of the ITAT [which affirmed the order dated 29th January 2003 of the CIT (A)] stood dismissed by this Court on 24th March 2006. Why the Department failed to do so is indeed a mystery. 18. The Department then carried the order dated 24th March 2006 passed by this Court in appeal to the Supreme Court. The said appeals of the Department were heard along with a ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be imposed in cases falling thereunder. Section 271C falls in the category of such cases. Section 273B states that notwithstanding anything contained in Section 271C, no penalty shall be imposed on the person or the Assessee for failure to deduct tax at source if such person or the Assessee proves that there was a reasonable cause for the said failure. Therefore, the liability to levy of penalty can be fastened only on the person who do not have good and sufficient reason for not deducting tax at source. Only those persons will be liable to penalty who do not have good and sufficient reason for not deducting the tax. The burden, of course, is on the person to prove such good and sufficient reason. In each of the 104 cases before us, we find that non-deduction of tax at source took place on account of controversial addition. The concept of aggregation or consolidation of the entire income chargeable under the head Salaries being exigible to deduction of tax at source under Section 192 was a nascent issue. It has not be considered by this Court before. Further, in most of these cases, the tax- deductor-Assessee has not claimed deduction under Section 40(a)(iii) in computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals on 24th March 2006. 24. Mr. Raghvendra Singh, learned counsel for the Department, suggested that the proceedings emanating from the order dated 1st May 2003 of the CIT (A) was separate. Those facts, according to him, were not present before the ITAT which heard the Department s appeals against the order dated 29th January 2003 of the CIT (A). He submitted that in any event since these appeals have been admitted and the question framed, they have to be heard and disposed of on merits. 25. The Court fails to understand how, after the Supreme Court has by its judgment dated 25th March 2009 categorically held on facts that the Respondent-Assessee had discharged the burden of showing reasonable cause for the failure to deduct TDS, this Court can possibly pass an order in the present appeals which might have the effect of contradicting the aforementioned judgment of the Supreme Court. 26. It is strange that the Department allowed the proceedings to continue on two parallel tracks without making an effort, even before the ITAT, to have the two appeals i.e. the Department s appeals against the CIT (A) s order dated 29th January 2003 and the Assessee s appeals against the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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