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TMI Blog2011 (9) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... . a) .. .. b) Department of Income Tax To exempt from provisions of Sections 41(1), 45, 72(3), 43-B, 80 read with Sections 139, 115JB and provisions of Chapter XVII of the Income Tax Act. 3. The brief facts required to decide as to whether the petitioners have a case or not are as follows: 4. Respondent no.3 i.e., Tedco Granites Ltd. (in short TEDCO) which is the sick industrial company, is in the business of manufacturing single super phosphate (fertilizer). The plant for this purpose was set up in 1995. It appears that net worth of TEDCO got eroded, and consequently, a reference was filed with the Board for Industrial Financial Reconstruction (in short BIFR). TEDCO was declared a sick industrial company on 21.12.2005. 5. Pursuant to the said order of the BIFR, with the help of the operating agency, a DRS was formulated. The DRS was taken up for consideration by the BIFR on 04.12.2006. The said DRS which contained the impugned paragraph i.e. para 14.3 (b), to which we have made a reference hereinabove, was circulated to the concerned authorities on 08.12.2006. The short particulars of the DRS, in accordance with the provisions of Section 18(3)(a) of the Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 04.12.2006. It appears from the list of parties attached to the order that originally there were 14 parties including the Assessing Officer, Ward No.3, Income Tax Office, Sastri Nagar, Bhilwara, Rajasthan (S.No.14) to whom the DRS was circulated. Three additions to this list have been made by hand which are as follows: S.No.15 Assistant Director, ESIC, Regional Office, New Delhi. S.No.16 Dte. Of Income Tax (Recovery), New Delhi. S.No.17 Secretary, CBDT, New Delhi Even if we do not take into account the 3 names added to the list, it cannot be denied that S.No.14 i.e. the Assessing Officer, Ward No.3, Income Tax Office, Sastri Nagar, Bhilwara, Rajasthan was made a party to the proceedings and the DRS was circulated to him by the BIFR vide its order dated 04.12.2006. No averments have been made to the contrary by the ld. counsel for the appellant. However, the argument that has been advanced by the ld. Counsel for the appellant is that as per the CBDT Circular No.683 dated 8.6.1994, the Assessing Officer, Income Tax Office, Bhilwara has no locus standi in the scheme. The Income Tax Office,Bhilwara can only grant income tax concessions which are permissible un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, we are of the opinion that the circulation of DRS to the Assessing Officer, Ward No.3, Income Tax Office, Sastri Nagar, Bhilwara, Rajasthan is proper service of DRS as per 19(2) of SICA and does not vitiate the proceedings before the BIFR. Since no consent was received within the stipulated period from the appellant, it shall be deemed that consent has been given by the appellant under Section 19(2) of SICA. 8. Learned counsel for the petitioners before us have assailed the said observations of the BIFR. Learned counsel for the petitioners have contended that the reasoning of the AAIFR that service on the Assessing Office would suffice is contrary to the circular issued by the Central Board of Direct Taxes (in short CBDT‟) bearing no.683 dated 8.6.1994 (in short the said circular‟). It has been contended before us that the said circular requires the service to be effected on the Director General of Income Tax (Admn.), who is mandated the task of co-ordinating issues concerning the reliefs and concessions sought in the scheme formulated for or on behalf of the sick industrial companies. Learned counsel for the petitioners submitted that no service w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace, New Delhi; (ii). Directorate of Income Tax (Recovery), Department of Revenue, 6th Floor, Mayur Bhawan, Connaught Circus, New Delhi-110001; and (iii). The Secretary, C.B.D.T., Department of Revenue, North Block, New Delhi-110001. 9.1 It is the contention of learned counsel for the petitioners that there is apparent disconsonance in the two lists, that is, one appended at page 205 and the other which is annexed at page 226. 10. In view of the aforesaid, learned counsel for the petitioners submits that it is quite clear that there was in fact no service effected on the petitioners. It is submitted that if the said circular is taken into account, a valid service in law would be one in which service is effected on petitioner no.2, if not petitioner no.1. Learned counsel for the petitioners submit that these facts were brought to the notice of the AAIFR which has chosen to give a short shrift to the submissions made on behalf of petitioners. As matter of fact, learned counsel for the petitioners drew our attention to another case involving a different sick industrial company, namely, Director General of Income Tax Vs. M/s. Shimoga Steels Ltd., in Appeal no.307/2007 vide judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fected on the Assessing Officer. 12.1 This fact, according to learned counsel for Respondent Nos.3 4 cannot be disputed by the petitioners. For this purpose, learned counsel for Respondent Nos.3 4 referred to the observations made by AAIFR in the impugned judgment where the counsel for the petitioners accepted the fact that the service had been effected on the assessing officer. Learned counsel for Respondent Nos.3 4 also tried to demonstrate that the change of stand by the petitioners on this account has taken place only in this court. In this regard, Ms. Dhir placed reliance on an inter-departmental letter dated 26.11.2008, whereby purportedly explanation was sought from the concerned Assessing Officer as to why the DRS had not been forwarded to the concerned authority, if it had been served upon him. Ms. Dhir submitted that in reply vide letter date 02.12.2008 the assessing officer took a rather curious stand that he never received the DRS, and in that regard, had placed reliance on the Common Receipt Register of the Financial Year 2006-07 maintained in the General Ward of Income Tax Office, Bhilwara. It was Ms. Dhir‟s endeavour to show that the stand now taken wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted August 31, 1990 (Annex II) in connection with the procedure to be followed in respect of grant of consent by the Central Government in cases involving financial assistance to be given under Direct Tax Laws for rehabilitating sick industries under Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). 2. While issuing the two circulars, the provisions of section 19(2) of SICA were not considered. According to section 19(2), all parties concerned with giving financial assistance for the rehabilitation scheme should give their consent. 3. The Board had withdrawn with immediate effect the above Circular Nos. 523 and 576 vide its letter of even numbers dated 30-12-1993. The said letter to AAIFR and BIFR clarified that each case of fiscal concession of financial assistance under Direct Tax Laws will now be considered in each individual case on merits for the purpose of consent as contemplated in section 19(2) of SICA, 1985 and consent or denial of consent will be conveyed to BIFR by the Central Government. The modal agency for coordination between the Board for Industrial and Financial Reconstruction (BIFR) and, Central Board of Direct Taxes and Appellate Authority fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect Tax Laws, each individual case would be considered on merits and that consent, if any, would be granted under Section 19(2) of SICA only thereafter. The consent or denial of consent would be communicated to the AAIFR and/or BIFR by the Central Government. The Nodal Agency for coordination between BIFR and CBDT and between AAIFR and CBDT would be the Director General of Income Tax (Admn.). 17. A reading of the circular thus would convey that the decision on the aspect of reliefs or concessions to be granted can only be communicated by the Central Government. On behalf of the Central Government, it would be the CBDT which would engage with, either the BIFR or the AAIFR, depending on where the case of the sick industrial company was pending; and as between the two authorities i.e., CBDT and the BIFR or the AAIFR and the CBDT, the nodal agency deputed to coordinate the aspect of grant of financial concessions or financial assistance to be given to a sick industrial company would be Director General of Income Tax (Admn.). It cannot be disputed that this circular is in public domain. As a matter of fact, learned counsel for the petitioners quite correctly pointed out to us that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y indicated in the circular is crucial before one could say that the sanctioned scheme would be binding on the Income Tax Department, is quite apparent on a bare reading of the provisions of section 19 of SICA. 20.1 A perusal of the provisions of section 19 of SICA would show that where the Central Government is to provide financial assistance in the form of reliefs and concessions its consent, is mandatory. Where Central Government proposes not to give its consent, it is required to file its objection within sixty (60) days of the date of circulation of the DRS or such further period not exceeding sixty (60) days, which the BIFR may allow, failing which it shall be deemed that Central Government has given its consent. The Central Government is not defined in SICA. The Central Government being an amorphous body has by virtue of the said circular appointed a nodal agency‟, in other words, an agent to act for and on its behalf in matters concerning financial assistance and concessions under the Direct Tax Laws. There is no provision under the Income Tax Act for according such consent. Therefore, the two statutes are required to be read harmoniously in order to avoid a confl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed in Shimoga Steels Ltd. though by the same Bench is latter in point of time. The Bench in Shimoga Steels Ltd may have, after hearing learned counsel for the parties, taken a view which was supportive of the stand adopted by the Income Tax Department. It is quite possible that the earlier view was not brought to the notice of the bench. However, this aspect of the matter need not detain us any further as we have already indicated that, in our opinion, the only entity which could have engaged with the BIFR was the Director General of Income Tax (Admn.) and therefore service had to be effected accordingly. We may only observe for the future that both the AAIFR and the BIFR should keep this in vital aspect in mind while seeking response to reliefs and concessions proposed to be given to a sick industrial company under the Direct Tax Laws. 23. It is precisely for this reason that the judgments cited by learned counsel for Respondent Nos.3 4 do not require to be discussed as none of them deal with point in issue raised before us. 24. We may only note that there is an observation in para 21(4) of the judgment of a Division Bench of this Court in the case titled Mewar S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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