In an order highly critical of the Income-Tax department, the Bombay High Court has pulled up the department for its “cavalier” approach and on the way tax issues are decided by the department “without application of mind”. The order was pronounced last week by Justice DY Chandrachud and Justice JP Devadhar.
The division bench made these observations in an order on a writ petition filed by engineering major Larsen & Toubro, which had moved court after the commissioner of Income-Tax rejected its petition for a lower rate of tax-deducted-at-source (TDS). The commissioner had reportedly said that even if excess tax was deducted at source, the tax payer would come to no harm as he (the taxpayer) is bound to get his money back with interest.
The high court found the commissioner’s reasoning unacceptable. “We are constrained to observe that the application filed by the assessee has been rejected in a rather cavalier manner and without application of mind to circumstances which are germane to the statute,” said the court.
The case is related to a monorail project contract that was awarded by MMRDA to L&T. The latter had applied under Section 197 of I-T Act for a direction from the I-T department for a lower rate of TDS. The assessing officer rejected the application on the ground that the assessee had failed to furnish figures for the past three years. L&T then filed a revision application with the commissioner of I-T.
The high court found it impossible to accept the view that rejection of an application under Section 197 is not an order. Besides, the high court also noted that the assessing officer did not furnish any valid reason for rejecting the application.
The court also made reference to a system that allows discretion of the assessing officer, even if the applicant fulfills all the stipulated conditions.
Is there any circular relating treatment of share trading gain as capital gain or business gain.
is there any different treatment whether i earn gain from share in 30 0r within 2 days?
Readers may see the Responses to the earlier insertion on “S. 197 TDS: High Court censures Dept for cavalier approach”:
“1. Anandhi Says:
“May 5th, 2010 at 10:54 am
“197 section is full of controversies, guess even after a decade, this battle between dept and taxpayer is not going to end. Its high time the FM gets involved and bring out suitable law in the place of the existing section.
“2. AB Says:
“May 5th, 2010 at 2:14 pm
“Controversy apart, the point that should attract the notice of the FINMIN bosses is the attitude of the officers administering the law-will these very officers tolerate such conduct of an officer if this were their own case? And, it may perhaps be found that the CIT as well as the underlings involved in the case have already been promoted-and may be, even on the basis of the “outstanding category” awarded to then because of this very case!
“Does the department have the courage to take action against such patently incompetent, inadequate and useless burdens on the taxpayers?
“Read more: https://www.taxguru.in/income-tax-case-laws/s-197-tds-high-court-censures-dept-for-cavalier-approach.html#ixzz0nWMDmLb9“
With due respect to the Hon’ble High Court, I am inclined to agree to the view of Mr. Akhilesh. The Revenue department’s foremost duty is to act in the interests of, and to protect, the revenue but, of course, within the four corners of law and not ignoring the principles of ‘natural justice’. If, as stated in the news, the applicant had failed to furnish the requisite details called for by the department in order to enable itself to do justice to the Revenue, there would not appear to have been any miscarriage of justice at all, especially as there is no scope for equity in a taxing law.
Since, however, the impugned order was based on the misinterpretation of law that, an action u/s 197 does not tantamount to an order for purpose inter alia of s. 263, the High Court’s decision cannot be faulted.
It appears, Mr. Akhilesh missed this point that the Hon’ble High Court decided in favour of the appellant-assessee on the short ground that it is “impossible to accept the view that rejection of an application under Section 197 is not an order” …(and also since) “the assessing officer did not furnish any valid reason for rejecting the application”.
The I.T. department has done correct for not issuing certificates of lower tax rate applied by the company u/s 197. The decision of the authority was in the interest of the revenue.
This is a great thing done by Jyoti by cross-referencing the Taxguru item from an earlier release.
THE RESPONSES ON YOUR NEWS TITLED “HIGH COURT FUMES AT INCOME TAX DEPARTMENT’S RECOVERY MANIA- STRICTURES AGAINST DEPT FOR DISPOSING STAY APPLICATIONS WITHOUT PROPER REASONS” OF APRIL 1 ARE REPRODUCED FOR PROPER UNDERSTANDING OF THE BACKGROUND:
1. TDS Says:
April 2nd, 2010 at 7:31 am
With due respect, the Hon’ble High Courts may not know that the smaller tax payers cannot afford to eithe pay bribes at all levels including the appellate authorities of the highest levels and can also not go upto the High Courts-not even the Tribunal which is also EXPENSIVE. Who will think of their plight with hundreds of CCITs trying to extract money or under pressure from higher authorities direct the lower authorities to attach all bank accounts in all cases irrespective of the merits of the appeals before the CIT appeals? Demands are raised in deliberately made high pitched assessments and even when 1st appeal is pending AOs without even considering stay applications attach bank a/cs even of salaried and retired people. CIT appeals are legally empowered to entertain stay applications as per HC judgements but they prefer making money for giving tax relief (as in Tribunal also)and without applying mind. 90% of CIT admn and appeal dont know how to draft orders-their staff or professionals bring drafts (with cash) of orders wanted. Taxpayer has to pay through their nose the bribes at every stage, since Ombudsman’s post is also not given to honest persons whose integrity is impeccable. Recovery is a very very lucrative posting in IT deptt.
2. Jaspal Says:
April 3rd, 2010 at 2:35 pm
Kudos to TDS. He is right on spot except the Tribunal part. I think assessee’s do get justice at the ITAT level but the ITAT is unaffordable to small assessees. They are the worst sufferers. Not only coercive methods are used against them for recovery but their appeals are indefinitely put on hold because of low revenue potential. CIT (Appeals), except a few honourable exceptions, abuse their power in case of high demand cases to extort money from the assessees. Some of the tactics are:
(i) not hearing the appeals on a continuous basis (suddenly the hearing is adjourned sine die for no rhyme or reason),
(ii) not passing the orders months after the appeals are finally heard and in the meantime they get transferred and the new CIT hears the appeal all over again,
(iii) not taking any steps to ensure that AO’s submit remandme given to them,
(iv) asking for AO’s comments on piece meal basis.
The purpose is obviously to delay the disposal of appeal so that the AOs get on the nerves of the assessees for recovery of demands and the assessee is forced to strike the deal with CIT(A)to expeditiously dispose off the appeal.
I am aware of certain appeals involving low demands (3 to 5 lacs) which have been pending for 4 to 9 years despite hearing having cocluded long time back.
It is inconceivable that CBDT is not aware of the sorry state of affairs. If they are indeed unaware, they are not fit to be occupying their positions.
TDS Says:
April 10th, 2010 at 4:57 pm
I am afraid, Mr. Jaspal has missed the point I made by specifically wrote the word “EXPENSIVE” in BOLD letters about the ITAT. The real situation is totally contrary to what he thinks about the actual COST OF JUSTICE available there. What I have written is not only from about 40 years of experience in anti-fraud/tax-evasion/vigilance duties, but from interacting with several professionals, tax payers, justice-seekers, serving and ex-members of the tribunal, many honest judges, various honest and truly kind (but backboneless) officers of the IT department and, of course, our very own anti-corruption macinery’s top echelons who receive complaints of coprruption against the hon’ble men manning the benches from the top to bottom. The truth is very bitter indeed-not different at all from the IT department’s corruption. One only hopes that the chain of the persons involved in the red-handed apprehension of a Kolkata CA and his going underground will one day become public through some spirited anti-corruption organisation like the Parivartan (amazingly started by a very young and courageous officer who resigned from the IRS!), the Transparency International India, etc., filing RTI application urging the CBI to disclose the same. The buck truly goes high and higher and highest and God knows where is starts!
Read more: https://www.taxguru.in/income-tax-case-laws/high-court-fumes-at-income-tax-departments-recovery-mania-strictures-against-dept-for-disposing-stay-applications-without-proper-reasons.html#ixzz0kms0IB2y
https://www.taxguru.in/income-tax-case-laws/high-court-fumes-at-income-tax-departments-recovery-mania-strictures-against-dept-for-disposing-stay-applications-without-proper-reasons.html#ixzz0kgvfoxCA