Case Law Details
While giving effect to the order of the Tribunal dated 30.04.2009, the Asst. Commissioner cannot determine the total income of the assessee at Rs.16,21,630/-, in which a part of the award received from the said TV game show is included. Learned Assessing Officer while giving effect to the order of the Tribunal is expected to function within the parameters of law. As it appears, the learned Assessing Officer has exceeded its jurisdiction and power while giving effect to the order of the Tribunal which has become final.
This shows utter disregard to the orders of the Tribunal, which is not expected from the Assessing officer, who is subordinate to the Tribunal. Therefore, the order passed under Annexure- 1 which is impugned in this writ petition, is not only erroneous, but also error in law. It is necessary to make an observation that the impugned order under Annexure- 1 lacks judicial propriety. Hence, the order is liable to be quashed, which we direct. The assessee is entitled to get refund of the entire advance tax of Rs.7,55,500/- along with interest, as provided under the Act and we accordingly direct the Asst. Commissioner of Income tax, Circle-2(2), Cuttack to do so.
Before parting with the judgment, we feel it necessary to observe that in view of the various communications made by the Assessing Officer to the petitioner which have been quoted in the body of the writ petition, it is difficult to disbelieve the contentions taken by the Assessee in paragraph-4 of the writ petition that being scared of initiation of prosecution and imposition of 300% penalty and on the assurance of refund of the amount paid as advance tax along with interest @ 12% per annum, the Assessee paid advance tax of Rs.7,55,500/- on 30.03.2008 as directed by the Assessing Officer and finally filed the return on 14.02.2002. The letter of the Asst. Commissioner, Income Tax shows that he deputed one A.Karim for the purpose of making full payment of advance tax by the assessee.
This is certainly not a healthy practice on the part of the authorities acting on behalf of the Revenue in the matter of collection of tax. In order to gain faith of the assessees and create confidence in the minds of the tax payers and for smooth administration of tax law, the Revenue authorities must act in a fair and legal manner.
Law is well settled that every action of the State and its instrumentality should be fair, legitimate and above board and without any affection or aversion. (See Haji T.M. Hassan Rawther Vs. Kerala Finance Corporation, AIR 1988 SC 157; E.P. Royappa Vs. State of Tamil Nadu, AIR 1974 SC 555 and State of Andhra Pradesh & Anr., – vs- Nalla Raja Reddy, AIR 1967 SC 1458).
The Hon’ble Supreme Court in M/s. Dabur India Ltd. and another v. State of Uttar Pradesh and others. AIR 1990 SC 1814, observed that Government, Central or State, cannot be permitted to play dirty games with the citizens of this country to coerce them in making payments which the citizens were not legally obliged to make. If any money is due to the Government, the Government should take appropriate steps, but it should not take extra legal steps or adopt the course of manoeuvring. Because of the above discontentment expressed at the Bar, it has become necessary to provide guidelines for just exercise of the power of Revenue authorities. To prevent the abuse of power and to see that it does not become a new despotism, courts are gradually evolving the principles to be observed while exercising such power. New problems call for new solutions.
HIGH COURT OF ORISSA: CUTTACK
W.P.(C) No.2113 of 2011
In the matter of an application under Articles 226 and 227 of the Constitution of India.
Lopamudra Misra
-Versus
The Asst. Commissioner of Income Tax
Date of Judgement : 18.05.2011
ORDER
B.N. Mahapatra, J. The prize money of Rs.25,00,000/- (rupees twenty-five lakhs), which the petitioner-Lopamudra Misra got by exhibiting her talent in a TV Game Show, i.e., “Kaun Banega Crorepati” having been made taxable by the Income Tax Authorities, she has approached this Court by means of this writ petition praying for quashing of order dated 04.11.2009 (Annexure- 1) and directing the Assessing Officer to refund the entire advance tax of Rs.7,55,550/- along with interest as provided under First Part of Section 140 of the Income Tax Act, 1961( for short, “Act”) .
2. Bereft of unnecessary details, the facts and circumstances giving rise to the present writ petition are that the petitioner-assessee is an individual deriving income from running a Cyber Café-cum-Computer Coaching Centre. She filed return of income showing total income Rs.16,21,630/- for the assessment year 2001-02. In her return, the assessee disclosed income from household property, business and other sources. The same was processed under Section 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny and accordingly notice under Section 142 of the Act was served on her. In course of hearing of the assessment case, the assessee was asked to submit her clarification as to why the award of Rs.25.00 lakhs from the said TV game show shall not be taxed under Section 115BB of the Act. The contention of the assessee before the Assessing Officer was that the award of Rs.25.0 lakhs received by her was not taxable under the Act. Rejecting assessee’s explanation, the Assessing Officer completed the assessment under Section 143(3) of the Act holding that the award received from the said TV game show was taxable under Section 11 5BB of the Act.
3. Aggrieved by the assessment order, the assessee filed an appeal before the Commissioner of Income Tax (Appeal) [for short, ‘CIT(A’)] on the ground that the Assessing Officer was not justified in applying the provision of Section 115BB of the Act as amendment to Section 2(24)(ix) where an explanation was added vide Explanation (ii) Finance Act, 2001 came into effect only on 01.04.2002 for the first time “brining the receipt from TV game show” within the definition of “income”. Therefore, the assessee having received the award on 05.11.2000, provisions of Section 11 5BB and Explanation (ii) to Section 2(24)(ix) of the Act, which came into effect only by the Finance Act, 2001 with effect from 01.04.2002, cannot be made applicable with retrospective effect. Learned CIT(A) accepted the stand of the assessee taken in respect of the amendment of Section 2(24(ix) of the Act and introduction of explanation (ii) as well as inapplicability of Section 115BB of the Act to the fact situation. However, learned CIT(A) held that receipt of the award from the said TV game show by the assessee is assessable under the head “income from other sources” and directed the Assessing Officer to determine the quantum of income afresh allowing expenses incurred from such income after affording an opportunity of hearing to the assessee.
4. Being dissatisfied with the order of the learned CIT(A), the assessee filed Second Appeal before the learned Income Tax Appellate Tribunal (for short, ‘ITAT’) questioning the finding of the learned CIT(A) that the receipt of income from the said T.V. game show by the assessee is taxable under the heading “income from other sources” as well as his direction to the Assessing Officer for making fresh determination of quantum of income. The Income Tax Department filed two appeals before the ITAT, one under Section 154 of the Act bearing ITA No.472/CTK/03 and another bearing ITA No.359/CTK/03. In ITA No.359/CTK/03 the Revenue questioned the order of learned CIT (A) who held that Section 1 15BB and explanation No.(ii) to Section 2 (24)(ix) of the Act are not applicable to the case of the assessee-petitioner. Against the said appeal, the assessee also filed cross objection. The ITAT heard all these appeals along with Cross-objection and disposed of those by a common order dated 05.08.2004. By the said order, Revenue’s appeal was allowed and the assessee’s appeal and Cross-objection were dismissed.
5. Against that order, assessee filed appeal under Section 260A of the Act before this Court for adjudication of various questions of law. However, before this Court, the challenge was confined as to whether the receipt of the award by appellant-petitioner on 05.11.2000 can be said to be income and exigible to tax under the Act for the assessment year 2001-02 especially when amendment to Section 2(24(ix) was brought into effect from 0 1.04.2002. This Court quashed the order of the learned ITAT dated 05.08.2004 and remanded all the matters, i.e., petitioner’s appeal, Department’s appeal and also petitioner’s cross objection to the Tribunal to consider afresh keeping in view the date of amendment of the relevant statute and in particular the date from which the amendment to the statute came into force. Pursuant to the said order of this Court, learned ITAT on 30.04.2009 allowed the assessee’s appeal and dismissed the appeal filed by the Department and assessee’s cross objection holding that the award of Rs.25.0 lakhs from the said TV game show received by the assessee on 05.11.2000 cannot be considered as income of the assessee so as tobe taxable under Section 115BB of the Act for the assessment year 2001-02 as the amendment to Section 2(24)(ix) of the Act came into force w.e.f. 0 1.04.2002 which would have the prospective operation. Pursuant to the said order of the learned Tribunal, the Asst. Commissioner of Income Tax, Circle-2(2), Cuttack issued intimation dated 04.11.2009 to the assessee giving effect to the order of the ITAT in Appeal Nos.341, 359 and 472/CTK/2003 and C.O. No.37/CTK/2003 in IT Appeal No.359/CTK/2003 dated 30.04.2009 by which the revised total income of the assessee was determined at Rs.16,21,630/- (Annexure- 1). Hence, the present writ petition.
6. Mr.B.K. Mishra, authorized representative of the assessee submitted that in view of the order of the Tribunal dated 30.04.2009, the prize money of Rs.25.0 lakhs received by the assessee from the said TV game show cannot be assessed as income of the assessee and the assessee is entitled to get refund of Rs.7,55,500/- wrongly paid towards advance tax along with interest as provided under the Act. The order of intimation passed under Annexure- 1 is illegal and an attempt has been made by the opp. party-Department to retain a part of the advance tax without authority of law.
7. It was further argued that the Revenue has illegally collected Rs.7,55,500/- as advance tax on 30.03.200 1. Opp. parties 1 and 2 with a mala fide intention distorted facts and provisions of the statute and illegally withheld the actual refund due to the assessee. After receipt of the prize money from Star Plus by the assessee, the Assessing Officer on 16.01.2001 issued a notice to the assessee for payment of advance tax of Rs. 11.00 lakhs under Section 208 of the Act on or before 31.03.2001. The said notice was accompanied by a challan of Rs. 11.0 lakhs. The assessee met the Assessing Officer and informed that she is not liable to pay tax as there was no provision under the Act to treat the receipt of the prize money as income of the assessee. Thereafter, the Asst. Commissioner issued another notice on 16.01.2011 giving reference to his earlier notice dated 16.01.2001 intimating the petitioner that payment of advance tax is due on or before 15.03.2001 for the financial year 2000-0 1 relating to assessment year 200 1-02, any default, deferment in payment of advance tax attracts levy of interest under Sections 234B and 234C of the Act respectively and requested the assessee to make full and final payment of the advance tax by 15.03.2001. He has also deputed one A.Karim, Income Tax Inspector for the said purpose. Thereafter, Assessing Officer started threatening the assessee-petitioner that the Department would start prosecution proceeding immediately after 31.03.2001, by which her career would be damaged and served another notice under Section 208 of the Act.
Referring to their telephonic discussion, the Asst. Commissioner clarified to the assessee-petitioner that under Section 115BB of the Act, the assessee is to pay tax at the flat rate of 40% on the prize money and surcharge of 6% thereon. In the said letter, the petitioner was also intimated that her tax liability comes to Rs. 10,39,000/- after allowing rebate and deductions under different provisions of the Act and in case of default to discharge her obligation to pay the said amount, she would be charged with interest, heavy penalty and prosecution proceedings would be initiated against her. In the said letter, she was also intimated that once the penalty proceeding is initiated she would not be left with any defence and she would be imposed penalty to the tune of 300% of the amount of tax sought to be evaded. Being scared of initiation of prosecution and imposition of 300% penalty and on the assurance of refund of advance tax along with interest @ 12% per annum, after getting clarification from Central Board of Direct Taxes (for short, ‘CBDT’) as directed by the Assessing Officer, the assessee paid Rs.7,55,550/- on 30.03.200 1 as advance tax.
8. Awaiting clarification from CBDT, the assessee filed her return on 14.02.2002. Subsequently, by order dated 16.12.2002 passed under Section 154 of the Act, the Assessing Officer determined the income of the assessee at Rs.25.00 lakhs and levied extra tax of Rs.3,89,930/-. Vide notice dated 22.10.2002 under Section 142 of the Act, the petitioner was directed to produce books of account. Another notice of even date under Section 143(2) of the Act was also issued to the petitioner to attend the office of the Assessing Officer on 18.11.2002 at 11.30 AM. The Assessing Officer completed the assessment on 27.01.2003 under Section 143(3) of the Act rejecting the claim of the assessee-petitioner that according to the amendment in Section 2(24) (ix) of the Act, the prize money received from the said TV game show was brought to the tax net only from 01.04.2002 and subsequent assessment years and hence the assessee could not be taxed for such receipt. On 12.05.2009, the authorized representative of the assessee also submitted a copy of the order dated 30.04.2009 of the ITAT before the Commissioner of Income Tax with a request to arrange refund of the entire amount of Rs.7,55,550/-.
9. It was further submitted that though, according to the assessment order dated 27.0 1.2003 and order dated 05.05.2004 under Section 251 of the Act, the prize money of Rs.25.00 lakhs was included in the total income of the assessee, but in view of the order of the ITAT dated 30.04.2009 (Annexure-2), the said receipt should not be included in total income. Therefore, the assessee is entitled to get refund of the total advance tax of Rs.7,55,550/- with 12% interest per annum. The assessee-petitioner filed Misc. Application before the ITAT bearing ITA No.08-1 1/CTK/2010. Vide order dated 30.08.20 10, the said Misc. Application was disposed of with the observation that since the assessee’s appeal was allowed and the Revenue’s appeals were dismissed, the Tribunal felt no need to further clarify its above order as the assessee would get the consequential relief in any case. The Assessing Officer is wrong in determining the income of the assessee at Rs. 16,21,630/-, which is part of the prize money and attempting to collect tax thereon. Referring to Section 237 of the Act, Mr.Mishra submitted that a non-existent assessment order cannot be annulled and the return of income lost its existence due to nullity and in terms of Section 139(9) of the Act. Consequent upon the decision of the learned ITAT, the prize money of Rs.25.0 lakhs cannot be said to be the income of the assessee and therefore, payment of advance tax to the tune of Rs.7,55,550/- is refundable in terms of the first part of Section 240 of the Act. Instead of refunding Rs.7,55,550/-, the income Tax authorities have wrongly refunded tax of Rs.2,12,763/- to the petitioner. The petitioner’s liability to pay income tax does not arise according to the provisions of Section 4(1) of the Act.
10. Placing reliance upon various judgments of the apex Court and High Courts, it was submitted that the petitioner is entitled to refund of tax paid in advance along with interest. Further, placing reliance on Modi Industries Ltd., Modinagar etc. v. Commissioner of Income Tax, Delhi and another etc. etc. it was also argued that the impugned order is erroneous and liable to be set aside as the direction of the higher authority is not faithfully carried out and the Assessing Officer has passed the impugned order without jurisdiction.
11. Mr.A.K.Mohapatra, learned Senior Standing Counsel for the Income Tax Department submits that there is no infirmity or illegality in the order passed by the Assessing Officer under Annexure- 1. The Assessing Officer is perfectly justified in determining the income of the assessee at Rs. 16,21,630/- as per the order of the ITAT and granting refund under Section 240 of the Act.
12. On rival contentions of the parties, the question that falls for consideration by this Court is as to whether the Asst. Commissioner, Income Tax, Circle-2(2), Cuttack is justified to determine the income of the assessee at Rs.16,21,630/- while giving effect to the order of the ITAT.
13. The relief sought for by the petitioner is two fold i.e., (i) to quash Annexure- 1 by which the ACIT treated the award received from T.V. Show as income taxable under the head “income from other sources” which is contrary to the order of the ITAT dated 30.04.2009, and (ii) the assessee-petitioner is entitled to get refund of Rs.7,55,500/- paid as advance tax under the threat of the Income Tax Authorities along with interest as provided in First Part of Section 240 of the Act.
14. The learned ITAT vide its order dated 30.04.2009 held that the amount of award of Rs.2 5.00 lakhs received from the said TV game show by the assessee on 05.11.2000 cannot be said to be her income, which is exigible to tax under Section 1 15BB of the Act for the assessment year 2001-02 as the amendment to Section 2(24) (ix) of the Act has come into operation from 01.04.2002. This finding of the learned Income Tax Appellate Tribunal is in terms of judgment of this Court dated 13.2.2009 passed in the case of the petitioner-assessee in I.T.A. No. 219 of 2004. Further, the Tribunal finally held that the appeal of the assessee is allowed and the two appeals filed by the Revenue and also the cross-objection are dismissed. Admittedly, in its appeal before the Tribunal, the assessee challenged the order of the CIT(A) holding that the award received by the assessee was taxable under the head “income from other sources” which the learned Tribunal held not correct. When the assessee’s appeal is allowed, the assessee is justified in saying that award received by her is not taxable under the head ‘income from other sources’. This order of the Tribunal has not been challenged by the Revenue before this Court. Thus, the said order has attained finality. Hence, the Asst. Commissioner is not justified to determine the income of the petitioner assessee at Rs.16,21,630/- in which award received from the said TV game show was included in its impugned order passed under Annexure- 1 while giving effect to the order of the Tribunal dated 30.04.2009.
15. Another important aspect which needs to be looked at is that after receiving the order of the Tribunal, the Income-tax Department filed Misc. Appeal No.82/CTK/2009 before the Tribunal with the following prayer.
“The Hon’ble ITAT may be pleased to examine the contents of its rulings in ITA No.34 1, 359,472 (CTK) of 2003 and pass suitable order holding that a sum of Rs.25 lakhs shall still be assessed to tax as income from other sources for the assessment year 2001-02, even if the explanation (ii) to Section 2(24)(ix) has been introduced w.e.f. 0 1.04.2002.
The Hon’ble ITAT may direct the Assessing Officer to follow the statutory provision of section 240 of the Income Tax Act, 1961 recomputing the assessable total income limiting the amount as per the Returned filed by the assessee at Rs.16,21,430/-.”
16. The learned Tribunal after hearing counsel for both the parties dismissed the said M.A. No.82/CTK/2009 vide order dated 11.02.2010 holding as follows:
“4. Having heard both sides and on perusal of materials available on record, we find that the learned DR reiterated the submission made in the M.A. could not point out any mistake apparent from the record crept in the order of the learned Tribunal. In view of this, we are of the view that if the plea of the Revenue has accepted it will amounts to review of our orders. Law is well settled that we don’t have such power and since the Revenue has failed to point out any mistake apparent from the record, the M.A. filed by the Department deserves to be dismissed.”
17. The IT Department has also not challenged the above order of the learned ITAT dated 11.02.2010. Thus, the order dated 11.02.2010 has also attained finality.
The assessee filed Misc. Application in I.T.A. No. 08- 1 1/CTK/2009 and the Tribunal disposed of the same on 30.08.20 10 with the following observations:
“Since the assessee’s appeal was allowed and the revenue’s appeals were dismissed,, wee feel no need to further clarify our above order as the assessee will get the consequential relief in any case. The A.O. is directed to pass an order giving effect to the order of the Tribunal dated 30.04.2009.”
Thus, from the above sequence of events and orders passed by the learned ITAT it becomes amply clear that the order of the ITAT dated 30.04.2009 has attained finality.
18. Now the question that arises for consideration is whether while giving effect to the appellate order, the Assessing Officer can travel beyond the order of the learned Tribunal and assess the receipt of award as income from other sources which has been held by the Tribunal not to be assesseed as such in its order. The answer is certainly in the negative. The Assessing Officer being the quasi judicial authority and sub-ordinate to the Tribunal is bound by the decision of the learned ITAT. The order of the learned ITAT is binding on the Assessing Officer.
19. At this juncture it is profitable to refer to the judgment of the apex Court in the case of Union of India and others v. Kamlakshi Finance Corporation Ltd., AIR 1992 SC 711. In paragraph-6 of the said judgment it has been observed as follows:
“The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not “acceptable” to the department — in itself an objectionable phrase — and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws”.
20. Therefore, while giving effect to the order of the Tribunal dated 30.04.2009, the Asst. Commissioner cannot determine the total income of the assessee at Rs.16,21,630/-, in which a part of the award received from the said TV game show is included. Learned Assessing Officer while giving effect to the order of the Tribunal is expected to function within the parameters of law. As it appears, the learned Assessing Officer has exceeded its jurisdiction and power while giving effect to the order of the Tribunal which has become final. This shows utter disregard to the orders of the Tribunal, which is not expected from the Assessing officer, who is subordinate to the Tribunal. Therefore, the order passed under Annexure- 1 which is impugned in this writ petition, is not only erroneous, but also error in law. It is necessary to make an observation that the impugned order under Annexure- 1 lacks judicial propriety. Hence, the order is liable to be quashed, which we direct. The assessee is entitled to get refund of the entire advance tax of Rs.7,55,500/- along with interest, as provided under the Act and we accordingly direct the Asst. Commissioner of Income tax, Circle-2(2), Cuttack to do so.
21. Before parting with the judgment, we feel it necessary to observe that in view of the various communications made by the Assessing Officer to the petitioner which have been quoted in the body of the writ petition, it is difficult to disbelieve the contentions taken by the Assessee in paragraph-4 of the writ petition that being scared of initiation of prosecution and imposition of 300% penalty and on the assurance of refund of the amount paid as advance tax along with interest @ 12% per annum, the Assessee paid advance tax of Rs.7,55,500/- on 30.03.2008 as directed by the Assessing Officer and finally filed the return on 14.02.2002. The letter of the Asst. Commissioner, Income Tax shows that he deputed one A.Karim for the purpose of making full payment of advance tax by the assessee.
This is certainly not a healthy practice on the part of the authorities acting on behalf of the Revenue in the matter of collection of tax. In order to gain faith of the assessees and create confidence in the minds of the tax payers and for smooth administration of tax law, the Revenue authorities must act in a fair and legal manner.
22. Law is well settled that every action of the State and its instrumentality should be fair, legitimate and above board and without any affection or aversion. (See Haji T.M. Hassan Rawther Vs. Kerala Finance Corporation, AIR 1988 SC 157; E.P. Royappa Vs. State of Tamil Nadu, AIR 1974 SC 555 and State of Andhra Pradesh & Anr., – vs- Nalla Raja Reddy, AIR 1967 SC 1458).
23. The Hon’ble Supreme Court in M/s. Dabur India Ltd. and another v. State of Uttar Pradesh and others. AIR 1990 SC 1814, observed that Government, Central or State, cannot be permitted to play dirty games with the citizens of this country to coerce them in making payments which the citizens were not legally obliged to make. If any money is due to the Government, the Government should take appropriate steps, but it should not take extra legal steps or adopt the course of manoeuvring. Because of the above discontentment expressed at the Bar, it has become necessary to provide guidelines for just exercise of the power of Revenue authorities. To prevent the abuse of power and to see that it does not become a new despotism, courts are gradually evolving the principles to be observed while exercising such power. New problems call for new solutions.
24. In the result, the writ petition is allowed with the above directions/observations.
No order as to costs.
