- (1.) In these proceedings under article 226 of the Constitution, the petitioner has sought to challenge a notice dated March 30, 2012, issued under section 148 of the Income-tax Act, 1961, by the JCIT (OSD)/DCIT VI, Kanpur, purporting to reopen the assessment for the assessment year 2005-06. The petitioner has also seeks to question a notice dated March 18, 2014, issued under section 142(1) calling upon the petitioner to show cause as to why a disallowance should not be made under section 40(a)(ia) of the Income-tax Act, 1961 of an amount of Rs. 49.40 crores for non-deduction of tax at source under section 194H. The petition is principally based on a judgment of a Division Bench of this court in the case of the assessee itself: Jagran Prakashan Ltd. v. Deputy CIT (TDS), 2012 345 ITR 288 (All.). In the judgment of the Division Bench, it has been held that (i) there is no relationship of the principal and agent between the petitioner and the advertising agencies; (ii) the advertising agencies do not render any service to the petitioner; (iii) 15 per cent trade discount allowed by the petitioner to the advertising agencies is not a payment of commission within the meaning of section 194H of the Income-tax Act; and (iv) the petitioner was not liable to deduct tax at source on the trade discount allowed to the advertising agencies and, hence, proceedings under section 201/201(1A) could not have been initiated against the petitioner. The reasons which were supplied to the petitioner for reopening the assessment were also based on the same set of facts as would be evident from the reasons as disclosed on April 30, 2012: "It is apparent that the assessee had paid commission of Rs. 41,00,85,385 without deducting TDS to advertising agents and has made default under section 194H of the Income-tax Act, 1961. Since the assessee has neither deducted TDS nor paid against payment of commission to the advertising agents, consequently, has made also default under section 40(a)(ia) of the Income-tax Act, 1961. Hence, the commission paid by the assessee is not allowable. In view of the facts as discussed above, I have reason to believe that the income of Rs. 41,00,85,385 chargeable to tax has escaped assessment for the assessment year 2005-06 and, thus, it is a case covered under section 147 of the Income-tax Act, 1961. A notice under section 148 will be issued after taking approval from the competent authority."
(2.) When the petition came up for hearing on March 27, 2014, this court was informed that Special Leave Petition No. 9861 of 2013 Deputy CIT v. Jagran Prakashan Ltd. filed by the Revenue against the judgment of the Division Bench of this court in Jagran Prakashan Ltd. was likely to come up before the Supreme Court on March 31, 2014. In view of this admitted position, the petition was directed to be listed on April 15, 2014. In the meantime, since the time for completing the assessment was to expire on March 31, 2014, this court, in order to obviate the bar of limitation, considered it appropriate to grant a stay to protect the interests of the assessee as well as the Revenue. In the circumstances, there was a stay of further proceedings in pursuance of the reassessment notices dated March 30, 2012, and March 18, 2014.
(3.) On April 18, 2014, this court adjourned the hearing of the petition since the court was apprised of the fact that the hearing of the aforesaid special leave petition before the Supreme Court was posted for May 5, 2014. However, in the meantime despite the order of stay, the Assessing Officer proceeded to pass an order of reassessment on March 31, 2014. Hence, a notice to show cause was directed to be issued to the Assessing Officer to explain why despite being aware of the fact that an order of stay had been passed by this court, she proceeded to complete the assessment. In pursuance of the notice to show cause, the Assessing Officer has filed an affidavit explaining her stand. The petition has been amended to challenge the order of reassessment which was passed despite an order of injunction granted by this court.;