- (1.) This appeal under Section 260A of the Income-tax Act, 1961 is at the instance of an assessee and is directed against an order dated April 23, 2004 passed by the Income-tax Appellate Tribunal, "A" Bench, Kolkata, in ITA No.369/Kol/2004 for the assessment year 1995-96 thereby dismissing the appeal filed by the assessee against the order passed by CIT (Appeals). Being dissatisfied, the assessee has come up with the present appeal.
(2.) It appears from the record that a Division Bench of this Court at the time of admission of this appeal formulated the following questions of law: "i) Whether the Tribunal was justified in law in holding that the interest under Section 201(1A) was mandatory and automatic irrespective of the bona fide contentions/conduct of the appellant? "ii) Whether and in any event, interest under Section 201(1A) can be charged for the period from May 6, 1997 when the order under Section 201 read with Section 194E was passed and notice of demand was issued on the basis of which interest under Section 220(2) has also been charged with effect from May 6, 1997 on the same amount resulting in concurrent charging of interest under Section 201(1A) and Section 220(2) for the period from May 6, 1997 to February 8, 2000 on the same amount?"
(3.) The facts giving rise to the filing of this appeal may be summed up thus: a) On May 6, 1997, the Income-tax Officer passed an order raising a demand of Rs.2,18,29,300/- under Section 201 read with Section 194E of the Income-tax Act, 1961. Against the said order dated May 6, 1997, an appeal was preferred before the Commissioner of Income-tax (Appeals) who, however, rejected the same by an order dated November 17, 1997. On further appeal, the Tribunal remanded the matter back to the Commissioner of Income-tax (Appeals) for a fresh decision. b) By an order dated December 28, 1998, the Commissioner of Incometax (Appeals) partly allowed the said appeal as a result whereof the original demand stood reduced to Rs.97,30,303/-. Against the said order dated December 28, 1998, the Department as well as the assessee filed two separate appeals before the Tribunal. The Tribunal by its order dated January 4, 2000 dismissed the appeal filed by the Department and gave partial relief to the assessee. c) Against the said order dated January 4, 2000 passed by the Tribunal in so far as the relief was not granted to the assessee, the said assessee filed an appeal under Section 260A of the Act before this Court and the Department also filed an appeal under Section 260A of the Act against the said order dated January 4, 2000. d) By an order dated January 31/February 1, 2000, the Income-tax Officer gave effect to the said order dated January 4, 2000 and computed a revised demand of Rs.38,88,731/-. e) It may not be out of place to mention here that earlier a bank guarantee for the entire demand of Rs.2,18,29,300/- was furnished pursuant to an order passed by the Tribunal on the stay application. By a letter dated February 4, 2000, the assessee informed the bank that it had not accepted the order of the Tribunal in so far as it had decided the issue against it and would be filing an appeal against the same. In such circumstances, without prejudice to its right to file appeal against the said order dated January 4, 2000 and under protest, the assessee requested the bank to honour the demand raised by the Income-tax Officer in terms of the said order of the Tribunal and in discharge of the obligation under the said bank guarantee. Accordingly, the bank paid the said sum of Rs.38,88,731/- to the Income-tax Officer. f) By a letter dated February 8, 2000, the Income-tax Officer requested the assessee to appear before him in connection with imposition of interest under Section 201(1A) of the Act. By a letter dated February 22, 2000, the assessee duly objected to the proposal to impose interest on the ground that it was taking step to file an appeal against the said order dated January 4, 2000 before this High Court and without prejudice to its rights and contentions had already requested the bank to pay the said sum of Rs.38,88,731/-. According to the assessee, since the question as to whether it was at all liable to deduct any tax would be the subject-matter of further proceedings, the question of computing any interest under Section 201(1A) at that stage did not arise. g) Apart from the aforesaid ground, according to the assessee, it was not liable to deduct any tax under Section 194E and the provisions of Section 201 had no manner of application. The Income-tax Officer was requested to drop the proposal for imposing penal interest under Section 201(1A). h) The Income-tax Officer, however, by an order dated February 28, 2000 held that the assessee was liable to pay interest under Section 201(1A) which was computed by him at Rs.26,86,697/-, such interest being computed on the sum of Rs.38,88,731/- from the date on which the Income-tax Officer considered that tax was deductible in the years 1993, 1994, 1995 and 1996, as the case may be, to the date on which tax was actually paid, i.e. February 8, 2000. i) By another order dated February 28, 2000, the Income-tax Officer without affording any opportunity to the assessee charged interest under Section 220(2) amounting to Rs.19,24,922/-. Such interest was calculated on the sum of Rs.38,88,731/- from the date of service of the demand notice, i.e. May 6, 1997 to the date of payment, i.e. February 8, 2000. j) Against the said order dated February 28, 2000, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals), however, by an order dated December 7, 2000 dismissed the appeal against the order imposing interest under Section 220(2) of the Act holding that the same was not maintainable. By another order dated December 14, 2000, the said appellate authority upheld the levy of interest under Section 201(1A) and dismissed the other appeal also. k) Against the said orders dated December 7, 2000 and December 14, 2000, the assessee preferred appeals before the Tribunal being ITA Nos. 370 and 369 (KOL)/2001. l) Both the aforesaid appeals were dismissed by the Tribunal by an ex parte order dated December 18, 2002 as "unadmitted". However, the assessee filed application before the Tribunal for recalling the said ex parte order dated December 18, 2002 and also filed appeal under Section 260A of the Act before this Court against the said order dated December 18, 2002 being ITA No. 123 of 2003. m) The Tribunal by order dated January 14, 2004 recalled the said ex parte order dated December 18, 2002 and as such, ITA No.123 of 2003 filed by the assessee had become infructuous. n) Both the appeals thereafter were heard by the Tribunal and the Tribunal by an order dated March 31, 2004 dismissed those appeals. By the said order, the Tribunal held that interest under Section 201(1A) was mandatory and automatic and that no appeal lay against the levy of interest under Section 220(2) of the Act. o) After the receipt of the said order dated March 31, 2004, the assessee filed an application under Section 264 of the Act before the Commissioner of Income-tax against the said order dated February 28, 2000 charging interest under Section 220(2) contending, inter alia, that no interest under Section 220(2) could be charged on any amount falling within the purview of Section 201 particularly when Sub-section (1A) of Section 201 provided for payment of interest right up to the date of payment of the amount falling within the purview of Sub-section (1). In the said application, the assessee highlighted that the interest on the sum of Rs.38,88,731/- had been concurrently charged both under Section 201(1A) and Section 220(2) of the Act for the period from May 6, 1997 to February 8, 2000. p) In view of the fact that this High Court had decided that an order charging interest under Section 220(2) is not appealable under the Act and such decision had been followed by the Tribunal in the order dated March 31, 2004, the assessee felt that no purpose would be served by filing an appeal under Section 260A against the said order of the Tribunal in so far as it related to interest charged under Section 220(2). Accordingly, the assessee preferred appeal against the order dated March 31, 2004 by the Tribunal in so far as it related to interest charged under Section 201(1A). Mr. Bajoria, the learned senior Advocate appearing on behalf of the appellant, has contended before us that the procedure provided in the Act for recovery starting from Section 156 of the Act, followed by the provision of Section 220(1) and the consequential order under Section 220(4) of the Act and the ultimate provision for recovery under Section 222 are not applicable in a case where an order has been passed under Section 201(1A) of the Act. Mr. Barojia, therefore, only prays for an observation in this appeal that Section 201 of the Act read with Sections 195 and 200 would indicate that a person responsible for deduction of tax at source in terms of Section 195 is deemed to be in default if he does not either deduct the tax at source, or having deducted it, does not pay it as required by Section 200 within the time prescribed under Rule 30. According to Mr. Barojia, Section 201 further indicates that the failure of such a person makes him an assessee in default, although he would not, but for the default, be an assessee in respect of the sum referred to in Section 195 and it is his failure to discharge his statutory obligation that visits him with the liability of an assessee in default. Mr. Bajoria submits that the said liability is cast upon his client under the aforesaid provisions, not because of any order or notice of demand, but because of the operation of the statute itself and this is quite unlike a regular assessment under which a tax becomes payable only upon service of a notice of demand under Section 156. Mr. Bajoria, therefore, submits that in such a case, there was no necessity of issuing any notice of demand in terms of Section 156 of the Act.;