High Court Of Kerala
CIT vs. Trichur Co-Operative Bank Ltd.
Sections 201(1), 201(1A), 231
Asst. Year 1986-87, 1988-89
G. Sivarajan & J.M. James, JJ.
IT Appeal Nos. 27, 38, 41 to 43 & 50 of 2000
16th June, 2003
Counsel Appeared
P.K.R. Menon & George K. George, for the Appellant : Arikkat Vijayan Menon & Harisankar V. Menon, for the Respondent
JUDGMENT
BY THE COURT :
All these appeals are filed by the CIT, Kochi against two separate orders of the Tribunal, Cochin Bench in ITA Nos. 312, 313 & 314/Coch/1995 in respect of the asst. yrs. 1986-87, 1987-88 & 1988-89 in connection with orders passed by the AO under s. 201(1) of the IT Act, 1961 (for short ‘the Act’) and in ITA Nos. 233, 234 & 235/Coch/1995 in respect of asst. yrs. 1986-87, 1987-88 & 1988-89 in connection with the orders passed by the AO levying interest under s. 201(1A) of the Act. ITA Nos. 27, 42 & 50 of 2000 are the appeals filed against the order of the Tribunal on the question arising under s. 201(1) of the Act and ITA Nos. 38, 41 & 43 of 2000 are filed against the order of the Tribunal on the question of imposition of interest under s. 201(1A) of the Act.
The brief facts necessary for consideration of these appeals are as follows : The respondentassessee is a co- operative bank at Trichur. During the previous year relevant to the asst. yrs. 1986-87 to 1988-89 the respondent- assessee had paid bonus to its employees purporting to be by way of advance payments in view of certain dispute regarding the bonus consequent on revision of pay of the employees. The assessee did not deduct the tax due from the employees in respect of these payments as provided under s. 192 of the Act. The AO took the view that the assessee had paid bonus which form part of the salary and therefore, there was statutory obligation cast on the assessee to deduct tax from such payment. Accordingly after notice to the assessee, orders were passed under s.201 of the Act declaring the assessee in default. Similarly another set of orders were passed making the assessee liable to pay interest on the defaulted tax. Being aggrieved by both sets of orders the assessee filed appeals before the CIT(A). The first appellate authority found that the assessee had defaulted in deducting the tax due on the payment of bonus paid to its employees by virtue of the provisions of s. 201(1) of the Act. The first appellate authority also found that in view of the said default the assessee has become liable to pay interest on the defaulted amount by virtue of the provisions of s. 201(1A) of the Act. However, the first appellate authority held that since the recovery of the defaulted tax has become barred under the provisions of s. 231 of the Act the recovery of interest on such defaulted amount was barred under the said provision. Being aggrieved by the order of the first appellate authority both the assessee and the Department filed appeals before the Tribunal. The Tribunal also found that the findings of the first appellate authority that the assessee is in default and that there is a corresponding obligation to pay interest under s. 201(1) and s. 201(1A) respectively. However, the Tribunal also upheld the view of the first appellate authority that the recovery of the tax and the interest have become barred under s. 231 of the Act. The Tribunal for the said purpose relied on the decision of this Court in Traco Cable Co. vs. CIT (1987) 62 CTR (Ker) 174 : (1987) 166 ITR 278 (Ker) and CIT vs. Meat Products of India Ltd. (1996) 136 CTR (Ker) 210 : (1997) 224 ITR 1 (Ker). It is against these orders of the Tribunal that the Department has come up in appeal.
Sri George K Geoge, learned Central Government standing counsel for taxes appearing for the appellant submits that the two decisions of this Court mentioned above were rendered at a time when the provision of s. 231 of the Act was on the statute book. He submitted that the said provision was omitted as per the Direct Taxes Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989. The counsel submitted that the decision rendered by this Court in the two decisions mentioned above will apply to the asst. yr. 1986-87, in that, the period of limitation provided under s. 231 of the Act expired on 31st March, 1989, and consequently the omission of s. 231 w.e.f. 1st April, 1989, will not save the period of limitation. However, so far as the asst. yrs. 1987-88 and 1988-89 are concerned the standing counsel submitted that the period of limitation provided under s. 231 of the Act expires only on 31st March, 1990 and 31st March, 1991, respectively. The standing counsel further submitted that since the deletion of s. 231 of the Act happened before the expiry of the period of limitation the effect is that the period of limitation provided under s. 231 no longer survives with respect of the asst. yrs. 1987-88 and 1988-89. The standing counsel accordingly submitted that the orders of the Tribunal so far as the asst. yrs. 1987-88 and 1988-89 will have to be set aside and the levy of interest under s. 201(1A) has to be upheld and the recovery of tax under s. 201(1) and the levy of interest under s. 201(1A) has to be sustained.
4. We have heard Sri Harisankar V. Menon, learned counsel appearing for the respondentassessee. Though the counsel had vehementally argued to sustain the orders of the Tribunal we find that the submission made by the standing counsel merits acceptance. We accordingly uphold the order of the Tribunal so far as the asst. yr. 1986-87 is concerned since the period of limitation provided under s. 231 expired prior to the omission of s. 231 w.e.f. 1st April, 1989. However, we set aside the orders in respect of the asst. yrs. 1987-88 and 1988-89 and hold that the orders of the assessing authority passed under ss. 201(1) and 201(1A) of the Act are legal and valid since there was no period of limitation in view of the omission of s. 231 from 1st April, 1989, prior to the expiry of the period of limitation provided in the said section.
These appeals are disposed of as above.
[Citation : 266 ITR 574]
