Revenue Needs To Be Consistent, Can’t Accept Proposition In One Case And Challenge In Another : Patna High Court

Quoting several judgments of the Apex Court, the Court held, "The established principle is that, if the Revenue has not challenged a declaration of law laid down by a High Court and accepted it in the case of one assessee, then it is not open to the Revenue to challenge its correctness in the case of other assessees, without just cause."

The court rendered its verdict in favor of Indian Oil Corporation Ltd., which was embroiled in a legal battle against the Income Tax Officer, TDS Circle.

The case pertained to two appeals arising from a common order concerning the assessment years 2002-03 and 2003-04.

The central issue revolved around the Income Tax Appellate Tribunal's decision to set aside assessment orders passed by the Assessing Officer, which were deemed to be beyond four years. It is worth noting that there were no specific limitations provided under Sections 201(1) and 201(1A) of the Income Tax Act, 1961, for the case in question.

The Income Tax Department had passed the assessment orders on 27.04.2007, invoking Sections 201(1) and 201(1A) of the Act to deem the assessee as in default for failing to deduct or pay the required tax, as an employer, due from the employee.

The Tribunal, in its judgment, observed that the assessment orders were passed after four years from the respective financial years 2001-2002 and 2002-03, which the Tribunal deemed to be beyond a reasonable period as per the various provisions of the Income Tax Act.

The Revenue argued based on decisions from the Calcutta High Court and the Punjab & Haryana High Court, claiming that the period of limitation was inapplicable concerning tax deducted at source (TDS).

An incidental issue was also raised regarding whether the previous remand order by the Tribunal merged with the Assessing Officer's order, preventing the assessee from raising the contention again.

However, Chief Justice K. Vinod Chandran and Justice Partha Sarthy, presiding over the bench, supported the Tribunal's decision. They stated that even when a statute does not prescribe a specific limitation period, the Department cannot pass orders after an unreasonably prolonged time.

The court emphasized that a reasonable time should be derived from the provisions of the relevant statute, and the High Courts' decisions aligned with the four-year period as deemed appropriate.

The court highlighted, “True, the provision was amended bringing in a limitation of four years, in 2010 and then later extended to six years and seven years. Providing a specific period of limitation by the Union Parliament indicates, though it is not applicable to the subject assessment orders, the wisdom of the legislature.”

Consequently, the court answered the question of law against the Revenue and in favour of the assessee and rejected the appeals filed by the Revenue.

Case Title: Income Tax Officer vs. Indian Oil Corporation Ltd.

Case No.: Miscellaneous Appeal No.832 of 2017

Date: 21-07-2023

Appearance:

For the Appellant/s: Smt. Archana Sinha @ Archana Shahi, Advocate

For the Respondent/s: Shri A.K.Rastogi, Sr. Advocate Shri Parijat Saurav, Advocate Ms. Smriti Singh, Advocate

Click Here To Read/ Download Order