2014 (11) TMI 1064 - HC - Income Tax

High Court sets aside Tribunal order on section 194J interpretation due to violation of natural justice

The Commissioner of Income-tax, Versus M/s. Wifi Networks Pvt. Ltd.

The High Court addressed the appeal challenging the Tribunal's order regarding the interpretation of section 194J. The Court found that the Tribunal's ... TDS u/s 194J - whether the payment in question does not attract section 194J as credit is given to the account of the payee by virtue of oral agreement dated 01.06.2006 without examining the existence such oral agreement and recorded a perverse finding - Held that:- we are of the view that the order passed by the Tribunal is not proper. It violates principles of natural justice. The Tribunal has a jurisdiction to decide the appeals on the ground which are not urged by both the parties. But the parties should be given an opportunity to have their say. In that view of the matter, we deem it proper to set aside the order impugned herein and remand back the matter to the Tribunal and Tribunal shall consider the appeals on the ground urged by the assessee as well as the additional ground the Tribunal found relevant to decide the appeals after recording the finding on both the grounds the appeal may be disposed of on merits in accordance with law. That would meet ends of justice. Issues:- Appeal challenging Tribunal's order- Interpretation of section 194J- Violation of principles of natural justiceAppeal challenging Tribunal's order:The High Court addressed the appeal filed by the Revenue challenging the Tribunal's order. The appeals involved the same assessee and were considered together. The primary issue was whether the Tribunal was justified in its decision regarding a payment not attracting section 194J due to an oral agreement. The Revenue argued that the Tribunal's decision was based on a ground not raised by the assessee, violating principles of natural justice. The assessee contended that the ground they raised was not considered, and if the court wanted to decide on a different ground, it should be based on the orders passed by the lower authorities.Interpretation of section 194J:The Revenue contended that the Tribunal's decision was based on a ground not previously raised by the parties, leading to a violation of natural justice. The High Court agreed, stating that while the Tribunal could consider different grounds, both parties should have the opportunity to present their arguments. As a result, the Court set aside the Tribunal's order and remanded the matter back to the Tribunal. The Tribunal was instructed to consider the appeals based on the grounds raised by the assessee and any additional grounds deemed relevant, ensuring that findings were recorded on all grounds before making a decision. This approach was deemed necessary to uphold the principles of natural justice and ensure a just outcome.Violation of principles of natural justice:The High Court concluded that the Tribunal's decision violated principles of natural justice as both parties were not given the opportunity to present their arguments on the grounds considered by the Tribunal. By setting aside the order and remanding the matter back to the Tribunal, the Court aimed to rectify this violation and ensure that both parties had a fair chance to have their say. The decision to remand the matter back to the Tribunal was made in the interest of justice to allow for a comprehensive consideration of all relevant grounds and a proper disposal of the appeals in accordance with the law.