TaxTMI 
TaxTMI 
2012 (9) TMI 400
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....er's application for issue of No-Deduction Certificate filed on 22.06.2009 followed by two reminders dated 04.09.2009 and 25.02.2010 for 14 months and pushing it to beyond the financial years 2009-10 and ultimately rejecting the same on 13.08.2010 in spite of the direction of this Court in its order dated 09.07.2010 to issue No- Deduction Certificate under Section 197 of the Act, 1961 within a period of four weeks from the date of the order as deliberate and illegal. 2. Petitioner's case in a nutshell is that it is a non-profit making organization, involved in the general public utility to ensure payment of wages of the labourers as well as their welfare, without involvement in any activity of trade, commerce or business. Petitioner's Trust was created under the recommendation of Justice H.R. Khanna, Former Judge, Supreme Court of India to smoothen the process of payment to labourers engaged by stevedores. Stevedores under the Paradeep Port for cargo handling were engaging group of labourers, on their own choice, on pick and choose basis, for which few group of labourers, were getting constant engagement and other were remaining completely unemployed. That apart, stevedores having....
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....e Tax Appellate Tribunal, Cuttack Bench, Cuttack that resulted in NIL demand for both the years. For the year in question, petitioner's application for grant of No-Deduction Certificate under Section 197 was processed and in response to the further query made by opposite party No.1, the petitioner filed the copies of last two years audited accounts and copy of the last assessment order on 04.09.2009. After receipt of the compliance, the concerned section lost the original application somewhere in the office, as a result of which the petitioner again had to file another copy along with all the enclosures on 25.02.2010 accompanied with a request to dispose of the application of the petitioner at an early date. Since no-deduction certificate was not issued in terms of Section 197(1) of the Act, 1961, an informal complaint was filed before the Commissioner of Income Tax but the same did not yield any result. In sheer, desperation, the petitioner was forced to invoke the extra ordinary jurisdiction of this Court by filing W.P.(C) No.5458 of 2010 praying inter alia for issuance of No-Deduction Certificate under the Statutory provision of the Act. The said writ petition was disposed of on....
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....ome without delay. The certificates issued by the Income-tax officers could be reviewed by them once in three years. 6. The petitioner has made application for issuance of nodeduction certificate 9 months prior to expiry of the financial year 2009- 10 i.e. on 22.06.2009. The ground of opposite party No.1 that nodeduction certificate can not be issued due to lapse of time is the deliberate action and delay on the part of opposite party Nos.1 to 3 who did not dispose of the application within a reasonable time. When an assessee files an application for issuance of No-Deduction Certificate, statutory duty is cast upon the I.T. Department to issue the certificate within a reasonable period/statutory limitation period which has not been done in the case of the petitioner. The action of the opposite parties in sitting over the matter is tainted with ulterior intention of the opposite parties as a whole and opposite party No.1 in particular, in defrauding the present petitioner by denying the statutory benefits permissible to him under the Act. The opposite parties with mala fide intention denied to statutory benefits to the petitioner which is nothing but gross dereliction of duties imp....
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....llegation of the petitioner that there is deliberate inaction on the part of the opposite parties is not correct. The petitioner is not affected in case any legal action is taken against the principal of the petitioner. Since huge demand was outstanding against the assessee, no short/no deduction certificate could be issued to the assessee and the petitioner had not taken any steps for payment of the arrears outstanding. Therefore, the application for short/no deduction certificate could be issued to the assessee. 8. On the rival, legal and factual contentions advanced by the parties, the following questions fall for consideration by this Court :- (i) Whether order dated 13.08.2010 (Annexure-1) passed by opposite party no.1-ITO (TDS) rejecting the application of the petitioner made in Form 13 of the I.T. Rules on 22.06.2009 for issuance of certificate under Section 197 of the Act for the financial year 2009-10 is sustainable in law ? (ii) Whether validity of the impugned order can be justified by assigning fresh reasons by way of counter affidavit other than that is mentioned in the impugned order? 9. Since, both the questions are interlinked, they are dealt with together. Und....
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.... date of hearing on 09.07.2010 the Department has not taken any ground that there was any outstanding dues against the assessee-petitioner for the financial year 2009-10 for which no certificate under Section 197 could be issued for that assessment year. 10. Thus, one of the reasons for not issuing the short deduction/no deduction certificate under section 197 of the Act to the petitioner was that there was letter of the Assessing Officer dated 25.03.2010 reporting opposite party No.1-ITO(TDS) that an amount of Rs.27,36,625/- for the assessment year 2004-05 and Rs.4,62,13,909/- for the year 2005-06 was outstanding against the assessee. Unfortunately, such a reason is not at all correct because as on 25.03.2010 no dues 4was outstanding against the petitioner-assessee. The demand raised for the assessment years 2004-05 and 2005-06 was nullified by the Tribunal vide its order dated 11th February, 2010 passed in I.T.A. No.191 & 192/CTK/2009 i.e. much before issuance of letter dated 22nd/25.03.2010. Copy of the Tribunal order was produced before this Court in course of hearing. 11. In view of the above, the Assessing Officer could have issued short deduction/no-deduction certificate u....
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....year 2009-10. On that date, learned Standing Counsel appearing on behalf of the Department could have taken a stand that no certificate under Section 197 of the Act could be issued after closure of the financial year in question. It appears that such a stand was not taken by learned Standing Counsel appearing for the Department on 09.07.2010. On the contrary, the Department has agreed before this Court to issue certificate on previous occasions, but by the impugned order, the Department refused to issue the certificate on the ground that the financial year in question is over. If that be the cause, it is not understood why the Department agreed before this Court to consider the petitioner's application made under Section 197 for grant of no-deduction certificate under Section 197 of the Act. Obviously the action of the Department are not bona fide and does not speak well of its attitude. 15. The mala fides are writ large because new grounds supporting the rejection order taken in the counter affidavit. The rejection order passed under Annexure-1 cannot be supported by any other grounds or reasons other than what is mentioned in the order. 16. Law is also well settled that validit....