LAWS(BOM)-2004-3-197

BDA LTD Vs. INCOME-TAX OFFICER

Decided On March 08, 2004
Bda Ltd Appellant
V/S
INCOME -TAX OFFICER Respondents

JUDGEMENT

(1.) THESE are appeals by the assessee, M/s. BDA Limited, a public limited company incorporated under the Companies Act, 1956. It has a distillery at Aurangabad and purchases materials required for bottling and marketing the foreign made Indian liquor, including the printing and packing material. M/s. Mudranika, another establishment was supplying the printed labels to be wrapped on the bottles to the assessee. The Income -tax Officer (TDS) visited the factory premises of the assessee by exercising powers of survey under Section 133A of the Income -tax Act, 1961 ('the Act', for short), and served summons to produce books of account in relation to the TDS for the financial years 1995 -96 and 1996 -97 on October 8, 1997, and more particularly payments made to M/s. Mudranika, the supplier of printed material from whom printed labels were purchased. Notice of hearing was given on the same day and the date for the same was fixed as October 9, 1998, during the course of which the assessee submitted all the required documents along with books of account and denied the liability of TDS for the financial years 1995 -96 and 1996 -97 under Section 194C of the Act in respect of the printed labels purchased from M/s. Mudranika. It had contended that the transaction with M/s. Mudranika was a contract for sale and not works contract. However, the Income -tax. Officer confirmed the demand of Rs. 40,481 and Rs. 79,134 for the first and second year, respectively, under Section 201(1A) of the Act. By way of interest under Section 201(1) of the Act, a further amount of Rs. 11,132 for the first year and Rs. 9,892 for the second year was also sought to be recovered, thus making a total of Rs. 1,40,639 by order dated January 16, 1998. This order came to be challenged before the Commissioner of Income -tax (Appeals) ('the CIT(A)'), Nagpur, in Appeal No. CIT(A) -1/NAG/75/ABAD/1999 -2000, and it came to be dismissed vide his order dated April 4, 2000. It is pertinent to note that, a composite appeal was filed for both the financial years and it came to be decided accordingly. The assessee, therefore, filed one single appeal before the Income -tax Appellate Tribunal. There was no objection recorded by the office of the Tribunal in entertaining a single appeal and non -payment of court fees for both the years. However, the appeal came to be placed before the single Bench (judicial Member), who proceeded to decide the appeal only for the financial year 1995 -96, on the ground that, two separate sets for two financial years were not filed, and payment of fees for both years was not remitted. The Tribunal did not take cognizance of the appeal for the financial year 1996 -97, and, by its order dated May 31, 2002, dismissed the appeal only for the first year.

(2.) SUBSEQUENTLY , Miscellaneous Application No. 47/PN/2002 came to be filed, purportedly as an application for review of the order dated May 31, 2002. It was contended for the first time that, the single Bench did not have jurisdiction under Section 252(2) and (3) of the Act to decide the demand for the financial year 1995 -96 as the assessed income for the same year of the assessee was to the tune of Rs. 2,13,33,830. This application came to be rejected by order dated May 27, 2003, and the Tribunal noted that, in spite of several opportunities having been granted, none remained present before it for the assessee to argue the review application, and adjournments were sought from time to time without putting in counsel's appearance on behalf of the assessee. It was further observed that, when the appeal was submitted in Form No. 36, Column Nos. 3(A) and 3(B) were kept blank, thereby not declaring income or assessed income. A photocopy of the assessment order was sought to be brought on record, but without making any formal application for addition, which was prohibited as per Rule 29 of the Income -tax Appellate Tribunal Rules. The Tribunal also observed that, the point of jurisdiction was required to be raised when the appeal was being heard by the single Bench and it could not have been so done by way of a review application subsequently. The assessee had submitted to the jurisdiction of the Tribunal, and it was not entitled to object to the same after the appeal was dismissed. In this regard, the Tribunal relied upon the decision of the Rajasthan High Court in the case of Jaipur Udhyog Ltd. v. CIT .

(3.) SHRI Sharma, learned Counsel for the assessee, submitted that the supply of printed labels by M/s. Mudranika was based on a specific purchase order, which clearly stated that, the assessee was not responsible for supply of raw material, etc., and the printing work was required to be carried out by the supplier in its own premises with the help of its own machinery and labour as well as raw material. Though the purchase order had given specifications of the labels required, that by itself would not make the transaction works contract, more so because M/s. Mudranika was not a captive unit of the assessee and it was supplying similar labels to many other companies/establishments as per their respective specifications. However, the Tribunal, in disregard to the well settled legal position and by relying upon the departmental circulars dated March 8, 1994, August 2, 1995 and August 8, 1995, proceeded to hold that, the transaction was a works contract. On the point of jurisdiction, Shri Sharma submitted that, the appeal was initially listed before the Division Bench, but by an administrative order, it came to be placed before the single Bench. Even if the assessee had not taken objection at the initial stage to the jurisdiction of the single Bench, it was necessary for the Tribunal itself to verify whether the assessed income of the assessee for the relevant year was less than rupees five lakhs, and if the assessee had not by any chance declared its income while filing the appeal, it could have been called upon to declare the same on the basis of the assessment order passed by the Income -tax Officer. There was no bar in taking such an objection on jurisdiction in a review application, as, such an application would only amount to correction of an error apparent on the face of the record inasmuch as the order passed by the single Bench was required to be recalled and the appeal was required to be placed before the Division Bench. Along with the review application, the assessee had submitted a photocopy of the assessment order for the financial year 1995 -96, and therefore, even in the absence of the assessee's counsel, it was necessary for the Tribunal to decide the issue regarding jurisdiction. Payment of fees is a procedural technicality and if it was noticed by the Tribunal that separate fees for the second year was required to be remitted, the office objection could have been raised and the assessee could have removed such objections within the time period granted. No such objection was ever raised till the appeal was decided for only one year and it was ignored for the second year. Even when the review application was filed, the assessee could have been called upon to remove the office objections and the appeal for the second year could have been decided on the merits, urged learned Counsel for the assessee.