By TIOL News Service

MUMBAI, JAN 17, 2018: THE issue is - Whether when the court finds that the assessee has not truly disclosed all the material facts in the case and now wants to withdraw the soiled petition, liberty to file fresh petition can only be granted if the Revenue is compensated for suffering costs on account of the assessee's mistake. YES is the answer.

Facts of the case

The Assessee, the Indian subsidiary of the UK-based Vodafone Group, is engaged in providing telecommunications services. The Assessee had filed the present Writ challenging the order passed by the Deputy Commissioner of Income Tax (TDS) wherein, the certificate dated 24th May, 2017 issued for lower deduction of tax at 0.39% for the period 22nd May, 2017 to 31st March, 2018 u/s 197 was cancelled.

In Writ, the High Court held that,

++ no hearing was given, no mention of meeting the Revenue with regard to these proceedings is even mentioned. This Court is not impressed by the submission on behalf of the Assessee that even the said order does not mention grant of any personal hearing to the Assessee. This does not absolve the Assessee from stating all the facts fully and truly. Including the fact that a hearing (howsoever inadequate) was given to the Assessee. This fact of hearing being granted is now admitted even by the Assessee after the note-sheet is produced. The affidavit dated 11th December, 2017 of the Assessee, however also does not make any attempt to explain the use of the word “No personal hearing whatsoever was granted”;

++ the order in question cancels a Certificate dated 24th May, 2017 which has a limited life as it expires on 31st March, 2018. Therefore, if the said Certificate dated 24th May, 2017 is cancelled without hearing then the most likely result in Court would be to set aside the said order and restore it for fresh consideration to Revenue. This re-adjudication would take some time. Therefore, ipso facto the earlier Certificate dated 24th May, 2017 resulting in the withholding tax be paid at 0.39% would be revived till fresh orders after hearing is passed u/s 197;

++ it is the responsibility of the Assessee to ensure that every material statement of fact stated in the petition as filed is correct and there is no suppression of material fact relating to the proceedings. The facts are only known to the Assessee and therefore, his obligation to ensure that facts are correctly represented in the petition. The only thing in support of the Assessee is that when the suppression is seen in the context of the fact, it is clear that at no time did the Assessee seek to obtain any ad interim / interim relief on the basis of said averment without notice to the other side, it could be suggestive of a mistake;

++ this Court has examined the orders passed from time to time, from the 6th November, 2017 onwards, when this petition was first moved and at no time did the Assessee seek any relief without notice to the other side. Therefore, the suppression may have been on account of mistake as it is unlikely to be made deliberately as it would stand exposed on the other side having notice of the same. Admittedly, the Assessee in this case, has always moved the Court after notice to the Revenue;

++ the Assessee's prayer to withdraw the petition is allowed. However, the liberty as sought by the Assessee to file a fresh petition cannot, in these facts, be unconditional because the Assessee has not come with clean hands i.e. petition is soiled. It seems most likely in view of the course of the conduct after filing of the petition that the suppression of material fact was a mistake. This Court does not want a party to suffer on account of what appears to be a mistake. The benefit of doubt is given to the Assessee in this case and would expect the Assessee to be more careful in future. Therefore, the liberty to file a fresh petition is granted on payment of cost of Rs.75,000/- to be paid to “Zonal Account Office, CBDT, Mumbai” as a condition precedent for filing a fresh petition challenging the order dated 11th October, 2017 of the Revenue.

(See 2018-TIOL-102-HC-MUM-IT)