Punjab and Sind Bank v. Addl. Commissioner of Income Tax-TDS

1. This matter came up before us for the first time on 05.01.2023, when after hearing learned counsel for the parties, we had, broadly, etched out the controversy in the matter. For the sake of convenience, the relevant part of the said order is extracted hereafter:

5. We may also note that insofar as the AY in issue is concerned i.e., AY 2005-06, an order dated 30.03.2013 was passed under Section 154 of the Act, whereby the original demand raised against the petitioner-bank amounting to Rs.1,36,04,250/- was reduced to Rs.50,89,894/-. The petitioner-bank, it appears, did not seek even the enforcement of this order for all these years.

6. Although the petitioner-bank has slept over its rights, we are prima facie of the view that since public money is involved, and because both the petitioner-bank and the NOIDA fall in the category of entities which deal with public funds, the respondents/revenue could consider repaying the money to the petitioner-bank for onward transmission to NOIDA.

7. We may note that the NOIDA has been following up the matter, despite which, the petitioner-bank did not act with alacrity. Given this position, NOIDA may have a case for recovering the interest from petitionerbank if we were to grant the relief, as sought in the writ petition.

8. However, insofar as this writ action is concerned, our remit is limited to the relief sought by the petitioner-bank, which as noted above, is for issuance of a direction to quash the order dated 28.02.2013.”

2. Thereafter, the matter was taken up on 27.01.2023, when further time was sought on behalf of the respondent/revenue, to take instructions in the matter. 2.[1] A request for accommodation was once again made on behalf of the respondent/revenue on 13.04.2023.

3. Mr Aseem Chawla, learned senior standing counsel, who appears on behalf of the respondent/revenue, says that says that he has been assigned the matter recently, and that he will argue the matter based on the record present available to the court. 3.[1] In other words, according to Mr Chawla, counter-affidavit on facts will not add anything to the matter. 3.[2] It is Mr Chawla’s contention that the petitioner bank approached this court after an enormous delay, something that we have already observed on 05.01.2023 and, therefore, is guilty of delay and laches.

4. Mr Salil Kapoor, who appears on behalf of the petitioner bank, informs us that the petitioner bank was a party to the judgment rendered by the Supreme Court in Commissioner of Income Tax (TDS) Kanpur and Anr. vs Canara Bank, (2018) 9 SCC 322.

5. It is Mr Kapoor’s contention that the judgment dealt with a bunch of matters, including the petitioner bank’s action. 5.[1] Furthermore, Mr Kapoor says that in that bunch, the petitioner bank had agitated the very same issue, albeit qua AY 2011-12. This aspect has already been noted by us, as would be evident from the extract set forth, i.e., paragraphs 2.[2] and 2.3, of the order dated 05.01.2023.

6. Mr Chawla, however, qua the legal issue, (which is that the petitioner bank was not required to deduct tax at source on payments towards interest made to NOIDA with regard to fixed deposits created by them), cannot but accept that the issue is covered against the respondent/revenue, in view of the decision of the Supreme Court in Commissioner of Income Tax (TDS) Kanpur and Anr. vs Canara Bank. 6.[1] Therefore, insofar as the instant writ action is concerned, the entire defence of the respondent/revenue is founded on delay and laches.

7. We would have perhaps accepted this plea, advanced by Mr Chawla, had it not been the case that the entity which is out of pocket (i.e., NOIDA) is an instrumentality of the State, and in a sense, is blameless.