Landmark Karnataka high court order on TDS defaults in Kingfisher case (Rav Fav) on i) Scope and ambit of first appellate authority vis a vis duty of assessee to place all material to counter AO's allegations ii) Competent authority to pass orders u/s 201 : regular TDS AO; iii) Tax Audit report data can be used to issue notices u/s 201 (read in light of amended clause 37(a),(b) and (c) in amended TAR) hold Kingfisher liable to pay outstanding TDS dues as admitted; four months given to reconciling Held ITAT grossly erred to upset CIT-A orders (detailed communication of vijay mallya reproduced in the orders)

[Kapil Goel]

 

Karnataka high court in Kingfisher Airlines case decided on 15/7/2014

 

i)            Basis of issuance of notice u/s 201 being tax audit report held valid: Issual of notice u/s 201 on basis of tax audit report information and disclosures is valid and assessee cannot contend that there is no basis and opportunity to rebut is not giving;

ii)          Competent Officer and Jurisdictional Issue: Held AO with whom regular TDS returns etc are filed is very much competent to launch proceedings u/s 201 and it is not DIT (Systems) which has the jurisdiction u/s 201(1) & 201(3);

iii)        Plea that natural justice is violated is held to be untenable as Assessee neither before AO nor before CIT-A took the said plea as it continued to harp on financial difficulties etc for payment of admitted dues etc;

iv)        The most crucial thing is that in this decision High court at length described the nature and scope of first appellate proceedings in income tax law which is unique and distinctive to other appellate authorities (earlier decision of MN Dastur of 14/7/2010 :analysed and explained)

v)          ITAT held completely misdirected itself to set aside the orders of lower authorities on alleged basis of lack of natural justice without examining the records

vi)        Four months time given to give appeal effect to high court order for computing final TDS demands