Supreme Court rejects Kingfisher’s plea challenging Rs 372 Cr TDS demand. A case study

I have written a couple of articles about Kingfisher defaults to bankers and income tax department. In continuation of Kingfisher saga, here is the update.

The Beginning

It was started with Income Tax Department conducting a survey u/s 133A of I T Act, on the premises of Kingfisher Airlines. During the course of survey the department noticed from the records available in the premises that they have deducted tax at source and failed to remit the same to the Government account for the financial years 2009-10, 2010-11 and 2011-12 to the tune of Rs.400,56,08,659/- (Four hundred crores fifty six lakhs eight thousand six hundred fifty nine only). The company, its principal officer and the authorized representatives admitted the liability of TDS and failed to pay the same.

The Order by the Assessing Offer

A quick recap of the sequence of things happened –

• The Assessing Officer passed an order on 30.12.2011 under Section 201(1) and 201(1-A) of the I.T. Act treating the company as an assessee in default and levied interest for not remitting the TDS within the stipulated time and raised a demand.

• The company being aggrieved by the order of assessing authority preferred an appeal before the Commissioner (Appeals) and the same came to be dismissed vide order dated 29.02.2012 confirming the order of assessing Officer

• Then the company filed second appeal before the Income Tax Appellate Tribunal (for short ITAT), Bangalore. The ITAT vide order dated 25.05.2012 allowed the appeal filed by the company, set aside the order of assessing officer and the Commissioner of appeals and remanded the matter back to the assessing officer for reconsideration in accordance with law after providing an opportunity to the company.

• The Income Tax Department being aggrieved by the order of remand passed by the ITAT approached Karnataka High Court. This Court granted in interim order subject to the company depositing 50% of the demand

High Court Order

The Judgment went in favor of Income Tax department. The Court said It is open for the department to proceed against the company, its directors or any other principal officer or officers responsible for default

Appeal Plea at Supreme Court

The aggrieved company approached Supreme Court against the order of Karnataka High Court. Now Supreme Court verdict is also out! The Supreme Court has dismissed the plea of Kingfisher Airlines Ltd against an order of the Karnataka High Court asking it to pay the TDS amount due to the Income Tax department. The apex court said there was no “legal and valid” ground for interference in High court’s order and dismissed the appeal of the airlines

Thought for the day

You can delay but you can’t deny. Time discovers truth.

Also Read :

• Tax Default by Kingfisher Airlines – Case Study Part I
• Tax Default by Kingfisher Airlines – case study Part II
• Loan to Kingfisher Airlines case study – Banker is clean bowled for no ball
• Kingfisher may fly free leaving bankers at the Airport Terminal

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