S.K. Katriar, J.
1. Heard learned junior counsel to Additional Advocate General No. 7 and Mr. Lalit Kishore, learned Additional Advocate General No. 3 for the appellants, and Mr. L.N. Rastogi for the Department of Income Tax.
2. This matter has been coming up repeatedly before the Bench without much of result. Lands of indigent farmers are acquired under the provisions of the Land Acquisition Act. It is a common experience in the State of Bihar that the proceedings under the Act take an unduly long time. The State of Bihar takes over possession of the land and the land owner has to wait for many years for compensation. He is deprived of his primary for sole source of livelihood without payment of compensation for years and years, often times covering two decades or more. The State of Bihar quite often prefers trivial appeals before this Court where the valuation of the appeal ranges between Rs. 500/- to Rs. 25,000/- and beyond. Although the State Government issued a circular nearly three decades ,ago that it shall withdraw all its land acquisition appeals pending in the High Court up to the valuation of Rs. 25,000/-, which by necessary implication also means that appeals up to that valuation shall not be filed. The first part is implemented with hiccups. and the second part remains unnoticed. In other words, the State of Bihar does not itself take any step to withdraw such pending appeals and the Court has to take steps to ensure that such appeals stand withdrawn, fresh appeals up to the valuation of Rs. 25,000/- continue to be filed. The result is that the poor farmer, who has been deprived of his source of livelihood, is harassed no end, and the Court is burdened with most unwanted litigations on account of such delayed payment of compensation, accrues which is cumulatively liable, to tax under Section 194A of the Income Tax Act Most of these land owners are indigent persons and can never be income tax payees, but for the accumulation of interest for circumstances beyond their control. While making payment of the amount of compensation, the Collector of the district relies on the circulars issued by the Income Tax Department that income tax on such accumulated interest has to be deducted at source. The aforesaid vital aspects of the matter do not seem to have been taken into account while issuing these circulars. I am aghast at the heartless and unrealistic answer of the Department during the earlier stages of the present proceedings that he can always claim refund. The Board must remind itself that most of such landowners are living in a State of abject poverty. Many of them are in a state of human existence that, if they meet each other in the second half of the lay. they do not greet each other by saving. How are you'. They instead say 'Have you taken food'. One bland, coarse meal a day is a luxury for them.
3. This Court had, therefore, desired the Board of Direct Taxes to consider the issue relating to TDS with respect to the accumulated interest and take appropriate remedial measures. The Department has placed before me the inter-departmental communication dated 20.3.2006, wherein the issue has been disposed of by the following resolution of the Board:
The issue of interest on delayed payment of compensation on compulsory acquisition of land whether interest is to be staggered over the years to which it pertained for the purposes of TDS was discussed. The Board is of the opinion that provisions of Section 194A is very clear and it does not allow staggering of interest over the years to which it pertained for the purpose of TDS. Therefore, the Affidavit filed by the officers of CCIT, Patna , before Patna High Court has to be modified and the correct position of scheme of tax deduction at source has to be brought to the notice of the High Court. At sane time it should be clarified that the CBDT has never contemplated issuing any circular to this effect as stated in the said Affidavit.
4. It appears to me that the matter needs the Board's reconsideration in view of the following aspects of the matter:
(i) Section 119 of the Income Tax Act 1961, inter alia, provides that the Board may. from time to time, issue such orders. instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act.
(ii) The Supreme Court in its judgment reported in Income Tax Reports [Vol. 224] 1997, page 551 (Bikram Singh and Ors. v. land Acquisition Collector and Ors.), has held as follows:
However, the appellants were entitled to spread over the income for the period for which payment came to be made, so as to compute the income for assessing tax for the relevant amounting year.
(iii) The following observations occur in the celebrated commentary of Kanga and Palkhivala and Vyas on 'The Law and Practice of Income Tax'. Volume-II, Ninth Edition, page 1639: -.the Supreme Court. while exhaustively reviewing its earlier judgments, reiterated that such circulars would be binding on the income-tax authorities even if they deviate from the provisions of the Act [33) so long as they seek to mitigate the rigour of a particular section for the benefit of the assessee (34).
(33) Keshavji Ravji v. CIT 183 ITR 1, 17(SC): CIT v. Sriram : [1986]161ITR302(Patna) : CIT v. Punalur : [1988]170ITR37(Ker) : Sriram v. CIT : [1993]199ITR579(Cal) : CIT v. Aspinwall : [1993]204ITR225(Ker) : CIT v. Abdul : UTI v. PK Unny 249 ITR 612. Of Dadamchand v. CIT 222 ITR 433: State Bank of Travancore v. CIT 158 ITR 102 (SC): Venugopala v. ITO : [1997]227ITR164(AP) : Banque Nationale v. CIT : [1999]237ITR518(Bom) .
(34) Sec : [1999]237ITR889(SC) . PP 1317-1327.
(iv) Article 144 of the Constitution of India provides as follows:
144. Civil and judicial authorities to act in aid of the Supreme Court.- All . authorities. civil and judicial, in the territory of India shall act in aid of the Supreme Court.
5. It thus appears to me that the entire matter needs reconsideration of the Board of Direct Taxes to consider the possibility/ desirability , of issuing an appropriate circular in terms of Section 119 of the Act, under the circumstances indicated hereinabove, and such other relevant factors, to mitigate the rigours of the. provisions of, TDS with respect to accumulated interest on. the amount of compensation determined under the Act. The Board may also, in the alternative and as a last resort, consider the desirability of recommending to the appropriate Ministry, suitable amendment in the Income Tax Act to achieve the object and suppress the mischief.
6. (I) I had in my earlier orders brought to the notice of the Board that the person deducting the tax at source does not very often issue any certificate at all to the person concerned/the assessee, let alone issuing the same in the prescribed proforma, exposing the latter to the risk of payment of tax twice.
(II) Cases are not unknown where such person deducts the tax at source, does not account for the same and does not deposit the same in the Government Treasury, which exposes the assessee to the risk of payment of tax twice.
(III) The amount of Income Tax paid in excess to the department is not refunded.
7. The Department has in its earlier affidavits stated that remedial measures have been taken. The Court entertains serious doubts about their proper and effective implementation. It should receive full attention of the authorities under the Act including the Board to strengthen its efforts to remedy the situation. It also needs regular monitoring.
8. Put up after six months. Let the Department place on record its affidavit within the same period bringing on record the steps taken in this connection.
9. Let copies of this order be handed over to learned Additional Advocate General Nos. 3 and 7, and Mr. L.N. Rastogi, learned Senior Standing Counsel for the Department of Income Tax.