2013 (8) TMI 10 - HC - Income Tax

Non-compliance of Section 194-B - TDS on Payment toward stake money - Assessee in default u/s 201(1) - Held that - respondent arrived at the said conclusion on appreciation of various factual aspects relating to petitioner's business activity and the documents furnished along with its explanation. Therefore, it is only for the appellate authority to determine on examination of the record and on appreciation of the documents produced by the petitioner, whether the respondent has exceeded its jurisdiction in holding the petitioner as a defaulter assessee. That being so, the error of jurisdiction which the respondent has allegedly committed in passing the impugned orders is not a mere error apparent on the face of the record which can be corrected under Article 226 of the Constitution of India - if aggrieved, the petitioner has to pursue the remedy of appeal available under the Statute, but they cannot straightaway invoke the jurisdiction of this Court under Article 226 of the Constitution of India - Decided against assessee.

Summary

Issues:
1. Assessment of the petitioner as an assessee in default under Sections 201(1) & 201(1A) of the Income-tax Act, 1961.
2. Contention of the petitioner regarding the legality and jurisdiction of the orders passed by the Deputy Commissioner of Income-Tax.
3. Availability of the remedy of appeal under Section 246A (1) (ha) before the Commissioner (Appeals) and its impact on the maintainability of the writ petitions.

Analysis:

1. The High Court dealt with the issue of the petitioner being assessed as an assessee in default under Sections 201(1) & 201(1A) of the Income-tax Act, 1961 for non-compliance with TDS provisions on payments made as stake money to horse owners. The petitioner contended that stake money payments are not subject to TDS under Section 194B and that the respondents' action was illegal. The Court noted that the respondent had issued show-cause notices and considered the petitioner's responses before passing the impugned orders. The Court emphasized that the appellate authority should determine if the respondent exceeded its jurisdiction, indicating that the error alleged was not correctable under Article 226 of the Constitution of India. The Court advised the petitioner to pursue the remedy of appeal available under the Statute.

2. The Court addressed the petitioner's argument regarding the legality and jurisdiction of the orders passed by the Deputy Commissioner of Income-Tax. The petitioner contended that Section 194B was erroneously invoked against them and, therefore, the impugned orders were without jurisdiction. The Court highlighted that the statutory power was allegedly misapplied but not lacking. It emphasized that the error of jurisdiction was not a correctable error under Article 226 of the Constitution of India. The Court suggested that the petitioner should follow the appeal process under the Statute instead of invoking the Court's jurisdiction directly.

3. The Court discussed the availability of the remedy of appeal under Section 246A (1) (ha) before the Commissioner (Appeals) and its impact on the maintainability of the writ petitions. The respondents argued that the writ petitions were not maintainable as the statutory remedy of appeal was available. The Court noted that provisions under the Income-tax Act allowed for safeguarding the assessee's interests during the appeal process. It mentioned that if the assessing officer did not consider the petitioner's request for protection during the appeal, a writ petition could be an option for redressal. However, the Court found that such a stage had not been reached in this case and, therefore, dismissed the writ petitions at the admission stage, advising the petitioner to pursue the appeal remedy available under the statute.