2015 (2) TMI 1271 - HC - Income Tax

AO jurisdiction to demand the amount of tax not deducted at source by an order passed under sub-sections (1) and (1A) of Section 201 - Held that - Case of Hindustan Coca Cola Beverage (P.) Ltd. v. CIT 2007 (8) TMI 12 - SUPREME COURT OF INDIA is a complete answer to the submissions advanced stating the Circular No.275/201/95-IT)(B), dated 29-1-1997 declares no demand visualized under section 201(1) of the Income-tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under section 201(1A) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty under section 271C of the Income-tax Act Even otherwise, whether the payee has offered money for taxation; whether the payee has paid tax on that, is a defence which the appellant could have taken. If he takes the defence, it is for him to prove it. It cannot be suggested that it was the obligation of the assessing officer to first explore the possible defences and then to collect evidence in support thereof.

Summary

Issues:
Interpretation of provisions in Chapter XVIIB of the Income Tax Act regarding the jurisdiction of the Assessing Officer to demand tax not deducted at source.

Analysis:
The judgment in question pertains to an appeal challenging a previous decision by the Tribunal, where the assessing officer and the CIT(A) rejected the contention of the assessee. The primary issue revolves around the interpretation of the provisions contained in Chapter XVIIB of the Income Tax Act, specifically regarding the jurisdiction of the Assessing Officer to demand tax not deducted at the source. The question framed at the time of admission of the appeal focused on whether the Assessing Officer has the authority to demand tax not deducted at source by issuing an order under specific sections of the Act.

During the proceedings, the appellant's counsel argued that liability under Section 191 could not be imposed on the assessee unless it was established that the payee had failed to offer the received money for taxation and pay tax on it. The counsel referred to the explanation to Section 191 to support this argument. On the other hand, the revenue's advocate disputed this claim and cited a judgment in the case of Hindustan Coca Cola Beverage (P.) Ltd. v. CIT, emphasizing the importance of Circular No.275/201/95-IT)(B) issued by the Central Board of Direct Taxes. The circular clarified that no demand under Section 201(1) should be enforced if the tax deductor proves that the taxes due have been paid by the deductee-assessee.

The Court, after considering the arguments presented, relied on the judgment cited by the revenue's advocate as a comprehensive response to the appellant's submissions. The Court highlighted that whether the payee had offered the money for taxation and paid tax on it could be a valid defense for the appellant, but the burden of proof lies with the appellant to establish this defense. The Court emphasized that it was not the duty of the assessing officer to investigate potential defenses or gather evidence to support them. Consequently, the appeal was dismissed, and the question was answered in the affirmative, affirming the decision of the Tribunal and the CIT(A).