2007 (6) TMI 141 - HC - Income Tax

TDS Assessee unable to provide details regarding payment of TDS for the AY is in question and accordingly interest imposed by the Jt. Commissioner but after few days assessee providing details to AO - HC rejected the order of lower authority and remand matter to AO for considering afresh

Summary

Issues:
1. Interpretation of Section 201(1A) of the Income Tax Act, 1961 regarding the levy of interest without a specific limitation period.
2. Whether the failure to produce evidence of tax deducted at source (TDS) in a timely manner justifies the levy of interest under Section 201(1A).
3. Consideration of evidence produced by the assessee after the initial orders by lower authorities.

Analysis:
1. The case involved an appeal under Section 260A of the Income Tax Act, 1961 concerning the levy of interest under Section 201(1A). The substantial question of law was whether the Tribunal was justified in holding that the levy of interest under Section 201(1A) was not subject to any limitation. The assessee, a Private Limited Company, had filed a return of income for the assessment year 1985-86, claiming a loss. The dispute arose when the authorities levied interest under Section 201(1A) for failure to remit TDS on interest and salary. The Tribunal confirmed the order, leading to the present appeal.

2. The assessee contended that the absence of a specific limitation period in Section 201(1A) did not entitle the revenue authorities to initiate action at any time. The counsel argued that although the tax amount was paid, the evidence was not produced before the authorities due to reasons like strikes. Subsequently, evidence of payment was produced, but not during the initial proceedings. The Revenue, however, argued that the assessee failed to remit the TDS amount and did not provide payment details despite multiple opportunities. The Revenue maintained that the levy of interest was justified under Section 201(1A) due to the default.

3. Upon hearing both parties, the Court noted that although the evidence was not initially filed, the TDS amount was paid by the assessee. The delay in producing details was attributed to external factors. The assessee eventually submitted evidence of payment, confirmed by the bank, after the initial orders. The Court emphasized the importance of considering such evidence to prevent double taxation and financial hardship to the assessee. Consequently, the Court set aside the Tribunal's order and directed the Assessing Authority to reconsider the matter, allowing the assessee to present further evidence and cooperate with the Department for a prompt resolution.

In conclusion, the judgment highlighted the significance of considering evidence of TDS payment, even if not initially presented, to ensure fair treatment of the assessee and prevent undue financial burden.