2022 (9) TMI 42 - HC - Income Tax

Maintainability of appeal before High Court - Statutory remedy of appeal u/s 246 - TDS u/s 194J - penalty u/s 201 as petitioner-college having failed to deduct tax at source in regard to payment made by way of honorarium to Guest Faculty Lecturers - petitioner submits that in view of undisputed facts involved of the Guest Faculty Lecturers neither falling under technical service nor professional service as per Section 194J statutory remedy of appeal though available is not efficacious, and therefore, grievance raised herein can very well be adjudicated under Article 226 of the Constitution. HELD THAT - As having perused the material on record and the provisions of Section 194J of Act of 1961, this Court is of the considered view that to ascertain the real object and import of the relationship between petitioner-college and Guest Faculty Lecturers and as to whether Guest Faculty Lecturers on the anvil of Section 194J for the purpose of T.D.S., disputed questions of fact will have to be gone into. It is trite law that writ jurisdiction ought not to be exercised when disputed questions of fact are involved and the relevant statute provides for an alternative efficacious remedy. Petitioner has not availed the alternative efficacious statutory remedy of appeal u/s.246 of Act of 1961 before Commissioner (Appeals). This Court do not see any apparent jurisdictional error in the order of Assessing Authority (Annexure P/1), and therefore, none of the exceptions laid down in the decision of Apex Court in the case of Whirlpool Corporation vs. Registrar of Trademarks, Mumbai 1998 (10) TMI 510 - SUPREME COURT can come to the rescue of petitioner-college. Since an interim order was passed by this Court which continues to subsist till date, this Court grants 45 days time to petitioner-college to approach the Appellate Authority u/s 246 of Act of 1961 and till then the interim order passed by this Court on 02.08.2021 shall continue to subsists. It is made clear that continuance of interim order is made merely to enable the petitioner to approach the appropriate appellate Forum and not to prejudice the mind of Appellate Authority, who is free to adjudicate the appeal on admission as well as on interim relief without being influenced by this order.

Summary

Issues:
Petitions filed under Article 226 seeking quashment of penalty imposed under Section 201 of the Income-Tax Act, 1961 for failure to deduct tax at source in regard to payments made to Guest Faculty Lecturers for the assessment year 2017-18.

Analysis:
The main issue in this case revolves around the imposition of a penalty under Section 201 of the Income-Tax Act, 1961 on a government college for not deducting tax at source in payments to Guest Faculty Lecturers. The petitioner argues that the statutory remedy of appeal under Section 246 of the Act is not efficacious due to the nature of the services provided by the Guest Faculty Lecturers. The petitioner relies on a recent decision of the Supreme Court to support this argument.

On the other hand, the respondent argues that disputed questions of fact are involved in determining whether the relationship between the college and the Guest Faculty Lecturers satisfies the requirements of professional or technical services under Section 194J of the Income Tax Act. The respondent contends that such factual inquiries should be left to the fact-finding authority rather than being addressed in writ jurisdiction.

The High Court notes that writ jurisdiction should not be exercised when disputed questions of fact are involved, especially when an alternative statutory remedy of appeal is available. The Court emphasizes that the petitioner did not avail the statutory remedy of appeal before the Commissioner (Appeals) under Section 246 of the Income Tax Act. The Court finds no jurisdictional error in the Assessing Authority's order and concludes that exceptions laid down in previous case law do not apply in this situation.

Considering the interim order passed by the Court, the petitioner is granted 45 days to approach the Appellate Authority under Section 246 of the Act. The interim order will continue to subsist until then. However, it is clarified that the continuation of the interim order is solely to facilitate the petitioner's appeal process and should not influence the Appellate Authority's decision-making process. If no appeal is filed within the stipulated period, the Revenue is free to execute the impugned assessment order.

In conclusion, the petitions are disposed of with the observation that the petitioner should pursue the appropriate appellate forum within the given time frame, and the interim order is maintained to facilitate this process without prejudicing the Appellate Authority's decision-making independence.