1997 (2) TMI 182 - AT - Income Tax

Assessing Officer Assessing Officer Assessment Year Assessment Year Tax At Source Tax At Source

Issues Involved:
1. Jurisdiction of the Assessing Officer at Chandrapur to levy interest under section 201(1A).
2. Definition and designation of the "principal officer" under section 2(35) of the Income-tax Act, 1961.
3. Compliance with section 194A and the consequences of shortfall in tax deduction at source.
4. Interpretation of rule 37(2A) and section 285 regarding filing statements and returns.

Detailed Analysis:

1. Jurisdiction of the Assessing Officer at Chandrapur to levy interest under section 201(1A):

The primary issue was whether the Assessing Officer (AO) at Chandrapur had the jurisdiction to levy interest under section 201(1A) of the Income-tax Act, 1961. The learned CIT(Appeals) held that the AO at Chandrapur had no jurisdiction to levy the interest because the Maharashtra State Electricity Board (M.S.E.B.) was assessed in Mumbai. However, the Tribunal found that the Superintending Engineer, who was responsible for deducting and depositing the tax, was located in Chandrapur. The Tribunal emphasized that the person responsible for paying interest and making deductions should be assessed by the AO having jurisdiction over him, which in this case was the AO at Chandrapur.

2. Definition and designation of the "principal officer" under section 2(35) of the Income-tax Act, 1961:

The Tribunal examined whether the Superintending Engineer of M.S.E.B. could be considered a "principal officer" under section 2(35). According to the section, a principal officer includes the secretary, treasurer, manager, or agent of the authority or company. The Tribunal concluded that the Superintending Engineer, being an agent responsible for making payments and deductions, falls under the definition of a principal officer. The Tribunal rejected the argument that a notice should have been served to designate the Superintending Engineer as the principal officer, as he was already acting in that capacity.

3. Compliance with section 194A and the consequences of shortfall in tax deduction at source:

The case involved a shortfall in tax deduction at source, where the M.S.E.B. deducted only 10% instead of the required 20%. The Tribunal agreed with the CIT(Appeals) that there was non-compliance with section 194A, resulting in a shortfall and delay in tax payment. Consequently, interest under section 201(1A) was leviable due to the short deduction and delayed payment of tax.

4. Interpretation of rule 37(2A) and section 285 regarding filing statements and returns:

The Tribunal analyzed rule 37(2A) and section 285 to determine who should file statements and returns. Rule 37(2A) requires the person making the deduction to file a statement with the AO having jurisdiction to assess him. Section 285, prior to its omission, also required the person responsible for paying interest to file returns with the AO having jurisdiction to assess him. The Tribunal interpreted "him" to mean the Superintending Engineer at Chandrapur, not the M.S.E.B. as a whole. Therefore, the AO at Chandrapur had the jurisdiction to assess the Superintending Engineer and levy interest under section 201(1A).

Conclusion:

The Tribunal held that the AO at Chandrapur was the competent authority to levy interest under section 201(1A) on the assessee. The appeal by the revenue was allowed, establishing that the Superintending Engineer, as a principal officer, was responsible for the shortfall and delay in tax deduction and payment, and the AO at Chandrapur had the jurisdiction to assess and levy the interest.

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