2018 (7) TMI 1171 - HC - Income Tax

TDS liability on assessee society - rectification application filed as found that the Demand as per Traces for the Financial Year 2010-11 for the petitioner Mission amounts to ₹ 3,54,120 but, the respondent Income Tax department in the impugned order dated 27.3.2018 for the Financial Year 2010-11 have assessed an amount of ₹ 6,84,60,590/- which is almost double of the said amount which is still pending for disposal - Held that - The maintainability of this writ petition shall be considered at the time of its admission. Considering the impugned order issued by the Assistant Commissioner of Income Tax Act, TDS, Guwahati under Section 201(1)/201(A) of the Income Tax Act, 1961 against the petitioner and during the pendency of the application dated 11.4.2018 (Annexure-N to the writ petition) made by the petitioner Mission before the Income Tax Department regarding rectification of the mistake, the operation of said impugned order dated 27.3.2018 shall remain suspended till the returnable date, i.e. 19.6.2018.

Issues:
1. Tax deduction at source for payment made to a registered society under Section 12A(a) of the Income Tax Act, 1961.
2. Discrepancy in the assessed tax amount and the actual 'Demand as per Traces' leading to a request for rectification.
3. Challenge to the order of the Income Tax Department under Section 201 of the Income Tax Act, 1961 and seeking direction to set it aside.
4. Potential punitive action under Section 271(C) of the Income Tax Act, 1961 against the petitioner.
5. Requirement for the petitioner to prefer an appeal against the impugned decision of the Income Tax department.

Analysis:
1. The petitioner executed a memorandum of understanding with a registered society for providing emergency response services without deducting tax at source. The Income Tax Department issued a show cause notice for non-deduction of tax, which was defended by the petitioner citing the exemption of the society under Section 12A(a) of the Income Tax Act. However, the Income Tax authority rejected this contention and assessed a significant tax amount, including 'Demand as per Traces.' The petitioner sought rectification of the assessed amount, claiming a discrepancy in the figures.

2. The petitioner highlighted that the assessed tax amount was almost double the actual 'Demand as per Traces' for the relevant financial year. An application for rectification under Section 154 was submitted, pending disposal. The petitioner argued that the impugned order by the Income Tax Department did not align with the provisions of Section 201 of the Income Tax Act, 1961, emphasizing the need for a correct assessment.

3. The writ petition was filed seeking the setting aside of the order dated 27.3.2018 by the Income Tax Department under Section 201 of the Income Tax Act, 1961. The petitioner requested a reduction in the taxable amount and urged against initiating any punitive action under Section 271(C) of the Act. The petitioner aimed for a direction to rectify the discrepancies and ensure compliance with the relevant tax provisions.

4. The Income Tax Department contended that any challenge to their order or potential penal action required the petitioner to prefer an appeal as per the provisions of the Income Tax Act. The petitioner expressed intent to appeal against the decision, indicating the procedural step to be taken for addressing the disputed tax assessment and potential penalties.

5. The High Court directed the Income Tax Department to provide information on the rectification request made by the petitioner before the next hearing date. The operation of the impugned order was suspended until the court's further consideration, indicating a cautious approach towards the disputed tax assessment and the rectification process. The maintainability of the writ petition was to be assessed during its admission, ensuring procedural compliance in addressing the tax dispute.

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