2020 (9) TMI 925 - HC - Income Tax

Payment of tax collectable at source u/s 206C - Maintainability of Writ petition - applicability of section 206C to a contract of settlement of Balu Ghats? - whether TCS cannot be recovered from the petitioner? - as contented mechanism provided under Section 206(c) of the Income Tax Act would be unavailable to recover of the amount - HELD THAT - All these contentions can be raised by the petitioner, in fact already stands raised vide representation dated 14.3.2008 (Annexure-8), which is still pending consideration before the authority. No reason to interfere with the impugned notice dated 18.04.2009 (Annexure-11), more so from the return filed by the petitioner, it does not appear as to whether, and if any, amount of component of TCS was deposited by the petitioner. Also as contended that only for the year in question the issue is pending, as for the subsequent period petitioner has already deposited the amount - issues raised before us are left open to be considered by the appropriate authority which in the instant case is the Assistant Director who issued notice dated 8.04.2009. We are not in agreement with the submission made that the Assistant Director has already prejudged the issue inasmuch as he has asked the petitioner to pay the amount by way of a Demand Draft - impugned notice cannot be read in such a manner. The Officer has to adjudicate the amount only after hearing the parties and affording adequate opportunity of filing reply and substantial compliance of principles of natural justice. The officer has only asked the petitioner to deposit the amount, through a Bank Draft, which is due and payable in accordance with law. In any event we clarify that the amount mentioned in the notice be not construed to be determination of the sum due and payable by the petitioner. We direct the petitioner to appear before the Assistant Director on 5th October, 2020.

Summary

Issues:
1. Validity of notice directing payment of tax collectable at source under Section 206C of the Income Tax Act, 1961.
2. Applicability of Section 206C of the Income Tax Act to a contract of settlement of Balu Ghats.
3. Interpretation of Section 206C regarding the point of application for tax collection.
4. Authority of the Mining Officer to raise a demand of Tax Collection at Source (TCS) for transactions in the financial years 2007-09.

Analysis:

1. The petitioner sought relief to quash the notice dated 18.04.2009 for tax collection under Section 206C of the Income Tax Act. The counsel referred to relevant judgments and argued that the Mining Officer lacked jurisdiction to demand TCS for transactions in 2007-09. The court noted that the petitioner's contentions were already raised in a pending representation before the authority. As the petitioner's return did not indicate TCS deposit, the court declined to interfere with the notice.

2. The petitioner also requested a declaration that Section 206C does not apply to a contract of settlement of Balu Ghats. The court did not address this issue directly but emphasized that the pending representations should be considered by the Assistant Director who issued the notice. The court directed the petitioner to provide additional material in support of the representation for further adjudication.

3. Another declaration sought was regarding the application of Section 206C only at the point of debiting amounts payable. The court did not delve into this issue but clarified that the Assistant Director must hear both parties, allowing the petitioner to present material and ensuring compliance with natural justice principles before determining the payable amount.

4. The authority of the Mining Officer to demand TCS for transactions in 2007-09 was contested. The court instructed the Assistant Director to hear the parties, consider the pending representations, and pass an appropriate order within two months. The court stressed the need for cooperation and directed the conclusion of all proceedings positively within the specified timeframe, even through virtual means if necessary.

In conclusion, the court disposed of the petition, directing the petitioner to appear before the Assistant Director for further proceedings and emphasizing the need for a fair adjudication process, cooperation, and timely resolution of the matter related to TCS demands for transactions in the years 2007-09.