9911796707
TMI Blog2014 (7) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... hese are all factual issues and there is no reason why the respondent-Officer should hesitate or shy from enquiring into this issue - When the Statute creates liability, there has to be a fact finding on the issue - Though the assessee has not produced the certificate from the accountant with respect to the income of the recipient, it is hard to accept that benefit of the provision will not be available to the assessee - there has to be a realistic assessment of the fact situation and in that any material information regarding filing of returns/ payment of tax by recipient furnished by the petitioner should receive consideration. The officer should have examined the truth or otherwise of the statement made by the petitioner that the recipient of the amount had filed its returns for tax assessment - Had the assessee been given an opportunity of personal hearing as sought for, a realistic assessment could have been done – the order of assessment has no reference to the information furnished by the assessee regarding filing of returns by the recipient of the amount nor does it contend any opinion as to why such statement of the assessee was not considered. The order passed by the auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counts and other documents maintained by the petitioner and has also recorded his observation. Later, by letter dated 24.2.2014 respondent asked the petitioner why petitioner should not be considered as an assessee in default by the notice Annexure-D. The petitioner claims to have filed detailed submission on 10.3.2014 explaining in detail that the petitioner is not liable for deduction of TDS under Section 194(c)of the Act for the payment made to the developers and thus cannot be described as an assessee in default. The explanation so submitted is Annexure-E. 5. The respondent, on receipt of Annexure- E has proceeded to pass the order on 11.3.2014 determining the tax liability as indicated therein chargeable under 201(1) and for default imposed the default invoking provision 201A of the Act. Notice under Section 156 of the Act was given to the petitioner but allowing only seven days time to reply for the payment of the amounts so demanded. The grievance of the petitioner is that even the said demand notice under Section 156 of the Act has curtailed the benefit of 30 days which the petitioner has to appeal against the said order. 6. The petitioner asserts that through a letter da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction when manifest legality is noticed in exercise of power by assessing officer and denial of opportunity to contest which is prerequisite meet the ends of justice. 11. Besides the above grounds, the petitioner has described the steps taken by the authority as harsh and unjustified in freezing the bank account of the petitioner paralyzing its day today functions resulting in incompensatable hardship to the workers of the company who could not be paid salary. 12. On behalf of revenue, Sri.K.V.Aravind, learned standing counsel has raised objection regarding maintainability of this Writ Petition on the ground that the petitioner has an alternative and efficacious remedy of appeal as provided under provision of Section 246 of the Income Tax Act. He drew my attention to the provision which undoubtedly envisages that any assessee or any deductor aggrieved by any of the following orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals). He would then refer to provision under Section 251 of the Act to show that the appeal remedy is not only efficacious but also alternate remedy. However, the grievance of the petitioner is that Section 251 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary circumstance may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or procedure required for decision has not been adopted." 16. The learned counsel would again refer to the decision of the Apex Court in the case of M/s. Hindustan Coco Cola Bevarage Pvt. Ltd. Vs. Commissioner of Income Tax, where the Apex Court dealing with action under Sections 201 and 201(1A) of the Act observes referring to the defence against order under Section 201 thus, "Be that as it may, the circular No. 275/201/95- IT(B) dated 29.1.1997 issued by the Central Board of Direct Taxes, in our considered opinion, should put an end to the controversy. The circular declares "no demand visualized under Section 201 (1) of the Income- tax Act should be enforced after the tax deductor has satisfied the officer-in-charge of TDS, that taxes due have been paid by the deductee-assessee. However, this will not alter the liability to charge interest under Section 201 (1A) of the Act till the date of payment of taxes by the deductee-assessee or the liability for penalty under Section 271C of the Incometax Act." 17. He would also refer to the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is questioned. In other words, learned counsel submits, the Officers invoked jurisdiction to pass order under Section 201(c) of the Act without determining whether the petitioner is liable to pay TDS under Section 201 of the Act. He has no jurisdiction to pass any consequential order like the order of assessment or attachment. 22. In negation of these grounds, Sri K.V.Aravind, learned Standing counsel submits the proviso would make it clear that the petitioner can avail the benefit of proviso only if the petitioner produces the certificate from the Accountant of the recipient before the Assessing Officer that the recipient of the amount paid by the petitioner has filed his returns and paid tax on the ground of tax liability so determined. He submits the petitioner has not produced such documents. Therefore, the submission of returns by the resident named in the Statute who is the recipient does not give immunity to the petitioner as provided by the proviso to Section 201 of the Act. Thus, he contends petitioner is liable to deduct TDS under Section 201 of the Act which it failed and thus the petitioner is liable for further action for imposing liability under Section 201(1)(a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbers. There is an observation that the petitioner has not furnished the reply as on 21.2.2014 necessitating issuance of show cause notice on 24.2.2014. The filing of detailed submission by the assessee on 7.3.2014 is clearly documented in the assessment order. Necessarily, the officer had to take into account the grounds so urged while proceeding to declare, the petitioner as "assessee in default'. 27. At this juncture, I am satisfied that though the petitioner had submitted a submission note, the same has not been considered by the respondent with reference to the survey conducted under Section 133 of the Act nor he has referred to the documents produced by the petitioner. There is no dispute, the petitioner has produced information about the filing of returns by the recipient of the amount from the Society and thus, petitioner rightly opposed action. 28. In this context the proviso gains importance. Section 201 of the Act no doubt requires, where any person, including the principal officer of a company,- (a) who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (1A) of Section 192, being an employer, does not ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to the contractors. The officer should have examined the truth or otherwise of the statement made by the petitioner that the recipient of the amount had filed its returns for tax assessment. Had the petitioner been given an opportunity of personal hearing as sought for, a realistic assessment could have been done. The object of the Act could have been achieved if the respondent had given due opportunity to the petitioner to substantiate its defense. The impugned order of assessment has no reference to the information furnished by the petitioner regarding filing of returns by the recipient of the amount nor does it contend any opinion as to why such statement of the petitioner was not considered. 33. I am satisfied, the grievance of the petitioner is justified. The order passed by the authority is an order without granting due opportunity to the petitioner which has resulted in treating the petitioner as assessee in default. Consequent to such opinion of the Officer, the petitioner has been saddled with not only the tax liability but even penalty. The officer has also proceeded in haste to resort to coercive steps to freeze the bank account to paralyze its function. The manner i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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