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TMI Blog2014 (9) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... itself liable to pay interest as provided in Section 201(1A) of the Act - the Income Tax Authority in spite of service of notice has not come forward to disclose why it has not taken any step against the Corporation – there was no substance in the contention that in this PIL, the Court should pass an order upon the Income Tax Authority to impose penalty – Income Tax Authority is directed to take immediate step against the Corporation for the non-compliances – Decided in favour of Petitioner. - Writ Petition (PIL) No. 159 of 2013 - - - Dated:- 5-9-2014 - CJ Mr. Bhaskar Bhattacharya And J. B. Pardiwala,JJ. For the Petitioner : Party-In-Person, Personal Capacity For the Respondent : Mr Maulik G Nanavati, Advocate JUDGMENT (Per : Honourable The Chief Justice Mr. Bhaskar Bhattacharya) By this Public Interest Litigation, the petitioner-in-person, a journalist of a Gujarati newspaper, has prayed for direction upon the Income Tax Authority to take appropriate steps, including levy of penalty and interest, upon the respondent No.1/the Municipal Commissioner, Vadodara Municipal Corporation, for non-compliance of the provisions contained in Section 194-I of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her assured this Court that the Corporation would henceforth deduct tax at source, as required under Section 194-I of the Income Tax Act on the rent paid by it for hiring of bulldozers from the Gujarat State Land Development Corporation Ltd. and would deposit the same in accordance with law. 4. The respondent No.2 has filed separate affidavit and has contended that the rent received by the respondent No.2 from the Corporation/the respondent No.1 has all been shown in the income tax returns filed by the respondent No.2 and there was also no default on the part of the respondent No.2 in paying income tax. The respondent No.2 has further stated that the respondent No.1 has started to deduct TDS from the payment made for the rent of bulldozers from 20th December 2013, although it has not deducted any TDS during the years 2001 to 2012 from payment made for the rent of bulldozers. 5. In spite of service of notice, curiously, the Income Tax Authority has not entered appearance and submitted its version for not taking any step against the respondent No.1 in spite of violation of the provisions contained in Section 194-I of the Income Tax Act. 6. The petitioner-in-person, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exceed one hundred and eighty thousand rupees : Provided further that an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such income by way of rent is credited or paid, shall be liable to deduct income-tax under this section. Explanation For the purposes of this section, - (i) rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any, (a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by the payee; (ii) where any income is credited to any account, whether called Suspense account or by any other name in the books of account of the person liable to pay such income, such crediting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dance with the provisions of sub-section (3) of section 200: Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident. Penalty payable when tax in default. 221. (1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of section 220, be liable, by way of penalty, to pay such amount as the Assessing Officer may direct, and in the case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so, however, that the total amount of penalty does not exceed the amount of tax in arrears : Provided that before levying any such penalty, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Authority has refused to exercise jurisdiction vested in it by law by taking no action against the Corporation/the respondent No.1 in spite of knowledge that there has not been deduction of the tax at source as provided in Section 194 I of the Act. In view of such fact, we direct the Income Tax Authority to take immediate step against the respondent No.1 as for inaction on the part of the Corporation it has brought itself to the position of a deemed assessee in default. It has also appeared that no interest as provided in Section 201(1A) of the Act has yet been paid by the respondent No.1. Therefore, there has been definite loss of revenue for the inaction on the part of the Municipal Authority as well as the Income Tax Authority. 13. We, therefore, dispose of this application by directing the Income Tax Authority to take note of the aforesaid default brought to our notice by the petitioner-in-person and to proceed in accordance with law. We make it clear that we have otherwise not gone into the question whether as to what extent the initiation of proceeding is barred by law of limitation or as to whether in this case the penal provision should be invoked against the res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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