9911796707
TMI Blog2005 (10) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... tutional validity of section 143(1)(a) of the Income-tax Act, 1961 ("the Act" for short) is challenged in this petition, the learned counsel for the petitioners has given up the issue relating to the constitutional validity and has restricted his arguments to challenge the intimation issued under section 143(1)(a) of the Act dated May 28, 1990, for the assessment year 1989-90, rectification order dated February 5, 1991, passed under section 154 of the Act rectifying the intimation dated May 28, 1990, and the intimation under section 143(1) (a) of the Act dated March 27, 1991, for the assessment year 1990-91. The facts relevant for the present petition are as follows: During the financial year 1988-89 relevant to the assessment year 1989-90, two companies, namely, LML Fibres Ltd. and Prkati Synthetics Ltd. had paid interest due to petitioner No. 1 company (hereinafter referred to as "the assessee") after deducting tax at source (TDS) as per the provisions of the Act. LML Fibres Ltd. had deducted TDS amount of Rs. 89,39,431 and Prkati Synthetics Ltd. had deducted TDS amount of Rs. 9,92,324. The said two companies failed to deposit the aforesaid TDS amount with the Income-tax Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed by the assessee as is evident from the TDS certificates issued by the two companies. It was further stated that since the TDS amount was not paid to the Central Government, the credit for TDS could not be given and consequently interest granted under section 244A of the Act would also have to be withdrawn. The assessee objected to the withdrawal of the credit of TDS and the interest granted under section 244A of the Act. It was contended that the said two companies had paid the TDS amount to the Income-tax Department within the time allowed by this court and under section 205 of the Act the income-tax authorities cannot demand the TDS amounts from the assessee for the failure of the two companies which deducted the TDS, to pay the TDS amount to the Central Government. Accordingly, it was submitted that the credit for the TDS amount with interest granted under section 244A of the Act cannot be withdrawn. Rejecting the contention of the assessee the Assessing Officer passed the impugned rectification order under section 154 of the Act on February 5, 1991, thereby withdrawing the credit of TDS to the extent of Rs. 49,65,878 as well as the interest amount of Rs. 8,77,438 gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firstly, the liability to deposit the amount deducted as TDS was on the two companies and for their failure to deposit the amount in the Government treasury the assessee cannot be penalised. Secondly, on acceptance of the loss return filed by the assessee, tax paid by the assessee including the TDS amount becomes legally due to the assessee. Thirdly, on the date of intimation issued under section 143(1)(a) of the Act, the TDS amount was in fact deposited into the treasury by the two companies and therefore, withdrawal of the TDS amount by initiating rectification proceedings under section 154 of the Act was wholly improper. Counsel for the assessee submitted that for the same reason withdrawal of the interest granted under section 244A of the Act was also unjustified. Mr. Mistry further submitted that it is well established in law by the decision of this court in the case of A.N. Shaikh v. Suresh B. Jain [1987] 165 ITR 86 that adjustment of refund against any outstanding demand cannot be made under section 245 of the Act without giving previous intimation to the assessee in writing. In the present case, the intimation in writing for adjustment of the demand for the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return for the assessment year 1989-90 and, therefore, credit for the TDS amount could not be given in the intimation dated August 25, 1990. Since the credit for the TDS amount was erroneously given, the Assessing Officer was justified in rectifying the error by passing an order under section 154 of the Act. Relying upon the decision of the Gauhati High Court in the case of Asst. CIT v. Om Prakash Gattani [2000] 242 ITR 638 counsel for the Revenue submitted that mere deduction of tax would not amount to total discharge of tax liability and the credit for the tax deducted can be given only if the amount is paid to the Central Government. Therefore, in the present case, as the TDS was not deposited on the date of filing the return, withdrawal of the credit for the TDS amount was justified and the consequent withdrawal of interest granted under section 244A was also justified. With reference to the levy of additional tax under section 143(1A) of the Act, counsel for the Revenue submitted that since the processed income was more than the returned income, the levy of additional tax in the assessment years in question was justified. We have carefully considered the rival submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to file the return of income within the stipulated time would have rendered the assessee liable for penalty. Since the TDS amount was deducted from the income of the assessee in the relevant financial year, the assessee was justified in computing its total income by taking into account the TDS amount deducted from its income. On processing the return of income, the Assessing Officer decided to accept the loss return filed by the assessee. Since the TDS amount claimed was already paid to the Central Government, the Assessing Officer was justified in giving credit for the said TDS amount. Therefore, withdrawal of the credit for the TDS amount given to the assessee on the ground that the said amount was not paid to the Central Government on the date of the filing of the return cannot be sustained. Heavy reliance was placed by the counsel for Revenue on the decision of the Guahati High Court in the case of Om Prakash Gattani [2000] 242 ITR 638. That decision, in our opinion, is wholly distinguishable on facts. In that case, even though the TDS was not paid to the Central Government, the assessee therein was claiming credit for the TDS amount and the Revenue on the other hand wante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-90, but the same was dismissed in view of the pendency of this writ petition. Now, we take up the dispute regarding the levy of additional tax under section 143(1A) of the Act. In the intimation for the assessment year 1989-90 the Assessing Officer has made addition of Rs. 1,34,119 as additional tax under section 143(1A). From the adjustment sheet annexed to the intimation, it appears that the Assessing Officer sought to make disallowance of Rs. 12,77,320 and on the said disallowance, additional tax under section 143(1A) at the rate of 20 per cent, has been computed at Rs. 1,34,119. As rightly submitted by counsel for the assessee, the said disallowance of Rs. 12,77,320 contained in the adjustment sheet has not been taken into account while computing the total income of the assessee. If the amount sought to be disallowed itself is not taken into account while computing the total income, then, the question of levying the additional tax on the amount of disallowance does not arise at all. Therefore, the addition of Rs. 1,34,119 as additional tax made in the intimation dated August 25, 1990, is without any basis and the same is liable to be deleted. As regards the addition of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
