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TMI Blog2017 (10) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer cannot treat the deductor that is, the present assessee as assessee-in-default. The proceedings u/s 201(1)/201(1A) has not been validly initiated and therefore, the impugned order u/s 201(1) read with section 201(1A) is bad in law and same is quashed. In the result the appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 38,064 This information was obtained by the Assessing Officer u/s 133(6) and without issuing any show cause notice and any proceeding been conducted in the cases of deductee-assessees had treated the assessee as assessee-in-default. The Assessing Officer relying upon the CBDT's circular no. 715 dated 8.8.1995, held that the assessee should have deducted tax at source on the interest at the time of deposits and the Flexi Fixed Deposit Scheme is a kind of time deposit and therefore, the assessee was liable for tax u/s 201(1) read with section 194(A). 3. This mater in the original proceedings had travelled up to the stage of the Tribunal, wherein, Tribunal vide order dated 2.2.2007, at the first instance dismissed the assessee's appeal for want of COD approval. However, later on, in the Miscellaneous Application filed by the assessee the said order was recalled and in the final order the Tribunal had set aside the order of the Learned CIT(Appeals) for all the three years and restored the same to the file of the Assessing Officer for fresh adjudication after providing reasonable opportunity to the assessee to lead the evidence to effect that, whether the payees have suffered tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levied. 7. We have heard both the parties and also perused the relevant materials on record. First of all, from the perusal of the impugned order, it is seen that the Learned CIT (Appeals) has held that the appeal of the assessee is not maintainable as there is a delay in filing of the appeal but at the same time he has proceeded to decide the appeal on merits. Once the appeal is dismissed on account of delay then there was no occasion or point to decide the appeal on merits and if the appeal has been decided on merits, this inter alia can be inferred that the Learned CIT (Appeals) has condoned the delay as he has not only entertained the appeal but also gone ahead to decide the appeal on merits on which the assessee has denied the liability for tax. Thus, we will confine ourselves on the findings of the Learned CIT (Appeals) on the merits. 8. Here in this case, on the perusal of the order of the Assessing Officer as well as the Learned CIT(Appeals), nowhere it is borne out, how the Assessing Officer had satisfied himself as to whether the deductee/payee has failed to pay taxes directly. It is only when a finding is arrived in the case of the deductee/payee that he has failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts wherein the Tribunal has observed and held as under:- "Though the impugned order of the AO is after the direction of ITAT, we take note that Hon'ble jurisdictional High Court (Allahabad High Court) has settled the law, in respect to the issue before us in the case of M/s. Jagran Prakashan Ltd. vs. DCIT - 345 ITR 288 (All) held as under:- "……..it is dear that deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly. In the present case, the Income Tax Authorities had not adverted to the Explanation to section 191 nor had applied their mind as to whether the assessee has also failed to pay such tax directly. Thus, to declare a deductor, who failed to deduct the tax at source as an assessee in default, condition precedent is that assessee has also failed to pay tax directly. The fact that assessee has failed to pay tax directly is thus, foundational and jurisdictional fact and only after finding that assessee has failed to pay tax directly, deductor can be deemed to be an assessee in default in respect of such tax………" The law in respect of initiation of proceedings u/s 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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