TMI Blog2001 (7) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... n the writ petition as has been made out by the writ petitioners is, inter alia, as follows: On February 22, 2000, several inspectors from the office of the joint Commissioner of Income-tax (TDS), Range-21, Calcutta, entered the office premises of the petitioner at 41, Chowringhee Road, Calcutta, and wanted to conduct a survey under section 133A of the Act regarding tax deducted at source matters. The said inspectors required the employees of the petitioners to produce some documents and books of account and the same were produced which were readily available. It has been further stated by the writ petitioners in the writ petition that on April 5, 2000, the petitioners received a summons issued under section 131(1) of the Act dated March 28, 2000, whereby respondent No. 1 required the petitioner to appear before her personally and to produce the documents as per enclosure to the said summons on April 12, 2000, at 12.30 p.m. The petitioner was required to appear before respondent No. 1. The writ petitioners in the writ petition as such prayed for a writ in the nature of mandamus commanding the respondents to cancel or rescind and/or withdraw the authorisation issued by respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is further submitted by Dr. Pal, appearing for the appellants, that the TDS officer, however, has issued the summons under section 131(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), alleging that the attendance of the appellant is required for the proceeding under the Income-tax Act and the appellant was therefore required to appear before her and to produce evidence/documents and the said summons under section 131(1) of the Act is the subject-matter of challenge in the writ petition. The broad question which has been raised in the instant appeal as contended or made through oral arguments and in the written submissions on behalf of the appellants are as follows: "(1) Whether respondent No. 1, viz., Assistant Commissioner of Income-tax, TDS, has at all any competence or jurisdiction to issue the summons under section 131(1) of the Act? (2) Whether, in any event, the said TDS officer has any authority to issue such notice under section 131(1) of the Act when no proceeding is pending before him at the time when such power under section 13 1(1) had been exercised by issuing the summons under section 131(1) of the Act?" In support of his contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It has been further submitted that Parliament has made a material distinction even in Chapter XVII-B between the officer before whom the TDS return is to be filed and the Assessing Officer who has the jurisdiction over the assessment of the person from whose income the tax is deducted to give the certificate of non-deduction or deduction at a lower rate of tax. He also cited the example of section 194J of the Act. He submitted that even under rule 36A(ii) a fundamental distinction has been made between the income-tax authority designated by the Chief Commissioner under rule 36A(i) and the Assessing Officer under rule 36A(ii). The Assessing Officer under rule 36A(ii) is not the designated income-tax authority. The Asses sing Officer is the officer who has the power and jurisdiction over the assessment of the person responsible for deducting the tax at source. This clearly shows that the prescribed authority is the authority who is competent to receive the return under section 206 and for the purpose of convenience he is merely designated by the Chief Commissioner or the Commissioner as the Assessing Officer, but he has no power or jurisdiction to assess either the income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that even assuming that the TDS officer by virtue of the aforesaid notification can exercise the power under section 131 of the Act, summons under section 131 can be issued only by an officer who has the power of assessment and who exercises quasi-judicial power while making an assessment. There must be proceedings pending before the TDS officer. In support of his contention, Dr. Pal has relied upon several decisions, namely, (1) Dwijendra Lal Brahmachari v. New Central Jute Mills Co. Ltd. [1978] 112 ITR 568 (Cal); (2) ITO v. James Joseph O' Gorman [1993] 204 ITR 454 (Cal); (3) Jamnadas Madhavji and Co. v. Panchal (J. B.), ITO [1986] 162 ITR 331 (Bom); (4) D. B. S. Financial Services Pvt. Ltd. v. George (M.) ITO (Second) [1994] 207 ITR 1077 (Bom) and (5) Rina Sen v. CIT [1999] 235 ITR 219 (Patna). Dr. Pal, to explain the definition of proceeding, has relied upon Stroud's Judicial Dictionary, volume 3, at pages 2309 to 2310. Black's Law Dictionary, sixth edition, Halsbury's law of England, volume 1 and the Shorter Oxford English Dictionary, volume 2. To explain the meaning of the word "proceeding", he has also relied upon the decisions reported in Brij Lal Suri v. St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the instant case there was a survey in the premises of the assessee and it was discovered that tax had not been deducted at source under section 194C of the Income-tax Act, 1961, for payment of about Rs.4.5 crores on account of specific printing and from payment of about Rs.137.64 crores to various parties for production of different items on behalf of the assessee and contract and from payment of rent over Rs.2 lakhs under section 194-I of the Act. A survey was conducted under section 133A of the Income-tax Act on an authorisation issued by the Joint Commissioner of Income-tax, Range 21(2), on February 22, 2000. The information gathered was passed on to the Assistant Commissioner of Income-tax, Circle 21(2), who had the jurisdiction over the case of the writ petitioners (appellants herein). The Assistant Commissioner of Income-tax, Circle 21(2), was receiving the annual return prescribed regarding tax deduction at source and she could charge interest under section 201(1A) and levy penalty under section 221 of the Income-tax Act, 1961, in case of default on the part of the assessee. Mr. Agarwal in this context relies on the definition of the term "assessee" as defined under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the effect that the officers of the companies shall submit a return in the prescribed form and manner with the prescribed particulars within the prescribed time before the prescribed income-tax authorities, and under section 2(33) of the Act, the term "prescribed" means prescribed by rules under this Act. Under rule 36A returns referred to in rules 37 and 37A shall be furnished to the Assessing Officer, so designated by the Chief Commissioner or Commissioner of Income-tax within whose area of jurisdiction the office of the persons responsible for deducting tax under Chapter XVII-B is situated as per clause (i) of the Rules. The annual returns in question were to be submitted to the Income-tax Officer having jurisdiction to assess the company concerned. Mr. Agarwal submits that the power to confer jurisdiction regarding submission and receipt of returns in respect of tax deducted at source is determined in terms of the rules framed by virtue of the power delegated duty cast by the Act itself in section 206. Mr. Agarwal also submits that rules are not under challenge to be ultra vires and after July 11, 1988, the Chief Commissioner and Commissioners have been authorized to delega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al returns is a sine qua non to ascertain defaults as regards deduction of tax at source, deposit of the tax to the credit of the Government account and deposit thereof within the prescribed time. Since the annual returns of the assessee herein are being submitted with the Assist ant Commissioner of Income-tax, Circle 21(2), she is the Assessing Officer concerned with the scrutiny thereof, issue of show-cause notices charging interest and levying penalty under the Act. Mr. Agarwal submits that earlier this power was with the Assessing Officer receiving the return of income who also used to receive the annual returns by virtue of the provisions of rule 37. With effect from July 12, 1988, when rule 36A was inserted in the Income-tax Rules, 1962, in cases where the Assessing Officer has been designated under clause (i) of rule 36A, the Assessing Officer so designated (Assistant Commissioner of Income-tax, Circle 21(2), in this case) and not the joint Commissioner, Special Range 4, is the authority concerned for the scrutiny of the annual returns. Mr. Agarwal then clarified the definition of "designate". He submitted that the word "designate" means give a specified position or a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e would like to refer to some decisions. In the case in Whirlpool Corporation v. Registrar of Trade Marks, AIR 1999 SC 22, the hon'ble Supreme Court observed as under: "The jurisdiction of the High Court in entertaining the writ petition under article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially, in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation." In Dr. Smt. Kuntesh Gupta v. Management of Hindu Kanya Mahavidyalaya, Sitapur, AIR 1987 SC 2186, the Supreme Court observed as under: "... alternative remedy is not an absolute bar to the maintainabilitv of a writ petition. When an authority was acted wholly without jurisdiction..." In Union of India v. Brij Fertitizers P. Ltd. [1993] 3 SCC 564, their Lordship observed: "That the petition once admitted and direction of filing affidavit given the plea of existence of alternative remedy cannot be taken at a subsequent stage". Thus it is now more or less the settled position of law that existence of alternative remedy is not an absolute bar to moving a wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and clause B under Chapter XVII deals with "deduction at source". Sections 206 and 206A of the Act provide as follows: "206. The prescribed person in the case of every office of Government, the principal officer in the case of every company, the prescribed person in the case of every local authority or other public body or association, every private employer and every other person responsible for deducting tax under the foregoing provisions of this Chapter shall within the prescribed time after the end of each financial year, prepare and deliver or cause to be delivered to the prescribed income-tax authority, such returns in such form and verified in such manner and setting forth such particulars as may be prescribed." From the above, it will appear that the principal officer in the case of every company shall within the prescribed time prepare and deliver or cause to be delivered to the prescribed income-tax authority such returns in such form and verified in such a manner and setting forth such particulars as may be prescribed. It is an admitted position that the petitioner company submitted returns before the Assistant Commissioner of Income tax, Circle 21(2), respondent N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l), a question arose as to whether the Assistant Commissioner of Income-tax that is the TDS officer has power or authority to levy penalty under section 221 of the Act and the Division Bench in the said case observed: "The Chief Commissioner has conferred power on the Assistant Commissioner of Income-tax (TDS), Circle 21(1), who has imposed penalty under section 221 of the Act, therefore, it cannot be said that the Assistant Commissioner of Income-tax (TDS) has no power to impose penalty under section 221 of the Act of 1961." In the above view, the contention of Dr. Pal that the Assistant Commissioner of Income-tax (TDS) is only the TDS return receiving authority fails. In this connection in the case reported in Calcutta Chromotype Pvt. Ltd. v. ITO [1971] 79 ITR 442 (Cal), it has been observed: (sic) In a recent decision reported in Peerless General Finance and Investment Co. Ltd. v. Assessing Officer [2001] 248 ITR 113 (All), it has been observed by the Division Bench of the Allahabad High Court: "Section 131 of the Income-tax Act, 1961, is a machinery provision and must be interpreted in a manner which makes the machinery work able and practicable." It has been ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of evidence, etc. The Assessing Officer under section 131 therefore has got the jurisdiction to call for the records or number of evidence or document or discovery as the civil court has got under the Code of Civil Procedure when trying a suit. Now under the same section 131, this Assessing Officer has been given power to impound books of account or other documents. This Assessing Officer has been given power to charge interest and to levv penalty. Now if Dr. Pal's contention is accepted then respondent No. 1 being the appropriate authority will have to convert herself into a rubber stamp authority and she will be entitled only to accept the return. That is neither the intention of the legislation nor the language of the provisions which has introduced rule 36A and section 206 and section 131 of the Act. The authority having power to charge interest and levy penalty on a particular return cannot be said to be an officer who is meant for the purpose of accepting only TDS return by giving rubber stamp. Now in this regard reliance may be placed on the decision reported in Assistant Collector of Central Excise v. National Tobacco Co. of India Ltd., AIR 1972 SC 2563, in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account or other documents as he may require and which may be avail able at such place, (ii) to afford him the necessary facility to check or verify the cash, stock or other valuable article or thing which may be found therein, and (iii) to furnish such information as he may require as to any matter which may be useful for, or relevant to, any proceeding under this Act." Sub-section (6) further provides: "(6) If a person under this section is required to afford facility to the income-tax authority to inspect books of account or other documents or to check or verify any cash, stock or other valuable article or thing or to furnish any information or to have his statement recorded either refuses or evades to do so, the income-tax authority shall have all the powers under sub-section (1) of section 131 for enforcing compliance with the requirement made," Under section 116 of the Act "income-tax authority" means a Commissioner, a joint Commissioner, a Director, a joint Director, an Assistant Director or Deputy Director or an Assessing Officer and for the purposes of clause (i) of section (1), clause (i) of sub-section (3) and sub-section (5), includes an Inspector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of the proceeding. "Proceeding" according to the Stroud's Judicial Dictionary, volume 3, means any proceeding is equivalent to any action and does not mean any step in ail action. "Proceeding" is obviously used as meaning a step in an action. Black's Law Dictionary, sixth edition, at page 1204, "proceeding " in a general sense means the form and manner of conducting juridical business before a court or judicial officer. Regular and orderly progress in form of law, including all possible steps in an action from its commencement to the execution of judgment. Halsbury's Laws of England, volume 1 page 5 para. 7, the term "proceeding" is frequently used to denote a step in an action, and obviously it has that meaning in such phrases as "proceeding in any cause or matter". When used alone, however, it is in certain statutes to be construed as synonymous with, or including, an action. The Shorter Oxford English Dictionary, volume 11, at page 1677, the instituting or carrying on of an action at law, a legal action or process, any act done by authority of a court of law, any step taken in cause by either party. A proceeding covers step in an action and is equivalent to an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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