TMI Blog1978 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... O was of the view that the said remittances were income chargeable to tax. As the assessee had not deducted tax from the amounts remitted as required under s. 18(3B) of the Indian I.T. Act, 1922, which corresponds to s. 195(1) of the I.T. Act, 1961, the ITO by a letter dated 1st March, 1965, called upon the assessee under s. 201(1) of the I.T. Act, 1961, to pay within a week from the receipt of the said letter a sum of Rs. 87,59,815 being the amount of tax which should have been deducted and paid by the assessee. The assessee appealed against the said order of the ITO before the AAC of Income-tax, and contended that the assessee had no obligation to deduct taxes from the remittances which, though having an element of income or profit, did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all payments by the assssee were made prior to 9th February, 1963, and defaults were committed thereby. The order under s. 201(1) of the Act initiating recovery proceedings made on the 1st March, 1965, was thus clearly out of time. The Tribunal, therefore, confirmed the order of the AAC including that there was no payment by the assessee in the year 1963 and consequently no default in the assessment year 1964-65. Accordingly, all the appeals of the revenue were dismissed. The cross-objections and appeals of the assessee were held to be infructuous as the merits of the assessee's contentions had not been considered and the matters being decided on the question of limitation only. On the application of the CIT, this court directed the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and are headed " Advance payment of taxes ". (d) Sections 220 to 232 are in Part D and are headed " Collection and recovery " (e) Sections 233 and 234 are in Part E and are headed " Taxes payable on provisional assessment ". Mr. Pal submitted that s. 201 is not included in the part which related to collection and recovery, but is included in the part under " Deduction at source ". Mr. Pal submitted that s. 201, therefore, cannot be said to relate to recovery and the proceedings thereunder cannot be said to be recovery proceedings. Mr. Pal further submitted that the letter issued in the instant case under s. 201 was in the nature of a demand notice informing the recipient that its liability to tax has been quantified and called upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officers directing payments of sums of money by taxpayers which are of the nature of orders for payment of tax, but which are still not orders of assessment." (b) CIT v. Blackwood Hodge (India) P. Ltd. [1971] 81 ITR 807. In this case a Division Bench of this court considered the scope and effect of s. 18(7) of the Indian I.T. Act, 1922, which corresponds to s. 201 of the I.T. Act, 1961, and observed as follows : " Now, under section 18(7), the person responsible for deduction of tax and payment thereof, is deemed to be not merely an assessee but also an assessee in default. There are three well-known stages of imposition of tax, namely, (a) liability to pay tax; (b) computation of tax payable; and (c) recovery of tax. Keeping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, implied demand for payment of the same and non-compliance therewith, whereby the person liable to deduct the tax at source and to pay the same to the I.T. authorities automatically becomes an assessee in default in respect of the same under the deeming provision of the said section. There was no scope for any further action on the part of the ITO to make the person concerned an assessee in default under the said section. Dr. Pal contended further that from the facts found by the Tribunal it is clear that recovery proceedings as envisaged in the Act in those sections and s. 231 thereof had become barred by limitation. The letter dated 1st March, 1965, clearly recorded that action was being taken to recover the amount alleged to be due. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the present reference, however, the contention on behalf of the revenue is that the letter dated 1st March, 1965, is not a recovery proceeding at all, but it only quantifies the liability and calls upon the person specified in s. 200 of the Act to pay the taxes within the time specified 482 therein and only in case of his failure to do so he will be in default and recovery proceeding may be started thereafter. The relevant portion of s. 201(1) is as follows : " 201. Consequences of failure to deduct or pay.-(1) If any such person and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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