TMI Blog2013 (9) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... rkmen was not to be included for calculating their taxable salaries. Consequently, the assessee obtained declarations from its employees that the amount received by the staff was actually spent on coming to office from residence and vice-versa, which were furnished to the revenue authorities during the course of proceedings - Inference can be drawn that advice came from the Income tax officer(TDS) from the letter written by the assessee-company to the said Income-tax Officer on 29th January, 1993 – Thus, action of the assessee, in not deducting tax at source from conveyance allowance paid to its workmen, was based on bonafide belief – Decided in favor of Assessee. - Income Tax Appeal No.-44 of 2002 - - - Dated:- 4-9-2013 - Hon'ble Sunil Ambwani And Hon'ble Surya Prakash Kesarwani,JJ. For the Appellant : A. N. Mahajan For the Respondent : R.S. Agrawal, Sujeet Kumar ORDER 1. We have heard Shri R.K. Upadhyay, learned counsel appearing for the appellant. Shri Rupesh Jain and Shri R.S. Agrawal appear for the respondent-assessee. 2. This Income Tax Appeal under Section 260-A of the Income Tax Act arises from an order of Income Tax Appellate Tribunal, Delhi Bench "C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance was not taxable. No written intimation was issued by ITO (TDS). The letter of the assessee dated 29.1.1993 addressed to the Income Tax Officer, Saharanpur referring to the discussions held with him, could not be relied upon in proof of any such information or assurance given to the assessee that the conveyance allowance was not liable to be included for the purpose of deduction of tax at source. 6. The ITAT, allowed the appeal. It accepted the explanation of the assessee to be bonafide and recorded its findings as follows:- "10. We have considered the rival submissions in the light of the material placed before us and precedents relied upon. The brief question that falls for our adjudication is as to whether the assessee-company should be deemed to be the assessee in default in terms of Section 201 (1) and consequently liable to interest under Section 201 (1A) or not. Section 192 (1) of the Act makes employer responsible for deducting tax at source from salary paid to its employees by estimating the income chargeable under the head "salaries" at average rate of income-tax. Sub section (3) of the same section stipulates that the person responsible for making deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn from the letter written by the assessee-company to the said Income-tax Officer on 29th January, 1993 in this regard. This shows that the action of the assessee, in not deducting tax at source from conveyance allowance paid to its workmen, was based on bonafide belief. This, in our opinion, fulfills the conditions as specified in Section 192 read with section 200. Further our view is fortified by the decision of the Delhi High Court in the case of Nestle India Ltd (supra). Under these peculiar circumstances, we are satisfied that the assessee should not be treated as assessee in default in terms of section 201. With these observations, we confirm the section of the CIT (Appeals) in so far as it was decided in favour of the assessee and reverse the other part which was decided in favour of the revenue. 11. In the result, the assessee's appeal is allowed and that of the revenue's stand dismissed." 7. Shri R.K. Upadhyay appearing for the revenue submits that the assessee was deducting tax on the estimated income of the employees including the travelling allowance upto January, 1993. For a period of two months, the assessee stopped deducting the amount on the ground that he held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has actually been performed by the employees. The computation of taxable salary income was found to be in order with reference to deduction availed by the employees. Relying upon P.V. Rajgopal v. Union of India 233 ITR 678 (Andhra Pradesh) it was held that the assessee cannot be converted into an Income tax Officer or an adjudicating authority for estimating the income of its employees. The computation of taxable salary income under Section 192 means that the assessee must declare his claim with reference to Section 201 proviso he can say that he had to be sufficient reasons not to deduct tax at source in respect of any income to avoid imposition of penalty. Where the assessee had accepted claim of employees of having performed journey and allowed them the Leave Travel Concession and considered the same to be exempt from taxation as per Section 10 (5) read with Rule 2 (b) of the IT Rules and further that the assessee had no reason to suspect or doubt that the declaration given by the employees particularly when no specific details or format has been prescribed, the assessee could not be treated as assessee in default. The employer cannot be given responsibility of the adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X
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