TMI Blog2001 (5) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... iness, the petitioner from time to time issued debentures. The petitioner has to deduct income-tax at source from the payment made to the various persons and creditors including shareholders and debenture holders under sections 194, 194A, 194C, 194-1, 194J and 200. The petitioner has to file returns. To pay interest against the aforesaid debentures the petitioner has to deduct tax on interest which is paid on debentures where the amount of such payment exceeds Rs. 2,500. After deduction the petitioner filed Form No. 25 with respondent No. 1. Similarly, the petitioner is required to deduct tax under section 194 of the Act where payment of dividend exceeds Rs. 2,500. The aforesaid deduction of tax is made under section 194 of the Incometax Act wherever it is applicable and the same is paid under section 200 of the Act and Form No. 26 duly filed with respondent No. 1. Section 115-0 was introduced by the Finance Act, 1997, with effect from June 1, 1997. In view of the aforesaid section, the petitioner was no longer required to deduct any tax from and out of the dividend or to file any Form No. 26 with effect from June 1, 1997. Similar deduction was made in the case of payment to 'the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apter XVII of the Incometax Act, headings "A", "B", "BB", and "C" do not contemplate any proceeding in respect of the prescribed returns filed under section 206 of the Income-tax Act before the prescribed income-tax authority. Section 4(2) of the Income-tax Act read with sections 190 and 191 thereof makes it abundantly clear that the liability is of the assessee, namely, the payee, to pay the tax and not the payer. The payer is only assisting to realise tax by one of the modes of realisation, namely, TDS. Chapter XVII heading "B" merely requires the payer to deduct tax, deposit the same under section 200, issue certificates to the payee under section 203 and file prescribed returns before the prescribed income-tax authorities under section 206 of the Income-tax Act. Neither Chapter XVII B nor the rules authorise the prescribed income-tax authority to make any investigation and/or enquiry in respect of the prescribed returns under section 206 of the Income-tax Act for the very obvious reasons that the tax which they have paid for which they filed the prescribed returns to their prescribed income-tax authority is not their tax but of the payee whose particulars and/or information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision like the above sections. All these Assessing Officers referred to in the above sections can only be the Assessing Officers of the payee and not the payer. These provisions clearly go to show that the Legislature is not only aware of but maintains the difference between the Assessing Officers and the prescribed income-tax authorities by using dual expressions. Section 203A of the Income-tax Act requires tax deduction account number to be obtained by the payer from the Assessing Officers unless the function of allotment of tax deduction account number under section 203A of the Income-tax Act has been assigned by the Chief Commissioner or Commissioner to any particular Assessing Officer as will be evident from rule 114A of the Income-tax Rules. Here again a clear distinction has been maintained between the prescribed income-tax authority under section 206 of the Income-tax Act and the Assessing Officer of the payer having jurisdiction under section 120 of the Income-tax Act. Therefore, Chapter XVII-B requires the prescribed returns to be filed before the prescribed income-tax authorities under section 206 of the Income-tax Act and not to the Assessing Officer. Chapter XVI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x, Range 2 1, Calcutta, passed on the information to the Assistant Commissioner of Income-tax, TDS Circle 21(2), Calcutta, who is the prescribed income-tax authority for receiving annual returns under section 206 of the Income-tax Act by virtue of the orders passed by the Chief Commissioner of Income-tax under section 120 of the Income-tax Act, read with rule 36A of the Income-tax Rules, 1962, in respect of the writ petitioner. The writ petition was directed against showcause notice dated April 5, 2000, calling upon the writ petitioner to explain the failure of the writ petitioner to deduct tax at source as noticed in the course of the survey. He contends that the writ petition is liable to be dismissed at the threshold, as a writ does not lie against a show-cause notice as held in the case of Indo Asahi Gloss Co. v. ITO [1996] 222 ITR 534 (Cal). In the case of B. K. Saha and Bras. Pvt. Ltd. v. ITO [1989] 180 ITR 293 (Cal), a writ against a notice under section 131 was rejected on similar ground. He further contends that the authority concerned in this case may charge interest under section 201(1A) or impose penalty under section 221 of the Income-tax Act, if the company is foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer" does not mean only an Officer concerned with the assessment of the income. Under section 2(7A) of the Income-tax Act an "Assessing Officer" means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act, and the joint Commissioner or joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act. He contends that the Chief Commissioner, who has passed the order under rule 36A, had the jurisdiction to pass this order by virtue of the jurisdiction assigned to him under section 120. In the circumstances, it cannot be said that the Assistant Commissioner of Income-tax, TDS Circle 21(2), is not the "Assessing Officer" or that the Central Board of Direct Taxes and the Chief Commissioners of Income-tax do not have the power to pass orders to confer relevant jurisdiction on the income-tax authorities oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... islative intent and purpose and then adopt a rule of construction which effectuates rather than the one that may defeat these. Having heard the respective contentions of the learned lawyers the points involved in this case, which require consideration of this court are(i) whether respondent No. 1 being "the prescribed income-tax authority" who is empowered to receive returns of collection of tax deducted at source has any authority and/or jurisdiction either under the Act itself or by delegated power to make survey under section 133A of the Income-tax Act or to issue summons for production of documents and books under section 131 of the said Act, and (ii) whether conferment of jurisdiction b y the Board as well as the Chief Commissioner of Income-tax is lawful and valid or not. In this case, on the allegation of failure to deduct tax at source under sections 194C and 194-I, the aforesaid enquiry and/or survey have been undertaken treating the writ petitioners to be a defaulter assessee within the meaning of section 201 of the said Act. It is the settled position of law as has been rightly argued by Mr. Agarwal that ordinarily issuance of the summons and notice as aforesaid is ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure to collect or pay tax will be applicable. Here is a question on the allegation of default in deducting taxes by the writ petitioner, whether for the purpose of recovery thereof treating the petitioners to be an assessee in defaults survey enquiry as provided Linder sections. 131 and 133A can be resorted to by the prescribed income-tax authority under section 206 or not. Mr. Pal wants me to be persuaded that survey and issuance of summons as provided under sections 131 and 133A can be resorted to only in case where income-tax authority proceeds under Chapter XIV for regular assessment. His further contention is that the petitioner is not an assessee under and/or is subjected to jurisdiction of respondent No. 1. who is only empowered to collect returns under section 206. Mr. Pal also wants to draw a distinction between the definition of the prescribed income-tax authorities as mentioned in section 206 and in the income-tax authorities as mentioned in section 139 of the said Act. I am unable to accept the contention of Mr. Pal that the procedure as laid down in sections 131 and 133A is meant for and/or can only be resorted to only in the case of proceedings under Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board not otherwise. So power of allocation of business under the scheme of the Income-tax Act has been exclusively vested upon the Board and this will be clear from sections 119 and 120 of the said Act. So it is necessary for this case to reproduce section 120 of the Act. "120. Jurisdiction of income-tax authorities.-(1) Income-tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by or under this Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities. (2) The directions of the Board under sub-section (1) may authorise any other income-tax authorities to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income-tax authorities who are subordinate to it. (3) In issuing the directions or orders referred to in sub-sections (1) and (2), the Board or other income-tax authority authorised by it niay have regard to any one or more of the following criteria, namely (a) territorial area ; (b) persons or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Official Gazette, direct that for the purpose of furnishing of the return of income or the doing of any other act or thing under this Act or any rule made thereunder by any person or class of persons, the incometax, authority exercising and performing the powers and fictions in relation to the said person or class of persons shall be such authority as m ay be specified in the notification." It appears from the aforesaid section 120 that the Board cannot confer jurisdiction whimsically or arbitrarily, and it is to be done within the guidelines mentioned in sub-section (3). It also appears from sub-section (6) that the Board can give directions for the purpose of, amongst others doing any other act or thing under this Act or any rule made thereunder by any person or class of persons, the income-tax authority exercising and performing the powers and functions in relation to the said person or class of persons shall be such authority as may be specified in the notification. The import of these words "doing any other act or thing" is, to my mind, of wide amplitude, however, not the extent beyond scope and purport of the Act itself. So it is clear that "any act or thing" means to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been issued under section 120 of the Income-tax Act. The circulars have been issued in terms of the provisions of the aforesaid Act and it is not contrary to any of the provisions of the Income-tax Act. So the authorities cited by Mr. Pal, viz., Kerala Financial Corporation v. CIT [1994] 210 ITR 129 (SC) ; State Bank of Travancore v. CIT [ 1986] 158 ITR 102 (SC) and Indo-Gulf Fertilizers and Chemicals Corporation Ltd. v. Union of India [1992] 195 ITR 485 (All), have no manner of application. As far as the decisions of this court cited by Mr. Pal reported in CIT v. Blackwood Hodge (India) P. Ltd. [1971] 81 ITR 807 and CIT v. Dunlop Rubber Co. (India) Ltd. [1980] 121 ITR 476, are concerned, the same were rendered on a different issue and there is no dispute about the law laid down by this court. In this case the question is whether any Income-tax Officer including the prescribed income-tax authority under section 201 can be conferred with any power or jurisdiction or not. Therefore, the aforesaid two decisions of this court have no manner of application. Conferment of jurisdiction emanates from section 120 not from section 206 of the Income-tax Act. and the Board has exercised its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visualise exclusion of applicability thereof if the situation so arises. Therefore, I hold that both the aforesaid two circulars are lawful and valid. Consequently, I hold respondent No. 1 as well as the other officials have acted lawfully within their power as lawfully conferred upon them. The power under section 131 of the said Act can, however, be exercised by the authorities mentioned in that section itself and this power cannot be exercised by any official subordinate to the rank of the Assessing Officer. However, the power of survey under section 133A can be exercised by any income-tax authority including the income-tax inspector. Sections 131 and 133A are accordingly quoted hereunder. "131. Power regarding discovery, production of evidence, etc.-(1) The Assessing Officer, Deputy Commissioner (Appeals), Deputy Commissioner, Commissioner (Appeals) and Chief Commissioner or Commissioner shall, for the purposes of this Act, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the fallowing matters, namely (a) discovery and inspection ; (b) enforcing the attendance of any person, including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , employee or any other person who may at that time and place be attending in any manner to, or helping in, the carrying on of such business or profession, (i) to afford him the necessary facility to inspect such books of account or other documents as he may require and which may be avail able at such price, (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. Explanation.-For the purposes of this sub-section, a place where a business or profession is carried on shall also include any other place, whether any business or profession is carried on therein or not, in which the person carrying on the business or profession states that any of his books of account or other documents or any part of his cash or stock or other valuable article or thing relating to his business or profession are or is kept. (2) An income-tax authority may enter any place of business or profession referred to in sub-section (1) only during the hours at which such place i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax, if so authorised by any such authority ; (b) 'proceeding' means any proceeding under this Act in respect of any year which may be pending on the date on which the powers under this section arc exercised or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after such date in respect of any year." The aforesaid powers, as it appears from the scheme of the Act, are of general nature do not confine to Chapter IV only and to be exercised by the respective authorities mentioned therein whenever necessary for any purpose of the Act. Such power can even be required to be exercised by the Board and the Chief Commissioner by issuing valid notification under section 120 of the said Act. Therefore, I hold that respondent No. 1 has correctly exercised her power ; so also the other respondents. Therefore, I do not find any merit in this writ petition and the writ petition is accordingly dismissed. Interim order stands vacated. There will be no order as to costs. Though the writ petition is dismissed, the interim order already passed shall continue till the following day after the summer vacation. Cer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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