TMI Blog2000 (11) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ed letters. It has further been prayed that a writ of prohibition be also issued to the respondent prohibiting the respondent from taking action in pursuance of the aforesaid letters and summons. The petitioner is a company registered under the Indian Companies Act doing the business of insurance and investment. After nationalization of the life insurance business, the petitioner stopped the provident insurance business and has been carrying on business of providing social welfare saving schemes for the benefit of the public. Petitioner No. 2 is a citizen of India and shareholder in the petitioner-company. The petitioners are challenging the competence and the authority of the respondents to issue summons under section 131 of the Income-tax Act and to conduct survey under section 133A of the Act and to seize books of account or documents in the course of survey. In paragraph 4 of the writ it is alleged that the petitioner has crores of customers all over India who have availed of various social welfare savings schemes of the petitioner. The petitioner has numerous employees and has various branches and units of which the Kanpur branch is one. The present dispute relates to the Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s alleged that the said requirements go to show that it is for the Assessing Officer who is making the income-tax assessment of the petitioner to consider whether proper tax has been deducted at source and paid accordingly or not. Copies of the relevant extracts of the tax audit report for the assessment year 1996-97 are at annexure A. In paragraph 7 of the petition it is alleged that all assessments up to the assessment year 1994-95 have been completed and all taxes which were payable by the petitioner on these assessments have been realised by way of adjustment with the amounts refundable to the petitioner for other years excepting a small portion for which rectification applications are pending before the Assessing Officer. As regards the pending assessments the taxes which had been deducted at source are said to be higher than the amount of tax payable and hence nothing is allegedly due or payable by the petitioner by way of advance tax. Assessments for annual year 1995-96 and onwards are pending before the Assessing Officer being the joint Commissioner of Income-tax, Special Range-13, Calcutta. In paragraph 8 of the writ petition it is alleged that the petitioner duly deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the Kanpur office of the petitioner copy of which is annexure D. The petitioner also received summons under section 131 of the Act dated November 6, 1998, requiring the petitioner to appear on November 17, 1998, and to produce certain documents vide annexure E. In paragraph 13 of the petition it is alleged that on November 17, 1998, an employee of the petitioner appeared before respondent No. 1 and produced the documents which were required to be produced. Respondent No. 1 retained the books of account under section 131(3) of the Act. A true copy of the letter dated November 17, 1998, is annexure F. In paragraph 14 of the writ petition it is alleged that the petitioner pointed out to respondent No. 1 that summons under section 131 of the Act can be issued only when any proceeding is pending but there was no proceeding pending. The petitioner also pointed out that the returns of income for the financial years ended March 31, 1996, and March 31, 1997, had already been filed with the joint Commissioner of Income-tax, Special Range-13, Calcutta, and the returns of income for the financial years ended on March 31, 1998, and March 31, 1999, were yet to be filed as the due dates fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged that the respondent acted illegally and without jurisdiction. In paragraph 27 it is alleged that respondent No. 1 is not the Assessing Officer of the petitioner and hence has no competence or authority to invoke any power under section 131 of the Act or to retain the books of account and documents. In paragraph 28 it is alleged that respondent No. 1 has not recorded any reason for impounding the said documents and hence his action is illegal, In paragraph 29 of the petition it is alleged that under proviso (b) to section 131(3) the documents cannot be validly retained beyond 15 days without the approval of the Chief Commissioner or Director. It is alleged that such approval has not been granted. In paragraph 30 it is alleged that the power under section 133A can only be exercised by the Assessing Officer and not by respondent No. 1. It is alleged that the inspection and seizure are without jurisdiction. In paragraph 32 it is alleged that article 19(1)(g) and article 14 of the Constitution have been violated. A counter-affidavit has been filed in which the allegations in the writ petition have been denied. In paragraph 4 of the counter-affidavit it is alleged that respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 194A from interest it was necessary to quantify the default and hence the proceeding under sections 201 and 201(1A) and summons under section 131 were valid. It is further alleged that instead of making TDS deduction and deposits, the petitioner and its agents at Kanpur provided pre-printed blank Forms No. 15H to their depositors but they were not filled up nor was the verification clause filled up. They were not submitted to the Commissioner of Income-tax as prescribed. It is alleged that the fact that the signature of the depositors was filled on blank forms sufficiently indicates that under the cover of these forms the petitioner never made TDS deduction. The petitioner has not been able to explain why these forms which should have been submitted by the seventh of the succeeding month in which they were received were kept in the petitioner's Kanpur office. Since the relevant documents were of vital nature relevant to the proceeding as such they were lawfully retained under section 131(3) of the Act. In paragraph 10 it is alleged that the survey and seizure were lawful and in accordance with law. In paragraph 13 it is stated that Sri Chandra Prakash who introduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of interest without TDS deduction. The petitioner had not deducted the income-tax at source and had violated the statutory provisions. In order to recover the tax in default the determination of its quantum was necessary for which relevant books of account and documents were lawfully seized. In paragraph 24 of the counter-affidavit various alleged defaults by the petitioner have been mentioned. Since the petitioner has its office at Kanpur the respondent has jurisdiction in the matter since the payments were being made there. In paragraph 28 of the counter-affidavit it is alleged that before retaining the books of account and documents the respondent has duly recorded the reasons and secured the approval of the Commissioner of Income-tax, Kanpur, to continue retention beyond 15 days. In paragraph 30 it is alleged that under section 133A every Assessing Officer can make survey in respect of the person or classes of persons in respect of whom he exercises jurisdiction. Respondent No. 1 is the Assessing Officer for TDS purposes and hence his action was valid. A rejoinder affidavit has also been filed and we have perused the same. Before dealing with the submissions of learned coun ..... 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 available 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. 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 the business or profession are or is kept." A perusal of section 131(1) shows that the Assessing Officer has various powers mentioned in those provisions. The expression "Assessing Officer" has been defined in section 2(7A) of the Act. It states: "'Assessing Officer' means the Assistant Commissioner or Deputy Commissioner or Assistant Director or Deputy Director or the Income-tax Officer who is vested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There is a distinction between annual return which a person responsible for deducting the tax is to file and the return of the income which an assessee is to file under section 139(1) in respect of his income. The annual return which has to be filed under section 206 is different from the disclosure of the income under section 139(1). The return filed under rule 36A has to be forwarded to the regular Assessing Officer which in the present case is the joint Commissioner of Income-tax, Special Range-13, Calcutta. Dr. Debi Prosad Pal, therefore, contended that respondent No. 1 has no jurisdiction to issue summons or take the impugned action. On the other hand, Sri Bharatji Agarwal, learned counsel for the Department, has relied on the order of the Commissioner of Income-tax, dated September 29, 1995, annexure C. A. 1, and has contended that respondent No. 1 has been authorised as the Assessing Officer and hence his action is valid as he is the Assessing Officer of TDS Ward-III (9), Kanpur. However, this order dated September 29, 1995, has been issued not by the Board but by the Commissioner of Income-tax, Kanpur. Hence, it cannot be said to be an order under section 120. It is, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the regular assessment. Hence, he has submitted that respondent No. 1 is also the Assessing Officer for the purpose of taking the impugned action. He has stated that respondent No. 1 cannot be treated as a post office merely for receiving the return of TDS and transmitting it to the regular Assessing Officer at Calcutta. The petitioner did not furnish the prescribed return in Form No. 36A. He has further submitted that respondent No. 1 has to ensure that the petitioner who is making payment of interest to various persons has deducted tax at source. Since the petitioner did not make deduction of tax at source hence the action was validly taken. Respondent No. 1 has to verify whether the TDS has been deducted or not and whether after deduction of TDS the same has been deposited with the Income-tax Department by the person responsible for it. He submitted that the petitioner committed gross violation of the statutory provisions of section 194A by not making TDS deduction as is evident from annexure C.A. 7. He has relied on the decision of the Calcutta High Court in Indo Asahi Glass Co. v. ITO [1996] 222 ITR 534. In our opinion, the submissions of learned counsel for the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n also make enquiries so as to make a correct assessment of the petitioner's income, but enquiries can also be made by respondent No. 1 who is at Kanpur regarding the TDS matters of employees of the Kanpur office of the petitioner. This will be convenient to the petitioner also relating to the functioning of his Kanpur office since the employees of the petitioner at Kanpur and other persons to whom the petitioner has paid interest at Kanpur office can easily by contacted by respondent No. 1 and details regarding their TDS can be verified by the income-tax authority at Kanpur. The view we are taking appears to be a practicable view otherwise to take the view that only the regular Assessing Officer at Calcutta can make these enquiries would be placing a difficult burden on him as he is at Calcutta far away from Kanpur. The provisions in question are machinery provisions and it is a settled principle of interpretation that such provisions should be interpreted to make the machinery workable, vide CIT v. Mahaliram Ramjidas [1940] 8 ITR 442 (PC); CIT v. National Taj Traders [1980] 121 ITR 535 (SC), etc. No doubt the opinion of respondent No. 1 regarding TDS details will not be binding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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