TMI Blog1996 (9) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... Ward-21(1), Calcutta. The appellants have entered into a collaboration agreement with Asahi Glass Company Ltd., a company incorporated in Japan, with regard to manufacture of sheet glass in India. The collaboration agreement was executed on May 20, 1983, between the appellants and the aforesaid Asahi Company Ltd. It appears that the appellants engaged some Japanese nationals as their technical personnel for manufacturing operations an also obtained the requisite permission from the Government of India and the Reserve Bank of India for such engagement of foreign nationals and for regulating their terms and conditions, including the payment of salary and other perquisites. It appears that some information came to be received by the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on June 5, 1996, at 11.30 a.m. for showing such cause. They were also called upon to submit copies of the collaboration agreement or other documents which guided payment to the foreign employees and receipts of the filing of the annual returns towards the payment of salaries, dividends, etc., in respect of the subject-matter of the controversy. Feeling aggrieved by the issuance of the aforesaid show-cause notice, the appellants filed a writ application under article 226 of the Constitution of India challenging the legality and the validity of the show-cause notice by contending, inter alia, that respondent No. 1 should not have issued the show-cause notice to the appellants because the appellants were not liable to pay any income-tax, mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nths from the date of filing the reply to the show-cause notice by the writ petitioner. " Feeling aggrieved, the appellants have come up in appeal before us. The various provisions of the Income-tax Act were referred to and relied upon by learned counsel for the parties before us during the course of hearing, including sections 9, 129, 194, 201 and 204 of the Act. It was contended before us on behalf of the appellants during the course of arguments that the appellants had no connection with Asahi Company Ltd. of Japan in so far as any question relating to the alleged payments to Japanese nationals in Japan was concerned. The main thrust of the arguments of learned counsel for the appellants was that the appointments were guided by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned single judge is wholly correct in observing and holding that the Income-tax Officer has merely issued the show-cause notice and that it is up to the appellants to explain before him that they are not liable for any action either under the Income-tax Act or under any other law. Even though Dr. Pal repeatedly argued before us that the facts alleged in the show-cause notice may be assumed to be correct, yet we found that certain facts could be disputed at a certain stage, at least the question of liability of the appellants surely is a fact in dispute. We are also fully conscious of the fact that so far the Income-tax Officer has not returned any positive finding, one way or the other, and, therefore, any comments by us regarding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived at by the Income-tax Officer and that there is no question of his having decided any issue relating to the liability of the appellants and that all the issues are wide open, subject to the explanation that the appellants may choose to offer and the examination and consideration of relevant facts and documents. According to learned counsel for the respondents, if it was ultimately found that the appellants were not liable to deduct tax at source, the respondent would have no hesitation in dropping the proceedings. This is not a case where the jurisdiction of the Income-tax Officer to issue the show-cause notice is under challenge. It is not disputed by any one that the Income-tax Officer did have the jurisdiction to issue the show-ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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