Rajasthan High Court - Jaipur
Bhura Mal Raj Mal vs Commissioner Of Income-Tax on 6 April, 1996
Equivalent citations: [1996]220ITR636(RAJ)
JUDGMENT
1. This matter arises out of the order of the Income-tax Appellate Tribunal, dated January 28, 1983, in respect of the assessment year 1977-78. The Tribunal has referred the following two questions of law arising out of the said order for opinion of this court :
" 1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that Section 199 of the Income-tax Act, 1961, admits of only one interpretation that the credit for tax deducted -at source is to be given for the assessment year relevant to the previous year in which such tax was deducted at source and, consequently, the Inspecting Assistant Commissioner (Assessment) was competent to invoke jurisdiction under Section 154 and withdrawing credit for tax deducted at source ?
2. Whether; on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in confirming the order of the Income-tax Officer withdrawing interest originally allowed under Section 214 and charging interest under Section 215 originally not charged ?"
2. The facts of the case are that while making the assessment for the assessment year 1977-78, the tax of Rs. 30,100 was deducted by Surana Enterprises and certificate of such deduction of tax dated December 13, 1976, and February 28, 1977, were produced by the assessee in the assessment proceedings. The assessee is maintaining the accounts according to Diwali year and, therefore, in the original assessment order the tax so deducted was adjusted in the assessment year 1977-78. The payer, Surana Enterprises, had maintained the books of account according to the year ending on June 30. After the assessment order under Section 143(3) was framed the Income-tax Officer was of the view that the deduction of the tax which has been given in the year 1977-78 should have been given in the year 1978-79 on the basis of the accounts maintained by the payer and accordingly an order under Section 154 of the Income-tax Act was passed.
3. The assessee submitted the reply dated May 4, 1981, which was taken into consideration and thereafter, the Inspecting Assistant Commissioner (assessing authority) came to the conclusion that there is a mistake apparent on record and, therefore, the credit which was given in the assessment year 1977-78 should have been given in the assessment year 1978-79. The credit already given in the year 1977-78 was withdrawn and was directed to be allowed in the assessment year 1978-79. The interest under Section 214 which was allowed was also withdrawn.
4. In the appeal before the Commissioner of Income-tax, it was observed that in accordance with the provisions of Section 199 of the Income-tax Act what is required to see is that the tax has been deducted and deposited and credit has to be given in the year in which the income from which such deduction has been made is being taxed which would be the year following the accounting year in which such tax was deducted. The order of the Inspecting Assistant Commissioner was accordingly set aside and it was observed that the tax in respect of the assessment year 1977-78 was rightly allowed in the original assessment order. The order of withdrawal of interest under Section 214 was also found not in accordance with law.
5. In the second appeal before the Tribunal the provisions of Sections 194A, 200 and 199 were taken into consideration. It was observed that under Section 194A any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income chargeable under the head "Interest on securities" shall at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force.
6. Section 200 provides that any person deducting any sum in accordance with the provisions of Sections 192 to 194 (section 194A included) shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs. Rule 30(1)(b)(i)(1) of the Income-tax Rules, 1962, provides that the sum deducted from income by way of interest under Section 194A of the Income-tax Act shall be paid to the credit of the Central Government within two months of the expiration of the month in which the date up to which the account of such business are made up falls.
7. The provisions of Section 199 of the Income-tax Act as amended by the Act No. 11 of 1987 are as under :
"Any deduction made in accordance with the provisions of Sections 192 to 194, Section 194A, Section 194B, Section 194BB, Section 194C, Section 194D, Section 194E, Section 194EE, Section 194F, Section 194G, Section 194H, Section 194G, Section 195, Section 196A, Section 196B, Section 196C and Section 196D, and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security or of the shareholder, as the case may be, and credit shall be given to him for the amount so deducted on the production of the certificate furnished under Section 203 in the assessment made under this Act for the assessment year for which such income is assessable."
8. The Income-tax Appellate Tribunal found that in the present case the tax was required to be deposited after the closure of the accounting year by Surana Enterprises in respect of the previous year 1977-78, the tax was neither deducted nor deposited. It was deducted on December 13, 1976, and February 28, 1977, and was required to be deposited within two months after the close of the accounting year which falls within the year 1978-79. Therefore, the assessee was not entitled to claim deduction in the assessment year 1977-78.
9. The arguments of learned counsel for the parties have been heard. Section 199 as it stood at the relevant time read as under :
" Any deduction made in accordance with the provisions of Sections 192 to 194, Section 194A, Section 194B, Section. 194BB, Section 194C, Section 194D, and Section 195 and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security or of the shareholder, as the case may be, and credit shall be given to him for the amount so deducted on the production of the certificate furnished under Section 203 in the assessment (including a provisional assessment under Section 141A), if any, made for the immediately following assessment year under this Act."
10. The above provision has been amended by the Finance Act No. 11 of 1987, with effect from June 1, 1987, and now the provision has been made that the credit shall be given for the amount so deducted on production of the certificate furnished under Section 203 in the assessment made under the Act for the assessment year for which such income is assessable. We have to take into consideration the law as existed during the relevant year. Section 199 provided that the amount of tax deducted is to be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security or of the shareholder, as the case may be, and credit shall be given to him for the amount so deducted on the production of the certificate furnished under Section 203 in the assessment, including a provisional assessment under Section 141A, if any, made for the immediate following assessment year.
11. Section 2(9) of the Income-tax Act defines "assessment year" which means the period of twelve months commencing on 1st day of April, every year. The tax deducted was in respect of the income of the accounting year/previous year 1976-77, therefore, the following year would be taken into consideration to be the assessment year 1977-78. It appears that the view which the Tribunal has taken that it was a mistake apparent was not proper in law inasmuch as the law as it was in existence has not contemplated that the accounting year of the payer is relevant. The liability to deduct tax has been fastened on the payer and the consequences have been mentioned in Section 201. If the payer does not make the payment of the tax deducted, he can be liable for prosecution and is also to be treated as an assessee in default, The certificates which have been issued for deduction of tax are based on the authority given under law and the ambiguity if any has been clarified by the subsequent amendment in Section 199 by the Finance Act of 1987,
12. In the case of CIT v. Tanjore Permanent Bank Ltd. [1984] 149 ITR 788 (Mad), it was observed that the tax credit can be given only in cases where the tax is paid on the income in respect of which deduction has been made at source and which is offered for assessment. In the context of the provisions of Section 154 it was observed that a mistake can be rectified if the Income-tax Officer has given the tax credit in a case where the income in respect of which tax has been deducted at source has not been offered for assessment as that would be taken as a mistake on the part of the Income-tax Officer. In the present case, the income has been offered for taxation in the assessment year 1977-78 and it was on the basis of the date of issue of certificates by Surana Enterprises (payer) the proceedings for rectification were initiated as the said date falls in the assessment year 1978-79 of the payer while it falls in the assessment year 1977-78 of recipient assessee. The provisions of Section 199 have contemplated that the credit has to be given in respect of the income of which the tax has been deducted in the assessment for the immediately following assessment year. The Income-tax Officer considered that the year of the recipient is relevant and not of the payer.
13. If there are two plausible views, it cannot be considered to be a mistake apparent. The provisions of Section 154 have to be invoked when the mistake is apparent that it does not involve any elaborate argument. The question whether it could be considered to be a mistake from the record was considered by the apex court in the case of T.S. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50, wherein it was observed that the mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. Following the aforesaid decision, we arc of the view that the Income-tax Appellate Tribunal was not justified in holding that Section 199 of the Income-tax Act admits of only one interpretation that the credit for tax deducted at source is to be given for the assessment year relevant to the previous year in which such tax was deducted at source and, consequently, the Inspecting Assistant Commissioner (Assessment) was not competent to invoke jurisdiction under Section 154 and withdrawing credit for the tax deducted at source. We are also of the opinion that the Income-tax Appellate Tribunal was not justified in confirming the order of the Income-tax Officer withdrawing interest originally allowed under Section 214 and charging interest under Section 215 originally not charged.
14. Consequently, the reference is answered in favour of the assessee and against the Revenue. No order as to costs.