Income Tax Appellate Tribunal - Nagpur
Vidarbha Liquor Corporation vs Assistant Commissioner Of Income Tax on 30 October, 1998
Equivalent citations: (1999)64TTJ(NAG)255
ORDER
K. P. T. Thangal, J.M. This appeal by the assessee is for the assessment year 1995-96. When the matter was taken up for hearing, the learned counsel for the assessee submitted that he is under instruction not to press the first ground. Hence this ground is rejected as not pressed. Thus, the only effective ground remained to be agitated is whether the interest under section 201(1A) was rightly charged.
2. The facts briefly are as under ..
The assessee has filed the return on 31-10-1995, declaring income at Rs. 1,94,300. The assessee carries on business of manufacturing and sale of country liquor as in the past. The return was filed along with an audit report in Form Nos. 3CB and 3CD. A balance was also filed along with the same. First it was processed under section 143(1)(a). Then it was taken for scrutiny and notice under section 143(2) was issued. Assessee's trading results were accepted as the books of account were found intact. Interest under section 201(1A) was also directed to be charged along with other interest for later payment of TDS while processing the matter under section 143(3).
3. The matter was agitated before the Commissioner (Appeals). The Commissioner (Appeals) dismissed the assessee's appeal holding that there was no convincing argument. It is against this order, the assessee is in appeal before the Tribunal.
4. The learned counsel for the assessee submitted before us that the levy of interest under section 201(1A) cannot form a part of the assessment order. A separate order required which is also separately appealable under clause (i) of section 246(1). Hence, the counsel submitted that interest under section 201(1A) as a part of the assessment order was without jurisdiction. The determination of the sum payable under section 143(3) is on the basis of assessment of the total income. The sum payable cannot include the interest leviable under section 201(1A) which has neither nexus nor dependent upon the computation of income or assessment. The counsel further submitted that the assessee has neither failed to deduct nor failed to pay after deduction tax at source as required by the Act. Section 201(1A) is not applicable to tax collection at source. The learned Departmental Representative supported the orders of the revenue authorities.
5. I have heard the rival submissions and have gone through the orders of the revenue authorities. It is to be noted that Chapter XX is regarding the appeals and revision to be made before the first appellate authority. Section 246(1) states :
"Subject to the provisions of sub-section (2), any assessee aggrieved by any of the following orders of an assessing officer (other than the Deputy Commissioner may appeal to the Deputy Commissioner (Appeals) against such order ..
an order against the assessee, where the assessee denies his liability to be assessed under this Act [or an intimation under sub-section (1) or sub-section (11B) of section 143, where the assessee objects to the making of adjustments] or any order of assessment under sub-section (3) of section 143 or section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed;
an order of assessment, reassessment or recomputation under section 147 or section 150;
an order under section 154 or section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of the said sections;
an order made under section 163 treating the assessee as the agent of a non-resident;
an order under sub-section (2) or sub-section (3) of section 170;
an order under section 171(i) any order under clause (b) of sub-section (1) or under sub-section (2) or sub-section (3) or sub-section (5) of section 185 (in respect of any assessment for the assessment year commencing on or before the 1-4-1992);
an order cancelling the registration of a firm under sub-section (1) or under sub-section (2) of section 186 (in respect of any assessment for the assessment year commencing on or before the 1-4-1992) an order under section 201;
an order under section 216 in respect of any assessment for the assessment year commencing on the 1-4-1988 or any earlier assessment year;
an order under section 237;
an order imposing a penalty under-
section 221, or section 271, section 271A, 271B (272A, section 272AA or section 272BB);
section 272, section 272B or section 273, as they stood immediately before the 1-4-1989, in respect of any assessment for the assessment year commencing on the 1-4-1988 or any earlier assessment years.
Section 246(1) speaks of an order under section 201. Section 201 deals with the consequences of failure to deduct or pay. Section 201(1) reads as under :
'If any such person and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax :
Provided that no penalty shall be charged under section 221 from such person, principal officer or company unless the assessing officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax.
Sub-section (1A) stipulates :
'Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at fifteen per cent per annum on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid."
From the above it is clear that there should be a separate order appealable under section 201(1A). An order passed under section 143(3) alone is not sufficient, because under section 143(3) the assessing officer makes an order in writing, assessing the total income or loss, and determine the sum payable by him or refund of any amount due to the assessee. Section 201 deals with the consequences of failure to deduct or pay. Section 201(1A) states, we have noted, without prejudice to the provisions of sub-section (1) of section 201, if any such person, principal officer or company did not deduct or after deducting fails to pay the tax then such defaulter shall be liable to pay simple interest at the stipulated rate.
6. The assessee has not deducted any tax at source. Therefore, there is no liability on the part of the assessee to make the payment of TDS attracting section 201(1A).
7. The assessee is a dealer in country liquor. Under section 206C the assessee has to make some collection at source. The collection is made from another party while deduction is done by the assessee making some payment himself. Section 201(1A) applies in consequence of failure to deduct or pay after deduction. After collection as per section 206C(3) he has to make the payment to the Central Government or the Board as the case may be, within seven days. If the person fags either to collect or after collecting fails to pay, it has required, he has to pay simple interest at the rate of 2 per cent per month or part thereof on the amount of such tax upto the date on which such tax was actually paid under sub-section (7) of section 206C. Under sub-section (8) of section 206C if the collector fails to make the payment after collection, the amount of the tax together with the amount of simple interest thereon has to be charged from the seller under sub-section (7) of section 206C.
8. From the above discussion, it is clear that section 201(A) is not applicable to an assessee who makes collection at source of the goods mentioned in the table of section 206C. In the light of the above discussion, the order of the Commissioner (Appeals) charging levy of interest under section 201(1A) is set aside.
9. In the result, the appeal of the assessee is allowed.