Calcutta High Court
Commissioner Of I.Tax vs Raiganj Co-Operative Marketing ... on 15 June, 2018
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
OD-6
ITAT No.17 of 2015
GA No.209 of 2015
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction (Income Tax)
ORIGINAL SIDE
COMMISSIONER OF I.TAX, JALPAIGURI
Versus
RAIGANJ CO-OPERATIVE MARKETING SOCIETY
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
The Hon'ble JUSTICE ABHIJIT GANGOPADHYAY Date : 15th June, 2018.
Appearance:
Md. Nizamuddin, Adv.
Mr. Agnibesh Sengupta, Adv.
Ms. Shyantee Datta, Adv.
The Court : The Revenue seeks to question the propriety of an order of the Appellate Tribunal which reversed the endorsement of the Assessing Officer's order of disallowance by the Commissioner (Appeals).
It is not in dispute that the assessee has been appointed by the State Government agencies for the purpose of procuring paddy from farmers and depositing the same in rice mills. The Appellate Tribunal found, on facts, that the assessee in this case was involved only in physically receiving the paddy from the farmers and depositing it with rice mills without even having the discretion of choosing the rice mills since the choice of rice mills would be indicated by the Government agencies. In such a scenario, it was the contention of the assessee that the assessee was a mere agent of the 2 Government in receiving payments and making over the same to the rice mills and there was no question of any deduction on account of tax at source while making such payments.
Even if in this case it is accepted that by virtue of the relationship between the State agencies and the assessee or by virtue of the nature of the work undertaken by the assessee, the assessee is seen to be an extension of the State agency, the obligation to deduct the tax at source appears to be absolute. However, the difficulty arises in applying the penalty under Section 40(a)(ia) of the Income Tax Act, 1961. It is inconceivable that if the Government as the payer is in default in deducting tax at source, the consequence envisaged under Section 40(a)(ia) would be attracted.
It was on such basis that the assessee, which was found on facts to be an extension of the relevant Government arm, was found not to be liable for the disallowance since the assessee in this case was merely an agent through which payment was travelling from the Government to the rice mills without the assessee having any say in the matter.
Since a possible view has been taken by the Appellate Tribunal in the circumstances, the same does not call for any reconsideration.
ITAT No.17 of 2015 and GA No.209 of 2015 are disposed of. There will be no order as to costs.
(SANJIB BANERJEE, J.) (ABHIJIT GANGOPADHYAY, J.) bp.