SALWAN CONSTRUCTION CO Vs. UNION OF INDIA

JUDGEMENT

(1.) ADMIT With the consent of counsel for the parties, I proceed to decide the petition finall at this stage itself.

(2.) The petitioners a firm and its three partners, impugn in this petition, unde Section 482 of the Code of Criminal Procedure, 1973, the legality and validity of the a.uthorisation issued by the Commissioner of Income-tax- respondent No.3 herein undersection 279(1) of the Income-tax Act, 1961 (for short 'the Act") sometime in March, 1992 for filing complaint against the petitioners under Section 276 B of the Act, as it stood prior to the insertion of amended Section 276B with effect from 1 April 1989, in respect of assessment years 1986-87 and 1987-88; consequent filing of the complaints under the said Section by the Assistant Commissioner, Income- tax-respondent No.2 herein, in the Court of the Additional Chief Metropolitan Magistrate, New Delhi on 31st March 1992 and the order 2 March, 1998 passed by the learned 'ACMM dismissing the petitioner's application under Section 245(2) Cr.P.C. seeking discharge. Besides the said two respondents, the Union of India has also been impleaded as proforma respondent No. 1.

(3.) The petitioner firm was awarded two contracts, one by the Air India and another by one M/s. Modipon. The petitioners, in turn, assigned the contract awarded by Air India to one M/s. Salwan Construction Company Private Limited, against which it was entitled to receive commission @ 2.5% of the receipts. The other contract was also assigned in favour of one Amarjit Singh HUF and the petitioner firm was entitled to receive commission at 5% from the said concern. The gross receipts from contracts assigned by Air India and Modipon were respectively Rs.2,93,61. 361.00 and Rs.4,37,520.00 . According to the Assessing Officer, the petitioner, being the contractor, was required to deduct under section 194C(1) of the Act tax at source on the said amounts received by the said assignees as sub-contractors, which it failed to do. Rejecting the stand of the petitioner firm that the contracts having been assigned in entirety, there was no relationship of contractor and sub-contractor and, therefore, the provisions of the said Section were not attracted, the Assessing Officer levied penal interest under Section 201 (IA) of the Act, amounting to Rs. 1,88,270.00 , on the petitioner vide order dated 20th January, 1992.