COMMISSIONER OF INCOME TAX Vs. SYNTHETICS LIMITED

JUDGEMENT

(1.) THE Tribunal, Indore, has made this reference under s. 256(1) of the IT Act, 1961 (hereinafter called "the Act").

(2.) THE facts giving rise to this reference as stated by the Tribunal are stated, in brief, as under : In compliance with the provisions of s. 206 of the IT Act, the employer, Shri Synthetics Ltd., Ujjain, filed the annual return of salary income in respect of its employees showing the amount of tax deductible under s. 192 of the IT Act, 1961. THE ITO (TDS), Bhopal, examined the said return and found that the tax deductible under s. 192 was not properly deducted by the abovementioned employer in respect of some of its employees. THE basis on which such recomputation has been done is not evident in the impugned order nor was it conveyed to the assessee before the order was passed. He, therefore, recomputed the income in respect of a number of employees and demanded, under s. 201 of the Act, the additional tax that should have been deducted at source. He also levied interest on short deductions under s. 201(1A) of the Act. THE assessee went up in appeal and challenged the order passed by the ITO under s. 201 (1A) of the IT Act. THE CIT (A) held that the ITO has transgressed his jurisdiction in the matter of dealing with the assessee- employer in respect of his obligations under s. 192 of the Act, inasmuch as the estimate referred to in this section could only be made by the employer and if he had bona fide done so, the ITO(TDS) was only concerned with the obvious and patent mistakes and could not go into controversial matters such as taxability or valuation of perquisites, etc. He, therefore, directed the ITO to revise the computation and, accordingly, allowed the appeal.

(3.) THE learned counsel for the applicant, Shri R. C. Mukati, submitted that this question has already been considered and decided in favour of the assessee and against the Department in the decision in CIT vs. Manager, M. P. Co-operative Development Bank Ltd. (1982) 31 CTR (MP) 187 : (1982) 137 ITR 230 (MP) which has been followed in CIT vs. Divisional Manager, New India Assurance Co. Ltd. (1983) 33 CTR (MP) 248 : (1983) 140 ITR 818 (MP), which are Division Bench decisions of this Court. In these decisions, relying on the provisions of s. 4 of the IT Act which is the charging section, it has been held that the principal liability for payment of income-tax is, therefore, that of the person who receives the income. THEse decisions have also considered the provisions of ss. 192 and 201(1) of the IT Act, under Chapter 17, which provides for deduction of tax at source.