REKHA SAHA Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) IN the writ petition, the petitioner has challenged the legality and validity of the order dated February 18, 2009 passed by the Commissioner of Income -tax, Durgapur, respondent No. 1, under Section 264 of the Income -tax Act, 1961 (for short 'the Act') and the assessment order dated December 11, 2007 passed under Sections 143(3)/147 of the Act by the Assistant Commissioner of Income -tax, Circle -2, Durgapur, respondent No. 2 and the notice of demand issued pursuant thereto and the notice dated March 16, 2009, under Section 226(3) of the Act for recovery of income -tax demanded relating to the assessment year 2004 -05 and proceedings thereunder and in pursuance thereof.

(2.) THE facts in brief are that the petitioner is engaged in the business of mechanical fabrication and erection pursuant to orders received from customers. At times, a part of the contract is entrusted to sub -contractors. From the payments required to be made to the sub -contractors, the petitioner deducts income -tax at source wherever required in accordance with the provisions contained in Section 194C of the Act and deposits the amount so deducted with the authorities. According to the petitioner, the gross amount payable to the sub -contractors in connection with erection work entrusted to them was Rs. 51,28,374.29 out of which she was required to deduct tax of Rs. 31,734 from payments aggregating to Rs. 26,44,536. The petitioner made the requisite deduction and deposited the same on different dates by June 30, 2004. It has been stated that the petitioner had entrusted the work relating to filing of annual TDS return as also the income -tax return to a learned advocate. She had also employed an accountant who from time to time interacted with the said learned advocate and made available such information and documents as the petitioner's advocate required. It has been submitted that the annual TDS return was filed on September 9, 2004 and usual income -tax return was filed on October 30, 2004. After the return was filed, the assessing authority issued notice under Section 154 of the Act. In the proceedings under Section 154 the petitioner agreed to rectification. Thereafter, the authorities issued notice under Section 148 relating to certain deductions amounting to Rs. 1,21,000 under Section 43B of the Act. In those proceedings under Section 148 the Assessing Officer took up the matter regarding the amount shown in the original TDS return amounting to Rs. 1,52,31,421 as paid to the sub -contractors. According to the petitioner, since the notice under Section 148 related to an amount under Section 43B, the Assessing Officer was not competent to take up the matter regarding the amount paid to the sub -contractors. However, the petitioner made an enquiry regarding the said sum. On enquiry it was found that her learned advocate and the accountant had made a mistake in filing the return. Thereafter, the Assessing Officer passed the order under Sections 143(3)/147 in the proceedings under Section 148 of the Act. The petitioner on April 3, 2008 filed an application under Section 264 of the Act against the order under Section 143(3)/147 dated December 11, 2007. A report on the petition under Section 264 of the Act was called for from the Assessing Officer. Report was received. The petitioner was asked to furnish parawise comments on the said report. Respondent No. 1 directed the Assistant Commissioner of Income -tax, Circle -2, Durgapur, respondent No. 2, to ascertain the authenticity of the annual return of deduction of income -tax in Form No. 26C. Pursuant thereto respondent No. 2 submitted a verification report dated January 16, 2009 which finds mention in the order passed under Section 264 of the Act. While passing the order under Section 264, respondent No. 1 had held that revised annual return was bogus and not authentic as per the verification report furnished by the Assessing Officer, respondent No. 2 and, thus, the contention of the petitioner was not accepted. According to the petitioner, the order dated February 18, 2009 passed under Section 264 of the Act by respondent No. 1 is not sustainable on two grounds that a copy of the verification report was not furnished to her and the respondents did not consider the revised return filed on January 11, 2005 which is annexed to the writ petition.

(3.) MR . J. P. Khaitan, learned senior advocate appearing on behalf of the petitioner, reiterating the statements made in the writ petition has submitted that the order is perverse as the revised return which was on record was not dealt with. Moreover, as the copy of the verification report was not furnished to the petitioner, there was violation of natural justice. Further, the respondents have not disputed the two affidavits filed by the learned advocate and the accountant wherefrom it is evident that the mistake was unintentional.