CIT JODHPUR Vs. MUNNI LAL AND COMPANY

JUDGEMENT

(1.) AT the instance of Revenue on the application made under Section 256 (2) of the Income Tax Act, 1961 the following two sets of questions have been referred impugning upon two controversies relating to recovery of interest in respect of tax not deducted at source by the assessee and the levy of penalty in respect of the same default. RA Nos. 194 to 201/jp/91 "1. Whether on the facts and in the circumstances of the case, the ITAT was justified in invoking provisions of Sec. 231 of the I. T. Act, 1961 and thus holding the levy of penalty under Sec. 221 for non-payment of tax deductible at source as barred by time? 2 Whether on the facts and in the circumstances of the case, the ITAT was justified in holding that no penalty under Sec. 221 is leviable on the tax deductible at source and non- deduction of tax being held for good and sufficient reasons. " RA Nos. 202 to 209/jp/91 1. Whether on the facts and in the circumstances of the case the ITAT was justified in invoking provisions of Section 231 of I. T. Act, 1961 and thus holding the levy of interest as barred by time? Whether on the facts and in the circumstances of the case the ITAT was justified in holding that no interest under Section 201 (1a) is leviable on the tax deductible at source, the on- deduction of tax being held for good and sufficient reasons?"

(2.) THE respondent assessee is a registered firm which carried on business as contractors and taken contractors from the PWD and Irrigation Department of the State Government. THE assessee was also sub-letting these contracts to sub-contractors for which commission @ 3% was charged, which was declared as his taxable income.

(3.) WHILE assessing officer found vide order dated 1. 11. 1984 that assessee had deducted tax at source in respect of three sub- contractors who had taxable income namely M/s. Sushil Construction Company, M/s. Sanjay Construction Company and M/s. Ramesh Construction Company. On these points the ITO said in his order that the default in respect of which the assessee has failed to deduct the tax as per provisions of Section 194 C read with Section 201 (1-A) of the Income Tax Act, 1961 without any good and sufficient reason and, therefore, penalty of varying sum was imposed for each assessment year between 1974-75 to 1980-81. Similarly, interest was also calculated for same period and it was also levied on the sum so computed which ought to have been deducted at source, but which has not been so deducted by assessee for each assessment year. The interest in all these separate orders was charged from the last date of ending on previous year's 31st March relevant to assessment year in relation to which assessee was required to deduct tax at source and deposit it with Central Govt. within time prescribed up to the date of the order. The ITO has not expressed his opinion to the questions of limitation at all, and has rest contended with saying that the arguments have been taken for the sake of arguments only having no force.