TaxTMI 
TaxTMI 
2005 (10) TMI 69
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.... 1989-90, two companies, namely, LML Fibres Ltd. and Prkati Synthetics Ltd. had paid interest due to petitioner No. 1 company (hereinafter referred to as "the assessee") after deducting tax at source (TDS) as per the provisions of the Act. LML Fibres Ltd. had deducted TDS amount of Rs. 89,39,431 and Prkati Synthetics Ltd. had deducted TDS amount of Rs. 9,92,324. The said two companies failed to deposit the aforesaid TDS amount with the Income-tax Department within the time prescribed under the Act and, therefore, the income-tax authorities initiated action against the said two companies. Thereupon both the said two companies moved this court by filing separate writ petitions and this court by its order both dated October 9, 1989, permitted the two companies to deposit the TDS amount with the Income-tax Department in instalments up to April 15, 1990. It is an admitted fact that both the companies have deposited the TDS amount in the Government treasury on or before April 15, 1990, as ordered by this court. On December 21, 1989, both the companies had issued TDS certificates to the assessee under section 203 of the Act, stating therein that the amount of TDS deducted would be paid....
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....to pay the TDS amount to the Central Government. Accordingly, it was submitted that the credit for the TDS amount with interest granted under section 244A of the Act cannot be withdrawn. Rejecting the contention of the assessee the Assessing Officer passed the impugned rectification order under section 154 of the Act on February 5, 1991, thereby withdrawing the credit of TDS to the extent of Rs. 49,65,878 as well as the interest amount of Rs. 8,77,438 granted under section 244A of the Act and raised a demand of Rs. 58,43,316 for the assessment year 1989-90. For the assessment year 1990-91, the assessee was entitled to refund of Rs. 2,18,79,061. On March 27, 1991, the Assessing Officer issued a notice under section 245 of the Act for adjusting the demand of Rs. 58,43,316 raised by the rectification order dated February 5, 1991, for assessment year 1989-90 from the refund due for the assessment year 1990-91. On the same day, i.e., on March 27, 1991, itself the Assessing Officer issued an intimation under section 143(1)(a) of the Act for the assessment year 1990-91 adjusting the demand of Rs. 58,43,316 raised for the assessment year 1989-90. Challenging the aforesaid action of t....
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....ction 244A of the Act was also unjustified. Mr. Mistry further submitted that it is well established in law by the decision of this court in the case of A.N. Shaikh v. Suresh B. Jain [1987] 165 ITR 86 that adjustment of refund against any outstanding demand cannot be made under section 245 of the Act without giving previous intimation to the assessee in writing. In the present case, the intimation in writing for adjustment of the demand for the assessment year 1989-90 from the refund due for the assessment year 1990-91 and the actual adjustment of the demand has been made simultaneously on March 27, 1991, in contravention of section 245 of the Act. Accordingly, Mr. Mistry submitted that the adjustment of the demand vide intimation dated March 27, 1991, is also liable to be quashed and set aside and the assessee is entitled to the credit for the TDS amount as well as the interest under section 244A of the Act. However, Mr. Mistry fairly stated that if the court is of the opinion that the issue regarding the grant of interest is a debatable issue, then the assessee be permitted to agitate the issue by filing an appeal against the intimation dated March 27,1991, and the appellate a....
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.... the return, withdrawal of the credit for the TDS amount was justified and the consequent withdrawal of interest granted under section 244A was also justified. With reference to the levy of additional tax under section 143(1A) of the Act, counsel for the Revenue submitted that since the processed income was more than the returned income, the levy of additional tax in the assessment years in question was justified. We have carefully considered the rival submissions. In the present case, it is an admitted fact that the TDS amount deducted from the income of the assessee during the financial year 1988-89 by the two companies has been paid to the Central Government. Credit for the said TDS amount was given to the assessee vide intimation under section 143(1)(a) for the assessment year 1989-90, but the same is withdrawn by the Assessing Officer only on the ground that the tax deductor had not deposited the amount of TDS till the date of the filing of the return by the assessee. Therefore, the question to be considered in this petition is, whether, the Assessing Officer was justified in withdrawing the credit given to the assessee for the TDS amount which was admittedly paid to the Ce....
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....entral Government on the date of the filing of the return cannot be sustained. Heavy reliance was placed by the counsel for Revenue on the decision of the Guahati High Court in the case of Om Prakash Gattani [2000] 242 ITR 638. That decision, in our opinion, is wholly distinguishable on facts. In that case, even though the TDS was not paid to the Central Government, the assessee therein was claiming credit for the TDS amount and the Revenue on the other hand wanted to recover the TDS amount from the assessee therein on the ground that the TDS has not been paid to the Central Government by the tax deductor. In that context the court held that the assessee therein is not entitled to the credit for the TDS amount till it is paid to the Central Government and that the Revenue is not entitled to recover the TDS amount from the assessee therein as the assessee had no control over the discharge of tax liability by the tax deductor. In the present case, the facts are totally different. As stated earlier, in the present case, the TDS amount has been in fact paid to the Central Government and, therefore, credit for the TDS amount could not be denied to the assessee. Thus, withdrawal of th....