TaxTMI 
TaxTMI 
2005 (3) TMI 72
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....ued by the Board on May 23, 1996, since published in [1997] 225 ITR (St.) 101. At the same time, an order passed under section 201 is appealable under section 245. Therefore, this liability to pay interest contemplated under section 201(1A) was never meant to be mandatory by the Legislature. The second point that has been raised is that the officer who had passed the order had no jurisdiction and as such the order passed is a nullity and cannot be enforced so far as the assessment years 1983-84,1984-85, 1986-87 and 1987-88 are concerned. So far as the assessment year 1985-86 is concerned, the same was passed without giving opportunity and, therefore, cannot be sustained on account of infraction of the principles of audi alteram partem when such order visits the assessee with penal/civil consequences. The points opposed: Mr. Agarwal, on the other hand, contended that the provisions relating to sections 234A, 234B and 234C fixing liability to pay interest is dependent on and has to be interpreted in the context in which such interest is chargeable. According to him, these are simple defaults on the part of the assessee and the interest that is chargeable in effect is a coerc....
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....to several decisions to support his contention with regard to the mandatory nature of the liability to pay interest under section 201(1A) as well as in relation to the question of jurisdiction. We shall be referring to those decisions at the appropriate stage. Points replied: In reply Dr. Pal referred to the decision in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) in order to contend that a point of law can be agitated even at the appellate stage though not raised earlier if it involves a question of law arising from the facts found by the authorities. He also sought to distinguish the decisions cited by Mr. Agarwal. Points of law: If can be raised in appeal for the first time: After having heard learned counsel for the parties, admittedly, it appears that this point of jurisdiction was taken before the learned Tribunal for the first time. At the same time, it is also apparent from the records that for the purpose of deciding the question, no amount of facts need be gone into. It can be decided on the basis of the facts already found by the authority concerned and the question is a pure question of law relating to jurisdiction, which goes to the root o....
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.... satisfaction of the Assessing Officer to defend such failure and such penalty imposed under section 221, thus, appears to be discretionary dependent upon good and sufficient reasons to the satisfaction of the Assessing Officer. Whereas sub-section (1A) provides for interest without prejudice to sub-section (1); it makes an assessee in default liable to pay simple interest at the rate prescribed on the amount of tax from the date deductible to the date of actual payment of the tax. The scheme in which sub-section (1A) has been framed does not leave any scope or ambiguity to hold such liability contingent upon good and sufficient reasons or otherwise. On the other hand, it makes it clear that an assessee in default is liable to pay simple interest for the period stipulated in sub-section (1A) in no uncertain terms. This is further supported by making such interest chargeable upon all the assets of the assessee in default under sub-section (2) in case after deduction the tax is not paid together with the interest. A similar question arose before this court in Kanoi Industries P. Ltd. v. Asst. CIT [2003] 261 ITR 488 where one of us (D.K. Seth, J.) was a party. In the said decision,....
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....ot made, in that event, interest cannot be avoided in a case where tax was not deducted on the date the tax was deductible till the date it was deducted and deposited. Dr. Pal relied upon the decision in State v. Amru Tulsi Ram, AIR 1957 Punj 55 in order to interpret the meaning of the expression "liable" occurring in sub-section (1A) of section 201. According to Dr. Pal the word "liable" means a future possibility or probability of the happening of an event, which may or may not actually occur. But this decision was dealing with section 381 of the Indian Penal Code, 1860 in order to interpret "shall also be liable to fine" interpreting the same as discretionary. This decision will not help us in the context of the present case as discussed hereinbefore having regard to the scheme of sub-section (1A), which is without prejudice and is dealing with somebody else's money, which is supposed to deduct and the charging of interest in the present case is in the nature of compensation. Inasmuch as the moment the liability to deduct accrues, it becomes a debt and the assessee in default was an agent or bailee on behalf of the Department. The deprivation of the receipt of the tax by the ....
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.... the context of default in relation to section 220, which contemplated payment of tax within a particular time on the service of the demand notice where the liability accrues on demand and not otherwise. Therefore, this reversal of the decision will not be an answer to the question with which we are now concerned, though, however, we may apply the principle laid down in the Karnataka case to section 201 in the context as we have already held, in which it operates. In Pentagon Engineering Pvt. Ltd. v. CIT [1995] 212 ITR 92 the Bombay High Court had held that the word "shall" in section 201(1A) makes the liability to pay interest mandatory since there was no pre-condition of considering of any "reasonable cause" for non-payment of tax in time contemplated under section 192. Under section 201 (1A) the Income-tax Officer is not required to take into consideration the "reasonable cause" for non-payment of taxes deducted or non-deduction and non-payment under section 192. In CIT v. Rathi Gum Industries [1995] 213 ITR 98, the Rajasthan High Court had held that section 201 of the Income-tax Act, 1961, provides not only for collection of tax which has not been deducted but for levy an....
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....ub-sections (1) and (2) of section 120 of the Income-tax Act, 1961, and all other powers enabling me in this behalf, I, the Chief Commissioner of Income-tax (Administration), Calcutta, hereby create a new Range viz., Range 21, under the jurisdiction and administrative control of the Commissioner of Income-tax, West Bengal VII, Calcutta. I also create six new wards under the administrative control and jurisdiction of Range 21, as detailed in column (2) of the Schedule annexed hereto. A Deputy Commissioner of Income-tax will be posted at Range 21 and he will be known as the Deputy Commissioner of Income-tax, Range 21, Calcutta. An Income-tax Officer, posted at a ward under Range 21 will be known as Income-tax Officer, (Tax deducted at source), the jurisdiction assigned to each ward is mentioned in column (3). 2. The Notification will come into effect from May 8, 1989, and is issued with the concurrence of the Chief Commissioner of Income-tax (Technical), Calcutta. Schedule -------------------------------------------------------------------------------- New Range under Commissioner of Income-tax, New wards created....
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....iction of the officer of the ward newly created. The expressions "who are" or "would come" include all assessees whose cases are pending or who would have come or used to come would also come under the new jurisdiction apart from those who are within such jurisdiction. The expression is clear enough to mean that this jurisdiction was prospective but all matters would be prospectively dealt with from the stage as it stood on the particular date, namely, May 8, 1989. The creation of new range and ward does not appear to be retrospective. It also does not provide that the matters pending would be transmitted to the newly created range or pending proceedings would stand transferred with the creation of the new jurisdiction. Unless there are express provisions in the statute, there is no scope for effecting transfer of pending proceedings to the newly created jurisdiction. However, Mr. Agarwal sought to rely upon the decision in Sait Bansilal and Rangisetti Veeranna v. CIT [1972] 83 ITR 750 (AP) to contend that unless the statute contains words, whether expressly or by necessary implication, ousting the jurisdiction of the Income-tax Officer once vested in him, the jurisdiction ca....
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....n also on the same analogy does not help Mr. Agarwal. The principle applied: Assessment years 1983-84, 1934-85, 1986-87 and 1987-88: In this case, so far as the assessments relating to the financial years 1982-83, 1983-84, 1985-86 and 1986-87 corresponding to the assessment years 1983-84, 1984-85, 1986-87 and 1987-88 were all initiated as against the assessee, admittedly, after May 8, 1989. Therefore, the Assessing Officer having territorial jurisdiction in respect of the regular assessment of the assessee could not assume jurisdiction after May 8, 1989, in respect of the matters covered under Chapter XVII-B. Thus, the orders in relation to those assessment years involved in the appeal except the assessment year 1985-86 corresponding to financial year 1984-85 cannot be sustained being without jurisdiction and a nullity. The assessment year 1985-86: So far as the assessment in respect of the financial year 1984-85 corresponding to the assessment year 1985-86 is concerned, it appears that this decision was taken on November 26, 1987 viz.: before May 8, 1989. Therefore, this was within jurisdiction. Whether hearing to be given when interest is mandatory: But an addition....
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....May 8, 1989, no proceeding under section 201(1A) could be initiated against the assessee after May 8, 1989. It was not a case of a proceeding pending before the erstwhile authorities, but a proceeding initiated after the creation of the new range and ward. The jurisdiction is not dependent on the date of accrual of the cause of action but on the date when it is initiated. It is the existence of the jurisdiction on the date of initiation of the proceeding, which is material. As such the proceedings against the present assessee in relation to the assessment years 1983-84, 1984-85, 1986-87 and 1987-88 having been initiated against the assessee, admittedly, after May 8, 1989, by the Assessing Officer having territorial jurisdiction in respect of the regular assessment of the assessee were without jurisdiction. Therefore, the orders passed by such Assessing Officer are without jurisdiction and a nullity and are liable to be set aside. The proceeding in relation to the assessment year 1985-86 having been initiated and concluded before May 8, 1989, by the Assessing Officer having territorial jurisdiction in respect of regular assessment of the assessee was within his jurisdiction and a....