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Omprakash Agarwal Vs. Income-tax Officer, b Ward and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberC.R. No. 1517(W) of 1969
Judge
Reported in[1976]102ITR432(Cal)
ActsIncome Tax Act, 1961 - Sections 124, 126, 206 and 276; ;Income Tax Rules, 1962 - Rule 32(2)
AppellantOmprakash Agarwal
Respondentincome-tax Officer, "b" Ward and ors.
Appellant AdvocateS.K. Ghosh, Adv.
Respondent AdvocateNanda Lal Pal, Adv.
Excerpt:
- .....in form no. xxiv and the said form of the return also indicates the manner of verification of such return. rule 35(2) provides that such a return is to be delivered to the income-tax officer specified in rule 32(2). under rule 32(2) of the rules, where the jurisdiction over the employees has been vested in any particular income-tax officer under section 126 of the act, the return under section 206 of the act is to be sent to the said income-tax officer. in other cases such return is to be sent to the income-tax officer within whose area or jurisdiction the office of the person responsible for paying the salaries is situated, if there is more than one income-tax officer having jurisdiction in the same area in which the office of such a person is situated, the income-tax officer specified.....
Judgment:

Debiprosad Pal, J.

1. The petitioner in this application has challenged the notice dated 13th March, 1969, issued by the Income-tax Officer, 'B' Ward, Siliguri, whereby he was called upon to furnish the annual return for the financial year 1967-68, under Section 206 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act').

2. The petitioner states that after the death of his father on 8th May, 1968, he as karta of the joint Hindu family of the deceased was managing the Bagdogra Tea Estate having its head office and principal place of business at 72, Girish Park North, Calcutta-6, and the garden at Bagdogra in the districtof Darjeeling. It is alleged that Bagdogra Tea Estate is a regular assessee under Income-tax Officer, 'A' Ward, District II(I), Calcutta, and has been assessed by the said Income-tax Officer up to the assessment year 1964-65. The petitioner received two notices dated 13th March, 1962, from the respondent No. 1, Income-tax Officer, 'B' Ward, Siliguri, from which it appears that he had not yet submitted the annual return for the financial year 1967-68 under Section 206(1) of the Act. The petitioner was further requested to furnish the annual return under the aforesaid section failing which he was asked to show cause why penalty under Section 276(b) of the Act should not be imposed upon him. The case was fixed for hearing on 21st March, 1969, when he was asked to produce evidence of filing of annual return under Section 206(1) of the Act, if the same was already furnished, on 21st March, 1969. On the same date, i.e., 13th March 1969, the respondent No. 1 issued a notice upon the principal officer, Bagdogra Tea Estate, whereby the said principal officer was called upon to show cause why penalty under Section 221(1) of the Act should not be imposed for failure to deduct tax on the amount of the 'salaries' payable to the employees. The said case was also fixed on 21st March, 1969. The petitioner's advocate by a letter dated 1st April, 1969, addressed to the respondent No. 1 pointed out that Bagdogra Tea Estate is not an assessee in the ward of respondent No. 1 and it has been regularly assessed by the Income-tax Officer, 'A' Ward, District II(I). It was, therefore, contended that respondent No. 1 had no authority, competence and/or jurisdiction to issue the said notice dated 13th March, 1969, On this allegation the petitioner came to this court and obtained a Rule nisi.

3. An affidavit by Sachindra Kumar Bose affirmed on 5th February, 1971, has been filed on behalf of respondents Nos. 1 and 2. In paragraph 5 of the said affidavit it is stated that Messrs. Bagdogra Tea Estate is being assessed to income-tax in respect of the firm's income. Hence the employees of the company at Bagdogra for the purpose of assessment fall within the jurisdiction of respondent No. 1 in pursuance of order No. 2P/6/67-68 dated 31st August, 1967, issued by the Commissioner of Income-tax, West Bengal-1, in exercise of his power conferred by Sub-sections (1) and (2) of Section 124 of the Act. It is further stated in the said affidavit that a notice under Section 206(1) of the Act was issued by respondent No. 1 as he had got the jurisdiction over the employees of the said company in pursuance of the aforesaid order of the Commissioner of Income-tax. It is further alleged that although the petitioner was called upon to submit the annual return of its employees for the financial year 1967-68 and the date was fixed for hearing on 21st March, 1969, the petitioner instead of complying with the said notice and appearing before the respondent No. 1 rushed to this court for cancellation of the said notices.

4. The question which falls for consideration in this case is whether respondent No. 1 has jurisdiction to issue the notices dated 13th March, 1969, calling upon the petitioner to submit the annual return under Section 206 of the Act, and if so whether the proceedings for the imposition of penalty under Section 276(b) of the Act for failure to furnish the annual return under Section 206 of the Act have been validly initiated.

5. Under Section 192 of the Act any person responsible for paying any income chargeable under the head 'Salaries' is under an obligation to deduct, at the time of payment, income-tax on the amount payable calculated at the rate prescribed for the year in which the payment is made. Section 206 requires the employer to furnish a return in writing in the prescribed form and verified in the prescribed manner. Such a return is to be filed within 30 days from the 31st of March in each year. The return is intended to help detection oi any avoidance of tax and hence the particulars to be known in such a return are confined to information regarding the payment of income, the amount deducted from the income of such person, the name and address of such person and others. Rule 35(1) of the Income-tax Rules, 1962, hereinafter referred to as the 'Rules', requires the return to be prepared in Form No. XXIV and the said form of the return also indicates the manner of verification of such return. Rule 35(2) provides that such a return is to be delivered to the Income-tax Officer specified in Rule 32(2). Under Rule 32(2) of the Rules, where the jurisdiction over the employees has been vested in any particular Income-tax Officer under Section 126 of the Act, the return under Section 206 of the Act is to be sent to the said Income-tax Officer. In other cases such return is to be sent to the Income-tax Officer within whose area or jurisdiction the office of the person responsible for paying the salaries is situated, If there is more than one Income-tax Officer having jurisdiction in the same area in which the office of such a person is situated, the Income-tax Officer specified by the Commissioner is to be the appropriate authority to whom such a return is to be sent. In a case where such a return is to be sent under Rule 32(2)(ii) to the Income-tax Officer within whose area or jurisdiction the office of the employer responsible for paying the salaries is situated, the employer is required to draw up in separate parts, one for each place where the employees are stationed and an additional extract of those parts relating to employees who are residing outside the jurisdiction of the Income-tax Officer before whom such a return is filed. They are also to be sent along with the return. This obligation to file a return under Section 206 of the Act read with Rules 32, 35 and 36 is independent of and distinct from the statutory obligation of a person to file his return of income under Section 139(1) of the Act. Failure to furnish such a return under Section 206 of the Act without reasonable cause or excuse may render a person liableto be punished with fine under Section 276(b) of the Act which may extend to Rs. 10 for every day during which the default continues.

6. The counsel for the respondents submitted that in view of the order dated 31st August, 1967, made by the Commissioner under Section 124(1) and (2) of the Act the petitioner has a statutory obligation to furnish the return under Section 206 read with Rule 32(2Xii) before respondent No. 1 who has the jurisdiction in respect of the salaried employees of the petitioner. The learned counsel placed before me the order being No. 2P/6/67-68 dated 31st August, 1967, passed by the Commissioner of Income-tax, West Bengal-1, under Section 124(1) and (2) of the Act. The said order, with the consent of the parties, is kept on record and forms a part of it. The material portion of the said order is set out as below :

1.Income-tax Officer, A-Ward, Siliguri, Income-tax Circle, Siliguri.

(i)All limited companies having their principal place of business within the revenue Sub-Division of Siliguri.

(ii)The cases of all directors and managing agents of the companies referred to at (i) above.

(iii)All persons having their principal place of business or profession within the Municipal Wards Nos. II, III, XV, XVI, XVII & XVIII of the Siliguri Police Station.

(iv)All persons who are partners of firms included in (iii) above.

(v)All new cases started as a result of survey operations or otherwise within the sub-division of Siliguri where the returned total income for the first year of assessment is Rs. 25,000 or above.

(vi)All persons who are partners of firms included in (v) above.

2.Income-tax Officer, B-Ward, Siliguri, Income-tax Circle, Siliguri.

All persons within the revenue subdivision of Siliguri except those mentioned in (i) to (vi) above.

7. The learned counsel for the respondents may be light in his submission that respondent No. 1 by virtue of the aforesaid order has the jurisdiction in respect of the employees of the petitioner who are within the revenue sub-division of Siliguri. This, however, does not confer upon the respondent any jurisdiction or authority to calf upon the petitioner to furnish a return under Section 206 of the Act before him. Rule 32(2) of the Rules specifies the Income-tax Officer to whom an employer is obligedto send a return under Section 206 of the Act. In a case where there is an order under Section 126 of the Act by the Board by which the jurisdiction over the employees has been vested in any particular Income-tax Officer, the employer is under the obligation to send the returns to him. I specifically enquired as to whether there had been any such order by the Board under Section 126 of the Act vesting the jurisdiction over the employees of the petitioner in any Income-tax Officer. The learned counsel for the respondents was unable to refer me to any such order made under Section 126 of the Act. The order made by the Commissioner of Income-tax on which reliance has been placed cannot be treated as an order under Section 126 of the Act. An order under Section 126 of the Act can be made only by the Board and not by the Commissioner of Income-tax. Secondly, the Commissioner of Income-tax has made this order specifically in exercis'e of power conferred upon him under Section 124(1) and (2) of the Act. In my view, in the absence of any order made under Section 126 of the Act, the respondents cannot assume any jurisdiction under Rule 32(2)(i) of the Rules to call upon the petitioner to furnish a return under Section 206 of the Act. The learned counsel for the respondents submitted that by reason of Rule 32(2)(ii) of the Rules respondent No. 1 has the jurisdiction and the power to call for such a return. In my view this contention of the learned counsel for the respondents has no substance. Rule 32(2)(ii) of the Rules specifically provides that in a case not covered by Clause (i) of Rule 32(2), the Income-tax Officer within whose area or jurisdiction the office of the employer responsible for paying the salaries is situated is the authority before whom such a return is to be sent. There is no allegation by the respondents that the office of the petitioner responsible for paying the salaries to the employees is situated within the area or jurisdiction assigned to respondent No. 1. On the other hand, the petitioner has made a specific allegation in paragraph 7 of the petition that the head office and principal place of business of Bagdogra Tea Estate is at 72, Girish Park North, Calcutta-6, from where the entire business is directed and controlled. The respondent No. 1 in his affidavit also did not rest his case on the ground that the office of the petitioner responsible for paying the salaries to the employees is situated within his jurisdiction. He has pleaded that he has jurisdiction to call for the return on the ground that the salaried employees of the company at Bagdogra Tea Estate fall within his jurisdiction by reason of an order dated 31st August, 1967, issued by the Commissioner of Income-tax. This in my view does not authorise him to call for a return under Section 206 of the Act as he is not the appropriate Income-tax Officer under Rule 32(2) of the Rules who has the competence and the jurisdiction to call for such a return. If he has no such jurisdiction to call upon the petitioner to submit a return under Section 206 of the Act,a fortiori he has no such jurisdiction to initiate any proceeding under Section 276(h) of the Act for failure to furnish such a return.

8. The result is that the said notices dated 13th March, 1969, issued by respondent No. 1 are quashed and/or set aside. There will be a writ in the nature of certiorari for that purpose. There will also be a writ in the nature of mandamus commanding the respondents to forbear from giving any effect to the said notices dated 13th March, 1969. 1, however, have not adjudicated upon the merits of the contention as to whether the petitioner is liable to any penalty or to any other consequences under the Act for the alleged failure to furnish any return under Section 206 of the Act or for the alleged failure to deduct the tax at the time of the payment of salaries to the employees. I also make it clear that this order in no way will affect or prejudice the right of the appropriate Income-tax Officer to take any appropriate action under the law against the petitioner. This Rule is made absolute to the extent indicated above. There will be no order as to costs.


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