Om Prakash Gattani Vs. Assistant Commissioner of Income Tax and ors. - Court Judgment

SooperKanoon Citationsooperkanoon.com/895888
SubjectDirect Taxation
CourtGuwahati High Court
Decided OnAug-02-1996
Case NumberCivil Rule No. 1487 of 1991
Reported in(1997)142CTR(Gau)340
AppellantOm Prakash Gattani
RespondentAssistant Commissioner of Income Tax and ors.
Excerpt:
- s. l. saraf, j. :during the asst. yr. 1986-87, the petitioner won two lottery prizes one for the value of rs. 10,50,000 and the other for rs. 18,000. under the provisions of s. 194b of the it act, 1961, the person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle in an amount exceeding one thousand rupees was obliged to deduct income-tax thereon at the rates in force while making the payment thereof. in the instant case one chandra agencies made the payment to the petitioner of the prize money. however, while making the said payment, the said chandra agencies, deducted a sum of rs. 2,62,500 and a sum of rs. 4,500 on account of the said two lottery winning prizes by way of deduction at source on account of it authorities. however, the said chandra agencies did not make any payment of the said tax deducted at source from the said prize money to the it authority. as such, while making an assessment for the year 1986-87 as against the petitioner, the it authority passed an order which reads as follows :'the credit for tax deduction at source is not given because when chandra agencies who made the payment to the assessee was requested to intimate the actual date of payment of tax deducted at source to the government account, the said chandra agencies replied that the records have been forwarded to the chairman, vaibhavshali bumper, and, accordingly, they were not able to furnish the date of payment of taxes to the government treasury. this explanation is not accepted and accordingly credit for this amount was not given. the credit for this will be given only when evidence as to the actual payment of the same is produced.'2. the writ petition has challenged the said order before this court, and has submitted that in view of s. 205 of the it act, 1961, passing of such order is not permissible in law. the said s. 205 is to be read along with s. 201 and s. 194b of the said act. the said s. 205 and s. 201, sub-s. (1), read as follows :'205. bar against direct demand on assessee. - where tax is deductible at the source under ss. 192 and 194, s. 194a, s. 194b, s. 194bb, s. 194c, s. 194d and s. 195, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income.201. consequences of failure to deduct or pay. - (1) if any such person and in the cases referred to in s. 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax :provided that no penalty shall be charged under s. 221 from such person, principal officer or company unless the ito is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax.'sec. 194b of the it act, 1961, is also set out hereunder :'194b. winnings from lottery or crossword puzzle - the person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle in an amount exceeding five thousand rupees shall, at the time of payment thereof, deduct income-tax thereon at the rates in force :provided that no deduction shall be made under this section from any payment made before the 1st day of june, 1972.'3. i have carefully gone through the provisions of the said sections and find that in view of s. 205, the authorities under no circumstances can make the petitioner liable to make payment of any tax to the extent to which the tax had been deducted at source by the person paying the prize money to the petitioner under s. 194b of the act. admittedly, the certificate issued by chandra agencies to the petitioner shows that the tax liable to be deducted at source was in fact deducted by the said chandra agencies and thereafter it was no more the liability or responsibility of the petitioner to pay any tax amount mentioned therein.in the premises, i hold that the said order passed by the ito regarding the tax deducted at source is illegal and contrary to the provisions of s. 205 of the act and the same is quashed and/or set aside. this order would not, however, prevent the it authorities to proceed against the said chandra agencies to realise the tax deducted at source. the it authorities will take appropriate steps in the matter.in the result, the petition is disposed of. there will be no order as to costs.
Judgment:

S. L. SARAF, J. :

During the asst. yr. 1986-87, the petitioner won two lottery prizes one for the value of Rs. 10,50,000 and the other for Rs. 18,000. Under the provisions of s. 194B of the IT Act, 1961, the person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle in an amount exceeding one thousand rupees was obliged to deduct income-tax thereon at the rates in force while making the payment thereof. In the instant case one Chandra Agencies made the payment to the petitioner of the prize money. However, while making the said payment, the said Chandra Agencies, deducted a sum of Rs. 2,62,500 and a sum of Rs. 4,500 on account of the said two lottery winning prizes by way of deduction at source on account of IT authorities. However, the said Chandra Agencies did not make any payment of the said tax deducted at source from the said prize money to the IT authority. As such, while making an assessment for the year 1986-87 as against the petitioner, the IT authority passed an order which reads as follows :

'The credit for tax deduction at source is not given because when Chandra Agencies who made the payment to the assessee was requested to intimate the actual date of payment of tax deducted at source to the Government account, the said Chandra Agencies replied that the records have been forwarded to the Chairman, Vaibhavshali Bumper, and, accordingly, they were not able to furnish the date of payment of taxes to the Government Treasury. This explanation is not accepted and accordingly credit for this amount was not given. The credit for this will be given only when evidence as to the actual payment of the same is produced.'

2. The writ petition has challenged the said order before this Court, and has submitted that in view of s. 205 of the IT Act, 1961, passing of such order is not permissible in law. The said s. 205 is to be read along with s. 201 and s. 194B of the said Act. The said s. 205 and s. 201, sub-s. (1), read as follows :

'205. Bar against direct demand on assessee. - Where tax is deductible at the source under ss. 192 and 194, s. 194A, s. 194B, s. 194BB, s. 194C, s. 194D and s. 195, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income.

201. Consequences of failure to deduct or pay. - (1) If any such person and in the cases referred to in s. 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax :

Provided that no penalty shall be charged under s. 221 from such person, principal officer or company unless the ITO is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax.'

Sec. 194B of the IT Act, 1961, is also set out hereunder :

'194B. Winnings from lottery or crossword puzzle - The person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle in an amount exceeding five thousand rupees shall, at the time of payment thereof, deduct income-tax thereon at the rates in force :

Provided that no deduction shall be made under this section from any payment made before the 1st day of June, 1972.'

3. I have carefully gone through the provisions of the said sections and find that in view of s. 205, the authorities under no circumstances can make the petitioner liable to make payment of any tax to the extent to which the tax had been deducted at source by the person paying the prize money to the petitioner under s. 194B of the Act. Admittedly, the certificate issued by Chandra Agencies to the petitioner shows that the tax liable to be deducted at source was in fact deducted by the said Chandra Agencies and thereafter it was no more the liability or responsibility of the petitioner to pay any tax amount mentioned therein.

In the premises, I hold that the said order passed by the ITO regarding the tax deducted at source is illegal and contrary to the provisions of s. 205 of the Act and the same is quashed and/or set aside. This order would not, however, prevent the IT authorities to proceed against the said Chandra Agencies to realise the tax deducted at source. The IT authorities will take appropriate steps in the matter.

In the result, the petition is disposed of. There will be no order as to costs.