The Chief Manager Punjab National Bank V. The Commissioner Of Income Tax and Ors

CWJC/2641/2013

AI Insights

The case involves the Punjab National Bank, Patna, as the petitioner, who challenged the orders of the Assistant Commissioner of Income Tax (TDS) and the Commissioner of Income Tax (TDS) regarding a demand notice for a shortfall in tax deduction at source for the financial years 2007-2008 and 2008-2009. The dispute centered on whether the tax deduction for a generator hired under a works contract should be at 2% under Section-194(C) of the Income Tax Act, or at a higher rate under Section-194(I). The petitioner argued that the contract was a works contract, thus applicable for a 2% deduction, while the tax authorities contended otherwise. The court upheld the tax authorities' decision, noting the petitioner's failure to provide sufficient evidence to support their claim.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 751502 (HC-PATNA)
• Appeal Type: Others
• Pronouncement Date: 08-02-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: HARSHWARDHAN PRASAD; ARCHANA SINHA
• Assessee Lawyers: A K RASTOGI; MANISH RASTOGI
• Keywords: Demand notice; Income Tax; Tax deduction at source; Works contract; Generator Hire
• Section: 264; 194 I; 194(C)

Judgement Text

"IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.2641 of 2013 ====================================================== 1. The Chief Manager, Punjab National Bank, Patna, Through Its Chief Manager, Shri Arbind Kumar S/O Late R.N. Singh R/O 125-B, Road No.2, Rajendra Nagar, Patna- 800016, P.O.- Arya Kumar Road & P.S.- Kadam Kuan, Distt.- Patna .... .... Petitioner/s Versus 1. The Commissioner Of Income Tax (TDS), Central Revenue Building, Bir Chand Patel Path, Patna 2. The Assistant Commissioner Of Income Tax (TDS), Central Revenue Building, Bir Chand Patel Path, Patna 3. The Union Of India Through The Secretary Department Of Revenue, Ministry Of Finance, Government Of India, Central Secretariat, North Block, New Delhi - 110001 .... .... Respondent/s ====================================================== Appearance : For the Petitioner/s : Mr. A.K. Rastogi, Adv. Mr. Manish Rastogi, Adv. For the Respondent/s : Mr. Harshwardhan Prasad, Adv. Mrs.Archana Sinha, Adv. ====================================================== CORAM: HONOURABLE MR. JUSTICE NAVIN SINHA and HONOURABLE MR. JUSTICE SHIVAJI PANDEY ORAL ORDER (Per: HONOURABLE MR. JUSTICE NAVIN SINHA) 2 08-02-2013 We have heard learned counsel for the petitioner and the respondent. The petitioner is aggrieved by order dated 20.5.2010 passed by the A.C.I.T. (T.D.S.) for the financial year ‘2007-2008 and 2008-2009’ and the consequent demand notice dated 20.5.2010 for Rs.21,670.00 the short fall of the tax deduction at source in respect of the generator hired by the petitioner from M/s. Roy Electricals along with interest of Rs.4,472.00. The order has been Patna High Court CWJC No.2641 of 2013 (2) dt.08-02-2013 2 affirmed in revision under Section-264 of the Income Tax Act by the C.I.T. (T.D.S.) on 13.3.2012. The relevant provisions of the Income Tax Act for our consideration are Sections-194(C) and 194(I) dealing with deduction of tax at source. At the relevant point of time when the demand was raised the rate for deduction of tax under Section-194(C) was 2% and that under Section-194(I) was 10%. Subsequently, in the year-2009 the rates under Section-194(I) has also been reduced to 2%. Learned counsel for the petitioner submitted that the generator was hired on works contract basis under which the maintenance of the generator was to be done by the service provider himself and accordingly the deductions were made under Section-194(C) at the rate of 2%. This specific stand was taken in reply to the show cause notice. If the Income Tax Authorities were of the opinion otherwise and liability was desired to be fastened more onerously under Section-194(I), before repelling the contention of the petitioner the authorities were required to disclose the basis on which any adverse conclusions was being drawn by them. It was next submitted that even if the petitioner did not submit any written contract agreement before the A.C.I.T. (T.D.S.), the revisional authority was required to hold an enquiry for his Patna High Court CWJC No.2641 of 2013 (2) dt.08-02-2013 3 satisfaction, especially when the petitioner had contended that it was a works contract disputing the opinion of the Department. Learned counsel for the Department has opposed the application. He submits that both the A.C.I.T. and the C.I.T.(T.D.S.) provided opportunities to the petitioner to furnish materials in support of their stand that it was a works contract, but the petitioner failed to produce any materials. The adverse inference drawn by the Department in the facts of the case cannot be faulted with. We have considered the submissions made on behalf of the parties and do not find any reason to interfere with the impugned orders. The demand notice was in essence a show cause notice. The petitioner was required to answer the same appropriately. A contract can be written or oral. Even if the petitioner did not have a written contract, nothing precluded it from placing appropriate evidence in support of an oral contract and the terms of the same. The enquiry contemplated under Section-264, as urged on behalf of the petitioner, would have been occasioned if the defence taken with appropriate materials had not been considered properly and the conclusion would have been erroneous. The failure of the petitioner to produce any evidence Patna High Court CWJC No.2641 of 2013 (2) dt.08-02-2013 4 whatsoever in support of its stand for a works contract, satisfies us that the conclusion arrived at by the respondents was a reasonable and possible view and also an adverse inference which does not merit interference in the writ jurisdiction. The writ application is dismissed. NAFR/ K.C.jha/- (Navin Sinha, J) (Shivaji Pandey, J) "