B. S. Saluja, J.M. - (1.) THE assessee is in appeal against order of CIT(A), dt. 11th January, 1992, mainly on the ground of confirmation of order passed by AO under s. 201 holding that tax had not been properly deducted.
(2.) Brief facts are that on scrutiny of Form No. 24 filed on 10th July, 1989, the AO observed that net taxable salary of Kanwar Jasjit Singh, employee of the assessee-company, was Rs. 54,240, whereon tax of Rs. 11,493 was to be deducted at source but the assessee had deducted only an amount of Rs. 9,000. He, therefore, held that there was deficiency of Rs. 2,493. AO directed the assessee to pay an amount of Rs. 2,493 plus interest thereon amounting to Rs. 1,277. AO also initiated penalty proceedings under ss. 272A(2) and 271C. On first appeal, learned counsel submitted that AO had erred in directing the assessee to pay amount of Rs. 3,770 as also in initiating penalty proceedings under s. 271C/272A(2). Learned CIT(A) considered the submissions and observed that apparently the assessee has not correctly deducted tax from salary of Kanwar Jasjit Singh and it was, therefore, liable to pay balance tax which was not deducted as also interest thereon, as per provisions of s. 201. He also observed that AO has no discretion in this respect. He, therefore, upheld action of AO. With reference to penalty proceedings, CIT(A) held that no penalty has been levied as yet and, therefore, the said ground was premature and rejected.
(3.) LEARNED counsel referred to the reply filed before AO, wherein it was submitted that Kanwar Jasjit Singh had intimated the office that he will be depositing Rs. 20,000 in NSS as before and this fact resulted in short deduction. Kanwar Jasjit Singh was regular income-tax assessee and had deposited tax on his income. The assessee filed a statement of income and expenditure in the case of Kanwar Jasjit Singh. It also attached statement of income and expenditure for asst. yr. 1988-89, which clearly provided that he had been regularly depositing in NSS. The assessee, therefore, urged that there was no intentional default on the part of the company and that short deduction of tax was caused due to wrong intimation by Kanwar Jasjit Singh. CIT(A) has not taken into consideration the said submissions before confirming order of AO. LEARNED counsel referred to the decision in the case of Gwalior Rayon Silk Co. Ltd. vs. CIT (1983) 140 ITR 832 (MP), wherein the ITO made certain controversial additions to salary as a result of which TDS became less. Regular assessment of the concerned employee was completed and tax paid. It was held that ITO had no jurisdiction to demand further tax from the employer in respect of tax short deducted. It was also held that it had not been found by ITO and the Tribunal that the assessee's estimate was not honest and fair. The assessee had deducted tax from salary of the employee on salary income honestly estimated by it and had also paid tax as required by s. 200. It could not be held to be an assessee in default in respect of the tax. Therefore, the provisions of s. 201(1A) also were not attracted. It further held ....... where the regular assessment of an employee had been completed and the amount of tax was fully paid by him, the ITO (TDS) had no jurisdiction under s. 201 to demand further tax from the employer in respect of tax short deducted relating to such employee'.;