Bhagwati Prasad, J. - (1.) THE present batch of petitions involve identical questions of law and facts. In this background, they are decided by a common judgment. For the factual matrix, details of the case of Chhogmal Chiranji Lal v. Commissioner of Income-tax, are taken into consideration.
(2.) IN this case, the petitioner has challenged the action of the respondents in issuing the orders annexure 3 and annexure 5. The orders impugned have been passed against the petitioner in the background that there were certain deposits with the petitioner and he was required to deduct income-tax on the payment "of interest on such deposits. Section 201(1) of the INcome-tax Act, 1961 (hereinafter referred to as "the Act"), provides that as and when such tax is paid on deposits, tax is required to be deducted at source. Such deduction is waived where the recipient of interest, even after receiving the interest does not become a person, who is liable to pay tax and furnishes a Form No. 15H. This is the admitted position that the petitioner had paid interest to depositors. From such depositors Form No. 15H was not received by him for the financial year 1998-99 up to March 31, 1999. Section 201(1) of the Act requires that as and when interest is paid on deposits, tax is required to be deducted at source. This is permitted to be not done when the recipient furnishes Form No. 15H, within the financial year. Section 201(1) of the Act is reproduced hereinbelow : "(1) If any such person and in the cases referred to in Section 194, the principal officer and the company of which he is the principal officer does not deduct the whole or any part of the tax 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 Section 221 from such person, principal officer or company unless the Assessing Officer 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." A show-cause notice was issued to the petitioner on May 26, 1999, deeming him to be an assessee in default in respect of the tax which was required to be deducted by him at source for the financial year 1998-99. In the notice annexure 2, it was said that why the case of the petitioner be not referred to the Commissioner of Income-tax for the levy of penalty. The argument of learned counsel for the petitioner is that notice annexure 2 which requires him to show cause has not clearly recorded that the petitioner is an assessee in default. The relevant para, of the notice annexure 2 reads as under : "(b) although you had paid interest exceeding Rs. 2,500 to various creditors and from whom you had not received Form No. 15H during the financial year 1998-99, yet you have not deducted tax at source." Learned counsel for the petitioner submits that in terms of Section 197A(1A) of the Act, no limitation is prescribed for submission of Form No. 15H. As per Section 197(2} of the Act, the petitioner could deposit the form so received by the seventh day of the month next following the month in which the declaration is furnished to him. If the petitioner has received Form No. 15H on April 1, 1999, then, it is a mere technical default and no tax can be recovered from the petitioner.
(3.) THE petitioner's further case is that the petitioner has received the form on April 1, 1999, and thus, it should be deemed that the requirement of law has been complied with because he could submit it to the Department up to April 7, 1999. THE petitioner had received the form before he was required to submit the same to the authorities. THE petitioner has further submitted that the Income-tax Officer (TDS) who had issued notice annexure 2 had no jurisdiction to assess and pass an order annexure 3 because under Section 197 of the Act, it is the Commissioner or Joint Commissioner who are the officers to whom the matter is to be referred and, therefore, the notice is bad for want of jurisdiction also. Learned counsel for the respondents had joined issue and has contested that receiving Form No. 15H on April 1, 1999, does not absolve the liability of the petitioner of paying tax. Section 201 of the Act provides a deeming clause that as and when the payer of the interest does not deduct the whole or any part of the tax he will be deemed to be an assessee in default in respect of tax. The exception to it is provided in Section 197A(1A) of the Act which reads as under : "(1A) Notwithstanding anything contained in Section 193 or Section 194A or Section 194K, no deduction of tax shall be made under any of the said sections in the case of a person (not being a company or a firm), if such person furnishes to the person responsible for paying any income of the nature referred to in Section 193 or Section 194A or Section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil." This is the admitted part of the case that until the end of the financial year 1998-99, form was not received by the petitioner. Until the petitioner receives Form No. 15H, he was under obligation to deduct the tax. Since, the obligation was not discharged by the petitioner, it was tantamount to a default. By the deeming clause under Section 201(1) of the Act by such an act the petitioner was liable to be branded as an assessee in default. ;