Case Law Details
Tirunelveli District Central Cooperative Bank Limited Vs JCIT- TDS (Madras High Court)
The issue under consideration is whether TDS on Cash Withdrawal u/s 194N is applicable even though the sums withdrawn is not constitute income in the hands of the recipient?
High Court states that, the stand of the learned Standing counsel that the department need not wait till the time limit for the assessees to file their returns for the assessment year gets over. It is open to the department to initiate action against the deductors, who have failed to act as per the requirements under Section 194N of the Act, as they are also deemed assessees. But then, when the enquiry is conducted, it is open to the noticees, who are to be treated as assessees in default to place materials before the Assessing Officer that the amounts received by the recipients do not represent income at their hands. If by then, the assessees had also filed their returns and the case falls under the proviso to Section 201(1) of the Act, the writ petitioners who have failed to deduct cannot be fastened with any liability. Since the Assessing Officers have not taken into account the entire scheme of the Act and had proceeded at breakneck speed, High Court constrained to interfere with the impugned proceedings and they are accordingly quashed. The matters are remitted to the file of the respective jurisdictional Assessing Officers. The Assessing Officers will issue fresh hearing notices to the writ petitioners. The writ petitioners are at liberty to bring on record the returns filed by the member-Societies who had withdrawn cash beyond the ceiling limit of Rupees One Crore. The Assessing Officers will exclude Pongal cash gift distributed by the petitioner-Banks at the instance of the Government of Tamil Nadu from the entire computation. This is because as already held the member-Societies have merely acted as business correspondents of the writ petitioners herein. As regards the remaining amounts, it is open to the writ petitioners to establish before the Assessing Officers that the sums withdrawn by the member-Societies do not represent income at their hands. As evidence the annual income tax returns filed by the member-Societies can be produced. If the second respondent is satisfied that the amounts withdrawn by the member-Societies did not in fact represent income at their hands, the jurisdictional Assessing Officers will drop further action. If they are not so satisfied, of course, it is open to the Assessing Officers to pass further orders in accordance with law.
With this liberty, the Writ Petitions stand allowed.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
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