Commissioner of Income Tax vs Life Insurance Corporation

Sohani, J.—By this reference u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), the Income Tax Appellate Tribunal, Indore Bench, has referred the following question of law to this court for its opinion:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that where regular assessment of an employee has been completed and the amount of tax fully paid by him, the Income Tax Officer (TDS) has no jurisdiction u/s 201 of the Act, 1961, to demand further tax from the employer in respect of the tax short-deducted relating to such employee ?"

The material facts giving rise to this petition, briefly, are as follows : In accordance with the provisions of Section 206 of the Act, the Divisional Manager of the Life Insurance Corporation of India, Sagar, filed for the assessment year 1977-78, the annual return of salary income in respect of its employees showing the amount of tax deductible u/s 192 of the Act. The Income Tax Officer (TDS), Bhopal, found that the tax deductible u/s 192 of the Act, was not properly deducted by the assessee in the cases of some of its employees. The Income Tax Officer, therefore, recomputed the income of those employees and demanded u/s 201 of the Act, the additional tax that should have been deducted u/s 201 of the Act. The appeal preferred by the assessee before the Commissioner of Income Tax (Appeals) was allowed. On further appeal preferred by the Department before the Tribunal, the Tribunal upheld the order of the Commissioner of Income Tax (Appeals) in this behalf. Hence, at the instance of the Department, the Tribunal has referred the aforesaid question of law to this court for its opinion.

Having heard learned counsel for the Department, we have come to the conclusion that the reference has to be answered in the affirmative and against the Department. It has been held by a Division Bench of this court in Commissioner of Income Tax Vs. Divisional Manager, New India Assurance Co. Ltd., , that where a regular assessment of an employee had been completed and the amount of tax was fully paid by him, the Income Tax Officer (TDS) had no jurisdiction u/s 201 of the Act to demand further tax from the employer in respect of the tax short-deducted relating to such employee.

In view of the decision of this court in Commissioner of Income Tax Vs. Divisional Manager, New India Assurance Co. Ltd., , our answer to the question referred to this court is in the affirmative and against the Department. In the circumstances of the case, parties shall bear their own costs of this reference.