By TIOL News Service

PATNA, APRIL 02, 2018: THE issue is - Whether when the assessee is a State Govt Department engaged in development of rural India, it is fair on part of Revenue to attach bank account for deposit of TDS in wrong manner. NO is the verdict.

Facts of the case:

The Assessee-department, engaged in constructing and maintaining the rural roads. The Assessee had filed its TDS return for the relevant AY. During the assessment proceeding, the Revenue noted that the Assessee had deposited the tax in a wrong TAN number, as a result, the computer system in which the deposit was made failed to reflect the deposit made by the Assessee. However, the Assessee submitted that due to certain administrative and technical defects, their deposit with the I-T Department was not properly reflected. The Revenue indicated that in view of the technical nature of working of the CPC System at Bengaluru, defects could not be cured and the Assessee was required to take certain actions in such matter. But, when no action was taken by the Assessee, the Revenue proceeded to attach the bank account of the Assessee.

the High Court held that,

++ the Revenue may be right in contending that the tax has been deposited in wrong manner because of which the deposit is not recorded and the correction is not possible and therefore, the Assessee should take certain action in the matter. Even if the Assessee did not take any action in the matter, the Revenue should not have attached the Assessee's bank account, instead should have taken up the issue before the higher authority of their department and tried to find out ways to resolve the same, instead of taking the extreme coercive action of attaching the bank account of the Assessee which has consequential effect of creating adverse effect in public functioning and managing the govt accounts, payment of salary to the employees and the public at large;

++ the manner in which both the Revenue and Assessee have functioned is not appreciable. Instead of approaching this Court, the Assessee should have taken up the issue through their departmental head with the I-T Department and thereafter tried to resolve the issue. The I-T Department also, in case it found that the Assessee has not deposited the tax in the correct form, should have taken up the issue with the Assessee's higher authorities or the State Government and tried to resolve the issue. Instead of doing so, the I-T Department took the most extreme coercive steps and the Assessee, therefore, approached this Court. In doing so, not only the public money, but public time and various other adverse effect has been caused;

++ this is a case where the Principal Chief Commissioner of the I-T Department and the Principal Secretary of the Assessee should be directed to sit and resolve the issue in question and till then the Assessee's bank account should be released.

(See 2018-TIOL-561-HC-PATNA-IT)