Law:

Section:

Section 131, read with section 206, of the Income-tax Act, 1961 - Discovery, production of evidence, power regarding - Whether where power enjoyed by Assessing Officers under section 131 to make queries from employer in case of non-fulfilment of requirement of section 206 was given to TDS officials in 1999 for first time, making of such queries by those officials prior to 1999, in absence of an appropriate authority, was without jurisdiction - Held, yes FACTS The assessee-employer in discharge of its bounden duty under section 206, deducted tax at source out of the salary income of its employees on a tentative basis and deposited the same with the appropriate authority along with the requisite form. On receipt of said form in the early part of 1990s, the TDS official raised several queries which were replied to by the assessee. However, dissatisfied with said explanations, he went on to make further queries on the subject. On writ petition filed by the assessee challenging the authority and propriety of the said officials to make such queries, which were otherwise entrusted to the Assessing Officers under section 131, the Single Judge of the High Court dismissed said petition by relying upon certain circular issued by the Central Government in 1999 in which TDS officials were also empowered to make queries from the employer under section 131, which was usually the power of the Assessing Officer. On appeal : HELD On reading of 1999 circular, it is clear that the power was extended to the TDS official and such notification would take effect from the date of the said order, meaning thereby the date of issuance of the said circular. Hence, such power was given to the TDS official in 1999 for the first time. The Single Judge held that such power was impliedly with TDS official as he had the power to impose penalty in case of non-fulfilment of the requirement of section 206. [Para 17] Tax deduction at source is a method of recovery of the tax in advance. Section 206 obligates the employer to deduct such tax from the salaries of the employees, who would otherwise come within the tax net. This is a method of recovery and not an assessment or adjudication. Once an…

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