important point
No demand under Section 201 (1) can be enforced after payment of taxes due. However, this will not alter the liability to charge interest under Section 201 (1A) of the Act till the date of payment of taxes or the liability for penalty under Section 271C.

JUDGMENT

B.SUDERSHAN REDDY, J.—

1.Leave granted.

2.This appeal by Special Leave preferred by the appellant-assessee is directed against the judgment of Delhi High Court dated 11.10.2006 in ITA No. 478 of 2005.

3.Briefly stated the facts are as follows :

4.The appellant-assessee is engaged in the manufacture and sale of soft drinks. The appellant- assessee entered into an agreement with M/s. Pradeep Oil Corporation for use of their premises for receipt, storage and dispatch of goods belonging to the appellant-company. There is no dispute that the appellant had paid the warehousing charges to M/s. Pradeep Oil Corporation on which tax was deducted under Section 194C of the Income Tax Act, 1961 (for short ‘the Act’) @ 2%. The Assessing Officer vide order dated 30.3.2001 held the appellant to be ‘assessee in default’ for failure to deduct tax at source in respect of warehousing charges paid to M/s. Pradeep Oil Corporation. The Assessing Officer rejected the plea of the assessee that the payments made by the appellant-company were in the nature of contractual payments on which tax was deducted under Section 194C of the Act at 2%. The Assessing Officer accordingly held that the warehousing charges were in the nature of rent as defined in Explanation to Section 194-I of the Act and, therefore, tax ought to have been deducted at 20% under the said provisions as against deduction of tax at 2% under Section 194C of the Act. The Assessing Officer having held the appellant to be ‘assessee in default’ for the shortfall in the amount of tax deducted at source levied interest under Section 201 (1A) of the Act on the amount of tax alleged to be short deducted. The Assessing Officer accordingly determined the amount of short deduction of tax and also levied interest payable thereon under Section 201 (1A) of the Act.

5.The appellant preferred an appeal against the order of the Assessing Officer before the Commissioner of Income Tax (Appeals) and thereafter before the Tribunal. The Tribunal also took the view that the appellant-assessee to be an ‘assessee in default’ in respect of the amount of short deduction of tax and also upheld the levy of interest under Section 201 (1A) of the Act. The further appeal preferred by the appellant-assessee was dismissed by the High Court on 21.5.2004.

6.The appellant thereafter preferred miscellaneous application in the appeals that were already disposed of seeking rectification of the order of the Tribunal dated 12.7.2002. Be it noted, the appellant did not raise any dispute about it being the ‘assessee in default’ and also raised no objection as regards the levy of interest under Section 201 (1A) of the Act. The grievance of the appellant was that its alternative contention that the warehouser has been assessed on its income and the tax due has been recovered from it by the department and therefore, no further tax could have been collected from the appellant has not been considered by the Tribunal in its order dated 12.7.2002. The contention was that since the tax to be recovered by the department on the income has already been paid by the assessee, no further tax should be recovered from the appellant on the same income. The Tribunal vide its order dated 13.9.2004 allowed the application of the appellant on the ground that the alternative contention of the appellant has not been considered while disposing of the appeal. The contention was specifically raised in Ground No. 7 of the memorandum of appeal preferred by the appellant. The Tribunal accordingly held, to that extent, there is a mistake apparent on the face of record and, therefore, constitutes a rectifiable mistake under Section 254 (2) of the Act. The Tribunal accordingly recalled its earlier order dated 12.7.2002 for the limited purpose of taking up the particular ground raised in Ground No. 7 in the memorandum of appeal. This order directing the reopening of the matter has attained its finality. The department did not challenge the said order.

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