Income-tax---

----Recovery of tax---Deduction of tax at source---Winnings from lottery-- Person paying prize deducting tax at source on prize---Prize winner is not liable to pay tax on prize---Indian Income Tax Act, 1961, Ss. 194-B & 205.

In view of section 205 of the Income Tax Act, 1961, the tax authorities cannot call upon the prize winner of lottery to make payment of the tax himself to the extent to which the tax had been deducted at source by the person paying the prize money under section 194-B of Income Tax Act.

D.K. Misra and O.T. Jamir for Petitioner.

G.K. Joshi for Respondents.

JUDGMENT

During the assessment year 1986-87, the petitioner won two lottery prizes one for the value of Rs.10,50,000 and the other for Rs.18,000. Under the provisions of section 194-B of the Income Tax Act, 1961, The person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle in an amount exceeding one thousand rupees was obliged to deduct income-tax thereon at the rates in force while making the payment thereof. In the instant case one Chandra Agencies made the payment to the petitioner of the prize money. However, while making the said payment, the said Chandra Agencies, deducted a sum of Rs.2,62,500 and a sum of Rs.4,500 on account of the said two lottery winning prizes by way of deduction at source on account of income-tax authorities. However, the said Chandra Agencies did not make any payment of the said tax deducted at source from the said prize money to the income-tax authority. As such, while making an assessment for the year 1986-87 as against the petitioner, the income-tax authority passed an order, which reads as follows:

"The credit for tax deduction at source is not given because when Chandra Agencies who made the payment to the assessee was requested to intimate the actual date of payment of tax deducted at source to the Government account, the said Chandra Agencies replied that the records have been forwarded to the Chairman, Vaibhavshali Bumper, and, accordingly, they were not able to furnish the date of payment of taxes to the Government Treasury. This explanation is not accepted and accordingly credit for this amount was not given. The credit for this will be given only when evidence as to the actual payment of the same is produce."

The writ petitioner has challenged the said order before this Court, and had submitted that in view of section 205 of the Income Tax Act, 1961, passing of such order is not permissible in law. The said section 205 is to be read along with section 201 and section 194-B of the said Act. The said section 205 and section 201, subsection (1) read as follows:

"205. Bar against direct demand on assessee.---Where tax is deductible at the source under sections 192 to 194, section 194-A, section 194-B, section 194-BB, section 194-C, section 194-D and section 195, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income.

201. Consequences of failure to deduct or pay.---(I) If any such person and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax:

Provided that no penalty shall be charged under section 221 from such person, principal officer or company unless the Income-tax Officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reasons failed to deduct and pay the tax. "

Section 194-B of the Income Tax Act, 1961, is also set out hereunder:

"194-B. Winnings from lottery or crossword puzzle.---The person responsible for paying to any person any income by way of winnings from any lottery or cross-word puzzle in an amount exceeding five thousand rupees shall, at the time of payment thereof, deduct income-tax thereon at the rates in force:

Provided that no deduction shall be made under this section from any payment made before the 1st day of June, 1972."

I have carefully gone through the provisions of the said sections and find that in view of section 205, the authorities under no circumstances can make the petitioner liable to make payment of any tax to the extent to which the tax had been deducted at source by the person paying the prize money to the petitioner under section 194-B of the Act. Admittedly, the certificate issued by Chandra Agencies to the petitioner shows that the tax liable to be deducted at source was in fact deducted by the said Chandra Agencies and thereafter it was no more the liability or responsibility of the petitioner to pay any tax amount mentioned therein.

In the premises, I hold that the said order passed by the Income-tax Officer regarding the tax deducted at source is illegal and contrary to the provisions of section 205 of the Act and the same is quashed and/or set aside. This order would not, however, prevent the income-tax authority to proceed against the said Chandra Agencies to realise the tax deducted at source. The income-tax authorities will take appropriate steps in the matter.

In the result, the petition is disposed of. There will be no order as to cost.

M.B.A./1564/FCOrder accordingly