Allowing the petition the Court held that the notices were given hardly a few days’ time to appear and respond. Therefore the process adopted by the respondents could not be said to be fair compliance with the principles of natural justice. The writ petitions were maintainable. However, the Department need not wait till the time limit for the assessees to file their returns for the assessment year to get over. It was open to the Department to initiate action against the deductors, who had failed to act in accordance with the requirements under section 194N of the Act, as they were also deemed assessees. But when the enquiry was conducted, it was open to the notices, who were to be treated as assessees in default to place materials before the Assessing Officer to show that the amounts received by the recipients did not represent income at their hands. The proceedings and orders were not valid. (AY. 2020-21)
Tirunelveli District Central Co-Operative Bank Ltd. v. Jt.CIT (TDS) (2020) 428 ITR 249 / 275 Taxman 60 / ( 2021 ) 202 DTR 61/ 321 DTR 86 (Mad.)(HC)
S. 194N : Payment of certain amounts in cash-Enquiry prior to commencement of relevant assessment year-Principle of natural justice is violated-No adequate opportunity to respond to notice-Notice is held to be not valid-Existence of alternate remedy is not an absolute bar on issue of writ. [S. 201(1), 201(IA), Art. 226]