MISC. APPEAL No.8 OF 2002 --- Against the order dated 8.8.2001 passed by the Income tax Appellate Tribunal, Patna Bench, Patna in I.T.A.No.121 (PAT)/2001. COMMISSIONER OF INCOME TAX--------(Appellant) Versus ACCOUNTS OFFICER-------------- Respondents) with MA No.9 oF 2002 COMMISSIONER OF INCOME TAX & ANR- (Appellant) Versus ACCOUNTS OFFICER------------ (Respondents) --- For the appellant : Mr. Harshwardan Prasad Ms. Archana Shahi, Advocates. For the Respondent : Dr. R.Usha, Advocate --- P R E S E N T THE HON'BLE MR. JUSTICE CHANDRAMAULI KR. PRASAD THE HON'BLE DR. JUSTICE RAVI RANJAN Prasasd & Ranjan,JJ. Both the appeals arise out of a common judgment and as such, they have been heard together and are being disposed of by this common judgment. Short facts, giving rise to the present appeals, are that the Accounts Officer of Barauni Thermal Power Station, Barauni, hereinafter referred to as „the assessee‟ is the person responsible for payment of the salary of the employees. He did not deduct income tax amounting to Rs.15,16,848/- as required under Section 192(1) of the Income Tax Act, while making 2 payment of the salary to the employees of the Barauni Thermal Power Station for assessment year 1998-99. The assessee deposited the said amount of tax in the account of the Central Government in three instalments. It deposited a sum of Rs.85000/ on 27.9.1997, Rs. 10 lacs on 31.3.1998, Rs. 4,31,848 on 2nd June, 1998. In the opinion of the Assessing Officer, assessee was liable to pay tax from the salary of the employees every month, which it failed to do and accordingly, levied a sum of Rs.1,31,775/- as interest on the assessee under Section 201 (1A) of the Income Tax Act, for short „the Act‟ by order dated 11.10.1999. For the assessment year 1999-2000, the assessee deposited a sum of Rs.48,05,092/- in the account of the Central Government on different dates. It deposited a sum of Rs.7 lacs on 9.1.1999, Rs.25 lacs on 31.3.1999, Rs. 16,05,092/ on 4.5.1999, Rs.88,045/- on 12.8.1999 and Rs.283 on 10.9.1999. The Assessing Officer imposed interest to the tune of Rs.4,04,650/- on the assessee. Aggrieved by the same, the assessee preferred two separate appeals before the Commissioner of Income Tax (Appeal), who partly allowed the same and directed the Assessing 3 Officer to charge interest on the amount, which remained unpaid on 8th of April, 1998 and 8th of April, 1999 for the assessment years l998-99 and 1999-2000 respectively. The Assessing officer, hereinafter referred to as the Revenue, aggrieved by the same, preferred separate appeals before the Patna Bench of the Income Tax Tribunal, hereinafter referred to as the Tribunal. The Tribunal, on consideration of the entire gamut of the case, came to the conclusion that in computing average rate of tax, the Assessing Officer may take the tax upto 5% of the liability of the individual employee for every month and the remaining tax liability is to be taken in the last month of the relevant financial years. Accordingly, it directed the Assessing Officer to compute the average rate of tax in the aforesaid manner and thereafter levy interest on the remaining amount of tax which remained unpaid from the date it would have been deducted. The Revenue, being not satisfied, preferred appeals before this Court. This Court by order dated 10.1.2006, admitted the appeal on the following substantial question of law: (i) Whether the Tribunal was justified in bifurcating the tax amount for 12 months for the purpose of calculation of interest 4 chargeable under Section 201 (1A) of the Income Tax Act, 1961? (ii)Whether the Tribunal was justified in directing to compute the interest chargeable while taking 5% of the tax liability of an individual employee for every month and remaining tax liability to be taken in the last month of relevant financial year?” Mr. Harshwardhan Prasad, appearing on behalf of the appellants, submits that for determining of average rate of income tax, estimated income of the employee is required to be taken and for that purpose, the employer is required to divide the income tax leviable by 12 to arrive at the average rate of income tax. According to him, the average rate of income tax arrived at by the aforesaid calculation, has to be deposited by the employer every month and its failure to make deduction, renders it liable for payment of interest under Section 201(1A) of the Act. Dr. R. Usha, appearing on behalf of the assessee, however, contends that the Tribunal‟s view cannot be said to be, in any way, erroneous calling for interference by this Court in appeal. In order to appreciate the rival submission, we deem it expedient to reproduce Section 192 (1) of the Act falling in Chapter 17 having the heading „deduction at source‟. Same reads as follows: 5 “192.Salaries-(1)Any person responsible for paying any income chargeable under the head “salaries” shall at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of rates in force in the financial year in which the payment is made, on estimated income of the assessee under this head for financial year.” From a plain reading of the aforesaid provision, it is evident that any person responsible for paying any income 21chargeable under the head „salary‟ is required to deduct income tax at the average rate of income tax on the estimated income of the assessee. The average rate of income tax is thus dependant upon the estimated income. Nothing has been brought to our notice as to how this estimated income of the employees is to be calculated by the person responsible for payment of salary. The average rate of income obviously depends upon the estimated income of the employee. In that view of the matter, we are of the opinion that no hard and fast rule can be laid for estimating the income. The deduction of income tax at the average rate of income tax on the estimated income of the employee is nothing but deduction of advance tax. It seems that the Tribunal had arrived at the figure of 5% of the tax liability for every month taking into account what is being followed in case of payment of advance tax. As observed 6 earlier, no hard and fast rule having been provided by the Legislature, we are of the opinion that the formula adopted by the Tribunal, cannot be said to be in any way, erroneous. Accordingly, answer of both the questions are in the affirmative and we hold that the Tribunal was justified in distributing the tax amount for 12 months for the purpose of calculation of interest as also the tax liability of an individual employee for every month. In the result, we do not find any merit in these appeals and are dismissed accordingly, but without any order as to cost. (C.K.Prasad) (Dr.Ravi Ranjan) Patna High Court, Dated,23rd Sept.2008. NAFR/ ahk