ORDER Dipak Misra, J. 1. Invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, the petitioner, namely, erstwhile Madhya Pradesh Electricity Board (for short the Board) and its functionaries have called in question the legal propriety of the order dated 20-6-2000 passed by the CIT, Jabalapur under Section 264 of the Income Tax Act, 1961 (for brevity the Act) and certain other orders passed under the Act and the rules framed thereunder and the action taken thereby. 2. The expose of facts are that the Board is an authority constituted under Section 5 of the Electricity Supply Act, 1948 which is engaged in power generation and distribution. Its units and branch offices are all over the State of Madhya Pardesh and there are 38 persons responsible for payment of salary who are the Drawing and Disbursing Officers (DDO) under Section 192 of the Act. Each of such officers pay salary to the employees within their areas after deducting income-tax from the salary of the employees in the unit/branch and submit report for TDS with their respective Income Tax Officer. The head office at Jabalpur disburses salaries to its employees in the Jabalpur Division and head office. The Board, apart from its own generating plant at different places also purchases power from various other sources like NTPC and others. The power generated in the plant as well as power purchased from outside is supplied through a common grid to the general public as well as to its employees. For the financial year 1997-98, the Board had its own generation in money value term Rs. 1231 crores and for 1998-99, it is Rs. 1262 crores. For the financial year 1997-98 its purchase from outside is Rs. 1910 crores and for 1998-99, is Rs. 2328 crores. It had supplied the power to its employees for the financial year Rs. 1.31 crores and for 1998-99 Rs. 1.41 crores. It is averred that the purchase rate from National Thermal Power Corporation Ltd. (NTPC) which is the principal supplier to the Board is Rs. 1.10 paise per unit. The purchase rate from other minor suppliers was approximately to that extent. The employees are supplied power at 50 per cent concessional rate and the average normal rate of supply charged to the employees is about Rs. 1.25 per unit. 1.10 paise per unit. The purchase rate from other minor suppliers was approximately to that extent. The employees are supplied power at 50 per cent concessional rate and the average normal rate of supply charged to the employees is about Rs. 1.25 per unit. The petitioner No. 1 who is a senior accounts officer in the Finance department of the Board deducted income-tax from the salary paid to the Boards employees at the headquarter and division under Section 192 of the Act and paid such amount of tax to the credit of the IT department as required under the provisions of the Act and the rules framed thereunder. The annual return of the TDS in Form 24 was submitted to the Income Tax Officer (TDS), Jabalpur. For deduction of tax a declaration is obtained from each employee giving details of the employees income and perks, etc. Certain specimen copies of the declaration have been cumulatively filed as Annex. P-2. 3. The Income Tax Officer (TDS), Jabalpur, the respondent No. 2 herein, carried out scrutiny of TDS return for the year 1997-98 and raised queries for explaining the nature of compensatory allowance paid to the employees in respect of payment to them as reimbursement of payment to a servant employed by them for official duties outside office and as to the supply of power at concessional rate of 50 per cent. The Board explained that upto 1970, orderly/peons were provided to the officers for helping them in the performance of official duties outside the office. The practice was discontinued and in its place, a fixed amount of Rs. 600 per month to Rs. 1200 per month was paid to the employees to appoint private helps for the duties that were being performed by peons or orderly. The compensatory allowance was paid to the employees as per the terms of circular of the Board for helping them in the performance of official duties and the said position was accepted by the IT department in the past as per various appellate orders in the case of employees as also the Board. As far as the supply of power to the employees is concerned, it was explained that it was not supplied free of charge but at the concessional rate of 50 per cent and supply of energy was made from the Boards own generation and, therefore, cannot be treated as taxable perks. 4. As far as the supply of power to the employees is concerned, it was explained that it was not supplied free of charge but at the concessional rate of 50 per cent and supply of energy was made from the Boards own generation and, therefore, cannot be treated as taxable perks. 4. The respondent No. 2 and the Jt. CIT issued further letter dated 9-3-2000 under Rule 2BB(1)(d) and Rule 3D directing the Boards chief accounts officer to deduct taxes in respect of both the items for the year 1999-2000. The said communication has been brought on record as Annex. P-4. The CIT attached the Boards account and recovered an amount of Rs. 1,69,55,120 as per Annex. P-9. When the revision was being heard before the respondent No. 1, the respondent No. 2, Income Tax Officer (TDS) determined the TDS short deducted at Rs. 1,65,92,870 under Section 201 of the Act, levied interest amounting to Rs. 34,74,502 thereby raising a total demand of Rs. 2,00,67,372 and issued a copy of the order and demand notice. It is contended in the petition that as revision for the year 1997-98 has been rejected, the petitioner has not approached the revisional authority as it would have been a futile endeavour and hence, has invoked the extraordinary jurisdiction of this Court. 5. It is the stand of the Board that the orders passed by the respondent and the actions taken are not justified in law in as much as it is an obligation of the employer to deduct on the basis of honest estimate of salary and by making controversial addition to salaries employer cannot be held responsible where assessment of an employee is completed and the amount of tax has been paid. It is urged that assuming there is short deduction the action should be to assess and recover the tax short deducted from the employees. It is asserted that the orders passed by the authorities are unsustainable as the employer has given compensatory allowance and it has no authority to disbelieve the genuineness of the claims made by the employees and hold enquiry. It is contended that the Board was required to deduct tax from the estimated income of the assessee and accordingly, it acted bona fide in accepting the declaration of the employees claiming deduction of compensatory allowance prescribed under Section 10(14) in Rule 2BB(1)(d). It is contended that the Board was required to deduct tax from the estimated income of the assessee and accordingly, it acted bona fide in accepting the declaration of the employees claiming deduction of compensatory allowance prescribed under Section 10(14) in Rule 2BB(1)(d). Reference has been made to Section 10(14) of the Act to highlight that the said provision exempts special allowance specially granted to meet the expenses incurred in the performance of the duties of an office as may be prescribed. It is contended that the respondents have erred in law in holding that the supply of electricity to its employees at concessional rate of 50 per cent was not exempted perquisite under Rule 3(d)(i). For valuing perquisites reliance has been placed on Rule 3(d)(i). In this backdrop reliefs have been sought for issue of writ of certiorari for quashment of the orders passed under Sections 201 and 201(1A) of the Act and notice of demand contained in Annex.-P-5 and for holding that the proceeding under the aforesaid provisions for demand of tax on short deduction for the assessment year 1999-2000 as per Annex.-P-11 is arbitrary and unjustified and unreasonable and to direct the respondents to refund the amount that has been recovered by Annex.-P-9 along with interest @ 18 per cent p.a. 6. A return has been filed on behalf of the respondent Nos. 1 and 2 contending, inter alia, that it has been admitted by the petitioner that the purchase rate from NTPC and others is @ Rs. 1.10 per unit whereas the same was supplied to the general public at different rates i.e. first 100 units @ Rs. 0.80 per unit; next 100 units @ Rs. 1.40 per unit and balance @ Rs 2.05 per unit per month. The Board charges NTPC @ Rs. 0.65 per unit whereas the general public is paying @ Rs. 1.45 per unit for the first 100 units. Thus, even if the Board is charging from its employees @ Rs. 1.25 per unit, it is giving additional benefits to its employees which is a perquisite since the petitioner is supplying the electricity to its employees at concessional rates after purchasing it from NTPC. Hence, the argument that the electricity supplied to its employees is from their own sources and as such no tax is chargeable is not acceptable. 1.25 per unit, it is giving additional benefits to its employees which is a perquisite since the petitioner is supplying the electricity to its employees at concessional rates after purchasing it from NTPC. Hence, the argument that the electricity supplied to its employees is from their own sources and as such no tax is chargeable is not acceptable. Had the electricity been supplied to the employees was from its own generation there was no reason for charging the NTPC charges. 7. It is the stand in the return that the contention that compensatory allowance is paid to the employees as per the circular of the Board is not acceptable as no such position has ever been accepted by the department. It is contended that the order passed by the respondent No. 2 is appealable under Section 246A(ha) to the Commissioner (Appeals) and thereafter under Section 253 to the Tribunal and a further appeal lies to the High Court. The petitioner did not prefer any appeal and has directly invoked the jurisdiction of this Court under Article 226 of the Constitution of India. It is put-forth that the Act provides a complete and self-contained machinery for obtaining relief against such action and when alternative remedy is available, the writ petition should not be entertained. A further stand in the return is that the petitioner-Board was bound to deduct tax from the salaries as per the provisions of the Act and on failure to deduct tax at appropriate rates, would be liable for penal interest under Section 201(1A) of the Act. Thus, in essence, the stand of the respondents is that the petitioner cannot get the benefit by taking a subterfuge and the reliefs sought, are not tenable. 8. We have heard Mr. H.S. Shrivastava, learned senior Counsel along with Mr. Sandesh Jain, for the petitioners and Mr. Sanjay Lai, learned Counsel for the revenue. 9. It is submitted by Mr. Shrivastava, learned senior Counsel appearing for the petitioners, that the CIT has committed gross illegality in not accepting the fact that for performance of their official duty orderly/peons were provided for officers was out of the office and this practice was prevalent and therefore, should have been treated as a compensatory allowance. 9. It is submitted by Mr. Shrivastava, learned senior Counsel appearing for the petitioners, that the CIT has committed gross illegality in not accepting the fact that for performance of their official duty orderly/peons were provided for officers was out of the office and this practice was prevalent and therefore, should have been treated as a compensatory allowance. It is also urged by him that the supply of power to the employees concerned was explained that it was not supplied free of charge but at a concessional rate of 50 per cent and from its own generation and, therefore, it cannot be treated as a taxable perquisite. To bolster the said submissions, he has pressed into service the decisions rendered in State bank of Patiala v. CIT (1999) 236 ITR 281 (P&H), Rajasthan State Electricity Board v. ITO (1994) 48 ITD 100 (Jp) and CIT v. Larsen & Toubro Ltd. (2009) 181 Taxman 71 (SC). 10. Mr. Sanjay Lal, learned Counsel for the revenue, has submitted that the petitioner would have been well advised to follow the statutory scheme by preferring appeal and hence, the writ petition should be thrown overboard. It is contended by him that the order passed by the learned CIT is absolutely justified, and does not warrant any interference. 11. As far as the preliminary objection with regard to coming into this Court without preferring appeal is concerned, we are of the considered opinion that as the factual matrix is absolutely clear and the writ petition was entertained long back, we do not intend to throw it overboard. 12. The two questions that emerge for consideration are: whether providing an orderly/peon would come within the concept of compensatory allowance; and whether the supply of power at a concessional rate should be treated as taxable perk. At this juncture, we think it appropriate to reproduce the analysis made by the CIT. The relevant portion of the order which is in Hindi on being translated into English would read as under: According to the circular of the appellant dated 4th Jan., 1971 this allowance will be paid to the employees who are appointed wholly for that purpose. The employee can take deduction in the return under Section 16(5). The relevant portion of the order which is in Hindi on being translated into English would read as under: According to the circular of the appellant dated 4th Jan., 1971 this allowance will be paid to the employees who are appointed wholly for that purpose. The employee can take deduction in the return under Section 16(5). In this circular it has also been stated that they will have to produce the receipts regarding receipt of the allowance before the DDO, the draft of which is enclosed with the circular in which a certificate regarding the expenses being actually incurred regarding orderly has been given. In the order of the appellant dated 6-6-1972 it has been stated that the allowance of Rs. 80 is compensatory allowance which is paid to the helper for helping in the official work at home. In the circular dated 7th Oct., 1974 also the same thing has been stated. 5.3 From the above facts it appears that everywhere the expenses have been actually incurred is stated. The receipt that has been produced is in respect of having received the amount and not that on that basis the employer can pay the allowance without deduction of tax. 6.1 Before me the appellant referred to the circular of the CBDT No. 747, dated 2nd Dec, 1996 (1996) 136 CTR 73. This circular is sent to DDO every year and was in respect of the year 1996-97. Similar circular issued for the assessment year 1997-98 which is relevant to this revision is being discussed here. The Circular No. 757 dated 20-10-1977 reported in (1997) 228 ITR 107, the allowance for which exemption can be given are given in para 5.2. In this the allowance under Section 10(14) and Rule 2BB are stated. In this the DDO are told that the deduction can be allowed when actually the amount has been spent fully or to that extent actually incurred. From reading of this it appears that the duties of DDO are given. In our case the DDO has not carried out his duties. The cases of employees to which reference has been made are not relevant, neither in those cases this fact has been examined minutely. Apart from it no case for the assessment year 1997-98 has been brought to my notice that tax has been paid by the employees. In our case the DDO has not carried out his duties. The cases of employees to which reference has been made are not relevant, neither in those cases this fact has been examined minutely. Apart from it no case for the assessment year 1997-98 has been brought to my notice that tax has been paid by the employees. Accordingly I am unable to accept the decision of the Commissioner (Appeals). 6.2 In my opinion the order passed by the Income Tax Officer (TDS) is proper. As the DDO has neither deducted the tax nor produced any evidence that the employee has paid the tax. Accordingly demand from DDO and levying interest is also proper. 7.1 The appellant is providing electricity at 50 per cent concession. His contention is that under Rule 3D since electricity is supplied from his own generation hence tax is not leviable and neither the tax is to be deducted. The officer has pointed out that the appellant is also purchasing some electricity from outside, he could not tell that the electricity supplied to the employee is from his own sources though the percentage of electricity purchased from outside than own generation is much less but the rule provides that the value will be taken as nil when the employer is not purchasing electricity from outside. 13. In State Bank of Patiala (supra), Punjab & Haryana High Court has held as follows: From the facts, we find that the order passed by the Income Tax Officer is wholly unjustified, arbitrary and untenable in law. When the employer bank had explained the investments made by the employees, there was no reason to hold the employer responsible for not verifying the source of investment. Even the source had been explained, but that too was not accepted. As has been seen, in the case of Shri R.R. Khanna, withdrawal of money had been made from the bank account a few days earlier to the investments. In the case of Smt. Kanta Gaur, withdrawal had been made from the bank account in which her salary was also deposited. In the face of the source having been explained, there was no reason for the employer to raise a further suspicion and to reject the rebate claimed by the two employees. In the case of Smt. Kanta Gaur, withdrawal had been made from the bank account in which her salary was also deposited. In the face of the source having been explained, there was no reason for the employer to raise a further suspicion and to reject the rebate claimed by the two employees. The Income Tax Officer in the course of assessment of the employees, may decline to accept the source as genuine, but that power rests with the FIX). The employer has been required to deduct tax at source from the estimated income of the employee. The petitioners application seeking interference by the CIT also did not help the petitioner, though not only the investments made had been duly explained, but also the source of money so invested. The CIT also did not feel inclined to accept the petitioners plea that, as an employer, the obligation cast on the petitioner had been discharged. Even a second attempt made by the petitioner by moving an application under Section 154 of the Act proved futile. These facts make out a case where the exercise of power has to be held wholly arbitrary, unwarranted and in excess of jurisdiction. 14. In CIT v. Larsen & Toubro Ltd. (supra) the apex court has held that the assessee employer is under no statutory obligation to collect the evidence to show that its employee had actually utilised the amount paid towards leave travel concession/conveyance allowance. 15. As is evident from the facts, in previous years the benefits were granted to the employees and no action was taken for non-deduction of tax at source. Mr. Shrivastava, learned senior Counsel, has drawn our attention to the decision of the Tribunal rendered in Rajasthan State Electricity Board (supra). 16. On a close scrutiny of the order passed by the CIT, it is perceptible that the said authority has not dealt with the controversy from the angles that have been reflected in the decisions referred to hereinabove. Quite apart from the same, the past practice has not been appositely considered. The CIT, as is manifest, has erroneously placed the onus on the assessee as regards collection of evidence by the employer. Quite apart from the same, the past practice has not been appositely considered. The CIT, as is manifest, has erroneously placed the onus on the assessee as regards collection of evidence by the employer. In view of the aforesaid, we are inclined to quash the impugned order and remit the matter to the CIT to deal with the matter afresh in the light of the decisions referred to hereinabove after affording opportunity of hearing to the petitioner or its successors. The CIT is directed to dispose of the proceeding within a period of three months from the date of receipt of the order passed today. As the amount of tax and penalty have already been recovered and the matter is remanded for adjudication, the Board shall not put forth any claim for refund at this stage. 17. The writ petition is allowed to the extent indicated hereinabove. There shall be no order as to costs.