G.D. Agrawal, Vice President: These two cross-appeals, one by assessee and other by Department for asst. yr. 1994-95, arise out of same order of CIT(A)-XL, Kolkata dt. 1st May, 2007. As common issue is involved in both these appeals, these appeals were heard together and disposed off by this common order. In these cross-appeals, only issue raised is with regard to holding assessee to be in default under s. 201(1) for non-deduction of tax and consequential interest charged under s. 201(1A) of IT Act. facts of case are that assessee is Non-Banking Financial Co. (NBFC). For financial year 1993-94, ITO (TDS) vide order dt. 24th June, 1996 held assessee to be in default in not deducting tax from interest paid to deposit-holders. As per ITO (TDS), total amount of interest paid which was liable to TDS under s. 194A was Rs. 13,09,54,590 on which tax which was required to be deducted was Rs. 1,46,66,910. assessee was held to be in default under s. 201(1) for above amount of Rs. 1,46,66,910. interest under s. 201(1A) amounting to Rs. 58,66,760 was also charged. When matter reached to Tribunal E Bench, Kolkata in ITA No. 1429/Kol/1999 vide order dt. 5th Jan., 2005 set aside matter back to file of ITO (TDS). ITO (TDS) vide order dt. 31st March, 2006 gave effect to order of Tribunal and held assessee to be in default under s. 201(1) for sum of Rs. 1,34,44,122. He also charged interest under s. 201(1A) amounting to Rs. 70,58,153. CIT(A) upheld order of ITO (TDS) passed under s. 201(1). However, in respect of interest charged under s. 201(1A), he directed ITO (TDS) to charge interest for period of 36 months as against for period of 42 months charged by ITO (TDS). Both parties aggrieved with order of CIT(A) are in appeal before us. At time of hearing before us, learned counsel for assessee argued at length. His arguments were three folds, viz. (i) That under s. 201(1) legislature has covered person referred to in s. 200 w.e.f. 1st June, 2002. Sec. 200 of IT Act provides liability of assessee deducting tax. As per learned counsel, before amendment in s. 201(1) by Finance Act, 2002, which is w.e.f. 1st June, 2002, even if assessee is in default in deducting tax, he cannot be made liable to pay same to Central Government. He stated that financial year under consideration is prior to 1st June, 2002 and, therefore, even if assessee is in default in deducting tax, assessee cannot be directed to pay same under s. 201(1) along with interest under s. 201(1A). (ii) That assessee has branches in large number of cities spread all over India. deposits are accepted from public in each branch of assessee-company. As per IT Act, separate tax deduction A/c. No. (TAN) was taken for each branch as per territorial jurisdiction of various ITOs (TDS). He has given list of different branches and TAN No. allotted to those branches. Such list is placed at pp. 56 to 59 of assessee s paper book. It is stated by learned counsel that jurisdiction of ITO (TDS) is limited to branches operating within territorial jurisdiction of such ITO (TDS). ITO (TDS), Kolkata has jurisdiction over head office of assessee company and 7 branches situated in his territorial jurisdiction. Therefore, he can treat assessee to be in default only in respect of payment of interest by head office and its 7 branches. ITO (TDS), Kolkata has no jurisdiction to hold assessee to be in default in respect of interest paid or credited by various branches of assessee company which are located outside his territorial jurisdiction. (iii) That assessee is NBFC accepting deposits from large number of public at large. As per various schemes floated by assessee company, no specific interest is paid but as per scheme deposit holders are required to make investment either in lump sum or on monthly/daily basis and at end of period of deposit, deposit holders are paid lump sum amount payable o n maturity of such deposit. difference between amount actually received by assessee and paid on maturity of deposit has been treated as interest by Revenue. However, such interest accrued to deposit holders from year to year i.e., from year in which deposit is made and up to year deposit is matured. assessee is following mercantile system of accounting. Therefore, liability of TDS would arise if interest system of accounting. Therefore, liability of TDS would arise if interest accrued to account of any deposit holder in year exceeds limit prescribed under s. 194A. He stated that normally deposit being accepted by assessee is of meagre sum ranging in few thousands rupees, therefore, interest accrued to each deposit holder in each year is below limit prescribed under s. 194A. He pointed out that total number of deposit holders with assessee company is more than 2.5 crores at present. He stated that whenever liability arose under s. 194A, i.e., whenever interest is paid by assessee exceeded limit prescribed under s. 194A, assessee has deducted tax. ITO (TDS) without pointing out single instance of failure of assessee to deduct tax has presumed default on part of assessee and estimated amount of TDS which assessee ought to have deducted from total interest payable. ITO (TDS) has not pointed out that interest paid to each person was exceeding prescribed limit. Without pointing out specific defect, assessee cannot be held to be in default merely on suspicion, surmises or conjectures. Before holding assessee to be in default under s. 201(1), onus is upon ITO (TDS) to establish that assessee was liable to deduct tax. This has to be proved demonstratively, i.e., by giving name of person to whom interest was paid and amount of interest paid or credited to such person. Without giving any such details, ITO (TDS) has just calculated amount of TDS on entire interest paid by assessee which is not in accordance with law. He submitted that in first round of appeal matter was set aside by Tribunal with specific direction to consider assessee s objection. However, in giving effect to order of Tribunal, ITO (TDS) without appreciating assessee s contention reiterated his earlier stand by slightly modifying quantum of liability of TDS under s. 201(1) and interest thereon under s. 201(1A). He concluded his arguments by saying that since assessee is not proved to be in default in single case, order passed under s. 201(1) and 201(1A) may be cancelled. learned Departmental Representative, on other hand, relied upon order of ITO (TDS). learned Departmental Representative at out set stated that appeal under consideration is against order of CIT(A) in set aside proceeding. In second round of appeal, assessee cannot challenge legality of order on ground that before amendment in s. 201(1) by Finance Act, 2002, ITO (TDS) cannot treat assessee to be in default even if assessee has failed to deduct tax. No such plea was raised when appeal was filed in first round against order of ITO (TDS). Therefore, in set aside proceedings validity of order of ITO (TDS) cannot be challenged on ground not raised in first round of appeal. He further stated that assessee did not furnish required information despite several opportunities allowed by ITO (TDS). When information is in specific knowledge of assessee and assessee is deliberately withholding same, ITO (TDS) had no option but to draw adverse inference and work out TDS on estimated basis which assessee ought to have deducted from interest paid by it. He, therefore, stated that order of ITO (TDS) should be sustained. He also submitted that in alternate, matter may be set aside again to file of ITO (TDS) with direction to assessee to furnish complete details before him. With regard to territorial jurisdiction of ITO (TDS), it is stated by learned Departmental Representative that assessee did not furnish any evidence before ITO (TDS), Kolkata that it has furnished required return of TDS before various TDS Officers from respective branches. In absence of such information, it was clear that assessee has neither deducted TDS nor furnished required information with ITO (TDS) having jurisdiction over various branches of assessee. In above circumstances, ITO (TDS), Kolkata, who was also having jurisdiction over head office of assessee company, had rightly held assessee to be in default for non-deduction of tax by it through its various branches. In rejoinder, it is stated by learned counsel that ITO (TDS), Kolkata had jurisdiction over 7 branches of assessee company. assessee has furnished complete details with regard to these 7 branches before him. He had no jurisdiction with regard to interest paid by various branches situated outside his territorial jurisdiction. Therefore, whether or not assessee has deducted TDS from interest paid in those branches, ITO (TDS), Kolkata cannot take any action. It is for respective ITO (TDS) to take appropriate action, if any required under law. He also stated that since required information pertaining to branches within jurisdiction of ITO (TDS), Kolkata had already been furnished, there is no justification for setting aside matter back to file of ITO (TDS), Kolkata again. He also pointed out that matter is almost 15 years old, i.e., pertaining to financial year 1993- 94 and, therefore, it would be wholly unjustified to send it back to file of ITO (TDS) second time. We have carefully considered arguments of parties and perused material placed before us. In first round of appeal assessee did not raise issue of validity of direction to pay TDS under s. 201(1) and interest thereon under s. 201(1A). As stated above, original order was set aside by Tribunal for limited purpose of allowing opportunity to assessee on issue of payment of TDS under s. 201(1) along with interest thereon under s. 201(1A). It is in second round of appeal that assessee has raised ground by arguing that financial year under consideration is prior to 1st June, 2002 and hence even if assessee is in default in deducting tax, assessee cannot be directed to pay same under s. 201(1) along with interest under s. 201(1A). Therefore, now question is whether this new ground can be taken up for first time in set aside proceeding before Tribunal. We find that issue regarding right of assessee to challenge legal validity of order in second round of litigation was considered by Hon ble Gujarat High Court in case P.V. Doshi vs. CIT (1978) 113 ITR 22 (Guj). In that case, reassessment order under s. 147 was passed by AO and in appeal before AAC against that reassessment order, assessee gave up contention regarding validity of notice of reassessment. AAC dismissed assessee s appeal on merits. On further appeal, Tribunal remanded case to AO with directions to cross-examine witness. On second round of appeal before AAC from order passed on remand, assessee contended that reassessment proceedings were not validly initiated. AAC observing that no reasons had been recorded by AO as required by s. 148(2), annulled order of reassessment. On appeal by Department, Tribunal held that once Tribunal passed order, matter became final and that order restoring case to file of ITO with clear instructions only to cross-examine witness meant that only point that was left open was in respect of issue set aside and not legal or jurisdictional aspect whether reassessment proceedings were correctly initiated. On reference, Hon ble High Court held as under: "that as jurisdictional provision which was mandatory and enacted in public interest could never be waived and want of jurisdiction was discovered b y AAC, there was no question of waiver by assessee. No question of finality of remand order of Tribunal could arise because mandatory conditions for founding jurisdiction for initiating reassessment proceedings had not been fulfilled. order of reassessment was, therefore, not valid." In view of ratio of above decision of Hon ble Gujarat High Court, it is evident that jurisdictional provision, which is mandatory, can be taken up in second round of litigation. We, therefore, respectfully following above decision of Hon ble Gujarat High Court permit assessee to raise issue relating to validity of order in second round of litigation. Accordingly, we proceed to examine assessee s contention on merits. Chapter XVII-B of IT Act, 1961 provides for deduction of tax at source. Secs. 192 to 196D provide for deduction of taxes from various sources of income. Secs. 197 and 197A provide for deduction of tax at lower rate or no deduction of tax at certain circumstances. Sec. 199 provides for credit of tax deducted. Sec. 200 provides duty of person deducting tax, i.e., person deducting tax is required to deposit same to credit of Central Government within prescribed time. Sec. 201(1) provides consequence of failure to deduct or pay tax. Before amendment by Finance Act, 2002, s. 201(1) reads as under: "201. (1) If any such person and in cases referred to in s. 194, principal officer and company of which he is principal officer does not deduct or after deducting fails to pay 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 assessee in default in respect of tax. Provided that no penalty shall be charged under s. 221 from such person, principal officer or company unless AO is satisfied that such person or principal officer or company, as case may be, has (without good and sufficient reasons) failed to deduct and pay tax." above section has been modified by Finance Act, 2002 w.e.f. 1st June, 2002 whereby words "referred to in s. 200" were inserted. After amendment, said section reads as under: "201. (1) If any such person (referred to in s. 200) and in cases referred to in s. 194, principal officer and company of which he is principal officer does not deduct (the whole or any part of tax) or after deducting fails to pay 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 assessee in default in respect of tax: Provided that no penalty shall be charged under s. 221 from such person, principal officer or company unless AO is satisfied that such person or principal officer or company, as case may be, has (without good and sufficient reasons) failed to deduct and pay tax." contention of learned counsel is that before amendment in s. 201(1) by Finance Act, 2002, assessee cannot be treated to be in default even if assessee has failed to deduct or failed to pay tax to credit of Central Government. We are unable to agree with this contention of learned counsel. As per s. 201(1) before amendment by Finance Act, 2002, if any such person fails to deduct or after deducting fails to pay tax as required by IT Act, he shall be deemed to be assessee in default in respect of tax. Any such person means person who is required to deduct tax at source as per provisions of ss. 192 to 196D of Act. Therefore, in our opinion, even prior to amendment by Finance Act, 2002 in s. 201(1), if assessee fails to deduct tax as required by IT Act or after deducting fails to pay tax as required by s. 200 of Act, he can be treated to be assessee in default in respect of such tax under s. 201(1) of Act. Now we come to second limb of argument of learned counsel. It is contended by learned counsel that ITO (TDS), Kolkata has exceeded his jurisdiction while passing order under s. 201(1)/201(1A) wherein he held assessee to be in default in respect of interest paid/credited by various branches of assessee company located out of his territorial jurisdiction. It is pointed out by learned counsel that assessee company is assessed to TDS with several TDS Officers and it has furnished TAN Nos. allotted by those various TDS Officers. Therefore, ITO (TDS), Kolkata should restrict his order in respect of transactions falling within his jurisdiction. Rule 36A of IT Rules, as it stood at relevant time, prescribed authority for purpose of s. 206. It reads as under: "36A. IT authorities for purposes of s. 206. returns referred to in rr. 37 and 37A shall be furnished to (i) AO, so designated by Chief CIT or CIT, within whose area of jurisdiction, office of person responsible for deducting tax under Chapter XVII-B is situated; or (ii) in any other case, to AO within whose area of jurisdiction, office of person responsible for deducting tax under Chapter XVII-B is situated." From above it is evident that Chief CIT or CIT within whose area of jurisdiction office of person responsible for deducting tax is situated, will designate AO with whom assessee has to furnish return. It was pointed out by learned counsel that since in case of assessee there were several persons responsible for making payment from which tax has to be deducted, there are several designated authorities under r. 36A. assessee has already been allotted TAN No. by those TDS Officers. Therefore, in our opinion, jurisdiction of each TDS authority is restricted to territorial area allotted to him by Chief CIT or CIT, who has designated him TDS Officer. In view of above, second limb of argument of assessee s counsel is accepted and order of ITO (TDS), Kolkata, so far it pertained to payments made outside his territorial jurisdiction is vacated. third argument of learned counsel was that ITO (TDS) without pointing out any instance of failure to deduct TDS has presumed default on part of assessee. It is stated by learned counsel that ITO (TDS) has even failed to point out that interest paid to each person was exceeding limit as prescribed under s. 194A and in absence of same assessee cannot be held to be in default. Sec. 194A of Act provides for deduction of tax from interest other than interest on securities. same reads as under: "194A. (1) Any person, not being individual or HUF, who is responsible for paying to resident any income by way of interest other than income [by way of interest on securities], shall, at time of credit of such income to account of payee or at time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at rates in force: [Provided that individual or HUF, whose total sales, gross receipts or turnover from business or profession carried on by him exceed monetary limits specified under cl. (a) or cl. (b) of s. 44AB during financial year immediately preceding financial year in which such interest is credited or paid, shall be liable to deduct income-tax under this section.] [Explanation. For purposes of this section, where any income by way o f interest as aforesaid is credited to any account, whether called Interest payable account or Suspense account or by any other name, in books of account of person liable to pay such income, such crediting shall be deemed to be credit of such income to account of payee and provisions of this section shall apply accordingly.] (2) [Omitted by Finance Act, 1992, w.e.f. 1st June, 1992.] (3) provisions of sub-s. (1) shall not apply [(i) where amount of such income or, as case may be, aggregate of amounts of such income credited or paid or likely to be credited or paid during financial year by person referred to in sub-s. (1) to account of, or to, payee, does not exceed two thousand five hundred rupees:]" From above it is evident that assessee is required to deduct TDS from interest other than interest on securities at time of (i) credit of such from interest other than interest on securities at time of (i) credit of such interest to account of payee or (ii) at time of payment of interest. As per Explanation where interest is credited to any account whether interest payable account or suspense account in books of account of assessee, such credit shall also be deemed to be credit of such income to account of payee and provisions of TDS under s. 194A would be applicable. As per sub- s. (3) no TDS is required to be deducted, if credit/payment does not exceed Rs. 2,500. Thus, assessee is liable to deduct tax at source if payment/credit of interest to any person in year exceeded Rs. 2,500. In this case we find that there is no factual finding by AO about violation of provision of s. 194A. On other hand, it was case of assessee that mostly interest accrued to each deposit holder in each year was below limit prescribed under s. 194A and whenever it exceeded limit, assessee has deducted tax. It was explained by learned counsel that assessee company is collecting small deposits from large number of people through out India. Therefore, total number of deposit holders with assessee is very large which is exceeding 2 crores, but deposit of each deposit holder is very small in amount. We find that ITO (TDS) in order under consideration has not given specific finding based on material particulars about violation of s. 194A. His finding is based upon presumption. He has not given names of persons and interest paid to them on which assessee has failed to deduct tax. In this case originally ITO (TDS) vide his order dt. 24th June, 1996 held assessee to be in default for not deducting tax from interest paid to deposit holders on presumption and worked out assessee s liability on estimated basis. matter was set aside by Tribunal. However, in order giving effect to order of Tribunal, again ITO (TDS) has worked out assessee s liability of TDS on basis of estimate and presumption. It would be evident from computation of assessee s liability worked out by ITO (TDS), which is as under: "Computation of Revised Demand As discussed above, revised demand is computed as follows: (I) Total interest paid by eleven branches is Rs. 17,58,09,207 out of which Rs. 27,95,366 is liable for TDS under s. 194A of Act in relation to financial year 1993-94. Total TDS under s. 194A chargeable on Rs. 27,95,366 is Rs. 3,13,081 at rate of 11.20 per cent. (II) In original order, AO computed interest liable to TDS for seven branches with reference to total certificate payment, not with reference to total interest payment by these branches. In doing so, AO had brought to tax some excess interest of Rs. 83,73,674 in respect of these seven branches. Based on reasonable estimate, excess interest not liable for TDS can be proportionately extrapolated to Rs. 1,09,17,752 in respect of eleven branches. Thus excess TDS charged in original order in respect of these eleven branches is to tune of Rs. 12,22,788. This excess TDS of Rs. 12,22,788 is now to be subtracted from total tax of Rs. 1,46,66,910 charged under s. 201(1) in original order. (III) Revised total demand based on above: Tax under s. 201(1) as per original order Rs. 1,46,66,910 Less: Excess TDS now to be subtracted Rs. 12,22,788 Balance payable Rs. 1,34,44,122 Add: Interest under s. 201(1A) for 42 months Rs. 70,58,153 Total of tax and interest Rs. 2,05,02,275 Less: Amount paid on 27th March, 1997 Rs. 2,05,33,670 Balance Refundable Rs. 31,395" As per s. 194A, assessee is required to deduct tax if credit or payment of interest to any person exceeded Rs. 2,500 in year. Therefore, AO has to give specific finding giving name of person and amount of interest paid to him. Without giving particulars with regard to name of person and interest paid to him, in our opinion, assessee cannot be held to have violated provisions of s. 194A merely on basis of presumption and suspicion. It has been contended by learned Departmental Representative that assessee has not furnished required particulars despite number of opportunities having been allowed by ITO (TDS). In contrast it has been explained by assessee s learned counsel that complete particulars relating to head office and 7 branches falling within territorial jurisdiction of concerned ITO (TDS) have been furnished. Without going to controversy whether assessee has furnished required particulars or not, in our opinion, even if assessee has not furnished details or necessary particulars, ITO (TDS) can take necessary steps to ensure furnishing of particulars and can also penalize assessee in accordance with law if assessee failed to comply with notices issued by him. However, absence of particulars will not authorize him to presume default of assessee under s. 194A so as to entitle him to take action under s. 201(1) and 201(1A) of Act. During course of argument before us, learned Departmental Representative has raised alternate ground stating that matter may be set aside again to file of ITO (TDS) with direction to assessee to furnish complete details before him. As discussed above, matter has already been set aside once. assessment year involved is 1994-95, (i.e., relating to financial year 1993-94) which is more than 13 years old. In view of above, in our considered opinion, there is no justification for setting aside matter again to file, of ITO (TDS) for second time. Considering totality o f facts and circumstances of case, we hold that ITO (TDS) was not justified in holding assessee to be in default under s. 201(1) of Act for financial year 1993-94, i.e., relating to asst. yr. 1994-95. Accordingly, order passed under s. 201(1) for asst. yr. 1994-95 is cancelled. Consequentially order levying interest thereon under s. 201(1A) of Act is also cancelled. In result, appeal by assessee is allowed and that by Revenue is dismissed. *** PEERLESS GEN. FIN. & INV. CO. LTD. v. ASSISTANT COMMISSIONER OF INCOME TAX