Income Tax Officer, TDS-1, Ward-3(5), Tirupathi V. The Commissioner, Palamaner Municipality, Chittoor

ITA 1026/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66209 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS AMISHA S GUPT
• Assessee Lawyers: S RAMA RAO
• Section: 133A; 194C; 201(1); 246

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NOS. 1025, 1026 & 1027/HYD/2012 ASSESSMENT YEARS: 2009-10, 2010-11, & 2011-12 INCOME TAX OFFICER-3(5),TDS-1, APPELLANT TIRUPATHI VS. THE COMMISSIONER, PALAMANER MUNICIPALITY, RESPONDE NT CHITTOOR DT. (TAN HYD03238E) APPELLANT BY : MRS. AMISHA S. GUPT RESPONDENT BY : MR. S. RAMA RAO DATE OF HEARING : 08/08/2012 DATE OF PRONOUNCEMENT : 27/08/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THESE APPEALS FILED BY THE REVENUE ARE DIRECTED AG AINST A COMMON ORDER OF CIT(A), GUNTUR, DATED 22/03/2012 F OR THE ASSESSMENT YEARS 2009-10, 2010-11 & 2011-12. SINCE THE IDENTICAL ISSUE IS INVOLVED IN THESE APPEALS, THEY WERE HEARD TOGETHER AND, THEREFORE, A COMMON ORDER IS PASSED F OR THE SAKE OF CONVENIENCE. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE DDO I S COMMISSIONER OF PALAMANER MUNICIPALITY AND IS AUTHO RIZED TO RELEASE PAYMENTS TO CONTRACTORS IN HIS TERRITORIAL AREA AND THUS, HE IS THE RESPONSIBLE PERSON AS DDO FOR MAKING VARI OUS PAYMENTS ITA NOS. 1025, 1026 & 1027/HYD/2012 THE COMMISSIONER, PALAMANER MUNICIPALITY 2 AND ALSO RESPONSIBLE FOR DEDUCTING TAXES FROM THE P AYMENTS MADE AS PER THE RATES APPLICABLE FROM TIME TO TIME AND T O REMIT THE SAME INTO THE GOVT. ACCOUNT. A SURVEY U/S 133A OF T HE ACT WAS CONDUCTED ON 27/10/2010 TO VERIFY THE COMPLIANCE OF THE DEDUCTOR TO TDS PROVISIONS UNDER CHAPTER XVIIB. IT WAS REVEALED THAT THE MUNICIPALITY IS MAKING PAYMENTS REGULARLY TOWARDS SALARIES TO ITS EMPLOYEES AND CONTRACT PAYMENTS FOR THE WORKS EXECUTED AND IS CARRYING OUT VARIOUS DEVELOPMENTAL ACTIVITIES IN THE TOWN BY AWARDING CONTRACTS TO VARIOUS PERSONS A ND UNDER VARIOUS SCHEMES LIKE GENERAL FUNDS, SSA GRANT OFFIC E BUILDING GRANT, 12 TH FINANCE GRANTS, NSDP, WATER TAP DONATION FUND, CC ROADS & DRAINS FUND, TRIBAL SUB-PLAN GRANT, NSDP FU ND, E-SEVA AND SJSRY ETC. IT WAS NOTICED FROM THE BOOKS OF ACC OUNT, REGISTERS & CASH BOOKS FURNISHED THAT THE ASSESSEE DEDUCTOR HAD FAILED TO COMPLY WITH THE PROVISIONS OF TDS. 3. IT WAS NOTICED THAT THE MUNICIPALITY IS MAKING P AYMENT EVERY MONTH TO A CONTRACTOR M/S SRI OM SAKTHI SEVA SANGHA M, PALAMANER FOR SUPPLY OF LABOUR FOR THE FYS. 2008-09 , 2009-10 & 2010-11 AS UNDER:- F.Y GROSS AMOUNT (IN RS.) 2008-09 27,40,800 2009-10 35,71,665 2010-11 31,60,339 TDS U/S 194C HAD NOT BEEN DEDUCTED AND CREDITED IN TO CENTRAL GOVERNMENT A/C ON THE ABOVE GROSS AMOUNTS P AID TO THE CONTRACTOR AND HENCE, THE ASSESSEE IS IN DEFAULT FO R NON-DEDUCTION OF TDS FOR THE SAID PAYMENTS AND THE DDO IS LIABLE FOR PAYMENT OF INTEREST U/S 201(1A) AND THE AO HAD WORKED OUT THE TDS AS UNDER AND RAISED THE DEMAND:- ITA NOS. 1025, 1026 & 1027/HYD/2012 THE COMMISSIONER, PALAMANER MUNICIPALITY 3 F.Y TDS @ 2.26% INTEREST U/S 201(1A) 2008 - 09 61,9 42 19,202 2009 - 10 80,720 15,336 2010 - 11 63,202 4,424 TOTAL 2,05,868 38,962 4. THE AO HAD ALSO NOTICED THAT IN SOME INSTANCES T HOUGH THE TAX HAD BEEN DEDUCTED ON SCHEMES LIKE GENERAL FUND AND OTHER GRANTS, SJSRY GRANT AND OTHER WORKS AND BUILDING GR ANT AND OTHER WORKS, THERE WAS DELAY IN REMITTING THE SAME INTO G OVT. A/C AND THE AO HAD LEVIED INTEREST U/S 201(1A) ON THESE PAY MENTS AS UNDER:- F.Y INTEREST U/S 201(1A)(RS.) 2008 - 09 20,162 2009 - 10 12,896 2010 - 11 7,757 5. THE TOTAL DEMAND DETERMINED U/S 201(1) AND U/S 2 01(1A) ARE AS UNDER:- AY 201(1) 201(1A) TOTAL 2009 - 10 61942 19,202 20,162 101306 2010 - 011 80720 15,336 12,896 108,952 2011 - 12 63202 4,424 7,757 75,383 6. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APP EALS BEFORE THE CIT(A) GUNTUR. 7. THE CIT(A), GUNTUR HELD THAT THE PAYER IS NONE OTHER THE COMMISSIONER OF PALAMANER MUNICIPALITY, WHO ACTS AS A DDO. HE FURTHER HELD THAT THE PAYMENTS IN QUESTION ARE NOT CONTRACT ITA NOS. 1025, 1026 & 1027/HYD/2012 THE COMMISSIONER, PALAMANER MUNICIPALITY 4 RECEIPTS, BUT SALARIES AND AS SUCH THE PROVISIONS O F SECTION 194C ARE NOT APPLICABLE. IT IS ASCERTAINED THAT THE IMPU GNED MUNICIPALITY MADE PAYMENTS EVERY MONTH TO A CONTRAC TOR M/S SRI OM SAKTHI SANGHAM, WHICH IS NOTHING BUT A NAME ASSI GNED COLLECTIVELY TO HEALTH WORKERS TO BE HEAD BY ONE OF THE WORKERS, WHO RECEIVED WAGES OF ALL THE WORKERS AFTER DEDUCTI NG PPF BY MUNICIPALITY I.E. NET BALANCE AND DISBURSED TO ALL EMPLOYEES AND ENCLOSED THE LIST FOR PERUSAL DURING THE COURSE OF THE APPELLATE PROCEEDINGS. THE CIT(A) OBSERVED THAT IT WAS SUBMIT TED BY THE AR OF THE ASSESSEE THAT THE MUNICIPALITY TREATED ALL T HE HEALTH WORKERS AS THEIR EMPLOYEES AD DEDUCTED PPF ETC. THE CIT(A) CONCLUDED THAT OM SAKTHI SEVA SANGAM IS ONLY A FACI LITATOR AND DOES NOT MAKE ANY PROFIT WHILE DISBURSING SALARIES TO HEALTH WORKS. IN THE CIRCUMSTANCES, I AM INCLINED TO ACCEP T THE SUGGESTION OF THE AR THAT THE AO HAS WRONGLY MADE L EVIES U/S 201(1) AND 201(1A) FOR ALL THE THREE IMPUGNED ASSES SMENT YEARS. 8. AGGRIEVED, THE REVENUE IS IN APPEALS BEFORE US F OR ALL THE THREE YEARS. 9. THE GROUND OF APPEAL RAISED BY THE REVENUE IS A S UNDER: THE LEARNED CIT(A), GUNTUR ERRED IN TAKING UP THE APPEAL WITHOUT JURISDICTION. 10. THE LEARNED DR SMT. AMISHA S. GUPT PRODUCED THE NOTIFICATION DATED 10/11/2010 ISSUED BY THE CHIEF C OMMISSIONER OF INCOME-TAX, HYDERABAD-1 WHEREIN THE CHARGE FOR T HE CIT(A), VIJAYAWADA, HQ AT VIJAYAWADA AND FALLING WITHIN THE JURISDICTION OF INCOME TAX AUTHORITY CIT(TDS), HYDERABAD SHALL E XERCISE THE POWERS AND PERFORM THE FUNCTIONS IN RESPECT OF ANY APPEAL FILED BY THE CASES OR CLASSES OF CASES SPECIFIED IN COLUM N 4, I.E. ALL APPEALS EMANATING FROM THE ORDERS OF ADDL.CIT/JCIT/ DCSIT/ ACSIT/ITOS OF RANGE-3, VIJAYAWADA. ITA NOS. 1025, 1026 & 1027/HYD/2012 THE COMMISSIONER, PALAMANER MUNICIPALITY 5 11. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI S. RA MA RAO SUBMITTED THAT HE WAS INSTRUCTED BY THE ITO(TDS), T IRUPATHI TO FILE AN APPEAL BEFORE THE CIT(A), GUNTUR UNDER SECT ION 246 OF THE IT ACT, WHILE SERVING THE NOTICE OF DEMAND U/S 156 OF THE IT ACT, 1961. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WHO IS THE JURISDICTIONALLY VALID CIT(A) IN THIS CASE? THE RE IS NEED FOR BASIC FACTS ON THIS ISSUE BASED ON THE DUTIES ALREA DY IN EXISTENCE. CIT(A), GUNTUR DID NOT HAVE OCCASION TO PASS SPEAKI NG ORDER ON THIS. IN THESE CIRCUMSTANCES, WE RESTORE THE FILES TO THE CIT(A), GUNTUR, TO RE-EXAMINE THE ISSUE OF JURISDICTION AND DECIDE THE MATTER IN ACCORDANCE WITH LAW. 13. IN THE RESULT, THE REVENUE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 27/08/2012. SD/- SD/- (D. KARUNAKARA RAO) (ASHA VIJAYARAGHAV AN) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 27 TH AUGUST, 2012. KV COPY TO:- 1) INCOME TAX OFFICER, - TDS-1, WARD 3(5), RAJASVA BHAVAN, 4 TH FLOOR, VARADARAJA NAGAR, TIRUPATHI 517501 2) THE COMMISSIONER, PALAMANER MUNICIPALITY, CHITTOR D T. 3) CIT, (TDS), HYDERABAD 4) THE DEPARTMENTAL REPRESENTATIVE, I.T.A .T., HYDERABAD.