The ITO (TDS), Ward-3(2), Vijayawada V. The The Executive Engineer, Panchayatraj Division, Vijayawada

ITA 13/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50231 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-04-2011
• Assessment Year: 2009-2010
• Appeal Filed On: 19-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Keywords: Bonafide belief
• Section: 194C

Judgement Text

ITA NOS 574 OF 2009 AND 12 & 13 OF 2011 EXE.ENGINEE R PANCHAYATRAJ VIJAYAWADA PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.574/VIZAG/2009 & ITA NOS.12 & 13/VIZAG/2011 ASSESSMENT YEARS:2007-08 TO 2009-10 ITO (TDS) WARD-3(2) VIJAYAWADA VS. EXECUTIVE ENGINEER, PANCHAYATRAJ DIVISIONS, VIJAYAWADA (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI D.S. SUNDER SINGH, SR.DR ASSESSEE BY: SHRI G.V.N. HARI, CA ORDER PER SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER THESE APPEALS ARE PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT (A) PERTAINING TO THE ASSESSMENT YEARS 2007-08 TO 2 009-10. INITIALLY THE DEPARTMENT HAS FILED ONE APPEAL FOR ALL THE YEARS V IDE APPEAL NO.ITA 574/VIZAG/2009. WHEN IT WAS POINTED OUT TO THE DEPA RTMENT THAT SEPARATE APPEALS ARE TO BE FILED FOR ALL THE ASSESSMENT YEAR S, THE DEPARTMENT HAS FILED ANOTHER TWO APPEALS VIDE ITA NOS.12 & 13/VIZAG/2011 WITH THE REQUEST THAT APPEAL NO.574 BE TREATED TO BE AN APPEAL FOR THE AS SESSMENT YEAR 2007-08. THE REVENUE HAS ALSO MOVED AN APPLICATION FOR CONDONATI ON OF DELAY IN FILING THE PROPER APPEAL FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10. 2. HAVING CAREFULLY EXAMINED THE REQUEST FOR CONDON ATION OF DELAY, WE ARE OF THE VIEW THAT THE DELAY IN FILING OF THE APPEAL FOR THE ASSESSMENT YEARS 2008-09 AND 2009-10 ARE CAUSED UNDER THE BONAFIDE BELIEF. W E ARE THEREFORE CONDONE THE DELAY AND ADMIT THE SAME FOR HEARING. ITA NOS 574 OF 2009 AND 12 & 13 OF 2011 EXE.ENGINEE R PANCHAYATRAJ VIJAYAWADA PAGE 2 OF 4 3. THE REVENUE HAS FILED REVISED FORM NO.36 IN ITA NO.574/VIZAG/2009 MAKING NECESSARY CORRECTIONS THEREIN. SINCE THE ERR ORS WERE MADE IN THE ORIGINAL FORM NO.36 UNDER A BONAFIDE BELIEF, THE REVISED FOR M NO.36 IS ACCEPTED AND IT WOULD SUBSTITUTE THE ORIGINAL FORM NO.36. 4. IN ALL THESE APPEALS THE REVENUE HAS ASSAILED THE ORDERS OF THE CIT (A) ON COMMON GROUNDS WHICH ARE AS UNDER: (I) THE ORDER OF CIT (APPEALS) IS ERRONEOUS BOTH O N FACTS AND ON LAW. (II) THE CIT (A) ERRED IN APPLYING THE BOARD CIRCUL AR NO.502 DATED 7/1/1988 TO WORKS EXECUTED UNDER ACDP SCHEME WHEREAS THE SAID CIRCULAR APPLIES TO WORKS EXECUTED UNDER NREP AND RLEGP SCHEMES ONLY. (III) THE CIT (A) FAILED TO APPRECIATE THAT G.O M.S . NO.18 DATED 9/11/2005 STIPULATES THAT THE NOMINEE OF THE COMMITTEE OR THE GROUP LEADER SHALL ENTER INTO AN AGREEMENT WITH THE EXECUTIVE AGENCY UNDER THE ACDP SCHEME AND THE PROVISIONS OF SECTION 194C OF THE I.T . ACT SHALL APPLY ACCORDINGLY. UNDER NREP AND RLEGP SCHEMES, THERE IS NO CONTRACT BETWEEN THE VILLAGE COMMITTEE/ VOLUNTARY AGENCIES AND THE STATE GOVERNM ENT AND THE BOARD CIRCULAR NO.502 CLARIFIES THAT THE PR OVISIONS OF SECTION 194C ARE NOT ATTRACTED IN THE CASE OF PAYMENTS MADE UNDER THESE PROGRAMMES. (IV) THE CIT (A) FAILED TO DISTINGUISH THAT UNDER N REP AND RLEGP SCHEMES THERE IS A SPECIFIC BAN ON EMPLOYMENT OF CONTRACTORS WHEREAS THE DEDUCTOR HAS ENTRUSTED THE WORK TO VILLAGE COMMITTEES/USER GROUPS AS WELL AS O THER CONTRACTORS UNDER ACDP SCHEME AND DEDUCTED TAX ON PAYMENTS MADE IN SOME OF THE CASES. (V) ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 5. DURING THE COURSE OF HEARING OF THE APPEAL, IT W AS ACCEPTED BY THE LD DR THAT IN SOME OF THE CASES TDS WERE DEDUCTED ON CERT AIN PAYMENTS, BUT MOST OF THE PAYMENTS WERE MADE WITHOUT DEDUCTING THE TDS. T HE LD DR HOWEVER, ITA NOS 574 OF 2009 AND 12 & 13 OF 2011 EXE.ENGINEE R PANCHAYATRAJ VIJAYAWADA PAGE 3 OF 4 AGREED THAT IN VIEW OF THE BOARD CIRCULAR NO.502 DA TED 7/1/1988, THE REVENUE IS NOT REQUIRED TO DEDUCT THE TDS ON PAYMENTS MADE TO THE LABOURERS DIRECTLY UNDER THE NREP AND RLEGP SCHEMES BUT WHENEVER THE P AYMENTS ARE MADE TO THE CONTRACTORS, THE ASSESSEE IS REQUIRED TO DEDUCT THE TDS. 6. THE COUNSEL FOR THE ASSESSEE ON THE OTHER HAND H AS SUBMITTED THAT THE ASSESSING OFFICER HIMSELF HAS ADMITTED THAT IN CERT AIN PAYMENTS, THE ASSESSE HAS DEDUCTED THE TDS. THESE ARE THOSE PAYMENTS WHICH WE RE MADE TO THE CONTRACTORS. THE ASSESSEE HAS NOT DEDUCTED THE TDS ON THOSE PAYMENTS WHICH WERE MADE DIRECTLY TO THE LABOURERS UNDER THE AFORE SAID SCHEME IN VIEW OF THE CIRCULAR OF CBDT. 7. IN REBUTTAL THE LD DR HAS URGED THAT FROM THE ORD ERS OF THE LOWER AUTHORITIES, IT IS NOT CLEAR WHETHER THE ASSESSEE H AS DEDUCTED THE TDS ON ALL PAYMENTS MADE TO THE CONTRACTORS AND THE DISPUTED P AYMENTS ARE ONLY THOSE PAYMENTS WHICH WERE MADE TO THE LABOURERS DIRECTLY UNDER THE AFORESAID SCHEME. THEREFORE, THE ENTIRE MATTER REQUIRES PROPE R VERIFICATION. THE LD COUNSEL FOR THE ASSESSEE HAS ALSO AGREED TO THIS PREPOSITIO N THAT THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER WITH A SPECIFIC DIREC TION. 8. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE R IVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDER OF THE LOWER AUTHORI TIES, WE FIND THAT IN SOME CASES THE ASSESSEE HAS DEDUCTED THE TDS ON PAYMENTS BUT I T IS NOT CLEAR WHETHER THE ASSESSEE HAS DEDUCTED THE TDS ON ALL PAYMENTS MADE TO THE CONTRACTORS. THERE IS NO DISPUTE ABOUT THE PAYMENTS WHICH WERE MADE DI RECTLY TO THE LABOURERS UNDER THE AFORESAID SCHEME. SINCE COMPLETE FACTS AR E NOT CLEAR FROM THE ORDER OF LOWER AUTHORITIES, WE ARE OF THE VIEW THAT THE MATT ER MAY BE REEXAMINED BY THE ASSESSING OFFICER IN THE LIGHT OF THE EVIDENCE FURN ISHED BY THE ASSESSEE. ITA NOS 574 OF 2009 AND 12 & 13 OF 2011 EXE.ENGINEE R PANCHAYATRAJ VIJAYAWADA PAGE 4 OF 4 9. WE ACCORDINGLY SET ASIDE THE ORDER OF THE CIT (A ) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIREC TION TO MAKE NECESSARY VERIFICATION WITH REGARD TO THE NATURE OF PAYMENTS MADE BY THE ASSESSEE. IF THE ASSESSEE HAS DEDUCTED THE TDS ON ALL PAYMENTS MADE TO THE CONTRACTORS, THE ASSESSEE SHALL NOT BE HELD TO BE IN DEFAULT. IF HE FAILED TO DO SO, THE ASSESSEE MAY BE HELD IN DEFAULT IN RESPECT OF THE CONCERNED AMOUNT. SO FAR AS THE PAYMENT MADE DIRECTLY TO THE LABOURERS UNDER THE AF ORESAID SCHEMES ARE CONCERNED, THERE IS NO DISPUTE IN RESPECT OF THE LE GAL PREPOSITION THAT THE ASSESSEE IS NOT REQUIRED TO DEDUCT THE TDS UNDER TH E AFORESAID SCHEMES. 10. IN THE RESULT THE APPEALS OF THE REVENUE ARE ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 24-05-2011. SD/- SD/- (BR BASKARAN) (SUNIL KU MAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PVV/SPS VISAKHAPATNAM, DATE: 24 TH MAY, 2011. COPY TO 1 THE ITO (TDS) WARD-3(2) VIJAYAWADA 2 THE EXECUTIVE ENGINEER, PANCHAYATRAJ DIVISION, VI JAYAWADA 3 4. THE CIT VIJAYAWADA THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM