The Deputy Commissioner Commercial Taxation Department, JODHPUR V. DCIT (TDS), JODHPUR

ITA 136/JODH/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8024 (ITAT-JODHPUR)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 12-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KONKANI
• Assessee Lawyers: ARPIT HALDIA
• Section: 194C; 201(1); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NOS. 136 TO 139/JU/2012 ASSESSMENT YEARS : 2006-07 TO 2009-10 THE DEPUTY COMMISSIONER COMMERCIAL VS THE DCIT (TDS ), TAXATION DEPARTMENT, JODHPUR JODHPUR PAN/TAN NO. JDHD01622F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ARPIT HALDIA RESPONDENT BY : SHRI G.R.KONKANI DATE OF HEARING : 04.12.2012 DATE OF PRONOUNCEMENT : 05.12.2012 ORDER PER N.K.SAINI, A.M. THESE FOUR APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST THE SEPARATE ORDERS EACH DATED 21.12.2011 OF CIT(A), BIKANER (CA MP AT JODHPUR). 2. THE ISSUE INVOLVED IN THESE APPEALS ARE COMMON A ND APPEALS WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY T HIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE COMMON GROUNDS RAISED IN THIS APPEAL READ AS UNDER:- 1. THAT THE ORDER AS FRAMED BY LEARNED COMMISSIONE R INCOME TAX (APPEALS), JODHPUR IS BAD IN LAW AND AWAY FROM FACT S. 2 2. THAT THE LEARNED COMMISSIONER INCOME TAX (APPEAL S), JODHPUR HAS ERRED IN TREATING THE APPELLANT AS ASSESSEE IN DEFAULT U/ S 201(1) 3. THAT, IN FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND KEEPING IN VIEW MATERIAL AVAILABLE ON RECORD THE LEARNED COMMISSION ER INCOME TAX APPEALS(JODHPUR) HAS ERRED IN THE FACTS OF THE CASE AND LAW IN TREATING THAT THE APPELLANT OUGHT TO HAVE DEDUCTED TDS U/SEC 194H AGAINST 194C ON THE PAYMENT MADE TO CONTRACTORS. 4. THAT THE LEARNED COMMISSIONER INCOME TAX (APPEAL S), JODHPUR HAS ERRED IN TREATING THAT THE TDS HAD TO BE DEDUCTED B Y THE APPELLANT ON THE AMOUNT PAID TO VARIOUS CONTRACTORS U/SEC 194H. THAT THE APPELLANT HAD DEDUCTED TAX ON THE SAID AMOUNT PAID TO CONTRACTORS U/SEC 194C. 5. THAT THE LEARNED COMMISSIONER INCOME TAX(APPEALS ), JODHPUR HAS ERRED IN TREATING THAT THE CONDUCT OF THE APPELLANT SINCE FEBRUARY 2009 WHEREBY APPELLANT HAS STARTED DEDUCTING TDS U/SEC 1 94H AS ACCEPTANCE OF THE FACT THAT DEDUCTION OF THE TAX AT SOURCE HAD TO BE MADE UNDER SECTION 194H AGAINST 194C. THAT THE APPELLANT IS A STATE GOVERNMENT DEPARTMENT AND THERE HAS BEEN NO INTENTION OF THE A PPELLANT TO AVOID OR EVADE TAX. THAT THE DEDUCTION U/SEC 194H WAS ONLY D ONE BY THE APPELLANT ONLY TO SAVE THEMSELVES FROM LEGAL HARASSMENT AND A VOID LEGAL PROCEEDINGS AGAINST THE APPELLANT. 6. THE APPELLANT MAY KINDLY BE PERMITTED TO AMEND A LTER OR ADD OR SUBTRACTS ANY FURTHER GROUND OR GROUND OF APPEAL ON OR BEFORE THE DATE OF HEARING. 4. FROM THE ABOVE GROUNDS, IT IS GATHERED THAT THE GRIEVANCE OF THE ASSESSEE REVOLVES TO THE DEFAULT U/S 201(1) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' IN SHORT] AN D TREATING THAT THE ASSESSEE OUGHT TO HAVE DEDUCTED TDS U/S 194H AGAINST SECTION 194C ON THE PAYMENTS MADE TO THE CONTRACTORS. 5. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSING OFFICER DURING THE COURSE OF VERIFICATION IN RESPECT OF COMMISSION GIV EN TO VARIOUS PARTIES FOR COLLECTION OF TAXES ON MINERALS /CASUAL COMMODIT IES IN THE SPECIFIED AREAS 3 AND AS TO WHETHER THE TAX AT SOURCES WAS BEING DEDU CTED CORRECTLY OR NOT, THE ASSESSING OFFICER CAME TO KNOW THAT THE ASSESSEE TH OUGH HAD DEDUCTED TAX AT SOURCE ON THE AFORESAID COMMISSION PAYMENTS BUT TIL L FEBRUARY 2009, THE DEDUCTION WAS BEING MADE U/S 194C OF THE INCOME TAX ACT, 1961 INSTEAD OF 194H OF THE ACT WHICH WAS PROPER SECTION APPLICABLE TO SUCH COMMISSION PAYMENTS. THE ASSESSING OFFICER WAS OF THE VIEW T HAT THE RESPONSIBLE PERSON HAD MADE SHORT DEDUCTION OF TAX AT SOURCE ON THOSE COMMISSION PAYMENTS. ACCORDINGLY, A SHOW CAUSE NOTICE U/S 201( 1) / 201(1A) OF THE ACT WAS ISSUED ON 7.1.2010 FOR THE FINANCIAL YEARS 200 5-06 TO 2008-09 TO THE RESPONSIBLE PERSON. THE RESPONSIBLE PERSON SUBMITT ED VARIOUS DETAILS AND REPLIES. THE ASSESSING OFFICER OBSERVED THAT THE R ESPONSIBLE PERSON HAD NOT DENIED THE FACT THAT THERE WAS A DEFAULT SO FAR AS SHORT DEDUCTION OF TAX ON THE COMMISSION PAYMENTS. HOWEVER, IT HAD BEEN CLAIMED THAT WAS ONLY A MISTAKE AND THERE WAS NO MALAFIDE INTENTION OF THE RESPONSI BLE PERSON FOR SHORT DEDUCTION OF TAX AND THAT SINCE ALL THE PARTIES TO WHOM THE COMMISSION PAYMENTS HAD BEEN MADE DURING FINANCIAL YEARS 2005- 06 TO 2008-09 HAVE FILED THEIR RETURNS OF INCOME AND PAID THEIR DUE TA X DEMAND U/S 201(1) OF THE ACT COULD NOT RAISED IN VIEW OF THE DECISION OF HON 'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGES PVT LTD [2007 ] 293 ITR 226 (SC). IN SUPPORT OF THE CLAIM, PHOTOCOPIES OF INCOME TAX RET URNS FILED BY SOME OF THE DEDUCTEES HAD BEEN FILED. THE ASSESSING OFFICER AF TER CONSIDERING THE EXPLANATION AND DETAILS FURNISHED BY THE ASSESSEE O BSERVED THAT THE RESPONSIBLE PERSON MADE DEDUCTION OF TAX AT SOURCE ON COMMISSIONS, PAYMENT TO VARIOUS PARTIES FOR COLLECTION OF TAX ON MINERALS, CASUAL COMMODITIES IN THE SPECIFIED AREAS, U/S 194C INSTEA D OF SECTION 194H OF THE 4 ACT, THEREFORE, THE TAX WAS DEDUCTED AT A LESSER RA TE WHICH RESULTED INTO SHORT DEDUCTION OF TAX AT SOURCE BY THE RESPONSIBLE PERSO N, THEREFORE, AS PER THE PROVISIONS OF SECTION 201(1) OF THE ACT, THE RESPON SIBLE PERSON WAS TO BE TREATED AS ASSESSEE IN DEFAULT FOR SUCH SHORT DEDUC TION AND ALSO LIABLE TO PAY INTEREST U/S 201(1A) OF THE ACT. AS REGARDS TO THE CONTENTION OF THE RESPONSIBLE PERSON THAT IF THE DEDUCTEE HAD PAID TA X DUE FROM HIM, DEMAND VISUALISED U/S 201 (1) OF THE ACT COULD NOT BE RAIS ED. THE ASSESSING OFFICER POINTED OUT THAT THE RESPONSIBLE PERSON COULD NOT P ROVIDE SATISFACTORY EVIDENCE REGARDING PAYMENTS OF DUE TAX IN THE RELEV ANT FINANCIAL YEARS BY MANY OF THE CONCERNED DEDUCTEES. 6. THE ASSESSEE CARRIED THE MATTER TO THE LD CIT(A) AND SUBMITTED THAT DEDUCTION OF TAX AT SOURCE WAS MADE ON COMMISSION P AYMENT U/S 194C OF THE ACT ON THE BASIS OF INDUSTRIAL GUIDELINES ISSUED B Y COMMISSIONER OF COMMERCIAL TAX DEPARTMENT. IT WAS FURTHER STATED TH AT THE AGREEMENT BETWEEN THE ASSESSEE AND VARIOUS PARTIES WAS ONLY IN THE NA TURE OF CONTRACT ON WHICH SECTION 194C OF THE ACT ONLY WAS ATTRACTED. IT WAS STATED THAT THE TAX HAVING BEEN DEDUCTED PROPERLY AND THERE BEING NO MALAFIDE INTENTION ON THE PART OF THE ASSESSEE, IT WAS NOT JUSTIFIED TO TREAT THE ASS ESSEE AS ASSESSEE IN DEFAULT U/S 201 OF THE ACT. IT WAS FURTHER STATED THAT THE INTEREST COULD NOT BE CHARGED / COLLECTED FROM THE ASSESSEE WHEN THE DEDUCTEES HA D DECLARED THE COMMISSION PAYMENT AS THEIR INCOME IN THE RESPECTIV E RETURNS OF INCOME FILED BY THEM AND PAID DUE TAXES. RELIANCE WAS PLACED ON THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA REPORTED AT 293 ITR 226((SC). 5 7. THE LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAD GIVEN CONTRACT TO V ARIOUS PARITIES FOR COLLECTION OF TAX ON MINERALS / CASUAL ITEMS IN THE SPECIFIED AREA AND PAID COMMISSION TO SUCH PARTIES FOR DOING THIS JOB AND R ENDERING THE SERVICES BUT THE DEDUCTION OF TAX AT SOURCE WAS MADE U/S 194C AN D NOT U/S 194H OF THE ACT UPTO FEBRUARY 2009. HE FURTHER OBSERVED THAT AFTER FEBRUARY, 2009, THE TAX WAS DEDUCTED AT SOURCE U/S 194H OF THE ACT WHICH SH OWED THE ACCEPTANCE OF THE POSITION OF DEDUCTION OF TAX IN RESPECT OF COMM ISSION PAYMENTS HAD TO BE MADE U/S 194H AND NOT U/S 194C OF THE ACT. AS REGAR DS THE CHARGING OF INTEREST U/S 201(1A) OF THE ACT, THE LD CIT(A) OBSE RVED THAT THERE WAS SHORT DEDUCTION OF TAX AT SOURCE ON WHICH INTEREST WAS CH ARGEABLE AS PER THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS RATHI GUM INDUSTRIES REPORTED AT 213 ITR 98 (RAJ). THE LD CIT(A) ALSO OBSERVED THAT WHERE THE DEDUCTEES HAD PAID TAX, THE SAME CANNOT BE ONCE AGAIN BE RECOVERED FROM THE DEDUCTOR AND ALSO THE B OARDS CIRCULAR NO. 275/201/95/IT(B) DATED 29.1.1997 DECLARES THAT NO D EMAND VISUALISED U/S 201(1) SHOULD BE ENFORCED IF TAX DEDUCTOR HAD SATIS FIED THE OFFICER-IN-CHARGE OF TDS THAT TAX DUE HAD BEEN PAID BY THE DEDUCTEEA SSESSEE BUT THIS WILL NOT ALTER THE LIABILITY TO CHARGE INTEREST U/S 201(1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAX BY THE DEDUCTEE ASSESSEE OR THE LIA BILITY OF PENALTY U/S 271C OF THE ACT. THE LD CIT(A) DIRECTED THE ASSESSING O FFICER TO RECALCULATE THE INTEREST AS FOUND CHARGEABLE FROM THE DUE DATE OF D EDUCTION TO THE DATE OF PAYMENT OF TAX BY THE DEDUCTEE AS PER INFORMATION F ILED BY THE ASSESSEE. NOW THE ASSESSEE IS IN APPEAL. 6 8. THE LD COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT I N THE PRESENT CASE CONTRACT WAS INVOLVED, THEREFORE, PROVISIONS OF SECTION 194C WERE APPLICABLE AND NOT OF SECTION 194H OF THE ACT. HE FURTHER SUBMITTED TH AT ON RECEIVING LETTER FROM THE DEPARTMENT, THE ASSESSEE STARTED DEDUCTING TDS U/S 194H OF THE ACT. A REFERENCE WAS MADE TO PAGE NO.32 OF THE ASSESSEES COMPILATION, WHICH IS THE COPY OF LETTER DATED 26.2.2009 ISSUED BY THE DCIT ( TDS) JODHLPUR, THE CONTENTS OF WHICH READS AS UNDER:- PLEASE REFER TO THIS OFFICE LETTER NO. 38 DATED 31 .12.2008 ADDRESSED TO THE COMMISSIONER, COMMERCIAL TAXES DEP ARTMENT, RAJASTHAN. JAIPUR (COPY ENCLOSED). SOME OF THE FIEL D OFFICERS HAVE FILLED REPLIES ON THE INFORMATION SOUGHT BY THIS OFFICE. I T IS GATHERED FROM THE INFORMATION PROVIDED BY THESE OFFICES THAT SOME OF THEM ARE MAKING TDS U/S 194C OF THE ACT, WHILE OTHERS ARE MAKING TD S U/S 194H OF THE INCOME-TAX ACT. THE NATURE OF COLLECTION CHARGES PA ID TO THE SUCCESSFUL BIDDER IS COMMISSION PAYMENT. YOU ARE, THEREFORE, R EQUESTED TO DIRECT ALL THE DDOS CONCERNED TO MAKE TDS U/S 194H OF THE INCOME TAX ACT WHILE MAKING PAYMENTS ON ACCOUNT OF COLLECTION CHAR GES. COPY OF YOUR DIRECTIONS MAY ALSO BE ENDORSED TO THIS OFFICE. 9. IT WAS SUBMITTED THAT ONLY AFTER RECEIVING THE S AID LETTER, THE ASSESSEE STARTED DEDUCTING TDS U/S 194H OF THE INCOME TAX AC T, EARLIER IT WAS DEDUCTING U/S 194C OF THE ACT. IT WAS FURTHER STATE D THAT THE DEDUCTEES HAVE PAID THE TAX ON THE COMMISSION RECEIVED WHICH WAS S HOWN AS INCOME IN THEIR RESPECTIVE RETURNS, THEREFORE, THE ASSESSEE WAS NOT TO BE CONSIDERED AS ASSESSEE IN DEFAULT U/S 201(1)AND NO INTEREST U/S 2 01(1A) WAS LEVIABLE. 7 10. IN HIS RIVAL SUBMISSIONS, THE LD. DR STRONGLY S UPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE WAS COLLECTING TAX ON MINERALS / CAUSAL COMMODITIES IN THE SPECIFIED AREAS AND IN LIEU OF T HAT WAS RECEIVING THE COMMISSION. THE ASSESSEE DEDUCTED TDS U/S 194C UP TO FEBRUARY 2009. THEREAFTER, THE SAME WAS DEDUCTED U/S 194H OF THE A CT. IN THE PRESENT CASE, THE ASSESSEE ALSO CLAIMED THAT THE DEDUCTEES PAID D UE TAX, THEREFORE, DEMAND VISUALISED U/S 201(1) OF THE ACT COULD NOT BE RAISE D. ON THE OTHER HAND, THE ASSESSING OFFICER POINTED OUT THAT THE ASSESSEE COU LD NOT PROVIDE SATISFACTORY EVIDENCE REGARDING PAYMENT OF DUE TAXES BY MANY OF THE CONCERNED DEDUCTEES. FROM THE CONTENTION OF THE ASSESSEE AND OBSERVATION OF THE ASSESSING OFFICER, IT IS NOT CLEAR AS TO WHETHER T HE ASSESSEE FURNISHED INFORMATION FOR HOW MANY DEDUCTEES PAID THE TAX, I T IS ALSO NOT CLEAR AS TO WHY AND HOW THE ASSESSING OFFICER WAS NOT SATISFIED FROM THE CONTENTION OF THE ASSESSEE, THEREFORE, THE FACTS ARE NOT CLEAR. SIMILARLY, IT IS NOT CLEAR AS TO WHETHER THERE WAS NOT ANY CONTRACT BETWEEN THE ASSE SSEE AND THE DEPARTMENT FOR MAKING THE PAYMENT OF COMMISSION TO THE ASSESSE E TO ATTRACT THE PROVISION OF SECTION 194H OF THE ACT BECAUSE NO LIGHT HAS BE EN THROWN BY THE ASSESSING OFFICER OR LD CIT(A) ON THIS VITAL FACT. AS THE FACTS ARE NOT CLEAR, WE DEEM IT APPROPRIATE TO SET ASIDE THE IMPUGNED OR DER PASSED BY THE LD CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF AS SESSING OFFICER TO ADJUDICATE THE SAME AFRESH IN ACCORDANCE WITH LAW A FTER PROVIDING DUE AND 8 REASONABLE OPPORTUNITY OF BEING HEARING TO THE ASS ESSEE (RESPONSIBLE PERSON). 12. SINCE THE FACTS FOR ALL THE YEARS ARE SIMILAR, THEREFORE, OUR FINDINGS GIVEN FOR THE ASSESSMENT YEAR 2006-07 (SUPRA) SHALL APPLY MUTATIS-MUTANDIS FOR THE REMAINING YEARS I.E. ASSESSMENT YEARS I.E 2007-08 TO 2009-10. 13. IN THE RESULT, APPEALS ARE ALLOWED FOR STATISTI CAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON THIS 05.12.2 012 ) SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 5 TH DECEMBER, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR ITAT, JODHPUR 9