Shri. Adit Gupta, Bangalore V. Commissioner of Income Tax (Appeals), Bangalore

ITA 1387/BANG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5502 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 05-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: H N KHINCHA
• Keywords: Rectification of order
• Section: 234B

Judgement Text

ITA.1387/BANG/2016 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER I.T.A NO.1387/BANG/2016 (ASSESSMENT YEAR : 2012-13) SHRI. ADIT GUPTA, NO.73, 1 ST FLOOR, CENTRAL STREET, K P WEST, BENGALURU 560 020 .. APPELLANT PAN : AGBPG3002D V. COMMISSIONER OF INCOME TAX (APPEALS), BENGALURU-2, BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. H. N. KHINCHA, CA REVENUE BY : SHRI. M. K. BIJU, JCIT HEARD ON : 17.04.2017 PRONOUNCED ON : 21.04.2017 O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A), BENAGALURU-2, IN ITA NO 164/CIT(A)-2/15-16 DT. 16.05.2016, FOR THE ASSESSMENT YEAR 2012-13. 02. THE ASSESSEE, AN INDIVIDUAL, IS A SALARIED EMPL OYEE OF KINGFISHER AIRLINES LTD, FILED HIS RETURN ON 29.06.2013, DECLA RING INCOME OF RS.67,42,890/-. THE RETURN WAS PROCESSED BY TH E CPC ON 20.02.2015. THE ASSESSEE SOUGHT RECTIFICATION U/S.154, SEEKI NG CREDIT OF TDS WHICH ITA.1387/BANG/2016 PAGE - 2 WAS REJECTED IN THE ORIGINAL ORDER, FOR THE REASON THAT THE TAX CREDIT WAS NOT AVAILABLE IN THE ASSESSEES ACCOUNT IN FORM 26A S. 03. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT ( A). HE FILED COPIES OF SALARY CERTIFICATES ISSUED BY HIS EMPLOYER, KINGF ISHER AIRLINES LTD, FOR THE PERIOD BETWEEN JULY AND NOVEMBER, 2011, SHOWING THA T TAX OF RS.10,50,588/- CLAIMED BY HIM IN HIS RETURN HAS BE EN DEDUCTED FROM HIS SALARY BY THE EMPLOYER. SINCE TAX HAS BEEN DEDUCTE D BY THE EMPLOYER BUT NOT PAID TO THE GOVERNMENT ACCOUNT, THEREFORE, HE C LAIMED THAT THE SAID THE DEFAULT HAS BEEN COMMITTED BY THE EMPLOYER. THE CI T (A) OBSERVED THAT AS PER SECTION 199, THE CREDIT TO THE ASSESSEE IS T O BE ALLOWED WHEN THE TDS AMOUNT IS ACTUALLY PAID. SO SHE HELD THAT THE ACTI ON OF THE AO IS IN ACCORDANCE WITH LAW. HOWEVER, THE CIT (A) HELD THAT AS PER SECTION 205, THE ASSESSEE SHALL NOT BE CALLED UPON TO PAY THE TAX TO THE EXTENT TAX HAS BEEN DEDUCTED FROM HIS INCOME IN ACCORDANCE WITH T HE PROVISIONS OF CHAPTER XVII. THUS, THE ACT PUTS A BAR ON DIRECT D EMAND AGAINST THE ASSESSEE IN SUCH CASES AND THE DEMAND ON ACCOUNT OF TAX CREDIT MIS- MATCH CANNOT BE ENFORCED COERCIVELY AND HENCE TH E CIT (A) HELD THAT NON-PAYMENT OF AMOUNT DEDUCTED FROM SALARY OF THE E MPLOYEE CANNOT BE ENFORCED COERCIVELY AGAINST HIM. WHILE PASSING THE APPELLATE ORDER, THE CIT (A) HELD THAT INTEREST U/SS.234A, 234B AND 234C IS MANDATORY AND CONSEQUENTIAL IN NATURE TO THAT EXTENT. THIS IS ON ACCOUNT OF NON-PAYMENT OF TAX DEDUCTED FROM THE EMPLOYEE BY THE EMPLOYER. THE SAME TREATMENT HAS TO BE GIVEN IN RESPECT OF TAX DEMAND ON ACCOUNT OF TDS DEDUCTED BUT ITA.1387/BANG/2016 PAGE - 3 NOT PAID TO THE GOVERNMENT. AGGRIEVED AGAINST SUCH OBSERVATION, THE ASSESSEE FILED THIS APPEAL. 04. THE AR SUBMITTED THAT THE INTEREST SHOULD NOT BE CHARGED ON THE ASSESSEE AND IN THIS REGARD RELIED ON THE FOLLO WING CIRCULAR/CASES: I) CBDT OM F. NO.275/29/2014, DT.11.03.2016 II) KAR HIGH COURT JUDGMENT IN ANUSUYA ALVA V. DCIT [(2005) 147 TAXMAN 152] AND III) BOMBAY HIGH COURT JUDGMENT IN YASHPAL SAHNI V. ACIT [(2007) 165 TAXMAN 144 (BOM) 05. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECTIFICATION ORDER DT. 20.02.2015. A PERUSAL OF THE ORDER U/S.154 SHOWS THAT THE ASSESSEE CLAIMED RS.19,76,925/- UN DER THE HEAD PRE-PAID TAXES COMPRISING OF : TDS : RS.16,32,885 140A : RS. 3,44,040. WHEREAS THE CPC ALLOWED A TOTAL TAX CREDIT OF RS .9,18,497/- COMPRISING OF TDS OF RS.5,74,457/- AND SELF-ASSESSMENT TAX OF RS. 3,44,040/-. THUS, TDS OF RS. 10,58,428/- DEDUCTED FROM THE ASSESSEES SALARY HAS NOT BEEN GIVEN CREDIT IN THIS ORDER AS THE ASSESSEES EMPLOY ER HAS NOT PAID IT TO THE GOVT. ACCOUNT. THAT IS WHY AS AGAINST RS.76,710/ - INTEREST LIABILITY COMPUTED BY THE ASSESSEE, THE CPC DETERMINED THE I NTEREST LIABILITY U/SS.234A, 234B AND 234C AT RS.5,92,588/, APPARENT LY FOR WANT OF TDS PAYMENT. ALTHOUGH, THE LEVY OF INTEREST U/SS.234 A, 234B AND 234C ARE MANDATORY, THE INTEREST LIABILITY IN THIS CASE AP PARENTLY ARISES ON ACCOUNT ITA.1387/BANG/2016 PAGE - 4 OF NON-PAYMENT OF TDS BY THE EMPLOYER . AS THERE I S A BAR AGAINST THE DIRECT DEMAND ON THE ASSESSEE U/S 205 TO THE E XTENT OF RS.10,58,428/- WHICH HAS BEEN DEDUCTED , THE LEVY OF INTEREST MA DE U/SS.234A, 234B AND 234C PROPORTION TO THE SHORTFALL OF THE IMPUGNED AM OUNT AT RS.10,58,428/- CANNOT BE ENFORCED FROM THE ASSESSEE. THIS DECIS ION, HOWEVER, DOES NOT PRECLUDE THE AO IN LEVYING THE INTEREST U/SS. 2 34A, 234B AND 234C ON TAXES OTHER THAN THE IMPUGNED TDS AND ENFORCING TH EM. 06. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DAY OF APRIL 2017. SD/- SD/- (SUNIL KUMAR YADAV) (S. JAYARAMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER