Senior Post Master, Meerut V. ITO (TDS), Meerut

ITA 1472/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6299 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2002-2003
• Appeal Filed On: 13-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARAT BHUSHAN GARG
• Assessee Lawyers: V K GOYAL
• Keywords: Non-deduction of tax
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES, NEW DELHI (CIRCUIT BENCH AT MEERUT) BEFORE : SHRI . I.C. SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 1472/DEL/2015 (ASSTT. YEAR: 2002 - 03 ) SENIOR POST MASTER, C/O. VINOD KUMAR GOEL, 282, BOUNDARY ROAD, CIVIL LINES, MEERUT VS. ITO(TDS), MEERUT (APPELLANT) (RESPONDENT) DATE OF HEARING 18 /12/2015 DATE OF PRONOUNCEMENT 15 / 03 /2016 ASSESSEE BY: SH. V.K. GOYAL, ADV REVENUE BY: SH. BHARAT BHUSHAN GARG, SR. DR O R D E R PER PRASHANT MAHARISHI, A. M. 1 . THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 13.02.2015 OF LD CIT(A) - MEERUT FOR THE ASSESSMENT YEAR 2002 - 03. 2 . THE ONLY GROUND OF APPEAL IS AGAINST THE NON E - DEDUCTION OF TAX AT SOURCE ON PAYMENT MADE TO THE AGENTS OF POST OFFICE IN NATIONAL SAVING SCHEME. 3 . THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE WAS HELD TO BE ASSESSEE IN DEFAULT OF RS.2,98,811/ - U/S 201(1) AND INTEREST OF RS.26,146/ - WAS ALSO LEVIED U/S 201(1A) OF THE ACT. THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) WHO IN TURN CONFIRMED THE ACTION OF ITO (TDS). 4 . RIVAL PARTIES WERE HEARD. IT IS A FACTS THAT POST OFFICE IS PAYING COMMISSION TO THE AGENTS THO UGH THE MODUS OPERANDI IS THAT COMMISSION AGENTS DEPOSITS THE PAGE 2 OF 6 AMOUNT OF BALANCE MONEY COLLECTED AFTER DEDUCTING THEIR COMMISSION WITH THE POST OFFICE . TH IS ISSUE HAS ALREADY BEEN DECIDED BY CO - ORDINATE BENCH VIDE ORDER DATED 3 RD JUNE 2005 IN 159/DEL/20 05 AS UNDER: - 3.3 THE AMENDED PROVISIONS OF SECTION 194H PROVIDED FOR DEDUCTION AT SOURCE ON THE PAYMENT OF COMMISSION MADE BY POST OFFICE TO SAS AGENTS, THIS AMENDMENT BECAME EFFECTIVE FROM 1.6.2001. IN, VIEW OF THE PROVISIONS UNDER SECTION 194H AND 2 06 READ WITH RULE 37 OF I.T. ACT, THE TDS DEDUCTED WAS TO BE DEPOSITED BEFORE 30.6.2002. AS THE INFORMATION REGARDING DEPOSITING OF TDS WAS NOT FILED BEFORE THE INCOME - TAX OFFICER (TDS & SURVEY), MEERUT, HE ISSUED A SHOW CAUSE NOTICE TO THE POST MASTER, HE AD POST OFFICE, MEERUT CITY. IN THE COMPLIANCE, A LIST OF 21 SAS AGENTS ALONG WITH DETAILS OF COMMISSION PAID TO THEM DURING 1.6.2001 TO 31.3.002 WAS FILED. AS THE POSTAL DEPARTMENT HAD NOT DEDUCTED TAX AT SOURCE FROM THE COMMISSION PAID TO THE SAS AGENTS FOR A PERIOD 01.06.2001 TO 3 1.3.2002, THE ASSESSING OFFICER HELD THAT THE ASSESSEE TO 'BE IN DEFAULT UNDER SECTION 201 (1) OF INCOME TAX ACT IN RESPECT OF TDS NOT DEDUCTED. THE ASSESSING OFFICER WORKED OUT THE. AMOUNT OF TDS DEDUCTIBLE DURING THE PERIOD 01.06.2001 TO 31.03.2002 AT RS.2,98,811/ - , THE ASSESSING OFFICER ALSO WORKED OUT INTEREST/UNDER SECTION 201 (1A) AT RS.26,146/ - AND THUS MADE TOTAL DEMAND OF RS.3,24,957/ - CHARGEABLE UNDER SECTION 201 (1). 3.4 ACTION OF THE ASSESSING OFFICER WAS CHALLENGED BEFORE THE ID, CIT (A). ON BEHALF OF THE ASSESSEE, IT WAS SUBMITTED MAT THE SAS AGENTS WERE NOT APPOINTED BY THE POST OFFICE BUT BY REVENUE OFFICE AND POST OFFICE ACTED ONLY AS AGENTS FOR DEPOSITING THE AMOUNT UNDER THE VARIOUS SCHEMES. IT WAS ALSO SUBMITT ED THAT AS PA THE REVISED AND AMENDED PROCEDURE, THE AGENTS WERE TO DEPOSIT ONLY THE NET AMOUNT AFTER DEDUCTING THE COMMISSION AND THUS THERE WERE NO PAYMENT OF COMMISSION BY THE POST OFFICE AND THUS, THERE WAS NO QUESTION OF PAYMENT OF TDS BY THE POST OFF ICE FROM THE AMOUNT OF COMMISSION CHARGED BY THE AGENTS. IN SUPPORT OF THIS ARGUMENT, REFERENCE WAS MADE TO THE LETTER NO 18/5/99 - NS - II DATED 11.05.2000 OF MINISTRY OF FINANCE (DEPARTMENT OF ECONOMIC AFFAIRS) AND ALSO THE LETTER NO.KPB/SB/PC/51/2001 DATED NIL AT BAREILLY. 3.5 IT WAS POINTED OUT BY THE ID. COUNSEL FOR THE ASSESSEE THAT AS THE MINISTRY OF FINANCE AND DEPARTMENT OF POSTS HAD NOT ISSUED CLEAR CUT DIRECTION, THE POST MASTER COULD NOT TAKE ANY DECISION ON HIS LEVEL AND WHEN THE DECISION OF FINANC E MINISTRY (DEPARTMENT OF ECONOMIC AFFAIRS) WAS COMMUNICATED THAT TAX HAD TO BE DEDUCTED AT SOURCE, THE DEPARTMENT STARTED DEDUCTING THE TAX. BESIDES, IT WAS SUBMITTED THAT ALL THE COMMISSION AGENTS - FILED THEIR RETURN OF INCOME AND COPIES OF THE RETURNS AL ONG WITH THE COMPUTATION OF INCOME OF AGENTS WERE ALSO FILED BEFORE E ASSESSING OFFICER. IN THIS REGARD, REFERENCE WAS MADE TO THE PAGE 3 OF 6 CIRCULAR OF CBDT DATED 29.1.1997 (F.NO.275/201/95 - IT(B)) AND IT WAS SUBMITTED ON THE BASIS OF THIS CIRCULAR MAT WHEN THE TAX ES HAD BEEN DULY PAID BY THE ASSESSEE, THE DEMAND OF TAX AGAINST DEDUCTOR SHOULD NOT BE RAISED. 3.6 AS REGARDS THE INTEREST UNDER SECTION 201(1A), IT WAS SUBMITTED THAT NOT PAID BY THE ASSESSEE, THE ASSESSEE COULD NOT HAVE MADE ANY DEDUCTION AND CONSEQUEN TLY, IT WAS LIABLE TO TAX UNDER SECTION 201 (1A). THE ID. CIT(A) AC CEPTED THIS PLEA AND DELETED THE TAX AND INTEREST CHARGED BY THE ITO, IDS UNDER SECTION 201 (1A) BY OBSERVING ASUNDER: - '2.2 FACTS OF THE CASE AND SUBMISSIONS OF THE ID. AR HAVE BEEN CONSID ERED. I FIND THAT THE PROV ISIONS OF SECTION 194H RELATING TO DEDUCTION OF - TAX FROM BROKERAGE AND COMMISSION INCLUDING COMMISSION PAID BY POS T OFFICES TO THE SAS AGENTS BECAME EFFECTIVE FROM'L.6 . 2001. THUS, THIS WAS THE FIRST YEAR OF T DS ON THE COMMISSION PAYMENT MADE TO SAS AGENTS AND SINCE THERE WERE NO GUIDELINES FORM THE APPELLANT'S OWN DEPARTMENT AS TO WHAT PROCEDURE WERE TO BE FOLLOWED AND ALSO THAT THE MINISTRY OF FINANCE ITSELF HAD LAID DOWN THE GUIDELINES WHEREBY IT WAS ONLY THE NET AMOUNT WHICH WA S TO BE DEPOSITED BY THE COMMISSION AGENT AFTER RETAINING THE AMOUNT OF COMMISSION, WHICH MEANS THE COMMISSION WAS NOT ACTUALLY PAID BY THE POST OFFICE, A BONAFIDE DOUBT ABOUT THE DEDUCTION OF TAX HAD EXISTED. AFTER THE RECEIPT OF COMMUNICATION FROM THE MI NISTRY OF FINANCE, CONVEYED THROUGH ITS OWN DEPARTMENT, THE APPELLANT HAS STARTED DEDUCTING THE TAX IN RIGHT EARNEST. THEREFORE, THE BENEFIT OF DOUBT IS TO BE GIVEN TO THE APPELLANT FOR NOT DEDUCTING THE TAX FROM THE COMMISSION WHICH THOUGHT NOT PAID, HAS BEEN DEEMED TO HAVE BE'EN PAID DURING THE PERIOD 1.6.2001 TO 31.3.2002 AND, THUS, CHARGING OF INTEREST UNDER SECTION1 201 (1A) CANNOT BE SUSTAINED AS THE APPELLANT CANNOT BE HELD TO BE A DEFAULTER. L D. CIT (A) AND REFERRED TO BEFORE US WERE NO T FILED BEFOR E THE ITO, IDS AND THE REFORE, HE HAD NO OCCASION TO EXAMINE THE SAME. EVEN THE ID. CIT (A) DID NOT GIVE OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THESE LETTERS AN D TO MAKE SUBMISSIONS WITH REGARD THERETO. HE DID NOT CALL FOR ANY REMAND REPORT FROM T HE ASSESSING OFFICER ON VARIOUS FACTS SUBMITTED BEFORE HIM. 3. 7. IN THE LAST PARAGRAPH REPRODUCED ABOVE, THE ID. CIT (A) HAS ALSO TAKEN SUPPORT FROM THE BOARD CIRC ULAR DATED 29.1.1997. IT APPEAR THAT HE HAS TAKEN INTO CONSIDERATION THE FACT THAT THE COMMISSION AGENTS WERE PAYING TAXES AS. PER THE LIABILITY AGAINST THEM AND THEY WERE DECLARING THE COMMISSION PAYMENTS IN THE RETURNS FILED BY THEM. ON THIS BASIS ALSO, HE HAS, HELD THAT RAISING OF PA YMENT IN THE HANDS OF THE ASSESSEE I$ NOT JUSTIFIED AS POINTED OUT BY THE ID. DR ALSO, THE ID. CIT (A) HAS NOT TAKEN PAINS TO VERIFY THESE FACTS. ALTHOUGH THE ASSESSEE FILED COPIES OF THE RETURN FILED PAGE 4 OF 6 BY THE COMMISSION AGENTS/SAS AGENTS BUT THE FACT THAT T HEY HAD PAID TAX ON THE AMOUNT OF COMMISSION RECEIVED BY THEM HAS NOT BEEN PROPERLY VERIFIED. ON THIS ASPECT ALSO, NO REPORT WAS CALLED FROM THE ASSESSING OFFICER NOT THE CONCERN ED COMMISSION AGENTS/SAS AGENTS WERE CALLED FOR VERIFICATION. 3. 8. IN VIEW OF THE ABOVE, THE FACT REMAINS THAT THE ID. CIT (A) HAS CONSIDERED EXTRANEOUS MATERIAL WITHOUT PROPER VERIFICATION. IN THE CASE OF KANOI INDUSTRIES (P) LTD. VS. ACIT 261 ITR 488, THE HONBLE CALCUTTA HIGH COURT HAS HELD THAT THE LEVY OF INTEREST IS M ANDATORY AND IS COMPENSATORY IN N ATURE. ACCORDING TO THE HON'BLE CALCUTTA HIGH COURT, THE LIABILITY TO PAY INTEREST ARISING OUT OF LAW IS AU TOMATIC. ON THIS BASIS, THE HON'BLE COURT HAS JUSTIFIED LEVY OF INTEREST UNDER SECTION 201 (1A). 3. 9. IN THE CASE OF CIT VS. PREMNATH MOTORS (PVT.) LTD. 253 ITR 705, THE HON'BLE DELHI HIGH' COURT HAS HELD THAT LEVY OF INTEREST UNDER SECTION 201 (1A) IS MANDATORY AND IF THERE - IS FAILURE TO DEDUCT TAX ON COMMI SSION PAID TO EMPLOYEES AND THE INTEREST IS PAYABLE UNDER SECTION 201(1 A). THE HON'BLE COURT HAS CONSIDERED THE MEANING OF WORD 'SHALL' APPEARING IN SECTION 201 AND HAS HELD THAT THE PROVISION ENACTED IS MANDATORY. ACCORDING TO THE HON'BLE COURT, THE PAYM ENT TO PAY TAX BY THE DUE DATE. IN THIS CASE ALSO, THE LEVY 3.1 0. IN VIEW OF THE ABOVE AUTHORITIES, THE ISSUE HAS TO BE EXAMINED IN THE LIGHT OF RELEVANT STATUTORY PROVISIONS. AS THE LD. CIT (A) HAS NOT PROPERLY CONSIDERED THE SCOPE OF THESE PROVISIONS AND FURTHER HE HAS RECORDED CERTAIN FINDINGS WITHOUT PROPER VERIFICATION AND WITHOUT AFFORDING ANY OPPORTUNITY TO THE ASSESSING OFFICER AS POINTED OUT ABOVE, WE CONSIDER IT PROPER, TO SET ASIDE THE ORDER OF THE ID. CIT (A) AND RESTORE THIS MATTER BACK TO H IM FOR DECIDING THIS AFRESH AFTER MAKING A DEEP PROBE INTO THE RELEVANT MATTER AND AFTER PROPER VERIFICATION OF RELEVANT FACTS INCLUDING THE FACT INCLUDING THE FACT REGARDING PAYMENT OF TAX BY THE COMMISSION AGENTS. THE ID. CIT (A) IS, THEREFORE, DIRECTED TO DECIDE THE ISSUE IN THE LIGHT OF OUR OBSERVATIONS MADE AS ABOVE AND AS PER LAW. WHILE DOING SO, HE SHALL PROVIDE ADEQUATE OPPORTUNITY TO THE ITO AS WELL AS TO THE ASSESSEE. 3. 11 . IN VIEW OF THE ABOVE, THE ORDER OF THE LD CIT( A) IS SET ASIDE AND THE MATTER IS RESTORED BACK TO HIM FOR FRESH ADJUDICATION. THE GROUNDS OF THE REVENUE ARE, THEREFORE, DECIDED ACCORDINGLY. IN VIEW OF ABOVE, THE THE R EFORE, DECIDED ACCORDINGLY. 3.12 IN THE RESULT, THE APPEAL (ITA NO.159/DEL/2003) FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PAGE 5 OF 6 5 . FURTHERMORE IF THE AGENTS HAVE PAID TO TAX ON THE COMMISSION INCOME EARNED BY THEM RECOVERY FROM THE CONCERNED POST MASTER IS ALSO NOT PROPER IN VIEW OF PROVISO TO SECTION 201 OF THE ACT AND R EGARDING INTEREST THE FIRST PROVISO TO SECTION 201()1A) MAY ALSO BE CONSIDERED. THE DECISION CITED BY LEARNED AR OF THE HONOURABLE SUPREME COURT OF INDIA IN CIT V AHMEDABAD STAMP VENDORS ASSOCIATIONS 348 ITR 378 DOES NOT APPLY TO THE FACTS OF THE CASE AS THAT DECISION WAS ON THE ISSUE WHETHER THE DISCOUNT GIVEN TO STAMP VENDORS FOR PURCHASING STAMPS IN QUANTITY WAS IN THE NATURE OF COMMISSION WHERE IN HONORABLE SUPREME COURT HAS HELD IN NEGATIVE. THIS IS NOT THE CASE OF DISCOUNT GIVEN BY T HE POST OFFICE TO THE AGENTS BUT ISSUE OF COMMISSION PAID BY POST OFFICE TO THE AGENTS WHO IN TURN COLLECT MONEY BUT DEPOSIT THE SAME WITH POST OFFICE AFTER DEDUCTING THEIR COMMISSION. 6 . THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH WE RESTORE THE MATTER BACK TO THE FILE OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) FOR DECIDING THE ISSUE THAT DIRECTION GIVEN AS PER THE ORDER OF CO - ORDINATE OF TRIBUNAL. 7 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 1 5 . 03 .2016 . - S D / - - S D / - ( I.C. SUDHIR ) ( PRASHANT MAHARISHI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 5 .03.2016 * AJAY KUMAR KEOT COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT (A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI PAGE 6 OF 6 DATE 1. DRAFT DICTATED ON 1 5 . 0 3 . 2 0 1 6 PS 2. DRAFT PLACED BEFORE AUTHOR 1 5 . 0 3 . 2 0 1 6 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 2 2 . 0 3 . 2 0 1 6 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 2 . 0 3 . 2 0 1 6 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.