ITO TDS Ward 2 , Coimbatore V. Suba Plastics Pvt. Ltd. , Coimbatore

ITA 1600/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5716 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 22-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T N SEETHARAMAN
• Keywords: Deemed dividend; Revised return
• Section: 194C; 201(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 1600/MDS/2017 / ASSESSMENT YEAR : 2008-09 THE INCOME TAX OFFICER, TDS WARD -2, COIMBATORE, NO. 1510, MAYFLOWER MIDCITY, TRICHY ROAD, COIMBATORE 641 018. VS. M/S. SUBA PLASTICS PVT. LTD., DOOR NO. 85, JOTHIPURAM, COIMBATORE 641 047. [PAN: CMBBO 3049E] ( / APPELLANT) ( / RESPONDENT) %& / APPELLANT BY : SHRI. ARV. SREENIVASAN, JCIT )*%& / RESPONDENT BY : SHRI. TN. SEETHARAMAN, ADVOCATE & /DATE OF HEARING : 16.11.2017 & /DATE OF PRONOUNCEMENT : 29.11.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: REVENUE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, COIMBATORE IN ITA NO. A39/2 013-14 DATED 31.03.2017 FOR THE ASSESSMENT YEAR 2008-09. :-2-: ITA NO. 1600/MDS/2017 2. M/S. SUBA PLASTICS PVT. LTD., THE ASSESSEE, IS E NGAGED IN THE BUSINESS OF MANUFACTURE OF PLASTIC MOULDED COMPONENTS. THE ITO , TDS WARD 1(3), COIMBATORE (A O) CONDUCTED AN INSPECTION IN THEASSE SSEES PREMISES ON 31.01.2013. BASED ON SURVEY OBSERVATIONS, THE AO INITIATED PROCEEDINGS U/S. 201, CALLED FOR THE DETAILS ON VARIOUS PAYMENTS MAD E, VERIFIED THEM, PASSED A CONSOLIDATED ORDER U/SS. 201(1) AND 201(1A) ON 22 .08.2013 ON THE PAYMENTS FALLING UNDER VARIOUS SECTIONS VIZ., 192B, 194, 194C ,194I AND 194J. THE AO OBSERVED THAT THE ASSESSEEMADE PAYMENTS IN VARIOUS AMOUNTS, IN DIFFERENT MONTHS OF THE RELEVANT YEAR TO ONE OF TH E SHAREHOLDER CUM MANAGING DIRECTOR VIZ., SHRI V. BASKARAN, WHO WAS HOLDING 98.94% OF COMPANY SHARE CAPITAL I.E., MORE THAN 10%, OVER AND ABOVE THE CREDIT BALANCES STANDING IN HIS ACCOUNT AT THE TIME OF MAK ING THOSE PAYMENTS. IT APPEARS FROM THE CIRCUMSTANCES THAT THE AO CONSIDER ED THAT THESE PAYMENTS ATRS. 33,10,486/- FELL UNDER THE SCOPE AND DEFINITI ON OF DEEMED DIVIDEND U/S. 2(22)(E) AND HENCE ATTRACTED TDS U/S. 194 BUT THE A SSESSEEFAILED TO DEDUCT TAX ON IT , SO THE ASSESSEEWAS IN DEFAULT IN RESPEC T OF TDS OF RS. 6,62,097/- AND ALSO THE INTEREST PAYABLE U/S. 201(1A) ON SUC H TDS , THE TOTAL OF WHICH WAS AT RS. 12,62,457/-. IT APPEARED THAT THE ASSE SSEE HAS ACCEPTED SUCH VIEW OF THE ASSESSEE AND HAS PAID SUCH AMOUNT ON 28 .02.2013 I.E., SHORTLY AFTER THE SURVEY, BUT LONG BEFORE THE AO PASSED T HE IMPUGNED CONSOLIDATED ORDER DT 22.8.2013 IN WHICH THE A ODETERMINED THE T AX DUE U/S 194 AT RS.6,62,097 , THE INTEREST U/S 201(1A) AT RS 6,00,3 60, THE TOTAL TAX DUE AT RS. :-3-: ITA NO. 1600/MDS/2017 12,62,457/- , TAX PAID AT RS.12,62,457 AND THE BALA NCE PAYABLE AT RS. NIL. THE ASSESSEEFILED AN APPEAL BEFORE THE CIT(A) AND T HE CIT(A) BASED UPON THE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S. CROMA INDIA PVT. LTD., VS ITO, TDS WARD 1(1), COIMBATORE IN ITA NO. 1230 & 1231/MDS/20 14 DATED 04.02.2015 HELD THAT THE DEMAND RAISED ON ACCOUNT OF THE DEFA ULT IN RESPECT OF NON- DEDUCTION OF THE TDS ON THE DEEMED DIVIDEND U/S. 19 4 IN THE ORDER U/S. 201(1) IS NOT JUSTIFIED AND HENCE DIRECTED TO DELE TE IT. FURTHER, THE CIT(A) OBSERVED FROM THE ASSESSMENT ORDER DATED 15.02.2016 PASSED BY THE DCIT IN THE CASE OF SHRI V. BASKARAN THAT THE IMPUGNED DEEM ED DIVIDEND WAS ALREADY OFFERED TO TAX BY HIM IN THE RETURN FILED IN THE CO URSE OF 148 PROCEEDINGS AND THE SAME WAS ASSESSED IN HIS HANDS. AS PER THE RET URN, SELF-ASSESSMENT TAX WAS ALSO PAID. IT APPEARS ON ACCOUNT OF INTEREST L IABILITY, DEMAND OF RS. 21,85,750/- WAS RAISED IN THE ASSESSMENT ORDER PASS ED BY THE AO. THAT TAX DEMAND IS IN ANY CASE RECOVERABLE FROMSHRIBASKARAN. THE DEEMED DIVIDEND, HAVING BEEN TAXED IN THE HANDS OF SHRIBASKARAN, THE RE IS NO CASE FOR FURTHER RECOVERY OF THE RELEVANT TAX FROM THE APPELLANT IN VIEW OF HONBLESUPREME COURTS DECISION IN THE CASE OF HINDUSTAN COCO COLA BEVERAGE PVT LTD (SUPRA). THE AO OFSHRIBASKARAN MAY PROCEED TO RECOVER WHATEV ER TAX PAYABLE ON ACCOUNT OF OFFERING OF THE DEEMED DIVIDEND BY SHRIB ASKARANAS INCOME. IN THE LIGHT OF THE FOREGOING OBSERVATION , THE CIT(A) HE LD THAT THERE CANNOT BE FURTHER TAX LIABILITY AGAINST THE APPELLANT ON ACCO UNT OF ALLEGED TDS DEFAULT ON :-4-: ITA NO. 1600/MDS/2017 DEEMED DIVIDEND PAYMENTS AND DELETE GROSS DEMAND OF RS 12,62,457/- RAISED IN THE ORDER IN DISPUTE. THEREFORE, GROUNDS ARE AL LOWED. 3. ON SUCH ORDER, THEREVENUEFILED THIS APPEAL WITH THE FOLLOWING GROUNDS: 1. THE CIT(A)-2 HAS NOT ACCEPTED THE AOS REASONIN G, AS THE IMPUGNED DEEMED DIVIDEND WAS ALREADY OFFERED TO TAX IN THE R ETURN FILED BY THE ASSESSEE DURING THE COURSE OF PROCEEDINGS U/S. 148 AND THE T AX HAS ALSO BEEN PAID. THE CIT(A), COIMBATORE HAS ERRED IN THE ASSESSMENT ORDE R DATED 15.02.2016 BY NOT MENTIONING THE ASSESSMENT YEAR IN WHICH THE ASSESSE E OFFERED DEEMED DIVIDEND FOR TAXATION AND PAID SELF-ASSESSMENT TAX, WHEREAS FOR THE ASSESSMENT YEAR 2007-08, ONLY AFTER THE INSPECTION OF 31.03.20 13, THE ASSESSEE HIMSELF CALCULATED THE TDS LIABILITY AND PAID THE TAX VIDE CHALLANS DATED 28.02.2013. ALSO FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSING OFFICER WILL NOT BE ABLE TO INITIATE PROCEEDINGS U/S. 148 IN THE FINANCIAL YEAR 2014-15, AS IT WAS ALREADY BARRED BY TIME. 2. THE CIT(A) HAS REFERRED TO THE DECISION OF HONB LE SUPREME COURT DECISION IN M/S. HINDUSTAN COCA COLA CASE. BUT THE CIT(A) HAS FAILED TO DIRECT THE ASSESSEE TO PAY THE INTEREST U/S. 201(1) ORDER FROM THE DATE OF DRAWING THE DEEMED DIVIDEND TO THE DATE OF PAYMENT OF TAX ON DE EMED DIVIDEND. 3. THE CIT(A), COIMBATORE HAS ERRED IN HOLDING THAT THE TDS OFFICER HAS EXCEEDED HIS JURISDICTION BY CONSIDERING THE AMOUNT AS DEEMED DIVIDEND. THE TDS OFFICER ALSO WORKS AS AN ASSESSING OFFICER, REL IANCE IS ALSO PLACED ON ITAT, HYDERABAD BENCH A IN THE CASE OF JAYPEEMGRANITIES (P) LTD VS INCOME TAX OFFICER, WARD 14(3), HYDERABAD. 4. THE ASSESSEE HAS TO COMPLY WITH THE PROVISIONS O F SECTION 194 WHICH STATES THAT BEFORE MAKING PAYMENT IN RESPECT OF ANY DIVIDEND OR BEFORE MAKING ANY DISTRIBUTION OR PAYMENT TO A SHAREHOLDER, OF AN Y DIVIDEND HAS TO DEDUCT TDS FROM THE AMOUNT OF SUCH DIVIDEND, INCOME TAX AT THE RATES IN FORCE. 4. THE D R SUBMITTED THAT THE ASSESSEE VOLUNTARILY PAID THE TAX DUE U/S 194 AT RS.6,62,097 , THE INTEREST PAYABLE ON THE TD S U/S 201(1A) AT RS. 6,00,360 AND THUS, THE TOTAL TAX PAID BY IT ON 28 .02.2013 I.E., SHORTLY AFTER :-5-: ITA NO. 1600/MDS/2017 THE SURVEY WAS DULY GIVEN CREDIT BY THE AO IN THE C ONSOLIDATED ORDER DT22.08.2013, AFTER THE SURVEY AND HE DETERMINED T HE BALANCE PAYABLE U/S 194 AT RS. NIL.IF AT ALL THE ASSESSEE HAS WRON GLY PAID THE IMPUGNED TAX AND INTEREST, IT SHOULD HAVE APPROACHED THE CONCERN ED AUTHORITIES WITH PROOF AND REQUEST FOR REFUND ETC. WHEN THE ASSESSEEVOLUN TARILY PAID THE TAX DUE U/S 194 AND THE AO HAS NOT RAISED ANY DEMAND, THE D ECISION OF THE CIT (A) ON SUCH MATTER IS UNTENABLE AND HENCE HIS ORDER MAY BE SET ASIDE. PER CONTRA, THE AR INVITED OUR ATTENTION TO THE RELEVANT PORTIO N OF THE ASSESSMENT ORDER PASSED BY THE DCIT, CORPORATE CIRCLE-2, COIMBATORE IN THE CASE OF SHRI V. BASKARAN FOR AY 2008-09, DATED 15.02.2016 WHICH IS EXTRACTED AS UNDER: 3. IN RESPONSE TO THE NOTICE U 148 OF THE I.T. AC T, 1961 ISSUED, THE ASSESSEE VIDE HIS LETTER DATED 08.02.20 16 HAD SUBMITTED ASUNDER: 'I HAVE FILED MY RETURN OF INCOME ON 20-1-2016 VIDE ACKNOWLEDGEMENT NO.933678461200116. A COPY OF THE ACKNOWLEDGEMENT ENCLOSED HEREWITH FOR YOUR KIND REF ERENCE. THERE WAS A INSPECTION CONDUCTED BY THE INCOME TAX OFFICER, TDS WARD AT M/S. SUBA PLASTICS PRIVATE LIMITED DURI NG THE INSPECTION THE INCOME TAX OFFICER HAS OBSERVED THAT THERE ARE WITHDRAWAL IN MY CURRENT ACCOUNT AND THESE WITHDRAW ALS HAVE RESULTED IN A DEBIT BALANCE. THE AMOUNT OF DEBIT BA LANCE WAS ARRIVED AT RS.33,10,486 AND THE SAME HAS TO BE SUBJ ECT TO TDS. AS MY SOFTWARE HAS CORRUPTED, I AM UNABLE TO VERIFY THE VALIDITY. HOWEVER, TO BUY PEACE, I HAVE VOLUNTARILY ADMITTED THIS AMOUNT AS DEEMED DIVIDEND AND I HAVE OFFERED T HE SAME AS INCOME IN MY REVISED RETURN. I REQUEST YOU TO KI NDLY ACCEPT MY RETURN OF INCOME. :-6-: ITA NO. 1600/MDS/2017 THE ASSESSEE FILED ITS RETURN OF INCOME IN RESPONSE TO NOTICE U1S 148 OF THE I.T.ACT, 1961 ON 20-1-2016 ADMITTING INCOME OF RS.44,43,488. SUBSEQUENTLY, NOTICE U/S 143(2) OF THE IT. ACT, 196 1 DATED 4-2-2016 WAS ISSUED AND SERVED ON THE ASSESSEE. SHRI.S.VENKATESH , FCA APPEARED AND FILED DETAILS SUCH AS COMPUTATION OF TOTAL INCOME S TATEMENT, AND HARD COPY OF THE RETURN OF INCOME FILED. 4. THE SUBMISSIONS OF THE ASSESSEE AS ALSO THE DETA ILS FILED HAVE BEEN PERUSED. THE ASSESSEE, IS THE MANAGING DIRECTOR OF M/S. SUBA PLASTICS PRIVATE LIMITED, WHEREIN, HE HOLDS 98.94% OF SHARES . THE CURRENT ACCOUNT OF THE ASSESSEE WITH THE COMPANY SHOWS THAT ASSESSE E HAD WITHDRAWN AMOUNTS OVER AND ABOVE THE CREDIT BALANCE THEREBY, ATTRACTING THE PROVISIONS OF SECTION 2(22)(E) OF THE I.T. ACT, 196 1. ACCORDING TO SECTION 2(22)(E) OF THE I.T. ACT, 1961 '2(22)(E) : ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTER ESTED, OF ANY SUM (WHETHER AS REPRESENTING A PART OF THE ASSETS O F THE COMPANY OR OTHERWISE (MADE AFTER THE 31ST DAY OF MA Y, 1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT BEING SH ARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OUR WITHOU T A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN TEN P ERCENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHARE HOLDER IS A MEMBER OR A PARTNER AND IN WHICH HE HAS A SUBSTANTI AL INTEREST (HEREAFTER IN THIS CLAUSE REFERRED TO AS THE SAID C ONCERN) OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR THE I NDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDER, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULATED PROFIT S;' THE ASSESSEE IN THE RETURN FILED IN RESPONSE TO NOT ICE U/S 148 OF THE ACT ISSUED, HAD INCLUDED A SUM OF RS. 33,10,486 BEING T HE AMOUNTS WITHDRAWN FROM THE COMPANY M/S. SUBA PLASTICS P. LT D. OVER AND ABOVE THE CREDIT BALANCE UNDER THE HEAD 'INCOME FROM OTHE R SOURCES' AND HAD PAID THE DUE TAXES THEREON. :-7-: ITA NO. 1600/MDS/2017 PLEADED THAT SINCE SHRI. V. BASAKARAN HAS PAID THE TAX ON THE IMPUGNED DEEMED DIVIDEND AND THE ASSESSEE HAVING WRONGLY PAI D TAX AT THE BEHEST OF THE AO, IT IS ENTITLED FOR REFUND AND THE DECISION OF THE CIT(A) IS CORRECT. 5. WE HEARD THE RIVAL CONTENTIONS. IT IS SEEN FROM THE ASSESSMENT ORDER, THAT THE ASSESSEE HAS PAID TDS ON THE DEEMED DIVIDE ND U/S 194 AT RS.6,62,097 AND THE INTEREST PAYABLE ON SUCH TDS U /S 201(1A) AT RS. 6,00,360. THUS, IT HAS PAID THE TOTAL TAX AT RS. 1 2,62,457/-ON 28.02.2013 I.E., SHORTLY AFTER THE SURVEY WHICH WAS DULY GIVEN CREDI T BY THE A O IN THE CONSOLIDATED ORDER DT22.08.2013, AFTER THE SURVEY A ND THE AO DETERMINED THE BALANCE PAYABLE U/S 194 AT RS. NIL. SUBSEQUENTLY, AS SEEN FROM THE SUBMISSION OF THE AR EXTRACTED, SUPRA, THAT THE AO OF SHRI V. BASKARAN ISSUED A NOTICE U/S. 148 ON 19.03.2015 AND SHRI. V. BASKAR AN FILED HIS RETURN ON 20.01.2016 ADMITTING THE DEEMED DIVIDEND AND HAS PA ID THE DUE TAXES THEREON. THUS, IT IS CLEARTHAT THE ASSESSEE HAS WRO NGLY PAID THE IMPUGNED TAXES(AS PER THE RATIO OF THIS TRIBUNAL,SUPRA) BY M ISTAKE OR INADVERTENCE OR ON ACCOUNT OF IGNORANCE ETC. SINCE, THE AO HAS SIMPLY ACCEPTED THE TAX PAYMENT MADE BY THE ASSESSEE IN THE CONSOLIDATED ORDER AND HE HAS NOT CREATED ANY DEMAND U/S. 194, ON SUCH FACTS AND CIRCUMSTANCES, W E ARE OF THE VIEW THAT THE CORRECT COURSE OF ACTION AVAILABLE FOR THE ASSE SSEE IS TO APPROACH THE CONCERNED AUTHORITY SEEKING REFUND, AND THE CONCERN ED AUTHORITY ON BEING SATISFIED SHALL HAVE TO GRANT APPROPRIATE RELIEF.CO NSIDERING THE TIME GAP, THE JURISDICTION OF THE INVOLVED A OS ETC, IN OUR VI EW, THE ASSESSEE MAY APPROACH :-8-: ITA NO. 1600/MDS/2017 THE ADMINISTRATIVE COMMISSIONER OF THE AO I.E., THE INCOME TAX OFFICER, TDS WARD-1(3), COIMBATORE AND SEEK NECESSARY REMEDY U/S . 264 BY PLACING RELEVANT MATERIALS. IN VIEW OF THE ABOVE, THE APPE AL OF THEREVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE REVENUES APPEAL IS TREATED A S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON WEDNESDAY, THE 29 TH DAY OF NOVEMBER, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) !' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: 29 TH NOVEMBER, 2017 JPV &)1232 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 4 ( )/CIT(A) 4. 4 /CIT 5. 2) /DR 6. 7 /GF