OFFICE OF X-EN PHED, Jaipur V. ITO, Jaipur

ITA 175/JPR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5121 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 06-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DHK
• Keywords: Reasonable cause
• Section: 206AA; 194C; 201(1); 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH ,-MH-TSU] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[ KK LNL; DS LE{K BEFORE: SHRI A.D. JAIN, JM & SHRI VIKRAM SINGH YADA V, AM VK;DJ VIHY LA-@ ITA NO. 175/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 OFFICE OF XEN, PHED, JAIPUR CUKE VS. ITO, TDS-1, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SHRAWAN KUMAR GUPTA (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA, (ADDL.CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07.09.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 14/09/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-III, JAIPUR DATED 31.12.2013 WHEREIN THE ASSESSEE HAS T AKEN FOLLOWING GROUNDS OF APPEAL: (1) THE IMPUGNED PENALTY ORDER U/S 154 R.W.S. 201(1)/20 1(1A) DATED 18.04.2012 IS BAD IN LAW AND THE FACTS OF THE CASE FOR WANT OF JURISDICTION AND VARIOUS OTHER REASONS AND HENCE THE SAME MAY KI NDLY BE QUASHED. (2) THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE F ACTS OF THE CASE IN SUSTAINING THE DEMAND OF RS. 1,75,677/- ON ACCOUNT OF SHORT DE DUCTION OF TDS AND INTEREST THEREON RAISED BY THE AO U/S 201(1) AND 20 1(1A). THE DEMAND SO RAISED BY THE ITO (TDS) AND PARTLY SUSTAINED BY THE LD. CIT(A) IS TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AND HENCE THE ADDITIONS MAY KINDLY BE DELETED IN FULL. ITA NO. 175/JP/14 THE XEN PHED, JAIPUR VS. ITO(TDS)-1, JAIPUR 2 2. FIRSTLY, DURING THE COURSE OF HEARING, GROUND NO .1 WAS NOT PRESSED HENCE THE SAME IS DISMISSED AS NOT PRESSED. 2.1 IN RESPECT OF GROUND NO.2, THE BRIEF FACTS OF T HE CASE ARE THAT THE ASSESSEE HAS FILED ITS TDS RETURN FOR THE 4 TH QUARTER OF F.Y. 2010-11 ON 24.07.2011 AND WHILE FILING THE SAID TDS RETURN, PA N OF SOME OF THE DEDUCTEES WERE WRONGLY MENTIONED. DUE TO SUCH MIS TAKE, THE AO HAD RAISED A DEMAND OF RS. 29,10,290/- INCLUDING THE INTEREST U/S 201(1A) OF THE IT ACT. BY APPLYING 20% TDS RATE IN PLACE OF 1 OR 2% ON SU CH CASES. THE APPELLANT THEREAFTER FILED CORRECTION STATEMENT ON 23.05.2013 . NOW, OUT OF THREE PERSONS, THE PAN OF TWO PERSONS NAMELY M/S YADAV C ONSTRUCTION CO. AND SHRI RAMDHAN JAT HAVE BEEN CORRECTED AND CONSEQUENT DEM AND HAS ALREADY BEEN REDUCED. THE PAN SUBMITTED OF SHRI LALA RAM IS STI LL INCORRECT/DEFECTIVE AND THE CURRENT DEMAND OF RS. 60,256/- IS ON ACCOUNT OF SHORT DEDUCTION ON PAYMENT TO SHRI LALA RAM AND INTEREST OF RS.39,000/ -THEREON. HENCE THIS APPEAL BEFORE US. 2.2 THE FINDING OF THE LD. CIT(A) IS AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE A PPELLANT AND FINDINGS OF THE AO IN THE REMAND REPORT. IT MAY BE NOTED THE DEMAND OF RS.29,10,290/- INCLUDING INTEREST DEMAND WAS RAISED BECAUSE OF THE REASON THAT WHILE FILING THE TDS RETURN THE APPELL ANT HAS MENTIONED PAN NO. OF SOME OF THE DEDUCTEES WRONG. HOWEVER, S UBSEQUENTLY, SUCH MISTAKE WAS RECTIFIED BY THE APPELLANT BY WAY OF CO RRECTION STATEMENT AND BY WAY OF FURNISHING CORRECT PANS OF SUCH DE DUCTEES. THE AO HAS ADMITTED ALL SUCH FACTS TO BE CORRECT. HOWEVER, PA N IN RESPECT OF SHRI LALA RAM IS STILL FOUND TO BE INCORRECT AGAINST WHI CH THE DEMAND ON ACCOUNT OF SHORT DEDUCTION IS ARRIVED AT RS. 60,02 2/-. THIS FACT WAS ALSO ADMITTED BY THE AR OF THE APPELLANT DURING THE APPE LLATE PROCEEDINGS. SIMILARLY THE SHORT DEDUCTION OF TAX AMOUNTING TO R S.36/- IS ALSO POINTED OUT BY THE SYSTEM AND THIS FACT WAS ALSO NOT DISPUT ED BY THE APPELLANT. ACCORDINGLY RAISING OF SUCH DEMAND TO THE EXTENT OF RS.60,022/- AND RS. 36/- AND CONSEQUENTIAL INTEREST U/S 201(1A) OF IT A CT IS FOUND TO BE CORRECT. ACCORDINGLY, ACTION OF THE AO TO SUCH AN EXTENT IS CONFIRMED. ITA NO. 175/JP/14 THE XEN PHED, JAIPUR VS. ITO(TDS)-1, JAIPUR 3 REGARDING THE REMAINING DEMAND, AS PER APPELLANT A S PER JUSTIFICATION REPORT FROM THE PORTAL OF CPC THE SAM E IS REPORTED TO BE RS.1,75,677/- WHICH INCLUDES DEMAND OF RS.60,022/- AND RS. 36/- NOT DISPUTED BY THE APPELLANT AS DISCUSSED IN THE ABOVE PARA. THE DISPUTE IS IN RESPECT OF DEMAND RAISED ON ACCOUNT OF SHORT DE DUCTION OF TAX IN THE CASE OF M/S YADAV CONSTRUCTION CO. AND RAMDHAN JAT. THE APPELLANT CASE IS THAT IN RESPECT OF THESE TWO PERSONS CORREC T PAN HAVE BEEN MENTIONED WHILE FILING THE CORRECTION STATEMENT. T HE FACT THAT THERE PANS ARE CORRECT IS EVEN PROVED FROM THE INFORMATI ON DOWNLOADED FROM THE CPC PORTAL. IN THIS BACKGROUND THE AO IS DIRE CTED TO AGAIN VERIFY SUCH FACTS AND IF THE APPELLANT HAS FILED CORRECTIO N STATEMENT PROPERLY BY MENTIONING CORRECT PANS THEN SUCH DEMAND MAY BE RED UCED/DELETED. SUBJECT TO SUCH VERIFICATION THE GROUNDS OF APPEAL ARE TREATED TO BE PARTLY ALLOWED. 2.3 THE LD. AR OF THE ASSESSEE SUBMITTED AT THE VER Y OUTSET THAT THE ASSESSEE IS A GOVT. DEPARTMENT. DURING THE YEAR SOME PAYMENT HAS BEEN MADE U/S 194C AND THE TDS HAS BEEN DEDUCTED WELL IN TIME AND ALSO DEPOSITED THE SAME INTO THE ACCOUNT OF CENTRAL GOVT. WELL IN TIME. THIS IS THE ADMITTED FACTS AND NOT DISPUTED. HOWEVER, THE RECIPIENT SHRI LALA RAM HAS PROVIDED HIS PAN NO. ABFPV4301L AND BY TAKING THIS PAN NO., ASSESSEE HAS FILED ITS TDS RETURN. ON RECEIVING THE INTIMATION U/S 200A IT HAS COME TO KN OW THAT THE PAN NO. OF SHRI LALA RAM IS WRONG AND THE DEMAND HAS BEEN RAISED ON ACCOUNT OF SHORT DEDUCTION DUE TO BY TAKING THE TDS RATE OF 20% IN P LACE OF 2% OR APPLICABLE RATE, DEEMING THE SAME AS NON PAN CASE. THE ASSESS EE THEREAFTER TRIED TO CONTRACT THE PERSON SHRI LALARAM BUT HE COULD NOT P ROVIDE HIS CORRECT PAN NO, AND THAT IS WHY THE ASSESSEE COULD NOT FILE THE COR RECTION STATEMENT FOR CORRECTION OF THE PAN OF SHRI LALA RAM. FURTHER WE ALSO CLARIFY THAT THE ABOVE TDS IS LYING WITH THE DEPARTMENT BECAUSE DUE TO WRO NG PAN THE RECIPIENT ALSO CANNOT CLAIM THAT TDS. HENCE ALSO NO LOSS TO REVENU E. ITA NO. 175/JP/14 THE XEN PHED, JAIPUR VS. ITO(TDS)-1, JAIPUR 4 ALTERNATIVELY AND WITHOUT PREJUDICE TO OUR OTHER SU BMISSION, EVEN ASSUMING SOME DEFAULT WAS THERE, THE SAME AT THE BEST WAS A MERELY TECHNICAL AND VENIAL BREACH OF LAW AND THE CONDUCT OF THE ASSESSE E HAS NOT BEEN SHOWN TO BE CONTUMACIOUS. NO DELIBERATE DEFIANCE OF LAW IS ESTA BLISHED. IN CONCLUSION, FIRSTLY THERE WAS NO SHORT DEDUCTION IN DEDUCTING T HE TDS AND SECONDLY AT THE WORST IF THERE WAS ANY SHORT DEDUCTION DUE TO WRONG PAN THE SAME WAS BEYOND, CONTROLLED TO THE ASSESSEE OR TECHNICAL OR VENIAL BREACH OF LAW FOR WHICH NO PENALTY CAN BE IMPOSED KINDLY REFER HINDU STAN STEEL VS. STATE OF ORRISA (SUPRA). SARASWATI ELECTRONICS VS. ITO 292 I TR 411 (KAR.) ALSO REFER BRANCH MANAGER, PUNJAB NATIONAL BANK VS. ADD. CIT 140 TTJ 622 (LUCK). THERE IS NO DISPUTE ABOUT THE FACT THAT THE APPELL ANT HAS DEPOSITED AMOUNT OF THE TAX DEDUCTED AT SOURCE UNDER THE PROV ISIONS OF THE ACT WITH THE GOVERNMENT WITHIN STIPULATED TIME. FURTHER, THE TA X DEDUCTED AT SOURCE FOR THE RELEVANT PERIOD WAS DEPOSITED BY THE APPELLANT ALONGWITH CHARGEABLE INTEREST BEFORE THE ISSUE OF SHOW CAUSE NOTICE FOR THE PENALTY UNDER REFERENCE. THE DEFAULT FOR WHICH DEMAND HAS BEEN RAISED BY THE AO RELATES TO MENTIONING WRONG PAN. IT IS SEEN THAT THE AO HAS RAISED THE DEMAND IN A ROUTINE MANNER WITHOUT BRINGING THE FACTS ON RECORD TO ESTABLISH T HAT THE APPELLANT COMMITTED THE DEFAULT WITHOUT A REASONABLE CAUSE. IF WE SEE IN DEPTH ABOUT THE INTENTION OF LEGISLATURE OF BRINGING THE PROVISIONS OF FILING OF TDS RETURN, IT IS CLEAR THAT THE REQUIREMENT OF THE TDS RETURN FILING IS TO ENS URE THAT WHETHER THE ASSESSEE HAS DEDUCTED CORRECT TAX OR NOT OR AFTER D EDUCTING THE SAME WHETHER PAID TO THE ACCOUNT OF CENTRAL GOVT. OR NOT AND COL LECTION OF TAX FROM RECIPIENTS OF INCOME THROUGH THE DEDUCTOR. IF ALL THE THING H AS BEEN DONE AND THE PURPOSE OF THE REVENUE IS FULFILLED AND WHEN THERE WAS NO LOOS TO THE REVENUE. THAN THERE SHOULD NOT BE ANY QUESTION TO RAISE ANY DEMAND ON THE ASSESSEE ONLY DUE TO THE REASON OF WRONG PAN PROVIDED BY THE RECIPIENT, WHEN THE ITA NO. 175/JP/14 THE XEN PHED, JAIPUR VS. ITO(TDS)-1, JAIPUR 5 DEMAND HAS BEEN RAISED DUE TO NON MENTIONING THE CO RRECT PAN NO. OF RECIPIENTS. BECAUSE AS THE ASSESSEE HAD PAID AMOU NT IN EVERY MONTH. THE ASSESSEE HAS PAID AFTER DEDUCTING THE TDS AND THIS TDS HAS BEEN DEPOSITED BY THE ASSESSEE VERY WELL IN TIMELY . HERE THE ASSES SEE HAD DONE ALL THE WORK WELL IN TIMELY WHICH WERE IN ITS HAND (I.E. DEDUCTION AN D DEPOSIT OF TAX). IN WHICH THERE WAS NO DEFAULT OF THE ASSESSEE IF ANY DEFAULT WAS OF THE RECIPIENTS, WHICH WAS BEYOND THE CONTROL OF THE ASSESSEE FOR WHICH H E SHOULD NOT BE SUFFERED OR PENALIZED. ALTHOUGH THE ABOVE DECISION ON PENALTY BUT THE RATIO OF THE SAME IS ALSO APPLICABLE IN THE PRESENT CASE. THEREFORE KEE PING IN VIEW THE TOTALITY OF THE ABOVE FACTS, CIRCUMSTANCES AND THE LEGAL POSITI ON, THE AO MAY KINDLY BE DIRECTED TO DELETE THE DEMAND SO RAISED. 2.4 THE LD DR IS HEARD WHO HAS RELIED UPON THE ORDE R OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE PROVISIONS OF LA W ARE VERY CLEAR IN RESPECT OF DEFECT IN FURNISHING THE WRONG TDS AND THE CONSEQUE NT LEVY OF TDS AT THE RATE OF 20% IN TERMS OF SECTION 206AA. 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IN TERMS OF SECTION 139A(5A) OF THE ACT , EVERY PERSON RECEIVING ANY SUM OR INCOME OR AMOUNT FROM WHICH TAX HAS BEEN DEDUCTED UNDER THE PROVISIONS OF CHAPTER XVIIB, SHALL INTIMATE HIS PE RMANENT ACCOUNT NUMBER TO THE PERSON RESPONSIBLE FOR DEDUCTING SUCH TAX UNDE R THAT CHAPTER. FURTHER, U/S 139A(5B) WHERE ANY SUM OR INCOME OR AMOUNT HAS BEEN PAID AFTER DEDUCTING TAX UNDER CHAPTER XVIIB, EVERY PERSON DEDUCTING TA X UNDER THE CHAPTER SHALL QUOTE THE PERMANENT ACCOUNT NUMBER OF THE PERSON TO WHOM SUCH SUM OF INCOME OR AMOUNT HAS BEEN PAID BY HIM IN ALL THE ST ATEMENT PREPARED AND DELIVERED IN ACCORDANCE WITH THE PROVISIONS OF SEC TION 200(3) OF THE ACT. ITA NO. 175/JP/14 THE XEN PHED, JAIPUR VS. ITO(TDS)-1, JAIPUR 6 2.6 FURTHER, WE REFER TO SECTION 206AA WHICH PROVID ES AS UNDER: (1) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISIONS OF THIS ACT, ANY PERSON ENTITLED TO RECEIVE ANY SUM OR INCOME OR AMO UNT, ON WHICH TAX IS DEDUCTIBLE UNDER CHAPTER XVIIB (HEREINAFTER REFERRE D TO AS DEDUCTEE) SHALL FURNISH HIS PERMANENT ACCOUNT NUMBER TO THE PERSON RESPONSIBLE FOR DEDUCTING SUCH TAX (HEREINAFTER REFERRED TO AS DEDU CTOR) FAILING WHICH TAX SHALL BE DEDUCTED AT THE HIGHER OF THE FOLLOWING RATES, NAMELY- (I) AT THE RATE SPECIFIED IN THE RELEVANT PROVISION OF THIS ACT, (II) AT THE RATE OR RATES IN FORCE, OR (III) AT THE RATE OF TWENTY PERCENT. SUB-SECTION (6) OF SECTION 206AA FURTHER PROVIDES T HAT WHERE PERMANENT ACCOUNT NUMBER PROVIDED TO THE DEDUCTOR IS INVALID OR DOES NOT BELONG TO THE DEDUCTEE, IT SHALL BE DEEMED THAT THE DEDUCTEE HAS NOT FURNISHED HIS PERMANENT ACCOUNT NUMBER TO THE DEDUCTOR AND THE P ROVISIONS OF SUB-SECTION (1) SHALL APPLY ACCORDINGLY. 2.7 ON PERUSAL OF THE ABOVE PROVISIONS, IT IS CLEAR THAT PRIMARY ONUS IS ON THE PERSON ENTITLED TO RECEIVE INCOME ON WHICH TAX IS D EDUCTIBLE AT SOURCE TO FURNISH HIS PAN AND IN CASE SUCH PAN IS INVALID OR DOES NOT BELONG TO THE SAID PERSON BY VIRTUE OF DEEMING FICTION, IT HAS BEEN S TATED THAT HE HAS NOT FURNISHED HIS PAN TO THE DEDUCTOR. IN SUCH A SCEN ARIO, THE ONUS SHIFTS ON THE PERSON RESPONSIBLE FOR DEDUCTING THE TAX THAT HE SH ALL DEDUCT THE TAX AT THE RATE SPECIFIED IN THE RELEVANT PROVISIONS OF THE AC T OR AT THE RATE OF 20% WHICHEVER IS HIGHER. IN THE INSTANT CASE THE PAN NUMBER OF SHRI LALA RAM WAS FOUND TO BE INCORRECT BY THE AO HENCE THE AO APPLIE D THE RATE OF 20% AS AGAINST RATE OF 2% PROVIDED UNDER SECTION 194C OF T HE IT ACT. THE ASSESSEE HAS MENTIONED THAT THEY HAVE TRIED TO CONTACT SHRI LALA RAM BUT HE COULD NOT ITA NO. 175/JP/14 THE XEN PHED, JAIPUR VS. ITO(TDS)-1, JAIPUR 7 PROVIDE HIS CORRECT PAN NO. AND THATS WHY THE ASSE SSEE COULD NOT FILE THE CORRECTION STATEMENT. IN OUR VIEW EVEN THOUGH THE PRIMARY ONUS IS ON SHRI LALA RAM TO FURNISH HIS CORRECT PAN NUMBER TO THE A SSESSEE, WHAT IS EQUALLY IMPORTANT IS THAT THE ASSESSEE SHOULD VERIFY AT THE TIME OF MAKING PAYMENTS OR AT THE TIME OF CREDIT IN HIS BOOKS OF ACCOUNTS WHE RE SHRI LALA RAM HAS SUBMITTED HIS CORRECT PAN NUMBER. IN THE INSTANT C ASE, THE ASSESSEE HAS FAILED TO DISCHARGE ITS OBLIGATION TO VERIFY THE CORRECT P AN AND IT IS ONLY AT THE TIME OF PROCESSING OF THE TDS RETURN THAT THE DEPARTMENT HA S NOTICED THE SUBMISSION OF INCORRECT PAN NUMBER AND THEREAFTER RAISED THE I MPUNGED DEMAND. WHAT IS IMPORTANT IS THAT THE EXERCISE TO FILE TDS RETUR NS SHOULD BE SUCH THAT IT CONTAINS CORRECT AND ACCURATE DATA AND IT IS ONLY T HEN THAT THE PROCESSING OF SUCH DATA HAS CAN HAPPEN PROPERLY AND CREDIT CAN BE GIVEN TO THE INCOME RECIPIENT. GIVEN THE NON-OBSTANTE NATURE OF PROVI SIONS AS CONTAINED IN SECTION 206AA(1) OF THE ACT WHICH OVERRIDES SECTION 194C OF THE ACT, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE AO IN RAISING DEMAND OF THE DIFFERENTIAL TAX THAT THE ASSESSEE SHOULD HAVE DEDUCTED BY VIRTUE OF SUBM ISSION OF INCORRECT PAN BY SHRI LALA RAM. AT THE SAME TIME, THE ASSESSEE SHA LL BE AT LIBERTY TO RECOVER THE SAID AMOUNT FROM SHRI LALA RAM. WITH THE ABOVE OBS ERVATIONS THE GROUND TAKEN BY THE ASSESSEE IS DISPOSED OFF. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/09 /2016. SD/- SD/- ( ,-MH-TSU ) ( FOE FLAG ;KNO ) ( A.D. JAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR ITA NO. 175/JP/14 THE XEN PHED, JAIPUR VS. ITO(TDS)-1, JAIPUR 8 DATED:- 14/ 09/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE XEN, PHED, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO (TDS)-1, JAIUR 3. VK;DJ VK;QDR@ CIT (TDS), JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-III, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 175/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.