M/s SLS Investment Private Limited, Kolkata V. ITO, Ward 59(3)/TDS, Kolkata, Kolkata

ITA 1827/KOL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1804 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 16-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Assessee Lawyers: S M SURANA
• Keywords: Non-deduction of tax
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & HONBLE SHRI M.BALAGANESH, AM ] I.T.A NO. 1827/KOL/20 16 ASSESSMENT YEAR : 2004-0 5 M/S SLS INVESTMENTS PVT. LTD. -VS- ITO, WARD-59(3),TDS,KOLKATA [PAN: AADCS 9398 H] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI S.M. SURANA, A DVOCATE FOR THE REVENUE : SHRI ARINDAM BHATTACHARJEE, ADDL. CIT DATE OF HEARING : 09.01.2018 DATE OF PRONOUNCEMENT : 12.01.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-24, KOLKATA [I N SHORT THE LD CITA] IN APPEAL NO. 55/CIT(A)-24/KOL/2008-09 DATED 17.06.201 6 AGAINST THE ORDER PASSED BY THE ITO, WARD-59(3), KOLKATA [ IN SHORT T HE LD AO] UNDER SECTION 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 (IN SHOR T THE ACT) DATED 19.03.2008 FOR THE ASSESSMENT YEAR 2004-05. 2. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE PAID INTEREST TO THE TUNE OF RS. 2,13,087/- TO 5 PARTIES AS UNDER: 2 ITA NO.1827/KOL/2016 M/S SLS INVESTMENTS PRIVATE LIM ITED A.YR.2004-05 2 THESE PAYMENTS WERE MADE WITHOUT DEDUCTION OF TAX A T SOURCE. THE LD. AO VIDE OFFICE LETTER DATED 04.03.2008 ASKED TO THE ASSESSE E TO EXPLAIN WITH SUPPORTING DOCUMENTS AS TO WHY THE ASSESSEE SHOULD NOT BE TREA TED AS ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT IN RESPECT OF SUCH NON-DEDUCTION OF TAX AT SOURCE FOR PAYMENT OF INTEREST AND WHY THE ORDER U/S 201(1)/201(1A) OF TH E ACT SHOULD NOT BE PASSED AGAINST IT FOR THE SAID DEFAULT. THE ASSESSEE DID N OT FURNISH ANY EXPLANATION TO OFFICE LETTER AND ACCORDINGLY, THE LD. AO PROCEEDED TO LEVY TAX AND INTEREST PAYABLE ON THE ASSESSEE AMOUNTING TO RS. 64,650/- B Y PASSING AN ORDER U/S 201(1)/201(1A) OF THE ACT ON 19.03.2008. 3. BEFORE THE LD. CIT(A), THE ASSESSEE PLEADED THAT IT HAD TOTAL PAID A SUM OF RS. 14,93,611/- TOWARDS INTEREST DURING THE FINANCIAL Y EAR 2003-04 AND HAS PROPERLY 3 ITA NO.1827/KOL/2016 M/S SLS INVESTMENTS PRIVATE LIM ITED A.YR.2004-05 3 DEDUCTED THE TAX AT SOURCE THEREON. IN RESPECT OF INTEREST PAYMENTS MADE TO AFORESAID FIVE PARTIES, SINCE THE PARTIES HAD PROVI DED FORM 15G TO THE ASSESSEE, NO TAX WAS DEDUCTED AT SOURCE ON THESE PAYMENTS. IT WA S FURTHER PLEADED THAT ALL THESE ASSESSEES WERE NOT HAVING ANY TAXABLE INCOME AND HE NCE, THE ASSESSEE WAS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE. THE ASSESSEE ALSO STATED THAT THE COPY OF FORM 15G PROVIDED BY THESE FIVE PARTIES WERE DULY F ILED BY THE ASSESSEE BEFORE THE JURISDICTIONAL COMMISSIONER OF INCOME TAX-XXI, KOLKATA ON 07.04.2004. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM TH E ASSESSING OFFICER IN THIS REGARD. THE LD. AO IN THE REMAND REPORT OBSERVED TH AT THE INSPECTOR OF INCOME TAX WAS DEPUTED TO VERIFY WHETHER THE FORM NO. 15G WERE ACTUALLY FILED BY THE ASSESSEE ON 07.04.2004 IN THE OFFICE OF THE LD. CIT . THE INSPECTOR REPORTED THAT THE OFFICE SUPERINTENDENT OF THE CIT OFFICE COULD N OT TRACE THE RELEVANT RECORDS/REGISTERS TO CHECK THE VERACITY OF THE CLAI M MADE BY THE ASSESSEE. THE INSPECTOR FURTHER VERIFIED THE RECEIPT REGISTER OF THE CIT(TDS), KOLKATA, FOR THE RELEVANT PERIOD AND OBSERVED THAT NO SUCH FORMS (I. E. FORM 15G) WERE RECEIVED IN THE OFFICE OF CIT(TDS), KOLKATA ON 07.04.2004. ACCO RDINGLY, THE LD. AO IN THE REMAND REPORT CONFIRMED THAT THE CLAIM MADE BY THE ASSESSEE IS NOT VERIFIABLE AND THE FORM NO. 15G WAS NOT FILED BY THE ASSESSEE BEF ORE THE LD. CIT IN DUE TIME. THE LD. CIT(A) ACCORDINGLY DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GR OUNDS: 1. THAT THE APPELLANT HAS SUBMITTED THE FORM 15G AT THE OFFICE OF CIT-XXI ON 07.04.2004 VIDE ITS LETTER DATED NIL. IF THE REL EVANT RECORDS/REGISTER COULD NOT BE TRACED THEN THE BENEFIT SHOULD HAVE BEEN ALL OWED TO YOUR APPELLANT. 2. THE LD. CIT(A) HAS ERRED IN FACT AND LAW BY HOLD ING THE PURPORTED COPY OF FORM 15G HAS THUS BEEN FURNISHED FOR THE FI RST TIME IN THE APPEAL STAGE AND THAT TOO IN JUNE, 2012 MORE THAN EIGHT YE ARS AFTER THE RELEVANT FINANCIAL YEAR.IN FACT THESE COULD NOT HAVE BEEN P RODUCED EARLIER AS THE LD.ITO, TDS PASSED THE ORDER ON THE VERY NEXT DAY O F THE FIRST DATE FIXED 4 ITA NO.1827/KOL/2016 M/S SLS INVESTMENTS PRIVATE LIM ITED A.YR.2004-05 4 FOR HEARING WHEN THE AUTHORIZED REPRESENTATIVE COUL D NOT APPEAR. HENCE, THERE WAS NO OPPORTUNITY TO PRODUCE THE FORM 15G EA RLIER. 3. THE LD. CIT(A) HAS ERRED IN FACT AND LAW BY HOLD ING THE COPIES OF THE PURPORTED FORM 15G HAS ALSO BEEN FURNISHED MUCH AFT ER THE APPEAL WAS FILED. THE EVIDENCE CAN BE ADDUCED AT ANY TIME DUR ING THE HEARING AND AT THE BEGINNING IT WAS ARGUED THAT THE LD. ITO HAS ER RED IN FACT AND LAW BY HOLDING THAT THE TAX WAS NOT DEDUCTED ON PAYMENT OF INTEREST TO THE CORPORATE ENTITIES WHEREAS THE PAYMENT WAS MADE TO INDIVIDUALS. 4. THAT THE APPELLANT CRAVES THE LEAVES TO ADD, ALT ER OR ABROGATE ANY GROUND OF APPEAL AT THE TIME OF HEARING. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. AR PLACED ON RECORD A COPY OF FORM NO. 26 CONTAINING THE ENTIRE DETAILS OF INTERE ST AND TAX PARTICULARS THEREON MADE BY THE ASSESSEE FOR THE TOTAL INTEREST PAYMEN T OF RS. 14,93,611/- WHICH ADMITTEDLY INCLUDED THE INTEREST PAID TO THE DISPUT ED AFORESAID FIVE PARTIES IN THE SUM OF RS. 2,13,087/-. HE DREW OUR ATTENTION TO NOT E NO.6 ATTACHED TO THE SAID FORM NO. 26 WHICH IS REPRODUCED HEREUNDER FOR THE S AKE OF CONVENIENCE: 6. WRITE A IF THE LOWER DEDUCTION OR NO DEDUC TION IS ON ACCOUNT OF A CERTIFICATE U/S 197. WRITE B IF NO DEDUCTION IS ON ACCOUNT OF DECLARAT ION U/S 197A. WE FIND THAT THE ASSESSEE HAD DULY FILLED UP IN THE COLUMN FOR NON-DEDUCTION OF TAX AT SOURCE EXPLAINING THE REASONS AS B IN RESP ECT OF INTEREST PAID TO THE AFORESAID FIVE PARTIES. THIS GOES TO PROVE THAT THE ASSESSEE HAD DULY REFLECTED IN FORM NO. 26 THAT THERE IS NO OBLIGATION FOR THE ASS ESSEE TO DEDUCT TAX AT SOURCE IN RESPECT OF INTEREST PAYMENT MADE TO AFORESAID FIVE PARTIES. MOREOVER, THE LD. AR ALSO PRODUCED THE COPY OF PROFIT AND LOSS BALANCE S HEET IN RESPECT OF TWO PARTIES BEFORE US FOR THE RELEVANT ASSESSMENT YEAR WHEREIN WE FIND THAT THOSE PARTIES DO NOT HAVE TAXABLE INCOME AND HENCE THE ASSESSEE WOUL D ALSO NOT BE ENTITLED FOR 5 ITA NO.1827/KOL/2016 M/S SLS INVESTMENTS PRIVATE LIM ITED A.YR.2004-05 5 DEDUCTION OF TAX AT SOURCE IN TERMS OF THE RATIO LA ID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF HINDUSTHAN COCACOLA BEVERAGES VS CIT REPORTED IN 293 ITR 226(SC). HENCE, THE ASSESSEE COULD NOT BE TREATED A S ASSESSEE IN DEFAULT EVEN ON THIS GROUND. WITH REGARD TO THE ISSUE OF FORM 15G N OT BEING VERIFIABLE, WE FIND THAT THE PROVISION OF SECTION 197A(1) OF THE ACT CL EARLY SAYS THAT IF THE PAYEES FURNISH DECLARATION IN WRITING TO THE ASSESSEE IN T HE PRESCRIBED FORM, THEN THE ASSESSEE NEED NOT DEDUCT TAX AT SOURCE ON THE PAYME NTS MADE TO SUCH PAYEES. THE PROVISIONS FOR FURNISHING OF THE SAID STATUTORY FOR MS (I.E. FORM 15G OBTAINED FROM THE PAYEES) BY THE ASSESSEE BEFORE THE JURISDICTIO NAL COMMISSIONER OF INCOME TAX IS PROVIDED IN 197A(2) OF THE ACT, WHICH IN OUR CONSIDERED OPINION, IS ONLY PROCEDURAL IN NATURE. THE SAID PROVISION CANNOT BE CONSTRUED AS MANDATORY CONDITION AND IS ONLY DIRECTORY IN NATURE. MOREOVER , THE SCHEME OF TAXATION PROVIDES FOR A SEPARATE PENALTY FOR VIOLATION OF PR OVISIONS OF SECTION 197A(2) OF THE ACT BY IMPOSING PENALTY U/S 272A(2)(F) OF THE ACT, WHICH IS AN INDEPENDENT ISSUE. THIS GOES TO PROVE THAT THE SCHEME OF TAXAT ION HAD PROVIDED NECESSARY CHECKS AND BALANCES TO TAKE CARE OF DIFFERENT PROVI SIONS. 5. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES , WE HOLD AS UNDER: (I) IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD INDE ED OBTAINED FORM 15G DECLARATION IN WRITING FROM THE AFORESAID FIVE PAYEES IN TIME. HENCE, THE ASSESSEE IS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE IN TERMS OF SECTION 197A(1) OF THE ACT. (II) FROM THE PAPER BOOK FILED BY THE ASSESSEE WE FIND THAT SHRI SOHANLAL JOSHI AND SHRI SOMANI RAM AVATAR WERE NOT HAVING TAXABLE INCOME AND HENCE IN ANY 6 ITA NO.1827/KOL/2016 M/S SLS INVESTMENTS PRIVATE LIM ITED A.YR.2004-05 6 CASE THE ASSESSEE COULD NOT BE TREATED AS ASSESSEE IN DEFAULT IN TERMS OF RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN 293 ITR 226 ( SUPRA). (III) IT HAS BEEN ORALLY MENTIONED BY THE LD. AR TH AT THE REMAINING THREE PARTIES ALSO DO NOT HAVE ANY TAXABLE INCOME, THOUGH NO EVID ENCES WERE FURNISHED BEFORE US TO THAT EFFECT. (IV) THE ASSESSEE HAD DULY REFLECTED IN THE RELEVA NT COLUMN IN FORM NO. 26 BY MENTIONING AS B WHICH CLEARLY STIPULATES THE ASSE SSEE HAD INDEED OBTAINED DECLARATION IN FORM 15G FROM THE RESPECTIVE FIVE PA YEES IN TIME. IT IS NOT IN DISPUTE THAT THE SAID FORM NO. 15G WAS VERY MUCH A VAILABLE BEFORE THE LD. AO BEFORE FRAMING THE ASSESSMENT WHICH IS QUITE EVIDEN T FROM THE FIRST LINE OF THE ASSESSMENT ORDER WHEREIN THE LD. AO STATES THAT ON VERIFICATION OF RECORDS IT WAS FOUND.. 6. WE FIND THAT THE ASSESSEE HAD INDEED DEDUCTED TA X AT SOURCE IN SUPPORT OF OTHER INTEREST PAYMENTS MADE BY IT AS IS EVIDENT FROM FOR M NO. 26. THIS GOES TO PROVE THE BONAFIDE CONDUCT OF THE ASSESSEE IN COMPLIANCE WITH THE PROVISIONS OF THE ACT. THE REQUIREMENT OF FURNISHING OF FORM NO. 15G DECLARATIONS BEFORE THE JURISDICTIONAL COMMISSIONER OF INCOME TAX AS PER SE CTION 197A(2) OF THE ACT SHOULD ONLY HAVE TO BE CONSTITUTED AS DIRECTORY IN NATURE AND NOT MANDATORY. SEPARATE PENAL PROCEEDINGS ARE PROVIDED U/S 272A(2) (F) OF THE ACT FOR VIOLATION OF PROCEDURAL REQUIREMENTS PROVIDED IN SECTION 197A(2) OF THE ACT. 7. IN VIEW OF THE AFORESAID FINDINGS, WE HAVE NO HE SITATION TO HOLD THAT THE ASSESSEE COULD NOT BE TREATED AS ASSESSEE IN DEFAUL T IN THE FACTS AND CIRCUMSTANCES 7 ITA NO.1827/KOL/2016 M/S SLS INVESTMENTS PRIVATE LIM ITED A.YR.2004-05 7 OF THE CASE AND ACCORDINGLY THE TAX AND INTEREST LE VIED IN THE SUM OF RS. 64,650/- U/S 201(1)/201(1A) OF THE ACT DESERVES TO BE CANCEL LED. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 12.01.2018 SD/- SD/- [N.V. VASUDEVAN] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 12.01.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. M/S SLS INVESTMENTS PRIVATE LIMITED, 25, STRAND ROAD, 4 TH FLOOR, MARSHALL HOUSE, R/N-430, KOLKATA-700001. 2. ITO, WARD-59(3),TDS, KOLKATA, 10B, MIDDLETON ROW , KOLKATA-700071. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S