Infosys BPM Limited, Bengaluru V. Assistant Commissioner Of Income Tax, TDS, Circle- 2(1), Bengaluru

ITA 1836/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6881 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-09-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 23-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNDAR RAJAN
• Keywords: Recovery proceedings; Rectification of order; TDS; Set aside
• Section: 206AA; 200A; 191; 192; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI. GEORGE GEORGE K, JUDICIAL MEMBER AND B. R. BASKARAN, ACCOUNTANT MEMBER ITA NO.1836 & 1837/BANG/2019 ASSESSMENT YEAR : 2011 12 & 2012-13 INFOSYS BPM LTD., PLOT NO.26/3, 26/4 & 26/6, HOSUR ROAD, ELECTRONIC CITY, BENGALURU-560 100. PAN AACCP 4478 N VS. THE ASST. COMMISSIONER OF INCOME TAX, TDS CIRCLE-2(1), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI SUDHEENDRA, C.A RESPONDENT BY : SHRI SUNDAR RAJAN, ADDL. CIT (DR) DATE OF HEARING : 08-09-2020 DATE OF PRONOUNCEMENT : 11-09-2020 ORDER PER GEORGE GEORGE K, JUDICIAL MEMBER 1. THESE APPEALS AT INSTANCE OF ASSESSEE ARE DIRECT ED TWO ORDERS OF CIT(A), BOTH DATED 25-6-2019. THE RELEVA NT ASST. YEARS ARE 2011-12 AND 2012-13. PAGE 2 OF 10 ITA NOS.1836 & 1837/BANG/2019 2. IDENTICAL ISSUES ARE RAISED IN THESE APPEALS, HE NCE THEY WERE HEARD TOGETHER AND A CONSOLIDATED ORDER IS PAS SED. 3. IDENTICAL GROUNDS ARE RAISED IN THESE APPEALS E XCEPT FOR VARIANCE OF FIGURES, HENCE GROUND PERTAINING TO ASS T. YEAR 2011-12 IS REPRODUCED. 1. GENERAL GROUND 1.1. THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, CENTRALIZED PROCESSING CELL - TDS, GHAZIABAD ('AO') HAS ERRED IN PASSING THE INTIMATION UNDER SE CTION 154 READ WITH SECTION 200A OF THE INCOME TAX ACT, 1961 ('THE ACT') IN THE MANNER PASSED BY HIM AND TH E COMMISSIONER OF INCOME TAX-(APPEALS)-3 ('CIT(A)') H AS ERRED IN CONFIRMING THE SAID ORDER. THE SAID ORDER BEING BAD IN LAW IS LIABLE TO BE QUASHED. 2. GROUNDS RELATING TO DEMAND RAISED UNDER 154 READ WITH SECTION 200A 2.1. THE LEARNED AO HAS ERRED IN DETERMINING RS. 1,24,130 AS THE AMOUNT PAYABLE ON ACCOUNT OF SHORT DEDUCTION OF TAX AT SOURCE AND INTEREST ON THE SAME IN RESPECT OF PAYMENTS OF SALARY, WITHOUT CONSIDERING THE FACTS OF THE CASE AND LAW APPLICABLE. 2.2. THE LEARNED AO HAS ERRED IN NOT APPRECIATING T HAT THE FLAT RATE OF TAX AT 20% ON GROSS PAYMENT CANNOT BE AUTOMATICALLY APPLIED IN THE CASE OF DEDUCTION OF T AX AT SOURCE UNDER SECTION 192 OF THE ACT. 2.3. IN ANY CASE AND WITHOUT PREJUDICE, THE EXERCIS E UNDERTAKEN BY THE AO BY ADOPTING THE RATE OF 20% UNDER SECTION 206AA AND CONSEQUENTLY RAISING THE DEMAND OF TAX IN AN INTIMATION ISSUED UNDER SECTION 200A IS BEYOND THE SCOPE OF THE SECTION 200A AND HENCE BAD IN LAW AND LIABLE TO BE QUASHED. 2.4. THE LEARNED CIT(A) HAS ERRED IN DISMISSING THE APPEAL ON THE GROUND THAT THE DEMAND OF RS. PAGE 3 OF 10 ITA NOS.1836 & 1837/BANG/2019 1,24,130/- HAS NOT BEEN RAISED VIDE ORDER UNDER SECTION 154 BUT VIDE ORDER UNDER SECTION 200A OF TH E ACT. 2.5. THE LEARNED CIT(A) HAS ERRED IN CONCLUDING THA T THE APPLICABILITY OF PROVISIONS OF SECTION 206AA WHILE PROCESSING THE RETURN UNDER SECTION 200A COULD NOT BE EXAMINED IN AN APPEAL AGAINST INTIMATION UNDER SECTION 154 AS THE IMPUGNED DEMAND WAS RAISED ONLY IN THE ORDER UNDER SECTION 200A. 2.6. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATI NG THE FACT THAT ONCE AN ORDER OF RECTIFICATION IS PAS SED UNDER SECTION 154, THE ORIGINAL ORDER PASSED UNDER SECTION 200A ITSELF IS MODIFIED AND WHAT REMAINS THEREAFTER IS, NOT THE ORDER OF RECTIFICATION, BUT THE ORDER UNDER SECTION 200A AS RECTIFIED. 2.7. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATI NG THAT EVEN THOUGH DEMAND WAS RAISED IN INTIMATION PASSED UNDER SECTION 200A, THE SAME DEMAND CONTINUED IN THE INTIMATION PASSED UNDER 154 AND HENCE THE APPELLANT HAD A LEGAL RIGHT IN FILING AN APPEAL AGAINST THE SAID INTIMATION. 2.8. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIATI NG THAT THERE IS NO RESTRICTION OR PROHIBITION IN CHAL LENGING THE INTIMATION PASSED UNDER SECTION 154 WITHOUT CHALLENGING THE INTIMATION PASSED UNDER SECTION 200 A. 2.9. IN ANY CASE AND WITHOUT PREJUDICE, DETERMINATI ON OF SHORT DEDUCTION OF TDS WITHOUT FINDING WHETHER PAYEE ALSO HAS FAILED TO PAY THE TAX DIRECTLY AMOUN TS TO DOUBLE RECOVERY OF TAX, WHICH IS UNSUSTAINABLE AND NOT PERMISSIBLE AS PER EXPLANATION TO SECTION 191. 2.10. ASSUMING WITHOUT ADMITTING THAT THE DETERMINATION OF SHORT DEDUCTION OF TDS IS CORRECT, THE SAME CANNOT BE RECOVERED FROM THE DEDUCTOR SINCE AS PER SECTION 191 WHERE INCOME TAX HAS NOT BEEN DEDUCTED IN ACCORDANCE WITH THE PROVISIONS OF CHAPT ER XVII B, INCOME TAX SHALL BE PAYABLE BY THE ASSESSEE I.E., PAYEE DIRECTLY. 2.11. ON FACTS AND CIRCUMSTANCES OF THE CASE AND LA W APPLICABLE, SHORT DEDUCTION OF TDS AMOUNTING TO RS. 67,184 SHOULD BE DELETED. PAGE 4 OF 10 ITA NOS.1836 & 1837/BANG/2019 LEVY OF INTEREST ON SHORT DEDUCTION 2.12 THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEV Y OF INTEREST ON SHORT DEDUCTION AMOUNTING TO RS. 56,950 . ON FACTS AND CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, INTEREST ON SHORT DEDUCTION IS NOT LEVI ABLE. THE APPELLANT DENIES ITS LIABILITY TO PAY INTEREST ON SHORT DEDUCTION. 3. PRAYER 3.1. IN VIEW OF THE ABOVE AND OTHER GROUNDS TO BE ADDUCED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE ORDER PASSED BY THE LEARNED CIT(A) AND THE INTIMATION UNDER SECTION 154 READ WITH SECTION 200A PASSED BY THE AU BE QUASHED OR IN THE ALTERNATIVE A) AMOUNT DETERMINED AS TAX SHORT DEDUCTED OF RS.67,184 BE DELETED. B) INTEREST LEVIED UNDER SECTION 201(1A) AMOUNTING TO RS. 56,950 BE DELETED. THE APPELLANT PRAYS ACCORDINGLY. 4. BRIEF FACTS OF CASE ARE FOLLOWS :- ASSESSEE IS A COMPANY, ENGAGED IN BUSINESS PROCESS MANAGEMENT SERVICE. FOR ASST. YEARS 2011-12 & 2012 -13, ASSESSEE HAD PAID SALARIES TO CERTAIN EMPLOYEES AND DEDUCTED TAX AT SOURCE (TDS) THEREON AT THE RATES I N FORCE AS PER SEC.192 OF THE IT ACT. THE ETDS STATEMENT/RETU RN FOR QUARTERS WERE FILED AS PER SECTION 200(3) OF IT ACT FOR ASST. YEAR 2011-12 & 2012-13. SUBSEQUENTLY CORRECTION STATEMENTS WERE FILED TO RECTIFY THE DEFAULTS EXIST ING IN THE STATEMENTS. THEREAFTER, STATEMENTS FILED BY ASSESS EE WERE PROCESSED BY TRACES AND INTIMATION U/S 154 R.W.S 20 0A OF PAGE 5 OF 10 ITA NOS.1836 & 1837/BANG/2019 IT ACT WAS RECEIVED BY ASSESSEE FOR ASST. YEAR 2011 -12 & 2012-13. 5. IN THE INTIMATION FOR ASST. YEAR 2011-12, THE SH ORT TAX DEDUCTION AT SOURCE WITH RESPECT TO FORM 24Q FOR 4 TH QUARTER OF THE FINANCIAL YEAR 2010-11 HAS BEEN QUANTIFIED A T RS.67,184/-. INTEREST ON SUCH SHORT DEDUCTION OF T AX AT SOURCE HAS BEEN QUANTIFIED AT RS.56,950/-. THUS, T HE NET SUM PAYABLE HAS BEEN DETERMINED AT RS.1,24,130/- [I .E 67,184 + 56,950]. SIMILARLY FOR ASST. YEARS 2012- 13, SHORT TAX DEDUCTION AT SOURCE WITH RESPECT TO FORM 24Q F OR 4 TH QUARTER OF THE FINANCIAL YEAR 2011-12 HAS BEEN QUAN TIFIED AT RS.73,929/-. INTEREST ON SUCH SHORT DEDUCTION OF T AX AT SOURCE HAS BEEN QUANTIFIED AT RS.53,874/-. THUS, T HE NET SUM PAYABLE HAS BEEN DETERMINED AT RS.1,27,800/- [ I.E 73,929 53,874]. THE ASSESSEE HAD DOWNLOADED AND ANALYSED THE JUSTIFICATION REPORT OF TRACES TO ASCE RTAIN THE REASONS FOR SHORT TDS AS MENTIONED U/S 200A OF IT ACT. IN THE INTIMATION PASSED U/S 200A, TDS HAS BEEN COMPUT ED AT FLAT RATE OF 20% AS PER SEC. 206AA OF THE IT ACT ON ENTIRE SALARY ON ACCOUNT OF INVALID PAN FURNISHED BY EMPLO YEES OF THE ASSESSEE. IN OTHER WORDS, TDS IS COMPUTED ON E NTIRE TAXABLE INCOME OF THE EMPLOYEES WITHOUT REDUCING TH E BASIC EXEMPTION LIMIT AVAILABLE TO INDIVIDUAL ASSESSEE. HOWEVER, THE ASSESSEE HAD DEDUCTED TAX AT SOURCE AT THE RATE S IN FORCE ON THE TOTAL TAXABLE INCOME AFTER REDUCING THE BASI C EXEMPTION LIMITS AND PAID SUCH TDS. ACCORDING TO T HE ASSESSEE, THE DIFFERENCE BETWEEN TAX DEDUCTIBLE AT SOURCE COMPUTED AT 20% AND THE ACTUAL AMOUNT OF TAX DEDUCT ED AT PAGE 6 OF 10 ITA NOS.1836 & 1837/BANG/2019 SOURCE HAS RESULTED IN SHORT DEDUCTION OF TAX AT SO URCE AS PER INTIMATION PASSED U/S 200A FOR ASST. YEAR 2011-12 & 2012- 13. 6. AGGRIEVED BY INTIMATION PASSED U/S 154 R.W.S 20 0A OF IT ACT FOR ASST. YEAR 2011-12 & 2012-13, ASSESSEE P REFERRED APPEALS BEFORE THE 1 ST APPELLATE AUTHORITY. BEFORE THE 1 ST APPELLATE AUTHORITY, THE ASSESSEE RELIED ON THE ORD ER OF ITAT VISHAKAPATNAM BENCH [ITA NO.115 TO 117 (VYSAG)/2015 DATED 22-1-2016 FOR PROPORTION THAT RATE OF TAX ON GROSS PAYMENT CANNOT BE AUTOMATICALLY APPLIED IN THE CASE OF DEDUCTION OF TDS U/S 192 OF THE IT ACT. FURTHER IT WAS CONTENDED THAT SEC. 206AA IS INAPPLICABLE TO PERSON S WHOSE INCOME IS BELOW TAXABLE LIMIT. 7. THE CIT(A) HOWEVER REJECTED THE APPEAL OF ASSESS EE WITHOUT GOING INTO THE MERITS. THE CIT(A) WAS OF V IEW THAT ASSESSEE OUGHT TO HAVE FILED APPEALS AGAINST INTIMA TION U/S 200A OF IT ACT INSTEAD OF INTIMATION U/S 154 R.W.S 200A OF THE IT ACT. THE RELEVANT FINDING OF THE CIT(A) REA D AS FOLLOWS:- 4.2 THE SUBMISSIONS OF THE APPELLANT HAVE DULY BE EN CONSIDERED. A PERUSAL OF THE RECORDS AS WELL AS SUBMISSIONS OF THE APPELLANT CLEARLY SHOWS THAT DEMAND OF RS.1,24,130/- RELATED TO SHORT DEDUCTION OF TAX AND CONSEQUENT INTEREST IN RELATION TO THE ABOV E REFERRED TWO EMPLOYEES WAS RAISED BY THE AO WHILE PASSING ORDER UNDER SECTION 200A OF THE ACT AND NOT THROUGH THE ORDER UNDER SECTION 154 OF THE ACT. SIN CE NO SUCH DEMAND OF RS 1,24,130/- HAS BEEN RAISED IN THE ORDER UNDER SECTION 154 OF THE ACT, SO THE RELEVANT ORDER PAGE 7 OF 10 ITA NOS.1836 & 1837/BANG/2019 WHICH WAS REQUIRED TO BE CHALLENGED IN APPEAL FOR S UCH DEMAND WAS THE ORDER UNDER SECTION 200A OF THE ACT AND NOT THE ORDER UNDER SECTION 154 OF THE ACT. VID E ORDER UNDER SECTION 154 OF THE ACT THE AO HAS ONLY LOOKED INTO THE CORRECTIONS FILED BY THE APPELLANT IN ITS CORRECTION STATEMENT AND NO FRESH DEMAND RELATED TO SHORT DEDUCTION OF TAX OR CONSEQUENTIAL INTEREST HA S BEEN RAISED BY THE AO. THIS IS NOT THE CLAIM OF THE APPELLANT THAT IN THE CORRECTION STATEMENT IT HAD CORRECTED THE PAN OF THE TWO EMPLOYEES AND THE SAME HAD NOT BEEN ACCEPTED BY THE AO. EVEN DURING APPELLATE PROCEEDINGS THE APPELLANT HAS ADMITTED TH AT VALID PANS OF THOSE TWO EMPLOYEES WERE NOT AVAILABL E WITH IT. THE APPELLANT HAS CONTENDED THAT THE DEMAN D AS PER PROVISIONS OF SECTION 206AA COULD NOT HAVE B EEN RAISED BY THE AU WHILE PROCESSING THE RETURN UNDER SECTION 200A OF THE ACT. HOWEVER THIS ARGUMENT IS DEVOID OF ANY MERIT AS THIS ISSUE COULD HAVE BEEN EXAMINED IN AN APPEAL AGAINST THE ORDER UNDER SECTI ON 200A OF THE ACT AS THE DEMAND WAS RAISED VIDE THAT ORDER AND NOT VIDE THE ORDER UNDER SECTION 154 OF T HE ACT PASSED BY THE AO IN RELATION TO THE CORRECTION STATEMENT. FURTHER IT IS ALSO NOT THE CASE OF THE APPELLANT THAT THE RECTIFICATION ORDER OF DENYING T HE CORRECTION OF A MISTAKE APPARENT FROM RECORD WAS PASSED BY THE AU IN RESPONSE TO A RECTIFICATION APPLICATION FILED BY IT WHEREIN IT HAD CONTESTED TH AT RAISING SUCH DEMAND WAS A MISTAKE APPARENT FROM RECORD. SO THAT ASPECT IS ALSO NOT REQUIRED TO BE L OOKED INTO. SINCE THE DEMAND OF RS 1,24,130/- HAS NOT BEE N RAISED VIDE ORDER UNDER SECTION 154 OF THE ACT, SO THE GROUNDS OF APPEAL OF THE APPELLANT ARE DISMISSED. 8. AGGRIEVED BY THE ORDERS OF CIT(A) FOR ASST. YEAR 2011-12 & 2-12-13, THE ASSESSEE HAS FILED THESE APPEALS BEF ORE THE ITAT. THE LD AR RELIED ON THE GROUNDS RAISED AND P RAYED THAT TRIBUNAL MAY REMAND THE ISSUE TO CIT(A) WITH DIRECT ION TO PAGE 8 OF 10 ITA NOS.1836 & 1837/BANG/2019 CONSIDER THE ASSESSEES CASE ON MERITS. THE LD DR STRONGLY RELIED ON ORDERS OF IT AUTHORITIES. 9. WE HAVE HEARD RIVAL SUBMISSIONS ADVANCED BY BOT H SIDES AND PERUSED THE MATERIAL ON RECORD. WE ARE I N VIEW THAT THE CIT(A) HAS ERRED IN DISMISSING THE APPEAL SOLELY FOR THE REASON THAT DEMAND HAS BEEN RAISED VIDE INTIMAT ION U/S 200A OF IT ACT AND ASSESSEE OUGHT TO HAVE FILED APP EALS AGAINST THE SAME. ONCE AN ORDER OF RECTIFICATION I S PASSED U/S 154 OF IT ACT, THE ORIGINAL ORDER PASSED U/S 20 0A ITSELF IS MODIFIED AND WHAT REMAIN THEREAFTER IS, NOT THE ORD ER OF RECTIFICATION, BUT THE ORDERS U/S 200A OF THE ACT A S RECTIFIED. THEREFORE THOUGH DEMAND WAS RAISED IN INTIMATION PA SSED U/S 200A OF THE IT ACT, THE SAME DEMAND CONTINUED I N THE INTIMATION PASSED U/S 154 OF IT ACT. HENCE, WE ARE OF THE VIEW THAT ASSESSEE HAS A LEGAL RIGHT IN FILING AN A PPEAL AGAINST THE SAID INTIMATION. MOREOVER, THERE IS NO RESTRICTION/PROHIBITION IN CHALLENGING THE INTIMAT ION PASSED U/S 154 OF THE IT ACT WITHOUT CHALLENGING THE INTIM ATION PASSED U/S 200A OF THE IT ACT. FOR THE AFORESAID R EASONS, WE SET ASIDE THE CIT(A) ORDERS FOR 2011-12 & 2012-13 A ND REMAND THE CASE TO HIM. THE CIT(A) IS DIRECTED TO PASS ORDERS ON MERITS/GROUNDS RAISED BEFORE HIM FOR ASST . YEARS 2011-12 & 2-12-13. IT IS ORDERED ACCORDINGLY. PAGE 9 OF 10 ITA NOS.1836 & 1837/BANG/2019 10. IN THE RESULT, THE APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPT., 2020. SD/- SD/- (B. R. BASKARAN) (GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 11 TH SEPT., 2020. VMS COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, BANGALORE. PAGE 10 OF 10 ITA NOS.1836 & 1837/BANG/2019 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -09-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -09-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -09-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -09-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -09-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -09-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -09-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED YES SR.PS