M/s. Foresight Automation Products Private Limited, Bangalore V. Assistant Commissioner Of Income Tax, CPC - TDS, Ghaziabad

ITA 2090/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6835 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-09-2020
• Assessment Year: 2018-2019
• Appeal Filed On: 30-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: R PRATIBHA
• Keywords: TDS
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER ITA NO. 2090 /BANG/2019 ASSESSMENT YEAR : 20 18 - 19 M/S.FORESIGHT AUTOMATION PRODUCTS PVT.LTD., NO.55, NEW NO.37, 16 TH CROSS, 6 TH MAIN, GAYATHRI DEVI PARK EXTENSION, BANGALORE-560003. PAN: AAACF4387N TAN: BLRF00373C VS. ASSISTANT COMMISSIONER OF INCOME TAX, CPC-TDS, GHAZIABAD. APPELLANT RESPONDENT ASSESSEE BY : SMT.R.PRATIBHA, ADVOCATE REVENUE BY : SMT.R.PREMI, JCIT (DR) ITAT DATE OF HEARING : 09 - 09 - 2020 DATE OF PRONOUNCEMENT : 11 - 0 9 - 2020 O R D E R PER N. V. VASUDEVAN, VICE PRESIDENT: THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DAT ED 13.08.2019 BY CIT(A)-3, BENGALURU, RELATING TO AYS 2018-19. 2. THE ISSUE THAT NEEDS TO BE DECIDED IN THESE APP EALS IS AS TO WHETHER THE REVENUE AUTHORITIES WERE JUSTIFIED IN LEVYING I NTEREST UNDER SECTION 201(1A) OF THE INCOME TAX ACT, 1961 (THE ACT) FOR DELAY IN REMITTING TAX DEDUCTED AT SOURCE TO THE CREDIT OF THE CENTRAL GOVERNMENT. THE ADMITTED FACTUAL POSITION IS THAT THE ASSESSEE DEDU CTED TAX AT SOURCE AND I TA NO.2090/BANG/2019 PAGE 2 OF 7 DEPOSITED THE SAME TO THE CREDIT OF THE GOVERNMENT OF INDIA. THE ASSESSEE REMITTED TAX ON 30.4.2018 AND THE SUM WAS DULY DEBITED IN THE BANK ACCOUNT OF THE ASSESSEE ON THAT DATE. HOWEVER IN THE TAX CHALLANS ISSUED BY THE BANK THE DATE OF PAYMENT WAS SHOWN AS 2.5.2018. SINCE THE DATE OF REMITTANCE WAS 2.5.2018, THE AO CHARGED INTEREST UNDER SECTION 201(1)(1A) OF THE ACT. 3. THE ASSESSEE HAS FILED A PAPER BOOK IN WHICH HE HAS GIVEN THE DATES OF DEPOSITS OF TDS AS PER THE BANK STATEMENT. HE HA S ALSO FILED COPIES OF THE CHALLAN EVIDENCING PAYMENT OF TAXES AS WELL AS THE BANK STATEMENT IN WHICH THE DATE OF PAYMENT IS SHOWN AS 2.5.2018. 4. THE AO AS WELL AS THE CIT(A) WERE OF THE VIEW T HAT IT IS ONLY THE PAYMENT AS SHOWN IN THE OLTAS THAT WILL BE CONSIDER ED AND THEREFORE THE ASSESSEE WAS LIABLE TO PAY INTEREST UNDER SECTI ON 201(1)(1A) OF THE ACT. IN COMING TO THE AFORESAID CONCLUSION, THE RE VENUE AUTHORITIES HAVE MADE A REFERENCE TO THE RECEIPTS AND PAYMENTS RULES GOVERNING GOVERNMENT RECEIPTS. THESE RULES WHICH HAVE BEEN E XTENSIVELY REFERRED TO IN THE ORDERS OF THE REVENUE AUTHORITIE S ARE IN RELATION TO PAYMENTS THAT ARE MADE BY CHEQUES AND THE ISSUE WAS WHETHER THE DATE OF DEPOSIT OF THE CHEQUE OR THE DATE OF REALISATION OF THE CHEQUE SHOULD BE REGARDED AS THE DATE OF PAYMENT. IN THE CASE OF THE ASSESSEE, HOWEVER THE PAYMENTS HAVE NOT BEEN MADE BY CHEQUES BUT ONLINE AND THE CREDIT IS INSTANT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARN ED DR RELIED ON THE ORDER OF THE CIT(A). THE LEARNED COUNSEL FOR THE A SSESSEE DREW OUR ATTENTION TO CIRCULAR NO.261 DATED 08.08.21979 WHER EIN IT HAS BEEN I TA NO.2090/BANG/2019 PAGE 3 OF 7 DIRECTED THAT EVEN IN THE CASE OF CHEQUES, THE DATE OF PAYMENT IS REGARDED AS THE DATE ON WHICH THE CHEQUE IS HANDED OVER TO THE GOVERNMENT BANKERS IF THE CHEQUE IS ULTIMATELY HONO URED. OUR ATTENTION WAS ALSO DRAWN TO THE DECISION OF THE ITAT BENCH IN THE CASE OF P L HAULWEL TRAILERS LTD., VS. DCIT [2006] 100 ITD 485 (CHENNAI) WHEREIN THE IDENTICAL ISSUE IN THE CONTEXT OF THE T REASURY RULES REFERRED TO BY THE REVENUE AUTHORITIES WAS CONSIDERED BY THE ITAT CHENNAI BENCH IN THE CONTEXT OF LEVY OF INTEREST UNDER SECT ION 234C OF THE ACT. 6. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO T HE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE RAISED IN THIS APPEAL IS NO LONGER RES INTEGRA AND HAS BEEN SETTLED BY THE DECISION OF THE ITAT CHENNA I BENCH IN THE CASE OF P L HAULWEL TRAILERS LTD. (SUPRA). THE FACTS OF THE CASE BEFORE THE ITAT CHENNAI BENCH IN THE CASE OF P L HAULWEL TRAIL ERS LTD. (SUPRA) WERE THAT THE ASSESSEE PAID ADVANCE TAX BY DEPOSITI NG THE CHEQUES IN THE AUTHORIZED BANK WITHIN DUE DATE. HOWEVER, CH EQUES WERE REALIZED AFTER DUE DATE. THE ASSESSING OFFICER, BY TAKING THE ACTUAL DATE OF REALIZATION OF THOSE CHEQUES AS DATE OF PAY MENT, LEVIED INTEREST UNDER SECTION 234C UPON THE ASSESSEE. ON A PPEAL, THE COMMISSIONER (APPEALS), RELYING UPON THE CENTRAL GO VERNMENT ACCOUNT (RECEIPTS AND PAYMENTS) RULES, 1983, CONFIR MED THE IMPUGNED ORDER.ON SECOND APPEAL THE TRIBUNAL HELD T HAT PARLIAMENT, IN ORDER TO DEFINE LAW RELATING TO PROMISSORY NOTE, BILL OF EXCHANGE AND CHEQUES, ENACTED THE NEGOTIABLE INSTRUMENTS ACT, 18 81. SECTIONS 10 AND 82 OF THE SAID ACT CLEARLY SAY THAT ONCE THE CH EQUE IS ENCASHED IN THE ORDINARY COURSE, IT WILL DISCHARGE THE DRAWER F ROM PAYMENT. THE SUPREME COURT, IN THE CASE OF K. SARASWATHY V. P.S. S. SOMASUNDARAM I TA NO.2090/BANG/2019 PAGE 4 OF 7 CHETTIAR[1989] 4 SCC 527 WHILE CONSIDERING THE PROV ISIONS OF SECTIONS 10 AND 82 OF THE NEGOTIABLE INSTRUMENTS ACT, 1881, HELD THAT THE PAYMENT BY CHEQUE SHOULD BE TAKEN TO BE DUE PAYMENT IF THE CHEQUE IS SUBSEQUENTLY ENCASHED IN THE ORDINARY COURSE.THEREF ORE, THE PARLIAMENT, IN ITS WISDOM, ENACTED THE NEGOTIABLE I NSTRUMENTS ACT TO REGULATE AND MANAGE THE TRANSACTIONS THROUGH CHEQUE S. FURTHER, SECTION 138 OF THE SAID ACT WAS AMENDED BY THE BANK ING, PUBLIC FINANCIAL INSTITUTIONS AND NEGOTIABLE INSTRUMENTS LAWS (AMENDMENT) ACT, 1988 BY INSERTING CHAPTER XVII COMPRISING OF S ECTIONS 138 TO 142 WITH EFFECT FROM 1-4-1989. THIS CHAPTER WAS INTRODU CED IN THE NEGOTIABLE INSTRUMENTS ACT, 1881 WITH A VIEW TO ENH ANCE THE ACCEPTABILITY OF CHEQUES IN SETTLEMENT OF LIABILITI ES BY MAKING THE DRAWER LIABLE FOR PENALTIES IN CASE OF BOUNCING OF CHEQUES DUE TO INSUFFICIENCY OF THE FUNDS IN THE ACCOUNT OR FOR TH E REASON THAT IT EXCEEDS THE ARRANGEMENT MADE BY THE DRAWER WITH ADE QUATE SAFEGUARDS TO PREVENT HARASSMENT OF HONEST DRAWERS. THEREFORE, THE INTENTION OF THE LEGISLATURE IS TO ENCOURAGE THE CITIZENS TO SET TLE THEIR LIABILITIES THROUGH CHEQUE OR DRAFT. THE PARLIAMENT, IN ORDER T O FACILITATE THE USAGE OF CHEQUE AND BANK DRAFT IN THE NORMAL TRANSACTION, ALSO INTRODUCED SIMILAR PROVISIONS IN THE INCOME-TAX ACT. FURTHERMO RE, THE CBDT, THE HIGHEST ADMINISTRATIVE BODY OF THE DIRECT TAXES, IS SUED CIRCULAR IN CIRCULAR NO. 261 DATED 8-8-1979 CLARIFYING THAT THE DATE OF PAYMENT WOULD RELATE BACK TO THE DATE OF PRESENTATION OF TH E CHEQUE IF THE CHEQUE IS HONORED ON PRESENTATION. ADMITTEDLY, THAT CIRCUL AR OF THE CBDT WAS NOT WITHDRAWN EVEN AFTER THE CENTRAL GOVERNMENT ACC OUNT (RECEIPTS AND PAYMENTS) RULES, 1983 WAS FRAMED. IN OTHER WORD S, EVEN TODAY, THE CIRCULAR ISSUED BY THE CBDT IN CIRCULAR NO. 261 DAT ED 8-8-1979 HOLDS I TA NO.2090/BANG/2019 PAGE 5 OF 7 THE FIELD. INCOME-TAX ACT IS A SPECIAL ENACTMENT BY PARLIAMENT FOR THE PURPOSE OF ASSESSMENT, LEVY OF TAX AND COLLECTION O F TAX. THEREFORE, THE COLLECTION OF INCOME-TAX SHALL BE REGULATED BY THE PROVISIONS OF THE ACT. THE CIRCULAR ISSUED BY THE CBDT, IN EXERCI SE OF THEIR STATUTORY POWER UNDER SECTION 119, WOULD BE BINDING ON THE INCOME- TAX AUTHORITIES IN PREFERENCE TO ANY OTHER EXECUTIV E INSTRUCTION ISSUED BY ANY OTHER AUTHORITIES. THEREFORE, IT IS VERY CLE AR THAT EVEN THE GOVERNMENT HAS TAKEN A DECISION WITH RESPECT TO THE PAYMENT OF THE GOVERNMENT DUES BY CHEQUE. THE CIRCULAR OF DIRECTOR ATE OF SERVICE TAX CLEARLY EXPRESSES THE INTENTION OF THE GOVERNME NT IN TREATING THE PAYMENTS MADE BY THE INDIVIDUAL ASSESSEES BY CHEQUE OR BANK DRAFT. CENTRAL GOVERNMENT ACCOUNT (RECEIPTS AND PAYMENTS) RULES, 1983 WAS FRAMED BY THE EXECUTIVE AUTHORITIES IN EXERCISE OF THEIR POWER UNDER ARTICLE 283(1) OF THE CONSTITUTION OF INDIA. RULE 20(1) OF SAID RULES SAYS THAT WHEN THE PAYMENT WAS MADE BY CHEQUE OR DRAFT, THE PAYMENT SHALL BE DEEMED TO HAVE BEEN MADE ON THE DA TE ON WHICH IT WAS CLEARED AND ENTERED IN THE RECEIPT SCROLL. WHER EAS UNDER THE NEGOTIABLE INSTRUMENTS ACT, 1881, AS INTERPRETED BY THE SUPREME COURT IN THE CASE OF K. SARASWATHY (SUPRA), IT IS O BVIOUS THAT THE DATE OF PAYMENT RELATES BACK TO THE DATE OF PRESENTATION OF THE CHEQUE PROVIDED THE CHEQUE WAS HONOURED ON ITS PRESENTATIO N. THEREFORE, THERE IS AN APPARENT CONFLICT BETWEEN THE LAW ENACT ED BY THE PARLIAMENT, NAMELY, THE NEGOTIABLE INSTRUMENTS ACT, 1881 ON ONE HAND AND THE RULE FRAMED BY EXECUTIVE AUTHORITIES I N EXERCISE OF THEIR POWER UNDER ARTICLE 283(1) OF THE CONSTITUTION OF I NDIA, ON THE OTHER HAND. WHENEVER THERE IS A CONFLICT BETWEEN THE RULE S FRAMED BY THE EXECUTIVE AUTHORITIES AND THE LAW ENACTED BY THE PA RLIAMENT, IT IS I TA NO.2090/BANG/2019 PAGE 6 OF 7 OBVIOUS THAT THE LAW ENACTED BY THE PARLIAMENT WILL PREVAIL OVER THE RULES FRAMED BY THE EXECUTIVE AUTHORITIES. THEREFOR E, THE PROVISIONS OF THE NEGOTIABLE INSTRUMENTS ACT, 1881 AS INTERPRETED BY THE APEX COURT IN THE CASE OF K. SARASWATHY (SUPRA) WOULD PREVAIL OVER THE CENTRAL GOVERNMENT ACCOUNT (RECEIPTS AND PAYMENTS) RULES, 1 983. THE TRIBUNAL FINALLY CONCLUDED THAT WHEN THE CHEQUES WE RE PRESENTED AND DEPOSITED BEFORE THE AUTHORIZED BANKER WITHIN THE D UE DATE FOR PAYMENT OF ADVANCE TAX AND WHEN THE CHEQUES AREENCASHED AND THE AMOUNTS WERE REALISED SUBSEQUENTLY THE DATE OF PAYMENT SHOU LD BE TAKEN AS DATE OF PRESENTATION OF THE CHEQUES AND THE ASSESSING OF FICER WAS DIRECTED TO TAKE THE DATE OF PRESENTATION OF THE CHEQUES BEFORE THE AUTHORIZED BANKER FOR PAYMENT OF ADVANCE TAX AS DATE OF PAYMEN T. 7. THE AFORESAID DECISION WILL APPLY IN THE PRESEN T CASE AS THE PAYMENT IN THE PRESENT CASE IS ON 30.4.2018 AND THE MONEY H AS GONE OUT OF THE CONTROL OF THE ASSESSEE. THE CENTRAL GOVERNMENT ACCOUNT (RECEIPTS AND PAYMENTS) RULES, 1983 DO NOT APPLY TO PAYMENTS BUT ARE APPLICABLE TO PAYMENTS MADE BY CHEQUES AND THE DATE OF PAYMENT WHEN PAYMENTS ARE MADE BY CHEQUES. EVEN IN SUCH CASES, THE RULE IS THAT IF THE CHEQUES ARE ULTIMATELY HONORED THE DATE OF HANDING OVER THE CHEQUE TO THE GOVERNMENT SHOULD BE REGARDED AS THE DATE OF PAYMEN T. THEREFORE THE AFORESAID DECISION OF ITAT CHENNAI BENCH IN THE CAS E OF P L HAULWEL TRAILERS LTD. (SUPRA)SUPPORTS THE PLEA OF THE ASSES SEE THAT THE LEVY OF INTEREST UNDER SECTION 201(1A) OF THE ACT TO THE FA CTS AND CIRCUMSTANCES OF THE PRESENT CASE CANNOT BE JUSTIFIED. WE, THERE FORE, DIRECT THAT THE ORDER UNDER SECTION 201(1A) OF THE ACT BE CANCELLED . THE APPEALS OF THE ASSESSEE ARE ACCORDINGLY ALLOWED. I TA NO.2090/BANG/2019 PAGE 7 OF 7 8. IN THE RESULT, APPEAL BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11TH DAY OF SEPTEMBER, 2020. SD/- SD/- SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER (N. V. VASUDEVAN) VICE PRESIDENT BANGALORE. DATED 11 TH SEPTEMBER, 2020. /DESAI S MURTHY/* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4 . CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.