Block Development Officer, V. ITO (TDS),

ITA 2744/DEL/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2257 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 01-12-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 25-08-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: PREM PRAKASH
• Keywords: Period of limitation; Competent authority; TDS
• Section: 201; 131

Judgement Text

ITA NOS. 2738, 2739, 2740, 2741, 2742, 2743&2744/DE L/2006 A.YRS. 1998-99, 1999-00, 2000-01, 2001-02,2002-03,2 003-04&2004-05 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2738, 2739, 2740, 2741, 2742, 2743&2744/ DEL/2006 A.YRS. 1998-99, 1999-00, 2000-01, 2001-02, 2002-03 , 2003-04 & 2004-05 BLOCK DEVELOPMENT OFFICER, VS. INCOME TAX OFFICE R (TDS). BAGHRA, D. MUZAFFARNAGAR, MUZAFFARNAGAR C/O PREM PRAKASH ADVOCATE, RAJ COMPLEX, MAHABIR CHOWK, MUZAFFARNAGAR (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. PREM PRAKASH, ADVOCATE, DEPARTMENT BY : SMT. MONA MOHANTY, DR ORDER PER BENCH THESE APPEALS HAD EARLIER TRAVELLED TO THE TRIBUNAL AND VIDE ORDERS DATED 20.2.2007 THESE APPEALS WERE TREATED AS ALLOWED FO R STATISTICAL PURPOSES. THE TRIBUNAL HAD REMITTED THE CASE TO THE FILES OF T HE LD. CIT(A) FOR FRESH DECISION IN ACCORDANCE WITH LAW, SPECIFICALLY, AS TO WHETHER THE PROVISIONS OF SECTION 194-C OF THE ACT ARE ATTRACTED WHEN THE CONTRACTS WERE ON LY FOR SUPPLY OF MATERIAL. SUBSEQUENTLY, PURSUANT TO THE MISC. APPLICATION FI LED BY THE ASSESSEE, TRIBUNAL FOUND THAT ALL THE POINTS RAISED IN THE APPEALS BY THE ASSESSEE WERE NOT DECIDED WHILE PASSING THE AFORESAID ORDER. HENCE, THE TRI BUNAL RECALLED THE ORDER FOR CONSIDERATION THE MERITS OF THE ISSUES WHICH REMAI NED UNDECIDED. PURSUANT TO ITA NOS. 2738, 2739, 2740, 2741, 2742, 2743&2744/DE L/2006 A.YRS. 1998-99, 1999-00, 2000-01, 2001-02,2002-03,2 003-04&2004-05 2 THIS RECALL ORDER THESE APPEALS HAVE BEEN FIXED BE FORE US. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE FOLLOWING ISSUES N OW REMAIN TO BE ADJUDICATED AS UNDER:- I) THAT EXPARTE ORDER TO CHARGE TDS AND INTEREST IS W RONG AND THERE WAS NO NOTICE TO SHOW CAUSE FOR THE SAME. II) ORDER TO CHARGE THE TDS WAS TIME BARRED. III) THERE WAS NO LIABILITY TO PAY INTEREST FOR LATE PA YMENT ON TDS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THERE WAS S URVEY BY THE TDS WING OF INCOME TAX DEPARTMENT, ON THE ASSESSEE ON 29.7.2004 . SOME VERIFICATIONS WERE MADE ON THE SPOT, WHILE SOME ACCOUNTS WHICH COULD N OT BE EXAMINED DURING THE SURVEY, WERE CALLED FOR U/S 131 OF THE ACT. AFTER VERIFICATION, THE AO CAME TO THE CONCLUSION THAT FOR FINANCIAL YEARS 1997-98 TO 2003-0 4, THERE WERE TAX DEDUCTIONS MADE BY THE ASSESSEE DEDUCTOR, BUT THE SAME WERE DEPOSITED BEYOND THE TIME PRESCRIBED. THEREFORE, ASSESSEE WA S LIABLE TO INTEREST U/S 201(1A) IN RESPECT OF SUCH DELAYS. FURTHER, THERE WAS CERTAIN PAYMENTS OF CONTRACT OF MORE THAN RS. 20,000/-, BUT TDS HAD NOT BEEN DEDUCTED OR TDS HAD BEEN DEDUCTED BY LESSER AMOUNT. THE ASSESSEE WAS LIABLE TO LEVY OF SHORT DEDUCTION ALONGWITH INTEREST ON THE SAME. THE AO ISSUED LIST OF DEFAULTS AND ALSO GAVE ITS WORKING YEAR-WISE FOR SHORT DEDUCTION O F TDS AS WELL AS INTEREST ON THE SAME AND INTEREST ON THE DELAYED PAYMENT. 3. THE LD. CIT(A) CONSIDERED THE ISSUE AND NOTED CE RTAIN LACUNAE AND OBSERVED THAT THE AO HAS ACCEPTED TO MODIFY THE O RDER TO CERTAIN EXTENT. THE CIT(A) OBSERVED THAT THE BASIC ISSUE REMAINED TO CH ARGEABILITY OF INTEREST AND LATE PAYMENT OF TDS BY THE ASSESSEE. HOWEVER, I N THE CONCLUDING ORDER THE LD. CIT(A) HELD THAT HE REJECTED THE CONTENTION OF THE ASSESSEE BOTH IN RESPECT OF TIME LIMIT AS WELL AS CHARGEABILITY OF TDS ON IMPU GNED PAYMENTS. THE MATTER ITA NOS. 2738, 2739, 2740, 2741, 2742, 2743&2744/DE L/2006 A.YRS. 1998-99, 1999-00, 2000-01, 2001-02,2002-03,2 003-04&2004-05 3 TRAVELLED TO THE ITAT WHICH HAS BEEN DISCUSSED IN PARA 1 AS ABOVE. NOW WE DEAL WITH THE ISSUES IN APPEAL AT PRESENT AS UNDER: - I) THAT EXPARTE ORDER TO CHARGE TDS AND INTEREST IS WRONG AND THERE WAS NO NOTICE TO SHOW CAUSE FOR THE SAME. ON THIS ISSUE WE NOTE THAT AO HAS DULY ISSUED SHOW CAUSE NOTICE ON 26.8.2004. IN THE SAID NOTICE IT HAS BEEN BROUGHT TO THE NOTICE OF THE ASSESSEE THE VARIOUS LACUNAE AND SHORTCOMINGS IN A VERY DET AILED MANNER AND THE ASSESSEE HAS BEEN GIVEN DATE TO RESPOND TILL 10.9. 2004. LD. COUNSEL OF THE ASSESSEE FAIRLY ACCEPTED THAT THIS GROUND RAISED BY THE ASSESSEE IS MISCONCEIVED, AS SHOW CAUSE NOTICE HAS DULY BEEN SERVED. ACCORD INGLY, THIS ISSUE RAISED BY THE ASSESSEE IS DISMISSED. II) ORDER TO CHARGE TDS WAS TIME BARRED. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. IN THIS CONNECTION, WE NO TE THAT THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NHK JAPAN BROADCASTIN G CORPORATION REPORTED IN 305 ITR 137 HAS HELD AS UNDER:- THAT THE DATE OF KNOWLEDGE WAS NOT RELEVANT FOR TH E PURPOSES OF EXERCISING JURISDICTION IN SO FAR AS THE PROVISIONS OF THE ACT WERE CONCERNED. THE TIME LIMIT OF FOUR YEARS PRESCRIBED BY THE TRIBUNAL CALLED FOR NON INTERFERENCE AND ACTION WAS TO BE INITIATED BY THE COMPETENT AUTHORITY UNDER THE ACT WHERE NO LIMITATION WAS PRE SCRIBED WITHIN THE PERIOD OF FOUR YEARS. THE ACCEPTANCE OF LIABILITY BY THE ASSESSEE WOULD NOT BY ITSELF EXTEND THE PERIOD OF LIMITATION NOR WOULD IT EXTEND THE REASONABLE TIME THAT WAS POSTULATED BY THE SCHEME OF THE ACT. MERELY BECAUSE IT HAD ADMITTED ITS LIABILITY AND AGREED TO PAY TAX VOLUN TARILY, THE ASSESSEE COULD NOT BE PUT IN A SITUATION WORSE THAN IF IT HAD CONT ESTED ITS LIABILITY. ITA NOS. 2738, 2739, 2740, 2741, 2742, 2743&2744/DE L/2006 A.YRS. 1998-99, 1999-00, 2000-01, 2001-02,2002-03,2 003-04&2004-05 4 IN THIS CASE, WE FIND THAT THE PROCEEDINGS WERE IN ITIATED ON 26.8.2004 AND THE APPEALS IN CONSIDERATION BEFORE U S ARE FROM FINANCIAL YEARS 1997-98 TO 2003-04. HENCE, FOR FINANCIAL YEAR 1997-98, 1998-99 AND 1999-2000, 4 YEARS ALREADY ELAPSED ON 31.3.2004 FROM THE DATE OF INITIATION OF PROCEEDINGS ON 26.8.2004. RESPECTFULL Y FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT AS ABOVE, WE HOLD THAT THE ASSESSMENTS ARE TIME BARRED FOR THE ASSESSMENT YEARS 1998-99, 1 999-2000 & 2000-01 AND HENCE WE QUASH THE SAME. III) THERE WAS NO LIABILITY TO PAY INTEREST ON LATE PAYMENT:- THE LD. COUNSEL OF THE ASSESSEE CONTENDED THAT ASSESSEE WAS NOT LIA BLE FOR ANY INTEREST ON LATE DEPOSIT OF TDS. FOR THIS THE LD. COUNSEL OF THE A SSESSEE SUBMITTED THAT AS PER THE CBDTS CIRCULAR NO. 4P DATED 21.7.1996 PROVISIONS O F SECTION 201 ARE NOT APPLICABLE IN CASE WHERE THE TAX IS DEDUCTIBLE BY OR ON BEHALF OF THE GOVERNMENT VIDE SECTION 204. ON THIS BASIS THE LD. COUNSEL O F THE ASSESSEE ARGUED THAT THE ASSESSEE IS NOT LIABLE TO PAY ANY INTEREST ON THE IMPUGNED AMOUNTS. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION. WE FIND THA T SECTION 204 POSTULATES, THE MEANING OF PERSON RESPONSIBLE FOR PAYING I) IN THE CASE OF PAYMENTS OF INCOME CHARGEABLE UNDER THE HEAD SALARIES, OTHER THAN PAYMENTS BY THE CENTRAL GOVER NMENT OR THE GOVERNMENT OF A STATE, THE EMPLOYER HIMSELF OR, IF T HE EMPLOYER IS A COMPANY, THE COMPANY ITSELF, INCLUDING THE PRINCI PAL OFFICER THEREOF; II) IN THE CASE OF PAYMENTS OF INCOME CHARGEABLE UNDER THE HEAD INTEREST ON SECURITIES, OTHER THAN PAYMENTS MAD E BY OR ON BEHALF OF THE CENTRAL GOVERNMENT OR THE GOVERNMENT O F A STATE, THE LOCAL AUTHORITY, CORPORATION OR COMPANY, INCLUD ING THE PRINCIPAL OFFICER THEREOF; IIA) IN THE CASE OF ANY SUM PAYABLE TO NON-RESIDENT INDIAN, BEING ANY SUM REPRESENTING CONSIDERATION FOR THE TRANSFER BY HIM OF ANY ITA NOS. 2738, 2739, 2740, 2741, 2742, 2743&2744/DE L/2006 A.YRS. 1998-99, 1999-00, 2000-01, 2001-02,2002-03,2 003-04&2004-05 5 FOREIGN EXCHANGE ASSET, WHICH IS NOT A SHORT-TERM CA PITAL ASSET, THE AUTHORIZED DEALER RESPONSIBLE FOR REMITTING SUCH SU M TO THE NON- RESIDENT INDIAN OR FOR CREDITING SUCH SUM TO HIS NO N-RESIDENT (EXTERNAL) ACCOUNT MAINTAINED IN ACCORDANCE WITH T HE FOREIGN EXCHANGE REGULATION ACT, 1973 (46 OF 1973), AND ANY RULES MADE THEREUNDER;] III) IN THE CASE OF CREDIT, OR, AS THE CASE MAY BE, PAYM ENT OF ANY OTHER SUM CHARGEABLE UNDER THE PROVISIONS OF THIS ACT, TH E PAYER HIMSELF, OR, IF THE PAYER IS A COMPANY, THE COMPANY ITSELF INCLUDING THE PRINCIPAL OFFICER THEREOF. 4. A READING OF THE ABOVE MAKES IT CLEAR THAT PAYMEN TS UNDER CONSIDERATION BEFORE US DO NOT FALL UNDER THE ABOVE MENTIONED SEC TION. AS THE AMOUNT ON WHICH TDS HAS BEEN DEDUCTED WAS NEITHER SALARY NOR INTEREST NOR PAYMENT TO NRI IN CONNECTION WITH TRANSFER OF ASSETS. HENCE RELIANCE PLACED BY THE LD. COUNSEL OF THE ASSESSEE ON THE ABOVE CIRCULAR IS MI SPLACED. 5. ANOTHER REALM OF LD. COUNSEL OF THE ASSESSEE SU BMISSION IN THIS REGARD IS THAT NO TDS WAS LIABLE TO BE DEDUCTED AS THE CONTRA CT WAS FOR SUPPLY OF MATERIAL. IN THIS REGARD, HE REFERRED TO THE ORDERS OF THE L D. CIT(A) PURSUANT TO THE REMAND BY THE TRIBUNAL WHEREIN LD. CIT(A) HAS ACCEPTED TH AT THESE PAYMENTS WERE FOR SUPPLY OF GOODS. HENCE, THE LD. COUNSEL ARGUED TH AT THERE WAS NO REQUIREMENT OF DEDUCTION OF TDS AS THE ASSESSEE HAS DEDUCTED T HE SAME. HENCE, , HE CLAIMED THAT ON THIS BASIS, THE ASSESSEE CANNOT BE HELD RESPONSIBLE FOR PAYING ANY INTEREST. 6. LD. DR ON THE OTHER HAND SUBMITTED THAT WHEN AN ASSESSEE ISSUES TDS CERTIFICATE, THE REVENUE DULY GIVES RECOGNITION TO THE SAME AND PAYS INTEREST TO THE CONCERNED ASSESSEE, IF NEED BE AS PER THE SITU ATION. HENCE SHE ARGUED THAT WHEN ASSESSEE HAS DEDUCTED TAX AND NOT DEPOSITED TO THE ACCOUNT OF GOVERNMENT, HE SHOULD BE LIABLE FOR INTEREST ACCOR DINGLY. HENCE SHE SUBMITTED THAT THIS LINE OF SUBMISSION OF THE ASSESSEE IS NOT SUSTAINABLE. ITA NOS. 2738, 2739, 2740, 2741, 2742, 2743&2744/DE L/2006 A.YRS. 1998-99, 1999-00, 2000-01, 2001-02,2002-03,2 003-04&2004-05 6 7. WE HAVE CONSIDERED THE SUBMISSIONS. WE FIND TH AT IT WILL BE APT TO REFER THE PROVISION OF SECTION 201 AS UNDER:- 201. (1) WHERE ANY PERSON, INCLUDING THE PRINCIP AL OFFICER OF A COMPANY- (A) WHO IS REQUIRED TO DEDUCT ANY SUM IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT; OR (B) REFERRED TO IN SUB-SECTION (1A) OF SECTION 192, BEING AN EMPLOYER, DOES NOT DEDUCT, OR DOES NOT PAY, OR AFTER SO DEDUC TING FAILS TO PAY, THE WHOLE OR ANY PART OF THE TAX, AS REQUIRED BY OR UNDER THIS ACT, THEN, SUCH PERSON, SHALL, WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH HE MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX: PROVIDED THAT NO PENALTY SHALL BE CHARGED UNDER SEC TION 221 FROM SUCH PERSON, UNLESS THE ASSESSING OFFICER IS SATISFIED T HAT SUCH PERSON, WITHOUT GOOD AND SUFFICIENT REASONS, HAS FAILED TO DEDUCT ANY P AY SUCH TAX. (1A) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SEC TION(1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPANY AS IS REFERRED TO IN THAT SUB- SECTION DOES NOT DEDUCT THE WHOLE OR ANY PART OF TH E TAX OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR U NDER THIS ACT, HE OR IT SHALL BE LIABLE TO PAY SIMPLE INTEREST AT ONE PE R CENT FOR EVERY MONTH OR PART OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHI CH SUCH TAX IS ACTUALLY PAID AND SUCH INTEREST SHALL BE PAID BEFO RE FURNISHING THE STATEMENT IN ACCORDANCE WITH THE PROVISIONS OF SUB-S ECTION(3) OF SECTION 200. (2) WHERE THE TAX HAS NOT BEEN PAID AS AFORESAID AF TER IT IS DEDUCTED, THE AMOUNT OF THE TAX TOGETHER WITH THE AMOUNT OF S IMPLE INTEREST THEREON REFERRED TO IN SUB-SECTION (1A) SHALL BE A CHARGE UPON ALL THE ASSETS OF THE PERSON, OR THE COMPANY, AS THE CA SE MAY BE, REFERRED TO SUB-SECTION(1). 8. THE ABOVE READING MAKES IT CLEAR THAT WHEN TAX HA S BEEN DEDUCTED IT IS INCUMBENT UPON THE ASSESSEE TO DEPOSIT THE SAME. FURTHER THE PROVISIONS OF SECTION 201(1A) MAKES IT CLEAR THAT WHEN THE CONCER NED PERSON DOES NOT DEDUCT OR AFTER DEDUCTING, FAILS TO PAY THE TAX, HE SHAL L BE LIABLE TO PAY THE INTEREST. ITA NOS. 2738, 2739, 2740, 2741, 2742, 2743&2744/DE L/2006 A.YRS. 1998-99, 1999-00, 2000-01, 2001-02,2002-03,2 003-04&2004-05 7 HENCE THE PROVISIONS OF THE ACT MANDATE THAT ASSESS EE SHOULD DEPOSIT THE TAX TO THE GOVERNMENT ACCOUNT AFTER DEDUCTION. IF THE ASS ESSEE FAILS TO DO, HE IS LIABLE TO PAY THE INTEREST UNDER SECTION 201(1A). ACCORDI NGLY, WE DECIDE THIS ISSUE IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 9. IN THE RESULT, THESES APPEALS BY THE ASSESSEE AR E PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/12/2009. SD/- SD/- [I.P. BANSAL] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04/12/2009 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES