T.H.E. Makers Pvt. Ltd, Gurgaon V. ITO(TDS), New Delhi

ITA 3757/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2116 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 04-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Keywords: Reasonable cause; TDS
• Section: 201(1); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `B : NEW DELHI BEFORE SHRI DEEPAK R. SHAH, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A. NOS.3756 TO 3759/DEL/2009 ASSESSMENT YEARS : 2005-06 TO 2008-09 T.H.E. MAKERS PVT. LTD., INCOME-TAX OFFICER (TD S), 24, GULMOHAR MARG, VS. ROHTAK. DLDF, QUTUB ENCLAVE, PHASE-II, GURGAON. PAN: AABCT3899E (APPELLANT) (RESPONDENT) APPELLANT BY : NONE. RESPONDENT BY : SHRI MANISH GUPTA, DR. O R D E R PER BENCH ALL THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), PANCH KULA, DATED 19 TH JUNE, 2009 IN APPEALS AGAINST ORDERS OF THE ASSESSING OFF ICER BEING ITO(TDS) ROHTAK PASSED UNDER SECTION 201 & 201(1A) OF THE IN COME-TAX ACT, 1961 (THE ACT). 2. AN INSPECTION WAS CARRIED OUT AT THE BUSINESS PR EMISES OF THE ASSESSEE IN RESPECT OF TAX DEDUCTED AT SOURCE (TDS) BY THE A SSESSEE. DURING THE COURSE OF INSPECTION, THE DIRECTOR OF THE ASSESSEE COMPANY DISCLOSED THAT THE 2 TAXES WERE DEDUCTED AT SOURCE UNDER DIFFERENT HEADS BUT COULD NOT BE DEPOSITED IN GOVERNMENT ACCOUNT. THEREFORE, IMMEDI ATELY A CHEQUE OF RS.10 LAKHS WAS GIVEN TO BE PRESENTED ON 29 TH NOVEMBER, 2006. LATER ON THE ASSESSEE MADE A REQUEST THAT THE REFUND DUE TO THE ASSESSEE FOR A.Y. 2005-06 BE ADJUSTED AGAINST THE TDS DEMAND. IT WAS CONTEND ED THAT REFUND OF APPROXIMATELY RS.13 LAKHS IS DUE TO THE ASSESSEE. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF TAX DEDUCTED AT SOURCE BUT N OT DEPOSITED INTO THE GOVERNMENT ACCOUNT. THE ASSESSEE BY ITS LETTER DATE D 21.4.2008 SUBMITTED THAT SUCH AMOUNT IS WORKED OUT TO RS.12,40,513/- UN DER DIFFERENT HEADS. THE A.O. TREATED THE ASSESSEE AS ASSESSEE IN DEFAULT FO R FAILURE TO DEPOSIT THE TAX DEDUCTED AT SOURCE. HE ALSO LEVIED INTEREST UNDER SECTION 201(1A) OF THE ACT. 3. BEFORE THE LEARNED CIT(A) IT WAS CONTENDED THAT DUE TO PAUCITY OF FUNDS AND HUGE LOSSES INCURRED THE ASSESSEE COULD N OT PAY THE TAX DEDUCTED AT SOURCE AND HENCE THE ASSESSEE MAY NOT BE TREATED AS ASSESSEE IN DEFAULT AND THE INTEREST LIABILITY BE ALSO WITHDRAWN. THE LEAR NED CIT(A) HELD THAT THE LIABILITY FOR DEPOSITING TAX DEDUCTED AT SOURCE HAS BEEN ADMITTED. THE ASSESSEE COULD NOT PRODUCE AS TO HOW IT WAS ENTITLE D TO REFUND OF RS.13 LAKHS. NO SUCH ORDER GRANTING REFUND WAS PASSED. ACCORDINGLY ORDER UNDER SECTION 201 WAS UPHELD. THE LEVY OF INTEREST BEING CONSEQUENTIAL WAS ALSO UPHELD. THE ASSESSEE IS IN FURTHER APPEAL BEFORE U S. 3 4. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. IN THE GROUNDS OF APPEAL THE PRIMARY CONTENTION IS THAT DUE TO EMBARGO ON EX PORT, THE ASSESSEE COULD NOT EXPORT THE GOODS AND HENCE SUFFERED HUGE LOSSES . THIS HAS LED TO DEFAULT IN PAYMENT OF TAX DEDUCTED AT SOURCE. IT IS ALSO C ONTENDED THAT EVEN AFTER DISALLOWANCE OF VARIOUS EXPENSES FOR DEFAULT OF PAY MENT OF TAX DEDUCTED AT SOURCE, THE ASSESSED LOSS IS OVER RS.75 LAKHS. THE REFUND DUE WAS ADJUSTED BY EXCHANGING OF REFUND ORDER WITH CHEQUE MADE IN T HE NAME OF TDS DEPARTMENT ON 4.9.2008. THIS REQUEST WAS ALREADY P ENDING AND HENCE THE ASSESSEE IS NOT TO BE TREATED AS ASSESSEE IN DEFAUL T UNDER SECTION 201 AND CONSEQUENTIAL LEVY OF PENALTY UNDER SECTION 201(1A) OF THE ACT. THE LEARNED DR SHRI MANISH GUPTA ON THE OTHER HAND , SUBMITTED THAT THE TAX WAS DEDUCTED DURING THE FINANCIAL YEAS 2004 -05 TO 2008-09. THE REFUND WAS NOT DUE PRIOR TO 2007-08. INCURRING OF LOSSES CANNOT BE A GROUND NOT TO HOLD THE ASSESSEE THE ASSESSEE IN DEFAULT. THE FACT REMAINS THAT ONCE THE TAX HAS BEEN DEDUCTED AT SOURCE ON BEHALF OF TH E GOVERNMENT, THE ASSESSEE IS DUTY BOUND TO DEPOSIT SUCH TAX IN THE G OVERNMENT COFFERS BEFORE THE DUE DATE. FAILURE TO DEPOSIT SUCH TAX WILL ATT RACT PROVISION OF SECTION 201. INTEREST UNDER SEC. 201(1A) IS ONLY CONSEQUEN TIAL AND COMPENSATORY IN NATURE FOR HOLDING THE GOVERNMENT FUNDS. THEREFORE , THERE IS NO LEGAL INFIRMITY IN THE ORDER OF THE COMMISSIONER (APPEALS ). 4 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE FACT TO BE NOTED IS THAT THE ASSESSEE HAS ALREADY DEDUCTED TAX AT SOURCE AND IT IS NOT THE CASE OF THE ASSESSEE THAT THE ASSESSEE WAS REQUIRED TO DEDUCT T AX AT SOURCE WHICH HE HAS NOT DEDUCTED. THE FACT OF HAVING DEDUCTED TAX AT S OURCE HAS BEEN ADMITTED ONLY AFTER THE SURVEY WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE AT DEFAULT WAS FOUND. SECTION 201(1) PROVIDES THAT WHERE ANY PERSON WHO IS REQUIRED TO DEDUCT ANY SUM, IN ACCORDANCE WITH PROVISION OF THIS ACT, DOES NOT DEDUCT OR DOES NOT PAY OR AFTER SO DEDUCTING FAILS TO PAY THE WHOLE OR ANY PART OF THE TAX, THEN SUCH PERSON SHALL BE DEEMED TO BE AN ASSE SSEE IN DEFAULT IN RESPECT OF SUCH TAX. THERE IS NO PROVISION IN THE ACT WHIC H HOLDS THAT IF THE ASSESSEE HAVING DEDUCTED THE TAX DOES NOT PAY TO THE CREDIT OF THE GOVERNMENT WILL BE ABSOLVED FROM SAID LIABILITY ON THE DEMONSTRATION O F REASONABLE CAUSE. UNDER THE SCHEME OF THE ACT, THE ASSESSEE DEDUCTS T AX AT SOURCE ON BEHALF OF OTHER PERSON AS AGENT OF THE GOVERNMENT. THEREFORE , THE ASSESSEE IS NOT ONLY UNDER OBLIGATION BUT OWE DUTY TO IMMEDIATELY PAY TH E TAX DEDUCTED AT SOURCE ON BEHALF OF OTHER PERSONS TO THE CREDIT OF GOVERNM ENT. THE FINANCIAL DIFFICULTIES WILL NOT ABSOLVE THE ASSESSEE FROM THE LIABILITY TO DEPOSIT THE TAX DEDUCTED AT SOURCE. THEREFORE, THE ASSESSEE WAS RI GHTLY TREATED AS ASSESSEE IN DEFAULT UNDER SECTION 201(1) OF THE ACT. INTEREST UNDER SECTION 201(1A) IS MERELY COMPENSATORY AND CONSEQUENTIAL IN NATURE. T HE ASSESSEE WAS HOLDING 5 THE TAX ON BEHALF OF GOVERNMENT AND HENCE FOR DEPRI VING THE GOVERNMENT WITH ITS DUES WILL QUALIFY INTEREST LIABILITY ALSO. 6. IN THE RESULT, ALL THE APPEALS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 11 TH DECEMBER, 2009. SD/- SD/- (RAJPAL YADAV) (DEEPAK R. SHAH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH DECEMBER, 2009. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.