Accounts Officer (Cash), Mandi V. ITO (TDS), Palampur

ITA 601/CHANDI/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64102 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 29-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 154; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 600 & 602/CHD/2009 A.Y: 2006-07 & 2007-08 THE ACCOUNTS OFFICER (CASH), V ITO (TDS), O/O G.M. (TELECOM) BSNL, PALAMPUR. KULLU (HP). PAN: AABCB-5576G & ITA NO. 601 & 603/CHD/2009 A.Y: 2006-07 & 2007-08 THE ACCOUNTS OFFICER (CASH), V ITO (TDS), O/O G.M. (TELECOM) BSNL, PALAMPUR. MANDI (HP). PAN: PTPBI-1503C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.R.THAKUR RESPONDENT : SHRI AKHILESH GUPTA DATE OF HEARING : 18.12.2012 DATE OF PRONOUNCEMENT : 26.12.2012 ORDER PER MEHAR SINGH, AM THESE ARE FOUR APPEALS, BY THE ASSESSEE APPELLANTS , AGAINST THE CONSOLIDATED ORDER OF THE CIT(A), DATED , 01.04.2009 PASSED U/S 250(6) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 2 2. SINCE ALL THE APPEALS INVOLVE COMMON ISSUES FOR ADJUDICATION, WE FIND IT EXPEDIENT TO PASS A CONSOL IDATED ORDER FOR THE SAKE OF BREVITY. 3. THE GROUNDS OF APPEAL, RAISED IN ALL THE APPEALS ARE SIMILAR, THEREFORE, GROUNDS OF APPEAL AS RAISED IN ITA NO.600/CHD/2009 A.Y. 2006-07, ARE REPRODUCED HEREUN DER, AS ILLUSTRATIVE CASE : 1. THAT THE LD. CIT(APPEALS) SHIMLA HAS ERRED IN DISMISSING THE APPEAL OF THE APPELLANT WITHOUT GOIN G THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LD. CIT(APPEALS) SHIMLA HAS ERRED IN CONFIRMING THE ORDER OF THE AO (TDS) CHARGING INTER EST U/S 201(1)/201(1A) OF THE INCOME-TAX ACT,1961, FOR NON- DEDUCTION OF TDS ON COMMISSION PAID TO STD/PCO BOOT H HOLDERS FRANCHISEES. 3. ANY OTHER GROUND WHICH MAY BE TAKEN BEFORE HEARING OF APPEAL WITH THE PERMISSION OF THE HON'BL E TRIBUNAL. 4. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS B EFORE THE BENCH, LD. 'AR' FILED A PHOTO COPY OF THE TRIBU NALS ORDER IN ITA NO. 1131/CHD/2009 A.Y. 2008-09 & ITA NO. 1134/CHD/2009 A.Y. 2008-09 IN ASSESSEE'S OWN CASE A ND STATED THAT THE ISSUE IS COVERED AGAINST THE ASSESS EE. 5. LD. 'DR' PLACED RELIANCE ON THE ORDER PASSED BY THE TRIBUNAL, IN THE ABOVE REFERRED APPEAL. 6. WE HAVE CAREFULLY PERUSED AND CONSIDERED THE RIV AL SUBMISSIONS, FACTS OF THE CASE AND THE ISSUE INVOLV ED THEREIN AND FOUND THAT THE ISSUE RAISED IN THESE APPEALS, I S COVERED BY THE DECISION OF THE BENCH IN ITA NO. 1131/CHD/20 09 A.Y. 2008-09 & ITA NO. 1134/CHD/2009 A.Y. 2008-09, IN ASSESSEE'S OWN CASE. HOWEVER, FOR THE SAKE OF READ Y 3 REFERENCE AND PROPER APPRECIATION OF THE ISSUE, THE RELEVANT PART OF THE DECISION IS REPRODUCED HEREUNDER : 3. THE FACTS OF THE CASE IN ITA NO.1131/CHD/2009 AR E THAT THE APPELLANT BHARAT SANCHAR NIGAM LTD. IS A CORPOR ATE BODY GRANTED LICENSE TO ITS FRANCHISEES FOR THE RUNNING OF STD/ISD- PCO BOOTHS ON COMMISSION BASIS. AS PER THE PROVISI ONS OF SECTION 194H OF THE INCOME-TAX ACT,1961, THE DEDUCT ION OF TDS HAD TO BE MADE AT THE RATE OF 5% FROM THE AMOUNT OF COMMISSION PAID TO STD/ISD-PCO BOOTH HOLDERS. NO DEDUCTION OF TDS WAS MADE FROM THE COMMISSION PAID ON THE GROUND THAT TH E CORPORATE OFFICE OF BHARAT SANCHAR NIGAM LIMITED AT NEW DELHI HAD MADE A REQUEST TO THE CENTRAL BOARD OF DIRECT T AXES, NEW DELHI NOT TO ENFORCE DEDUCTION OF TDS. THE CENTRAL BOARD OF DIRECT TAXES NEW DELHI ISSUED INSTRUCTIONS VIDE THE IR LETTER NO.275/15/2002-ITB DATED 15.7.2002, WHEREIN ALL THE COMMISSIONERS OF INCOME TAX WERE INSTRUCTED NOT TO ENFORCE RECOVERY OF TDS U/S 194H ON THE COMMISSION PAID TO STD/PCO FRANCHISEES TILL THE ISSUE IS FINALLY DECIDED. AS A RESULT OF THESE INSTRUCTIONS ALL THE DDOS ACROSS THE COUNTRY DID NO T DEDUCT THE TDS FROM THE COMMISSION PAID TO THE PCO FRANCHISEES FOR THE PERIOD FROM 01.04.2007 TO 31.5.2007 AND FINALLY AME NDMENT TO SECTION 194H WAS MADE BY THE FINANCE ACT,2007. THE LD. AO RAISED THE DEMAND OF INTEREST U/S 201(1)/201(1A) FO R NON DEDUCTION OF TDS FOR THE YEAR UNDER APPEAL. THE AP PEAL ORDER DATED 1.4.2009 HAS BEEN RECTIFIED BY THE CIT(A) SHI MLA SUSTAINING THE CHARGING OF INTEREST U/S 154 FOR THE MONTH OF APRIL 2007 TO MAY,2007. 4. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, LD. 'AR' CONTENDED THAT AS PER THE CIRCULAR ISSUED BY THE CB DT VIDE LETTER NO.275/15/2002-ITB DATED 15.07.2002, IT HAS BEEN DI RECTED NOT TO ENFORCE THE RECOVERY OF TDS U/S 194H OF THE INCO ME-TAX ACT. BY RELYING ON SUCH INSTRUCTIONS, THE ASSESSEE DID N OT EFFECT THE TDS. HE ALSO PLACED RELIANCE ON THE ORDER OF THE T RIBUNAL IN THE CASE OF ITO V AO (BSNL) MAIN TELEPHONE EXCHANGE, GU RGAON (ITA 3996/D/2004) DATED 20.10.2005. 5. LD. 'DR' ON THE OTHER HAND, VEHEMENTLY CONTENDED THAT THE PROVISIONS OF SECTION 194H CANNOT BE OVER-RULED BY THE CIRCULAR ISSUED BY THE BOARD. IT WAS, FURTHER, ARGUED BY THE LD. 'DR' THAT THE ASSESSEE MIS-READ, MIS-CONCEIVED AND MIS-INTERP RETED THE IMPUGNED CIRCULAR, WHICH CONTEMPLATES ONLY NON-ENFO RCEMENT OF RECOVERY. THE SAID CIRCULAR CANNOT BE READ AS MAKI NG THE PROVISIONS OF SECTION 194H, AS INOPERATIVE. HE DREW OUR ATTENTION TO THE RELEVANT PARA OF THE CIRCULAR, WHI CH IS REPRODUCED HEREUNDER : CENTRAL BOARD PAYMENT OF COMMISSION U.O.NOTE ITAT AMT. OF DIRECT TAXES BY BSNL TO VARIOUS STD/ NO .279/COD ITA NO. 378.87 PCO HOLDERS WITHOUT 193/2007 3996/D/TA X-499 BHARAT SANCHAR DEDUCTING TAX AT SOURCE H IGH COURT 204 DT. NIGAM LTD. U/S 194H OF THE IT ACT 20.10.05 THE COMMITTEE HEARD BOTH PARTIES TO THE DISPUTE AND NOTED THAT BOTH THE CIT(A) AND ITAT WERE OF THE VIEW THAT THE ASSESSEE COULD NOT BE TREATED AS DEFAULTER FOR NON-DEDUCTION OF TDS U/S 194H ON PAYM ENT OF COMMISSION TO VARIOUS STD/PCO HOLDERS AS CBDT HAD ISSUED INSTRUCT IONS TO THE EFFECT THAT RECOVERY MAY NOT BE ENFORCED TILL THE MATTER HAD BE EN CLARIFIED. IT DECLINED 4 PERMISSION TO CBDT TO PURSUE THE APPEAL BEFORE THE HIGH COURT AS NO QUESTIONS OF FACTS OR LAW WERE INVOLVED. 6. IT WAS, FURTHER, CONTENDED BY THE LD. 'DR' THAT THE PROVISION OF SECTION 201(1)/201(1A) OF THE ACT ARE MANDATORY IN NATURE. 7. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND THE RELEVANT RECORD. IN THIS CASE, TH E LD. ITO (TDS) VIDE ORDER DATED 30.09.2008 FOR THE FINANCIAL YEAR 2005-06 TO 2007-08 PASSED AN ORDER U/S 201(1)/201(1A). THE IT O (TDS) PALAMPUR (HP) CONDUCTED TDS INSPECTION, ON 28.02.20 08. CONSEQUENTLY, NOTICE WAS ISSUED TO THE ASSESSEE ON 28.02.2008, 08.04.2008 AND 17.07.2008 AND THE AO, AFTER APPRECI ATION OF THE SUBMISSION MADE BY THE ASSESSEE, RECORDED THE FINDINGS WHICH ARE REPRODUCED HEREUNDER : I HAVE GONE THROUGH THE ASSESSEE'S CONTENTION AND WRITTEN SUBMISSION AS WELL AS ABOVE DOCUMENTS PRODUCED BEFORE ME. I HAVE COME TO CONCLUSION THAT IN VIEW OF SECTION 194H THE TDS SHOULD HAVE BEEN MADE ON THE COMMISSION PAID TO THE PCO HOLDERS IN THE JURISDICTION OF THE ASSESSEE. IT WAS ONLY AFTER 30 TH MAY 2007 THE DEDUCTION WAS NOT TO BE MADE AS PER THE AMENDED PROVISIONS OF SECTION 194H AS QUOTED ABOVE. HENCE I PROPOSE TO CREATE A DEMAND OF RS.1690613/- AS PER ANNEXURE-A ATTACHED WITH THE ORDER. 8. THE ITO (TDS), AS IS EVIDENT FROM THE LETTER DAT ED 20.04.2009 ADDRESSED TO AO(CASH) O/O THE GENERAL MA NAGER (TELECOMMUNICATION) DISTT.MANDI, MANDI (HP) INTIMAT ED THE FINANCIAL YEAR-WISE BREAK UP OF THE DEMAND AS UNDER : FINANCIAL YEAR DEMAND (RS.) 2005-06 9,31,578/- 2006-07 6,74,758/- 2007-08 84,273/-(AS EXPLAINED ABOVE) TOTAL DEMAND RS.16,90,613/- THE ITO (TDS) HAS RAISED THE DEMAND ONLY UNDER THE RELEVANT PROVISION OF SECTION 201(1)/201(1A) FOR THE MONTH O F APRIL,2007 AND MAY,2007. 9. LD. CIT(A), PASSED ORDER DATED 30.09.2009, FOR T HE FINANCIAL YEAR 2005-06 TO 2007-08 U/S 154 OF THE AC T, WHICH IS SELF-EXPLANATORY IN NATURE. THE RELEVANT PART OF T HE ORDER IS AS UNDER : APPEAL IN THIS CASE WAS DECIDED BY THE UNDERSIGNED VIDE ORDER DATED 01.04.2009 WHEREIN IN THE RESULT, THE APPEALS FOR F.Y. 2005-06 AND 2006-07 WERE DISMISSED AND FOR F.Y. 2007-08 WAS ALLOWED. 2. THE LD. AO VIDE APPLICATION U/S 154 OF THE IT ACT,1961 SUBMITTED THAT THIS OFFICE HAS CREATED DEMAND ONLY FOR TWO MONTHS I.E. APRIL,07 AND MAY,07 BEFORE THE AMENDMENT OF SECTION 194H, THE DEMAND OF ABOVE TAX PLUS INTEREST HAS RIGHTLY BEEN CREATED AN D 5 REQUIRES RECTIFICATION U/S 154. YOU ARE THEREFORE, REQUESTED TO KINDLY RECTIFY THE APPELLATE ORDER. 3. AN OPPORTUNITY OF BEING HEARD WAS AFFORDED TO THE ASSESSEE. THE APPELLANT HAS FILED WRITTEN SUBMISSION AND REITERATED THE SAME FACTS AS AT THE TIME OF HEARING OF THE APPEAL. THE SAME HAS BEEN CONSIDERED. 4. I HAVE CONSIDERED THE SUBMISSION OF THE LD. AO. I AM INCLINED TO AGREE WITH THE LD. AO. THE AMENDMENT IS W.E.F. 01.06.2007 AND THE LD. AO HAS CHARGED THE INTEREST ONLY FOR THE MONTH OF APRIL & MAY 2007 I.E. BEFORE THE AMENDMENT. AS SUCH, THE INTEREST IS TO BE SUSTAINED UPTO MAY,2007 I.E. BEFO RE THE AMENDMENT W.E.F. 01.06.2007. THEREFORE, THE RES ULT COLUMN MAY BE READ AS UNDER: RESULT :APPEAL FOR F.YRS. 2005-06 AND 2006-07 IS DISMISSED AND FOR THE F.Y. 2007-08 IS ALLOWED W.E.F . JUNE,2007 ONWARD. 10. THE RELIANCE PLACED BY THE ASSESSEE ON THE CIRC ULAR UNDER REFERENCE IS MISPLACED ONE. THE ASSESSEE HAS MISINT ERPRETED THE CLEAR CONTENTS OF THE SAID CIRCULAR. THE CBDT, IN T HAT CIRCULAR HAS MERELY CONVEYED NOT TO ENFORCE THE RECOVERY OF DEMAND. THERE IS NOT A WHISPERING OF NOT TO CREATE THE DEMA ND UNDER THE PROVISION OF SECTION 201(1)/201(1A) OF THE ACT. IT IS AN UNDISPUTED SETTLED LAW THAT CBDT A CREATURE OF THE STATUTE, CANNOT ARROGATE UPON ITSELF LEGISLATIVE POWER TO EN ACT LAWS. IN A NUTSHELL, CIRCULAR ISSUED BY THE CBDT INCLUDING THE CIRCULAR UNDER REFERENCE, CANNOT MAKE THE PROVISIONS OF SECT ION 194H OF THE ACT AS INOPERATIVE. THEREFORE, THE RELIANCE PL ACED BY THE ASSESSEE ON THE SAID CIRCULAR IS OF NO LEGAL CONSEQ UENCE. SIMILARLY, THE DECISION OF THE ITAT QUOTED BY THE A SSESSEE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS THE CIRCULAR OF THE BOARD UNDER REFERENCE CANNOT REPEAL THE PROVISION O F SECTION 194 OF THE ACT, AS CONSTRUED IN THE SAID DECISION. HOW EVER, SAID CIRCULAR ISSUED BY THE BOARD MERELY STATES NOT TO E NFORCE THE RECOVERY AS DISCUSSED EARLIER. IT CANNOT BE INTERP RETED TO MEAN THAT THE SAID CIRCULAR HAD MADE THE PROVISIONS OF S ECTION 194H AS REDUNDANT. THEREFORE, ANY DECISION WHICH IS PATENT LY CONTRARY TO THE EXISTING STATUTORY POSITION, MERELY PERPETUATE AN ERROR IN APPLICATION OF LAW. THE PROVISIONS OF SECTION 201(1) AS ALSO 201(1A) ARE MANDATORY IN CHARACTER AND WOULD HOLD T HE FIELD IN THE PRESENT CASE. HOWEVER, A PROVISO UNDER SECTION 194H WAS INSERTED BY THE FINANCE ACT,2007 W.E.F. 01.06.2007 WHEREBY IT IS PROVIDED THAT NO DEDUCTION SHALL BE MADE UNDER THIS SECTION ON ANY COMMISSION OR BROKERAGE PAYABLE BY BHARAT SANCH AR NIGAM LTD. OR MAHANAGAR TELEPHONE NIGAM LTD., TO THEIR PU BLIC CALL OFFICE FRANCHISEES. IT IS MENTIONED THAT THE ITO (TDS) HAS RAISED THE DEMAND FOR THE PERIOD PRIOR TO THE INSERTION OF THE SAID PROVISO. IN VIEW OF THE ABOVE LEGAL AND FACTUAL DI SCUSSIONS AND HAVING REGARD TO THE CLEAR RELEVANT PROVISIONS OF T HE ACT, WE DONT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND, HENCE, THE SAME IS UPHELD. 11. AS THE FACTS AND CIRCUMSTANCES OF THE APPEAL IN ITA NO.1131/CHD/2009 ARE SIMILAR TO THAT OF APPEAL NO.ITA/1134/CHD/2009, THEREFORE, THE DECISION TAKEN IN ITA 6 1131/CHD/2009 WOULD APPLY MUTATIS MUTANDIS TO APPEA L IN ITA NO.1134/CHD/2009 ALSO. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 7. RESPECTFULLY FOLLOWING THE ABOVESAID ORDER OF TH E TRIBUNAL, IN ASSESSEE'S OWN CASE IN ITA NO. 1131/CH D/2009 A.Y. 2008-09 & ITA NO. 1134/CHD/2009 A.Y. 2008-09, ALL THE FOUR APPEALS I.E. ITA NO. 600, 601, 602 & 603/C HD/2009 OF THE ASSESSEE, ARE DISMISSED. 8. IN THE RESULT, APPEALS OF THE ASSESSEES ARE DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH DEC., 2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26 TH DEC.,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH