M/s.Agreenco Fibre Foam P. Ltd, Kannur V. The ITO, Kannur

ITA 614/COCH/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6696 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-01-2020
• Assessment Year: 2004-2005
• Appeal Filed On: 04-11-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRITUNJAYA SHARMA
• Keywords: Rectification of order; TDS
• Section: 201(1); 201; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E SHRI GEORGE GEORGE K., JUDICIAL MEMBER I.T.A. NO S . 614 - 61 7 /COCH/2 01 9 ASSESSMENT YEAR S : 2004 - 05 TO 2007 - 08 M/S. AGREENCO FIBRE FOAM (P) LTD., P. B . NO. 3622, BALIAPATTAM, KANNUR. [PAN: A AECA 5986G] VS. THE INCOME TAX OFFICER, TDS, KANNUR. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) ASSESS EE BY SHRI ARUN RAJ S., ADV. REVENUE BY SHRI MRITUNJAYA SHARMA , SR. DR DATE OF HEARING 04/ / 0 2 / 20 20 DATE OF PRONOUNCEMENT 06 TH / 0 2 /20 20 O R D E R PER GEORGE GEORGE K.,JUDICIAL MEMBER: THESE APPEALS AT THE INSTANCE OF THE ASSESSEE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF THE CIT(A) DATED 20/08/2019. THE ORDER OF THE CIT(A) ARISES OUT OF THE ORDERS PASSED U/S. 201(1) AND 201(1A) OF THE I.T. ACT. THE RELEVANT ASSESSMEN T YEARS ARE 2004 - 05 TO 2007 - 08. 2. COMMON ISSUES ARE RAISED IN THESE APPEALS, HENCE THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. I.T.A. NOS.614 - 617/COCH/2019 2 3. IDENTICAL GROUNDS HAVE BEEN RAISED IN THESE APPEALS. THE ISSUES PRIMARILY RAISED IN THE GROUNDS ARE: I) ORDERS PASSED U/S. 201 AND 201(1A) OF THE I.T. ACT ARE BARRED BY LIMITATION. II) NO PAYMENT WAS MADE BY THE ASSESSEE BUT IT WAS ONLY A BOOK ADJUSTMENT, THEREFORE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX ON SUCH BOOK ADJUSTMENT NOR ASSESSEE HAD DEDUCTED TAX AT SOURCE . 4. TH E LD. AR CONCEDED THAT SINCE THE ASSESSEE - COMPANY WA S DEFUNCT, HE WAS NOT IN A POSITION TO GET NECESSARY MATERIAL TO PROVE THAT THERE WAS NO PAYMENT MADE AND TDS IS ONLY BOOK ADJUSTMENT. THE LEARNED AR ALSO DID NOT RAISE ANY ARGUMENTS REGARDING THE ISSUE THAT ORDERS PASSED U/S. 201(1) AND 201(1A) OF THE I.T. A CT ARE BARRED BY LIMITATION. THE LD. AR HAS RAISED LIMITED CONTENTIONS WHICH , I SHALL DEAL WHILE ADJUDICATING THE APPEALS FOR EACH OF THE ASSESSMENT Y EARS. I.T.A. NO. 614/COCH/2019 : ( AY 2004 - 05 ) 5. THE ASSESSING OFFICER PASSED ORDER U/S. 201(IA) OF THE I.T. ACT (ORDER DATED 10 - 10 - 2012) . THE ASSESSING OFFICER OBSERVED THAT AS PER THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET ALONGWITH THE RETURN OF I NCOME, THE ASSESSEE HAD NOT REMITTED TDS AMOUNTING TO RS.5,30,730/ - TO GOVERNMENT ACCOUNT AS ON 31.03.2004. T HE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT TDS LIABILITY RELATING TO THE RELEVANT ASSESSMENT YEAR IS ONLY RS.3,29,123/ - AND THE ASSES SEE HAD PAID A SUM OF RS.1,74,221/ - AS TDS RELATING TO THE RELEVANT I.T.A. NOS.614 - 617/COCH/2019 3 ASSESSMENT YEAR. IT WAS SUBMITTED THAT TDS OUTSTANDING FOR AY 2004 - 05 IS ONLY RS.1,54,903/ - (RS.3,29,123 - RS.1,74,221/ - ). THE ASSESSING OFFICER OBSERVED THAT THE DEDUCTOR, AFTER DEDUCT IN G THE T AX HAS FAILED TO PAY THE SAME TO THE G OVERNMENT ACCOUNT AS REQUIRED UNDER THE I.T. ACT. THE ASSESSING OFFICER CONCLUDED THAT AS EXPLAINED IN CIRCULAR NO. 5/2010 DATED 3.6.2010, PARA 50.3, NO TIME LIMIT IS PRESCRIBED FOR ORDER U/S. 201(1 A ) OF THE I.T. ACT WHERE THE DEDUCTORS HAVE DEDUCTED BUT NOT DEPOSITED THE TDS, AS THIS IS A CASE OF DEFALCATION OF GOVERNMENT DUES. THE ASSESSING OFFICER CALCULATED THE INTEREST PAYA B LE U/S. 201(1A) OF THE I.T. ACT AMOUNTING TO RS.63,688. THE CALCULATION OF THE A SSESSING OFFICER READS AS FOLLOWS: TAX DEDUCTIBLE : OPENING BALANCE AS ON 01 - 04 - 2013 RS.3,75,828 TAX DEDUCTIBLE DURING THE FY 2003 - 04 RS.3,29,123 RS.7,04,951 TAX DEDUCTED PAID TO THE GOVT. ACCOUNT RS.1,74,221 BALANCE TDS NOT PAID AS ON 31.03.2004 RS.5,30,730 INTEREST U/S. 201(1A) CALCULATED UPTO 31.03.2004 RS. 63,688 5.1 ON FURTHER APPEAL, THE CALCULATION MADE BY THE ASSESSING OFFICER U/S. 201(1A) OF THE I.T. ACT WAS CONFIRMED BY T HE CIT(A). 5.2 T HE ASSESSEE BEING AGGRIEVED BY THE ORDER OF THE CIT(A) HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. AR SUBMITTED THAT TDS LIABLE TO BE PAID FOR THE RELEVANT ASSESSMENT YEAR, I.E., 2004 - 05 WAS RS.3,29,123/ - AND THE ASSESSEE HAD P AID A SUM OF RS.1,74,221/ - OUT OF RS.3,29,123/ - . THEREFORE, THE BALANCE I.T.A. NOS.614 - 617/COCH/2019 4 OUTSTANDING , ACCORDING TO THE LD. AR IS ONLY RS.1,54,903/ - AS ON 31/03/2004 AND NOT RS.5,30,730/ - . HENCE ACCORDING TO THE LEARNED AR INTEREST U/S. 201(1A) OF THE I.T. ACT IS TO BE CA LCULATED ONLY ON A SUM OF RS.1,54,903/ - . 5.3 THE LD. DR ON THE OTHER HAND SUBMITTED THAT THIS CONTENTION OF THE ASSESSEE WAS NEVER RAISED NEITHER BEFORE AO NOR CIT(A). THE LD. DR SUBMITTED THAT INTEREST U/S. 201(1A) OF THE I.T. ACT HAS TO BE CALCULATED FOR PAYMENT OF OUTSTANDING TDS TO THE GOVERNMENT ACCOUNT AS ON 31/03/2004. HENCE IT WAS SUBMITTED THAT THE CALCULATION OF INTEREST U/S. 201(1A) OF THE I.T. ACT IS CORRECT. 5.4 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. F OR THE ASSESSMENT YEAR 2004 - 05, THE ORDER PASSED BY THE ASSESSING OFFICER IS PERTAINING ONLY TO INTEREST LEVIED U/S. 201(1A) OF THE I.T. ACT. INTEREST HAS BEEN RIGHTLY CALCULATED ON THE AMOUNT OF TDS OUTSTANDING AS ON 31/03/2004 OF THE I.T. ACT. THE HONB LE MADRAS HIGH COURT IN THE CASE OF CIT VS. CHENNAI METROPOLITAN WATER SUPPLY & SEWERAGE BOARD REPORTED IN 348 ITR 530 (MADRAS) HAD HELD THAT INTEREST U/S. 201(1A) OF I.T. ACT HAS TO BE CALCULATED FROM THE DATE ON WHICH TAX SHOULD HAVE BEEN DEDUCTED TO THE DATE ON WHICH PAYEE SHOULD HAVE FILED ITS RETURN UNDER PROVISIONS OF THE ACT. IT WAS FURTHER HELD BY HONBLE HIGH COURT THAT INTEREST U/S. 201(1A) OF I.T. ACT IS AUTOMATIC. AS MENTIONED EARLIER, THE ASSESSING OFFICER HAD ONLY PASSED ORDER U/S. 201(1A) O F I.T. ACT FOR AY 2004 - 05. THE INTEREST U/S. 201(1A) SINCE IT IS TO BE CALCULATED FROM THE DATE I.T.A. NOS.614 - 617/COCH/2019 5 ON WHICH TAX IS TO BE DEDUCTED AND BEING MANDATORY, THE ASSESSING OFFICER HAS CORRECTLY CALCULATED INTEREST U/S. 201(1A) OF THE I.T. ACT FOR THE AMOUNT OF TDS OUTSTANDING AS ON 31 - 03 - 2004. , I T IS ORDERED ACCORDINGLY. THUS, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004 - 05 IS DISMISSED . ITA NO.615 /COCH/2019 : ( AY 2005 - 06 ) 6. THE ASSESSING OFFICER PASSED ORDER DATED 4.2.2013 U/S. 201(1) AND 201(1A) OF THE I.T. ACT . THE ASSESSING OFFICER OBSERVED THAT AS PER TDS DETAILS, THE ASSESSEE COMPANY HAD NOT REMITTED TDS AMOUNTING TO RS. 1,5 0 ,529/ - TO GOVERNMENT ACCOUNT AS ON 31.03.2005. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT TAX DEDUCTED FROM THE PAY MENT MADE DURING THE FINANCIAL YEAR 2004 - 05 WAS RS.1,61,154/ - AND THE ASSESSEE HAD PAID ONLY RS.10,625/ - AS TDS RELATING TO THE RELEVANT ASSESSMENT YEAR. THE ASSESSING OFFICER CALCULATED THE TOTAL TAX PAYABLE INCLUDING INTEREST U/S. 201 & 201(1A) OF THE I.T. ACT UPTO 4.2.2013 AS FOLLOWS: TAX DEDUCTED DURING THE FY 2004 - 05 RS.1,61,154 LESS: TAX DEDUCTED PAID TO THE GOVT. ACCOUNT RS. 10,625 BALANCE TDS NOT PAID AS ON 31.03.2004 RS.1,50,5 29 INTEREST U/S. 201(1A) CALCULATED UPTO 04.02.2013 RS.1,43,002 (ANNEXURE - I) TOT AL PAYABLE RS.2,93,531 6.1 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER PASSED U/S. U/S. 201(1) AND 201(1A) OF THE I.T. ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) CONFIRMED THE VIEW TAKEN BY THE ASSESSING OFFICER. I.T.A. NOS.614 - 617/COCH/2019 6 6.2 THE ASSESSEE BEING AGGRIEVED, HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LIMITED CONTENTION OF THE LD. AR IS THAT FULL AMOUNT OF TDS OF RS.1,50,529/ - OUTSTANDING AS ON 31/03/2005 WAS PAID ON 13/03/2013 AND THE ISSUE MAY B E REMITTED TO THE ASSESSING OFFICER FOR VERIFICATION. 6.3 THE LD. DR ON THE OTHER HAND SUBMITTED THAT THE PAYMENT HAS BEEN MADE SUBSEQUENT TO THE ORDER PASSED U/S. 201(1) & 201(1A) OF THE I.T. ACT AND THERE IS NO POINT IN REMITTING THE ISSUE TO THE FIL E OF THE ASSESSING OFFICER. 6.4 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE IMPUGNED ORDER U/S . 201(1) AND 201(1A) OF THE I.T. ACT WAS PAS S E D ON 04/02/2013 . IN TH E SAID ORDER, BALANCE TDS OUTSTANDING AS ON 31/03/2005 WAS DETERMINED AT RS .1,50,529/ - AND INTEREST U/S. 201(1A) OF THE I.T. ACT WAS CALCULATED UP TO THE DATE OF THE ORDER, I.E., 04.02.2013 AMOUNTING TO RS.1,43,002/ - . THE PAYMENT MADE SUBSEQUENT TO THE DATE OF ORDER, I.E., 04.02.2013 GETS ADJUSTED TO THE AMOUNT DETERMINED IN THE ORDER DATED 04.02.2013. THE ASSESSEE HAS TAKEN THE PLEA THAT PAYMENTS HAVE BEEN MADE ON 13 /03/2013 FOR THE FULL AMOUNT OF RS.1,50,529/ - WHICH IS TDS OUTSTANDING AS ON 31/03/2005. THE AMOUNT PAID GETS AUTOMATICALLY ADJUSTED TO THE AMOUNT DETERMINED AS PE R THE ORDER PASSED U/S. 201(1) AND 201(1A) OF THE I.T. ACT. THEREFORE, THERE IS NO REQUIREMENT OF REMITTING THE CASE OF THE FILE OF THE ASSESSING OFFICER. IT IS ORDERED ACCORDINGLY. HENCE, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005 - 06 IS DI SMISSED . I.T.A. NOS.614 - 617/COCH/2019 7 I.T.A. NO. 616/COCH/2019 : ( AY 2006 - 07 ) 7. THE ASSESSING OFFICER PASSED THE ORDER U/S. 201(1) AND 201(1A) OF THE I.T. ACT (ORDER DATED 04/02/201 2 ). AS PER TDS DETAILS, THE ASSESSEE HAD NOT REMITTED TDS AMOUNTING TO RS.7,114/ - TO GOVERNMENT ACCO UNT AS ON 31.03.2006. THE ASSESSING OFFICER OBSERVED THAT THE TDS DEDUCTED FROM THE PAYMENT MADE DURING THE FY 2005 - 06 WAS RS.22,414/ - AND THE ASSESSEE HAD PAID ONLY RS.15,300/ - AS TDS RELEVANT TO THE ASSESSMENT YEAR 2006 - 07. HENCE, THE BALANCE TDS DEDUC TED BUT NOT PAID TO THE GOVERNMENT ACCOUNT WAS RS.7,114/ - . T H E ASSESSING OFFICER CALCULATED THE TOTAL TAX PAYABLE U/S. 201(1) INCLUDING INTEREST U/S. 201(1A) OF THE I.T. ACT AS FOLLOWS: TAX DEDUCTED DURING THE FY 200 5 - 06 RS.22 ,414 LESS: TAX DEDUCTED PAID TO THE GOVT. ACCOUNT RS. 10,625 BALANCE TDS NOT PAID AS ON 31.03.2004 RS. 7,114 INTEREST U/S. 201(1A) CALCULATED UPTO 04.02.2013 RS. 5,905 (ANNEXURE - I) TOTAL PAYABLE RS. 13,019 7.1 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER PASSED U/S. U/ S. 201(1) AND 201(1A) OF THE I.T. ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) CONFIRMED THE VIEW TAKEN BY THE ASSESSING OFFICER. 7.2 THE ASSESSEE BEING AGGRIEVED, HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LIM ITED CONTENTION OF THE LD. AR IS THAT SUBSEQUENT TO THE ORDER PASSED U/S. 201(1) AND 201(1A) OF THE I.T. ACT , THE TOTAL AMOUNT PAYABLE U/S. 201(1) OF THE I.T. ACT WAS REDUCED TO RS.4,430/ - INSTEAD OF RS.13,019/ - CALCULATED BY THE AO. I.T.A. NOS.614 - 617/COCH/2019 8 THE LD. AR HAS PRODU CED A COPY OF RECTIFIED ORDER FOR THE AY 2006 - 07 (ORDER DATED 14/03/2013) AS PER WHICH THE COMPUTATION OF TAX PAYABLE U/S. 201(1) AND INTEREST U/S. 201(1A) IS AS FOLLOWS: TAX DEDUCTED DURING THE FY 2004 - 05 RS.22,414 LESS: TAX DEDUCTED PAID TO THE GOVT. ACCOUNT RS.19,993 BALANCE TDS NOT PAID AS ON 31/03/2005 RS. 2,421 INTEREST U/S. 201(1A) CALCULATED UPTO 04.02.2013 RS. 2,009 (ANNEXURE - 1) TOTAL PAYABLE RS.4,430 7 .3 THE LD. DR WAS DULY HEARD. 7.4 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE DEPARTMENT ITSELF HAS REDUCED THE LIABILITY U/S. 201(1) & 201(1A) OF THE I.T. A CT TO RS.4,430/ - FOR THE AY 2006 - 07 FROM RS.13,019/ - ORIGINALLY DETERMINED. NO OTHER CONTENTIONS HAVE BEEN RAISED. HENCE, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2006 - 07 IS DISMISSED. I.T.A. NO.617/ C OCH/2019 : ( A.Y. 2007 - 08 ) 8 . THE ASSESSING OFFICER PASSED ORDER U/S. 201(1) AND 201(1A) OF THE I.T. ACT VIDE ORDER DATED 18/03/2013 FOR THE AY 2007 - 08. THE ASSESSING OFFICER MADE ASSESSEE LIABLE FOR TAX DEDUCTION U/S. 201(1) OF THE I.T. ACT AMOUNTING TO RS. 28,104/ - AND INTEREST U/S. 201(1A) AT RS.28,616/ - TOTALLING TO RS.56,720/. I.T.A. NOS.614 - 617/COCH/2019 9 8.1 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER PASSED U/S. U/S. 201(1) AND 201(1A) OF THE I.T. ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) CONFIRMED THE VIEW TAKEN BY THE ASSESSING OFFICER. 8.2 THE ASSESSEE BEING AGGRIEVED, HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER WHILE PASSING THE ORDER U/S. 201(1) AND 201(1A) OF THE I.T. ACT HAD RELIED EXCLUSIVELY ON TH E AUDIT REPORT FOR THE YEAR ENDING 31/03/2007. THE LD. AR HAS FILED A COPY OF ADDENDUM TO THE AUDITORS REPORT FOR THE FY 2006 - 07 ( ADDENDUM DATED 11/08/2008). IT WAS SUBMITTED THAT A S PER THE ADDEDDUM TO THE AUDITORS REPORT , THE RE IS NO DEMAND PAYABLE F OR THE ASSESSMENT YEAR 2007 - 08. THE LD. AR FURTHER SUBMITTED THAT ASSESSEE HAS FILED APPLICATION FOR RECTIFICATION OF ORDER PASSED U/S. 201(1) AND 201(1A) OF THE I.T. ACT ( APPLICATION DATED 20/04/2013). 8.3 THE LD. DR RELIED ON THE ORDERS OF THE INCO ME TAX AUTHORITIES. 8.4 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. ACCORDING TO THE ASSESSEE THERE IS NO TDS PAYMENT OUTSTANDING FOR THE A.Y. 2007 - 08 AS PER THE ADDENDUM TO THE AUDITORS REPORT DATED 11/08/2008. IT IS TO BE NOTED THAT THE ASSESSEE HAS FILED RECTIFICATION APPLICATION BEFORE THE ASSESSING OFFICER. IT IS FOR THE ASSESSEE TO PURSUE THE RECTIFICATION APPLICATION FILED BEFORE THE ASSESSING OFFICER AND PROVE ITS CASE THAT NO TDS PAYMENT IS OUTSTANDING AS ON 31/03/2007. I.T.A. NOS.614 - 617/COCH/2019 10 WIT H TH ESE OBSERVATION S , I DISMISS TH E APPEAL FILE D BY THE ASSESSEE FOR AY 2007 - 08 . 9 . IN THE RESULT, THE APPEAL S OF THE ASSESSEE FOR THE AYS 2004 - 05 TO 2007 - 08 ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 6 TH - 0 2 - 20 20 . SD/ - (GEORGE GEORGE K.) JUDICIAL MEMBER PLACE: KOCHI DATED: 6 TH FEBRUARY , 20 20 GJ COPY TO: 1. M/S . AGREENCO FIBRE FOAM (P) LTD., P.B. NO. 3622, BALIAPATTAM, KANNUR. 2 . THE INCOME TAX OFFICER, TDS, KANNUR. 3. THE COMMISSIONER OF INCOME - TAX (AP P EALS) , KOZHIKODE. 4. THE PR. COMMISSIONER OF INCOME - TAX, KOZHIKODE. 5. D. R., I.T.A.T., COCHIN BENCH, COCHIN. 6 . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN