Account Officer (Cash), Kangra V. ITO(TDS), Palampur

ITA 617/CHANDI/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51620 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 02-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AKHILESH GUPTA
• Assessee Lawyers: R R THAKUR
• Keywords: Opportunity of being heard
• Section: 154; 2; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 617 & 618/CHD/2009 A Y: 2006-07 & 2007-08 THE ACCOUNTS OFFICER (CASH), V ITO (TDS) O/O THE GENERAL MANAGER (TELE), PALAMPUR. BSNL, DHARAMSHALA, DISTT.KANGRA (HP). PAN: AABCB-5576G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.R.THAKUR RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 12.12.2011 DATE OF PRONOUNCEMENT : 14.12.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEALS FILED BY THE ASSESSEE ARE AGAIN ST THE ORDER DATED 01.04.2009 PASSED BY THE LD. CIT(A) SHIMLA U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'TH E ACT'). 2. ITA NOS. 617/CHD/2009 AND 618/CHD/2009 FOR ASSESSMENT YEARS 2006-07 AND 2007-08 RESPECTIVELY C ONTAIN THE SIMILAR GROUNDS OF APPEAL. THEREFORE, GROUND O F APPEAL IN ITA NO.617/CHD/2009 ARE REPRODUCED HEREUNDER: 1. THAT THE LD. CIT(A) SHIMLA HAS ERRED IN DISMISSING THE APPEAL OF THE APPELLANT WITHOUT GOING THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LD. CIT(A) SHIMLA HAS ERRED IN CONFIRMING THE ORDER OF THE AO (TDS) CHARGING 2 INTEREST U/S 201(1)/201(1A) OF THE INCOME-TAX ACT,1961 FOR NON-DEDUCTION OF TDS ON COMMISSION PAID TO STD/PCO BOOTH HOLDERS FRANCHISEES. 3. ANY OTHER GROUND WHICH MAY BE TAKEN BEFORE HEARING OF APPEAL WITH THE PERMISSION OF THE HON'BLE TRIBUNAL. 3. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS B EFORE THE BENCH, IT TRANSPIRED THAT THE ISSUES INVOLVED I N BOTH APPEALS ARE COVERED BY THE DECISION OF THIS BENCH I N ASSESSEE'S OWN CASE RENDERED IN ITA NO.1131/CHD/200 9 & ITA NO.1134/CHD/2009 A.Y. 2008-09. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN A SSESSEE'S OWN CASE, RENDERED ON 31.10.2011 IN THE SAID APPEAL S, THE APPEAL OF THE ASSESSEE IS DISMISSED. THE RELEVANT AND OPERATIVE PART OF THE DECISION IS REPRODUCED HEREUN DER : THESE ARE TWO APPEALS OF THE SAME ASSESSEE AGAINST THE ORDER OF THE CIT(A) DATED 30.09.2009 PASSED U/S 154 OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE ACT') . 2. SINCE BOTH THE APPEALS RELATE TO THE SAME ASSESSEE AND INVOLVE COMMON ISSUES FOR ADJUDICATION , WE FIND IT EXPEDIENT TO PASS A CONSOLIDATED ORDER F OR THE SAKE OF BREVITY. 3. THE FACTS OF THE CASE IN ITA NO.1131/CHD/2009 ARE THAT THE APPELLANT BHARAT SANCHAR NIGAM LTD. IS A CORPORATE BODY GRANTED LICENSE TO ITS FRANCHISEES F OR THE RUNNING OF STD/ISD-PCO BOOTHS ON COMMISSION BASIS. AS PER THE PROVISIONS OF SECTION 194H OF TH E INCOME-TAX ACT,1961, THE DEDUCTION OF TDS HAD TO BE MADE AT THE RATE OF 5% FROM THE AMOUNT OF COMMISSIO N PAID TO STD/ISD-PCO BOOTH HOLDERS. NO DEDUCTION OF TDS WAS MADE FROM THE COMMISSION PAID ON THE GROUND THAT THE CORPORATE OFFICE OF BHARAT SANCHAR NIGAM 3 LIMITED AT NEW DELHI HAD MADE A REQUEST TO THE CENT RAL BOARD OF DIRECT TAXES, NEW DELHI NOT TO ENFORCE DEDUCTION OF TDS. THE CENTRAL BOARD OF DIRECT TAXES NEW DELHI ISSUED INSTRUCTIONS VIDE THEIR 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 FINAL LY DECIDED. AS A RESULT OF THESE INSTRUCTIONS ALL THE DDOS ACROSS THE COUNTRY DID NOT DEDUCT THE TDS FROM THE COMMISSION PAID TO THE PCO FRANCHISEES FOR THE PERI OD FROM 01.04.2007 TO 31.5.2007 AND FINALLY AMENDMENT TO SECTION 194H WAS MADE BY THE FINANCE ACT,2007. THE LD. AO RAISED THE DEMAND OF INTEREST U/S 201(1)/201(1A) FOR NON DEDUCTION OF TDS FOR THE YEA R UNDER APPEAL. THE APPEAL ORDER DATED 1.4.2009 HAS BEEN RECTIFIED BY THE CIT(A) SHIMLA 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 T HE CBDT VIDE LETTER NO.275/15/2002-ITB DATED 15.07.2002, IT HAS BEEN DIRECTED NOT TO ENFORCE THE RECOVERY OF TDS U/S 194H OF THE INCOME-TAX ACT. BY RELYING ON SUCH INSTRUCTIONS, THE ASSESSEE DID NOT EFFECT THE TDS. HE ALSO PLACED RELIANCE ON THE ORDER OF T HE TRIBUNAL IN THE CASE OF ITO V AO (BSNL) MAIN TELEPH ONE EXCHANGE, GURGAON (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 M IS- READ, MIS-CONCEIVED AND MIS-INTERPRETED THE IMPUGNE D CIRCULAR, WHICH CONTEMPLATES ONLY NON-ENFORCEMENT O F RECOVERY. THE SAID CIRCULAR CANNOT BE READ AS MAKI NG THE PROVISIONS OF SECTION 194H, AS INOPERATIVE. HE DREW 4 OUR ATTENTION TO THE RELEVANT PARA OF THE CIRCULAR, WHICH 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/TAX-499 BHARAT SANCHAR DEDUCTING TAX AT SOURCE HIGH COU RT 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 ASSES SEE COULD NOT BE TREATED AS DEFAULTER FOR NON-DEDUCTION OF TDS U/S 1 94H ON PAYMENT OF COMMISSION TO VARIOUS STD/PCO HOLDERS AS CBDT HAD I SSUED INSTRUCTIONS TO THE EFFECT THAT RECOVERY MAY NOT BE ENFORCED TILL THE MATTER HAD BEEN CLARIFIED. IT DECLINED PERMISSION TO CBDT TO PURSUE THE APPEAL BEFORE THE HIGH COURT AS NO QUESTIONS OF FAC TS 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, THE LD. ITO (TDS) VIDE ORDER DATED 30.09.2008 FOR T HE FINANCIAL YEAR 2005-06 TO 2007-08 PASSED AN ORD ER U/S 201(1)/201(1A). THE ITO (TDS) PALAMPUR (HP) CONDUCTED TDS INSPECTION, ON 28.02.2008. CONSEQUENTLY, NOTICE WAS ISSUED TO THE ASSESSEE ON 28.02.2008, 08.04.2008 AND 17.07.2008 AND THE AO, AFTER APPRECIATION OF THE SUBMISSION MADE BY THE ASSESSEE, RECORDED THE FINDINGS WHICH ARE REPRODUC ED 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 MANAGER (TELECOMMUNICATION) DISTT.MANDI, MANDI (HP) 5 INTIMATED 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 TH E MONTH OF 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 THE 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 AND REQUIRES RECTIFICATION U/S 154. YOU ARE THEREFO RE, REQUESTED TO KINDLY RECTIFY THE APPELLATE ORDER. 3. AN OPPORTUNITY OF BEING HEARD WAS AFFORDED TO TH E ASSESSEE. THE APPELLANT HAS FILED WRITTEN SUBMISSIO N 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 . 6 BEFORE THE AMENDMENT. AS SUCH, THE INTEREST IS TO B E SUSTAINED UPTO MAY,2007 I.E. BEFORE THE AMENDMENT W.E.F. 01.06.2007. THEREFORE, THE RESULT 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 CIRCULAR UNDER REFERENCE IS MISPLACED ONE. THE ASSE SSEE HAS MISINTERPRETED THE CLEAR CONTENTS OF THE SAID CIRCULAR. THE CBDT, IN THAT CIRCULAR HAS MERELY CONVEYED NOT TO ENFORCE THE RECOVERY OF DEMAND. THE RE IS NOT A WHISPERING OF NOT TO CREATE THE DEMAND UND ER THE PROVISION OF SECTION 201(1)/201(1A) OF THE ACT. IT IS AN UNDISPUTED SETTLED LAW THAT CBDT A CREATURE OF T HE STATUTE, CANNOT ARROGATE UPON ITSELF LEGISLATIVE PO WER TO ENACT LAWS. IN A NUTSHELL, CIRCULAR ISSUED BY THE CBDT INCLUDING THE CIRCULAR UNDER REFERENCE, CANNOT MAKE THE PROVISIONS OF SECTION 194H OF THE ACT AS INOPERATIV E. THEREFORE, THE RELIANCE PLACED BY THE ASSESSEE ON T HE SAID CIRCULAR IS OF NO LEGAL CONSEQUENCE. SIMILARL Y, THE DECISION OF THE ITAT QUOTED BY THE ASSESSEE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS THE CIRCULAR OF THE BOARD UNDER REFERENCE CANNOT REPEAL THE PROVISION OF SECTION 194 OF THE ACT, AS CONSTRUED I N THE SAID DECISION. HOWEVER, SAID CIRCULAR ISSUED BY TH E BOARD MERELY STATES NOT TO ENFORCE THE RECOVERY AS DISCUSSED EARLIER. IT CANNOT BE INTERPRETED TO MEA N THAT THE SAID CIRCULAR HAD MADE THE PROVISIONS OF SECTIO N 194H AS REDUNDANT. THEREFORE, ANY DECISION WHICH I S PATENTLY CONTRARY TO THE EXISTING STATUTORY POSITIO N, 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 THE FIELD IN THE PRESENT CASE. HOWEVER, A PROVISO UNDER SECTION 194 H WAS INSERTED BY THE FINANCE ACT,2007 W.E.F. 01.06.2007 WHEREBY IT IS PROVIDED THAT NO DEDUCTION 7 SHALL BE MADE UNDER THIS SECTION ON ANY COMMISSION OR BROKERAGE PAYABLE BY BHARAT SANCHAR NIGAM LTD. OR MAHANAGAR TELEPHONE NIGAM LTD., TO THEIR PUBLIC CAL L 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 ABOV E LEGAL AND FACTUAL DISCUSSIONS AND HAVING REGARD TO THE CL EAR RELEVANT PROVISIONS OF THE ACT, WE DONT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND, HENCE, TH E 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 1131/CHD/2009 WOULD APPLY MUTATIS MUTANDIS TO APPEAL IN ITA NO.1134/CHD/2009 ALSO. 12. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 4. IN THE RESULT, APPEALS OF THE ASSESSEE ARE DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DEC.,2011. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14 TH DEC.,2011. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH