The Income Tax Officer, Jammu V. The Block Development Officer, Rajouri.

ITA 63/ASR/2014

• Counselvise Citation: 6320914 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-03-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 04-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause
• Section: 206AA; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO. 63(ASR)/2014 ASSESSMENT YEAR:2010-11 PAN :AMRBI2212E INCOME TAX OFFICER, VS. THE BLOCK DEVELOPMENT OFFI CER, TDS CIRCLE, JAMMU. SUNDERBANI, DISTT. RAJOURI. (APPELLANT) (RESPONDENT) APPELLANT BY:SMT. RATINDER KAUR, DR RESPONDENT BY:NONE DATE OF HEARING:10/03/2015 DATE OF PRONOUNCEMENT:11/03/2015 ORDER PER A.D. JAIN, JM: THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEA R 2010-11 AGAINST THE ORDER DATED 25.11.2013 PASSED BY LEARNED CIT(A) , JAMMU, TAKING THE FOLLOWING GROUNDS: 1. WHETHER THE LD. CIT(A) WAS RIGHT IN FACTS AND C IRCUMSTANCES AND IN LAW IN PASSING THE IMPUGNED ORDER AS THE SAM E IS CONTRARY TO FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE IMPUGNED ORDER IS ERRONEOUS IN LAW AS W ELL AS ON MERITS. ITA NO.63(ASR)/2014 2 3. WHETHER THE LD. CIT(A) WAS RIGHT IN FACTS AND CI RCUMSTANCES AND IN LAW IN HOLDING THAT IN THE CASES OF CONTRAC TORS WHO WERE HAVING PAN ALLOTTED BEFORE THE DATE OF INSPECTION, THE PAYMENT SHOULD NOT BE BROUGHT INTO THE AMBIT OF DEFAULT FOR LESSER DEDUCTION OF TDS, INSPITE OF THE FACT THAT THE AO H AD GIVEN OPPORTUNITIES TO THE PR TO FURNISH PROOF OF PAN CAR DS WITH THE CONTRACTORS BEFORE DETERMINING THEIR QUANTUM OF DEF AULT. 4. WHETHER THE LD. CIT(A) WAS RIGHT IN HOLDING THAT MERELY HAVING PAN WITHOUT FURNISHING THE SAME BEFORE THE AO IS A SUFFICIENT GROUND FOR DELETING THEIR DEMAND CREATED BY THE AO BY APPLYING HIGHER RATE OF TDS. 2. AN INSPECTION WAS CONDUCTED ON THE ASSESSEE, A BLOCK DEVELOPMENT OFFICER BY THE ITO (TDS), JAMMU. IT WAS FOUND THAT ON TOTAL PAYMENTS OF RS.1,21,33,801/-, MADE TO DIFFERENT CONTRACTORS DUR ING THE YEAR, NO TAX HAD BEEN DEDUCTED U/S 194C OF THE INCOME TAX ACT, 1961( THE ACT, FOR SHORT). THE AO, THUS, PASSED AN ORDER UNDER SECTIONS 201(1) /201(1A) OF THE ACT, RAISING A DEMAND OF RS.27,53,510/- @ 20%, AS ACCORD ING TO THE AO, NO PANS OF THE MATES WERE FOUND AVAILABLE IN THE RECOR D OF THE PR DURING THE COURSE OF INSPECTION AND THE PR HAD ALSO FAILED TO FURNISH ANY COPY OF PAN OBTAINED BY HIM DURING THE PROCEEDINGS BEFORE THE A O. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) HELD THAT THE PAYMENTS OF RS.30,68,500/-, MADE TO 28 DIFFERENT CO NTRACTORS WERE HAVING PERMANENT ACCOUNT NUMBERS (PANS) AT THE TIME OF MA KING PAYMENTS AND ITA NO.63(ASR)/2014 3 THAT, THEREFORE, TAX ON THE AMOUNT OF RS.30,68,500/ - WAS REQUIRED TO BE DEDUCTED @ 1% AND NOT @ 20%, AS CHARGED BY THE AO. 4. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US . 5. THE NOTICE ISSUED TO THE ASSESSEE ON 19.01.2015 HAS NOT RETURNED UNSERVED. HOWEVER, NONE HAS APPEARED ON BEHALF OF T HE ASSESSEE. FINDING THAT THE MATTER CAN BE PROCEEDED WITH IN THE ABSENC E OF THE ASSESSEE, WE ARE DOING SO. 6. CHALLENGING THE IMPUGNED ORDER, THE LD. DR CONTE NDED THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT IN CASES OF CONTR ACTORS WHO WERE HAVING PANS ALLOTTED BEFORE THE DATE OF INSPECTION, THE PA YMENT SHOULD NOT BE BROUGHT IN THE AMBIT OF DEFAULT FOR LESSER DEDUCTIO N OF TAX; WHILE DOING SO, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE AO HA D GIVEN DUE OPPORTUNITY TO THE PR TO FURNISH PROOF OF PAN CARDS, WHICH WAS N OT DONE AND THAT IT WAS THEREFORE, THAT THE AO HAD RAISED THE DEMAND; AND T HAT THE LD. CIT(A) HAS ALSO ERRED IN HOLDING THAT MERELY HAVING PAN WITHOU T FURNISHING THE SAME BEFORE THE AO IS A SUFFICIENT GROUND FOR DELETING T HE DEMAND CREATED BY THE AO, BY APPLYING HIGHER RATE OF TDS. 7. WE HAVE HEARD THE LD. DR AND HAVE PERUSED THE RE LEVANT MATERIAL ON RECORD. THE LD. CIT(A), WHILE PASSING THE IMPUGNED ORDER, HAS OBSERVED AS FOLLOWS: ITA NO.63(ASR)/2014 4 (V) OUT OF PAYMENTS OF RS.54,56,500/- MADE TO DIFF ERENT CONTRACTORS DURING THE YEAR IT HAS BEEN ARGUED THAT TAX WAS REQUIRED TO BE DEDUCTED @ 1% AS AGAINST 20% RATE APPLIED BY TH E AO BECAUSE THESE PERSONS WHOSE TAX WAS REQUIRED TO BE DEDUCTED ARE HAVING PERMANENT ACCOUNT NUMBERS. THE AO IN HIS REMAND RE PORT HAS STATED THAT IN RESPECT OF PAYMENTS OF RS.23,41,000.00 MADE TO 19 DIFFERENT PERSONS, THE PERMANENT ACCOUNT NUMBERS HAVE BEEN OB TAINED/ALLOTTED AFTER THE PAYMENTS IN RESPECT OF CONTRACT HAVE MADE BY THE PERSON RESPONSIBLE FOR DEDUCTION OF TAX. IN FACT THERE IS AN OMISSION IN THE AOS REPORT OF TWO NAMES AT SR. NO. 9 (SH.TARA CHAN D) FOR RS.38,000 AND SR. NO.46(SH. PATEL KUMAR) FOR RS.9000. THIS M ISTAKES THE TOTAL RS.23,88,000/- INSTEAD OF RS.23,41,000/-. THEREFORE , IN RESPECT OF BALANCE PAYMENTS OF RS.30,68,500/- MADE TO 28 DIFFE RENT CONTRACTORS WERE HAVING PERMANENT ACCOUNT NUMBERS AT THE TIME O F MAKING PAYMENTS. ACCORDINGLY, TAX ON RS.30,68,500/- WAS R EQUIRED TO BE DEDUCTED @ 1% AS AGAINST CHARGED IN THE ORDER. 7.1. IT IS SEEN THAT AS AVAILABLE FROM THE IMPUGNED ORDER, BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED THAT PANS OF THE PER SONS IN WHOSE NAMES PAYMENTS AMOUNTING TO RS.54,56,500/- HAD BEEN MADE BY THE ASSESSEE DURING THE YEAR, WERE AVAILABLE ON RECORD, BUT COU LD NOT BE PRODUCED BEFORE THE AO DURING PROCEEDINGS BEFORE HIM. THE DETAILS O F THESE PERSONS ALONG WITH COPIES OF THEIR PAN WERE FILED AS ANNEXURE B WITH THE WRITTEN SUBMISSIONS OF THE ASSESSEE BEFORE THE CIT(A), CONT ENDING THAT THE APPLICABLE RATE OF TDS ON PAYMENTS OF RS.54,56,500/ - WAS, THUS, 1% AND NOT 20%, AS APPLIED BY THE AO (IMPUGNED ORDER PAGE 3, 2 ND LAST PARA). 7.2. THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE AO IN THIS REGARD. IN THE REMAND REPORT, DATED 18.11.2013, THE AO STAT ED AS FOLLOWS: ITA NO.63(ASR)/2014 5 (V) THE PR HAS FURNISHED PAN OF THE PERSONS IN WHO SE NAME PAYMENTS AMOUNTING TO RS.54,56,500/- WERE AVAILABLE BUT COULD NOT BE FURNISHED BEFORE THE AO AND THEIR DETAILS ARE AN NEXED NOW. INFORMATION REGARDING THE DATE OF ALLOTMENT OF PAN OF CONTRACTORS/MATES WAS SOUGHT FROM THE JURISDICTIONA L ASSEESSING OFFICER AND ALSO VERIFIED FROM AST. IN THE FOLLOWIN G CASES AS PER ANNEXURE B, PANS APPEARING AT S.NO.5 (RAM LAL), 9 (TARAN CHAND), 21 (PARDEEP CHAND), 24 (OM PARKASH), 25 (OM PARKASH), 26 (PATEL KUMAR), 36 (SUBASH CHANDER), 38 ( DEEPAK SHA RMA), 40 (KHEM RAJ), 41 (KASTURI LAL), 46 (POMESH CHANDER), 47 (SU BASH CHANDER), 49 ( ROMESH CHANDER), 52 ( TARA CHAND), 57 (MOHD AN WARD), 59 (SUBASH CHANDER, 63 (MOHD ANWAR), 65 (ROMESH CHANDE R) AND 69 (MOHD ANWAR) HAVE BEEN ALLOTTED AFTER THE DATE OF P AYMENTS. THUS THESE PANS WERE NOT EVEN ALLOTTED TO THE MATES/CON TRACTORS AFTER THE PAYMENTS MADE BY THE PR. 7.3. FROM THE ABOVE REMAND REPORT IT IS, THEREFORE, AVAILABLE THAT THE INFORMATION REGARDING DATE OF ALLOTMENT OF PAN OF CONTRACTORS/MATES WAS SOUGHT FROM THE JURISDICTIONAL AOS AND ALSO GOT VE RIFIED FROM AST BY THE AO. 7.4. THE ASSESSEE FILED A REJOINDER TO THE ABOVE RE MAND REPORT, STATING THAT : WITH REGARDS TO PARA V WHEREIN THE AO HAS VERIFIED THE ALLOTMENT OF PAN NO. OF CONTRACTORS/MATERS AND BELOW MENTION PAN NO. WERE ISSUED AFTER THE DATE OF PAYMENT. WE REQUEST THAT D ATE OF ALLOTMENT OF THE SAME MAY BE CONVEYED TO ASSESSEE AS ASSESSEE DO ES NOT HAS ANY MEANS TO VERIFY THE SAME AND FURTHER PRAYED THAT SI NCE ASSESSEE HAS PROCURED/GOT ALLOTTED THE PAN NUMBERS OF MATES AFTE R MAKING THE PAYMENTS, DEFAULT MAY BE CALCULATED AT 1% INSTEAD O F 20%. THIS DEFAULT IS DUE TO VARIOUS REASONABLE CAUSES VIZ BAC KWARDNESS OF THE AREA, ILLITERACY, IGNORANCE OF SECTIONS WHICH WERE NEWLY INCORPORATED IN THE ACT. 1 SR. NO.5 RAM LAL 2. SR.NO.9 TARA CHAND ITA NO.63(ASR)/2014 6 3. S.NO.21 PRADEEP CHAND 4. SR.NO.24 OM PARKASH 5. S.NO.25 OM PARKASH 6. S.NO.26 PATEL KUMAR 7. S.NO.36 SUBASH CHANDER 8. S.NO.38 DEEPAK SHARMA 9. S.NO.40 KHEM RAJ 10. S.NO.41 KASTURI LAL 11. S.NO.46 ROMESH CHANDER 12. S.NO.47 SUBASH CHANDER 13. S.NO.49 ROMESH CHANDER 14. S.NO.52 TARA CHAND 15. S.NO.57 MOHD. ANWAR 16. S.NO.59 SUBASH CHANDER 17. S.NO.63 MOHD. ANWAR 18. S.NO.65 ROMESH CHANDER 19. S.NO.68 MOHD. ANWAR 7.5. IN RESPONSE TO THE REJOINDER OF THE AO, THE AO GAVE THE FOLLOWING REPLY: THE PR FURNISHED PAN OF THE PERSONS IN WHOSE NAME PAYMENTS AMOUNTING TO RS.54,56,500/- WERE AVAILABLE BUT COUL D NOT BE FURNISHED BEFORE THE AO. AS ALREADY SUBMITTED VIDE REMAND REP ORT DATED 18.07.2013, INFORMATION REGARDING THE DATE OF ALLOT MENT OF PAN OF CONTRACTORS/MATES WAS SOUGHT FROM THE JURISDICTIONA L AO AND ALSO VERIFIED FROM AST. IN THE FOLLOWING CASES AS PER AN NEXURE B, PANS APPEARING AT S.NO.5 (RAM LAL), 9 (TARAN CHAND), 21 (PARDEEP CHAND), 24 (OM PARKASH), 25 (OM PARKASH), 26 (PATEL KUMAR), 36 (SUBASH CHANDER), 38 ( DEEPAK SHARMA), 40 (KHEM RAJ ), 41 (KASTURI LAL), 46 (POMESH CHANDER), 47 (SUBASH CHANDER), 49 ( ROMESH CHANDER), 52 ( TARA CHAND), 57 (MOHD ANWARD), 59 (S UBASH CHANDER, 63 (MOHD ANWAR), 65 (ROMESH CHANDER) AND 69 (MOHD A NWAR) HAVE BEEN ALLOTTED AFTER THE DATE OF PAYMENTS. THUS THES E PANS WERE NOT EVEN ALLOTTED TO THE MATES/CONTRACTORS AFTER THE PA YMENTS MADE BY THE PR. IT IS SUBMITTED THAT AS PER SECTION 206AA OF THE I. T. ACT, 1961 THE DEDUCTOR HAS TO OBTAIN PAN OF THE DEDUCTEE AT THE T IME OF PAYMENT, FAILING WHICH TAX HAD TO BE DEDUCTED BY THE DEDUCT OR @ 20% . THUS, ITA NO.63(ASR)/2014 7 IN THE INSTANT CASE, THE PR WAS REQUIRED TO DEDUCT TAX AT THE RATE OF 20% WHICH HAS BEEN DONE. 7.6. WHILE PASSING THE IMPUGNED ORDER, THE LD. CIT( A) DULY TOOK INTO ACCOUNT THE REMAND REPORT OF THE AO AND THE OTHER C OMMUNICATION BY THE ASSESSEE AND THE AO TO THE LD. CIT(A). ON PERUSING THE SAME, THE LD. CIT(A) HELD THAT OUT OF THE PAYMENTS OF RS.54,56,500/-, TH E AO, AS PER HIS REMAND REPORT, STATED THAT IN RESPECT OF PAYMENTS OF RS.23 ,41,000/- MADE TO 19 DIFFERENT PERSONS, THE PAN HAD BEEN OBTAINED AFTE R THE PAYMENTS HAD BEEN MADE. THE LD. CIT(A) OBSERVED THAT THE AO HAD OMITT ED TO MENTION TWO NAMES, I.E., S.NO.9 (TARAN CHAND) FOR RS.38,000/- A ND S.NO.46 (PATEL KUMAR) FOR RS.9000/-. THUS, THE TOTAL CAME TO RS.23 ,88,000/- AND NOT TO RS.23,41,000/-. THE LD. CIT(A) OBSERVED THAT AS SUC H, IN RESPECT OF THE BALANCE PAYMENTS OF RS.30,68,500/- MADE TO 28 DIFFE RENT CONTRACTORS , THE PANS WERE THERE WITH THE CONTRACTORS AT THE TIME OF MAKING THE PAYMENTS. IT WAS ON THIS BASIS THAT THE LD. CIT(A) HELD THAT TAX ON PAYMENTS OF RS.30,68,500/- WAS REQUIRED TO BE DEDUCTED @ 1%, AS AGAINST @ 20%, AS DONE BY THE AO. WE DO NOT FIND ANY ERROR IN THE ORD ER OF THE LD. CIT(A). IN THE REMAND REPORT ITSELF, THE AO DID NOT CHALLENGE THE FACUM OF 28 CONTRACTORS, CONCERNING PAYMENTS OF RS. 30,68,500/ - HAVING PANS AT THE TIME THE PAYMENTS WERE MADE. THE NAMES OF THE CONT RACTORS HAVING BEEN ALLOTTED PANS WERE MENTIONED IN THE REMAND REPORT I TSELF. THERE WAS AN ITA NO.63(ASR)/2014 8 OMISSION REGARDING TWO CONTRACTORS, WHICH WAS TAKEN INTO CONSIDERATION BY THE LD. CIT(A). THE NAMES MENTIONED IN THE REMAND R EPORT WERE REITERATED BY THE AO IN HIS REPLY TO ASSESSEES REJOINDER, AS REPRODUCED HEREINABOVE. 7.7. THEREFORE, IT DOES NOT LIE IN THE MOUTH OF THE DEPARTMENT NOW TO CONTEND THAT DURING THE PROCEEDINGS BEFORE THE AO, THE AO HAD GIVEN OPPORTUNITY TO THE PR TO FURNISH THE PROOF OF PANS WHICH WAS NOT DONE AND THAT THEREFORE, THE AO WAS CORRECT IN RAISING THE D EMAND IN QUESTION, I.E., @ 20% AND NOT @ 1%, AS HELD BY THE LD. CIT(A). THE DE PARTMENT IS ALSO NOT CORRECT IN CONTENDING THAT THE LD. CIT(A) ERRED I N HOLDING THAT MERELY HAVING PANS WITHOUT FURNISHING THEREIN, BEFORE THE AO WAS A SUFFICIENT GROUND FOR REDUCING THE DEMAND CREATED BY THE AO. T O REITERATE, ONCE THE FACTS, AS DISCUSSED ABOVE, HAVE BEEN ACCEPTED BY TH E AO BY WAY OF THE REMAND REPORT, AS PER WHICH, DUE VERIFICATION WAS G OT DONE BY SEEKING INFORMATION REGARDING ALLOTMENT OF THE DATE OF ALLO TMENT OF PANS TO THE CONTRACTORS, FROM THE JURISDICTIONAL AOS, AND THE SAME WAS GOT VERIFIED FROM THE AST, NOTHING ELSE REMAINS TO BE DONE. THE FACTU M OF THE ASSESSEE NOT HAVING PRODUCED PAN CARDS BEFORE THE AO DURING P ROCEEDINGS BEFORE HIM THUS CANNOT GO TO THE DETRIMENT OF THE AO. IN VIEW OF THE ABOVE, FINDING NO MERIT THEREIN, THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT BY WAY ITA NO.63(ASR)/2014 9 OF THE GROUNDS OF APPEAL RAISED IS REJECTED. THUS, THE APPEAL OF THE DEPARTMENT IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH MARCH, 2015. SD/- SD/- (B.P. JAIN) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11TH MARCH, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:THE BLOCK DEVELOPMENT OFFICER, RAJOURI 2. THE ITO (TDS) CIRCLE, JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.