M/s. Executive Engineer, Jhajjar V. ITO(TDS), Rohtak

ITA 636/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5168 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 04-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANSHUL PRAKASH
• Section: 133A; 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI R.S. SYAL, HONBLE VICE PRESID ENT & SHRI K. NARSIMHA CHARY, JUDICIAL MEMBER ITA NOS.-635 TO 637/DEL/2014 ( ASSESSMENT YEARS: 2010-11 TO 2012-13) EXECUTIVE ENGINEER PROVISIONAL DIVISION PWD B&R JHAJJAR RTK00700A VS ITO (TDS) ROHTAK ASSESSEE BY NONE REVENUE BY SH. ANSHUL PRAKASH, SR. DR ORDER PER SHRI K.N. CHARY, J.M. ALL THESE THREE APPEALS ARE FILED BY THE ASSESSEE CHALLENGING THE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS)- ROHTAK (HEREINAFTER FOR SHORT CALLED AS LD. CIT(A) ) IN RESPECT OF THE ASSESSMENT YEARS 2010-11, 2011-12 & 2012-13, WH EREBY THE LD. COMMISSIONER DISMISSED THE APPEALS PREFERRED BY THE ASSESSEE CHALLENGING THE ORDERS PASSED BY THE AO U/S 201(1) AND 201(1A) OF THE ACT. DATE OF HEARING 16.08.2017 DATE OF PRONOUNCEMENT 18.08.2017 2 ITA NOS. 635 TO 637/DEL/2014 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A GOVERNMENT SERVANT OF THE HARYANA STATE GOVERNMENT AND IS RESP ONSIBLE FOR DEDUCTING TDS FROM PAYMENTS MADE TO VARIOUS CONTRAC TORS WORKING WITH THEIR DIVISION. A TDS INSPECTION U/S 133A WAS CONDUCTED BY ITO (TDS) ON 14.02.2012 IN THE OFFICE PREMISES OF THE ASSESSEE AND DURING SUCH INSPECTION THE ITO NOT ED CERTAIN IRREGULARITIES LIKE SHORT DEDUCTION OF TDS, NON DEP OSIT OR DELAYED DEPOSIT OF THE SAME, AS SUCH, BY WAY OF A SHOW CAUS E NOTICE DATED 21.02.2012 THE AO CALLED UPON THE ASSESSEE TO EXPLA IN SUCH AN IRREGULARITIES BY 02.03.2012. HOWEVER, SINCE THE A SSESSEE COULD NOT FURNISH SUCH DETAILS BY THE STIPULATED TIME, AO PROCEEDED FURTHER AND PASSED THE ORDERS U/S 201(1) AND 201(1A ) OF THE ACT RAISING DEMAND ON THE ASSESSEE. 3. AGGRIEVED BY THE SAID ORDER, ASSESSEE CARRIED TH E MATTER IN APPEAL TO THE COMMISSIONER OF INCOME TAX STATING TH AT THE TDS WAS DEDUCTED AS PER THE PROVISIONS OF THE INCOME TA X APPLICABLE ON PAYMENTS MADE TO THE CONTRACTORS, THERE WAS NO O CCASION OF DELAYED DEPOSIT OR NON DEPOSIT OF SUCH TDS, THE TAX WITHHOLDING LIABILITY BEING A VICARIOUS LIABILITY, IT COMES TO LIFE ONLY WHEN THE 3 ITA NOS. 635 TO 637/DEL/2014 PAYEE FAILS TO DISCHARGE HIS LIABILITY AND IN THIS CASE WITHOUT VERIFICATION OF SUCH FACTS THE ORDERS U/S 201(1) AN D 201(1A) OF THE ACT WERE PASSED, AS SUCH, THEY ARE BAD. HOWEVER, L D. CIT (A) WITHOUT ADVERTING TO ANY OF THESE CONTENTIONS RAISE D BY THE ASSESSEE DISMISSED THE APPEALS ADVISING THE ASSESSE E TO FILE FURTHER CORRECTION STATEMENTS, IF REQUIRED BY TAKIN G UP THE ISSUE WITH THE AO. 4. CHALLENGING THIS ACTION OF THE LD. CIT (A) THE A SSESSEE IS IN APPEAL BEFORE US AND THE APPEALS ARE FILED WITH DEL AY OF 24 DAYS IN RESPECT OF ASSESSMENT YEARS 2011-12 AND 2012-13. I T IS THE EXPLANATION OF THE ASSESSEE THAT THEY HAVE COME TO KNOW OF THE DISMISSAL OF THE APPEAL ONLY THROUGH APPEAL EFFECT ORDER AND AS PER THE DIRECTIONS OF THE LD. CIT (A) GIVEN IN THE ORDE R THEY WERE PURSUING THE REMEDY WITH THE AO. ON THE ASPECT OF DELAY, IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE WAS SPEAK ING FALSE OR THAT ANY RIGHTS ARE CRYSTALLIZED IN FAVOUR OF THE R EVENUE TO PREVENTING THE ASSESSEE FROM GETTING THE JUST TAX L IABILITY ASSESSED IN THESE APPEAL PROCEEDINGS. IN THE CIRCUMSTANCES, WE CONDONE THE DELAY AND PROCEED TO HEAR THE MATTER ON MERITS. 4 ITA NOS. 635 TO 637/DEL/2014 5. AT THE OUTSET, IT IS THE ARGUMENT OF THE LD. AR THAT IN THE APPEALS BEFORE THE LD. CIT (A) THE ASSESSEE RAISED THE CONTENTIONS AS TO THE APPLICABILITY OF SECTION 194C OR 194J TO THE PAYMENTS MADE BY THE ASSESSEE TO THE CONTRACTORS WORKING WIT H THEM, ALSO AS TO THE FACT WHETHER REALLY THERE IS DELAYED OR N ON DEPOSIT OF SUCH TDS AND LASTLY WHETHER REALLY THE ASSESSEE COU LD BE DEEMED TO BE AN ASSESSEE IN DEFAULT WITHOUT VERIFICATION O F THE FACT AS TO WHETHER OR NOT THE PAYEES DISCHARGED THEIR LIABILIT Y IN THEIR RETURNS OF INCOME. HOWEVER, LD. CIT (A) DID NOT ADVERT TO ANY OF THESE ASPECTS AT ALL IN THE ORDER BUT PROCEEDED ON THE PR ESUMPTION THAT THE REMEDY FOR THE RELIEF SOUGHT BY THE ASSESSEE LI ES WITH FILING CORRECTION STATEMENT SO THAT THE DATA MISMATCHES AR E CORRECTED BY THE SYSTEM AUTOMATICALLY AND NO LEGAL ISSUE WAS INV OLVED. HE SUBMITS THAT THIS APPROACH OF THE LD. COMMISSIONER OF INCOME TAX IS TOTALLY LOPSIDED ONE AND CANNOT BE SUSTAINED. P ER CONTRA, LD. DR VEHEMENTLY RELIED ON THE ORDERS OF THE AUTHORITI ES BELOW. 6. WE HAVE CAREFULLY GONE THROUGH THE RECORD. FROM THE RECORD, IT IS CLEAR THAT BEFORE THE LD. CIT (A) THE ASSESSE E RAISED THE ISSUES RELATING TO THE APPLICABILITY OF THE PROVISIONS - W HETHER IT WAS 194C 5 ITA NOS. 635 TO 637/DEL/2014 OR 194J OF THE ACT - TO THE PAYMENTS MADE BY THE AS SESSEE TO THE CONTRACTORS AND SPECIFICALLY THEY RAISED A GROUND T HAT THEY HAD DEDUCTED A TDS AS PER THE PROVISIONS OF INCOME TAX APPLICABLE ON PAYMENTS MADE TO THE CONTRACTORS AND THE ASSESSEE H AD CONTRACTUAL AGREEMENT WITH THE PERSONS TO WHOM THE PAYMENTS WERE MADE AND, THEREFORE, RIGHTLY DEDUCTED THE TDS AT 2% U/S 194C OF THE ACT, WHICH IS APPLICABLE TO SUCH PAYMEN TS. THE SECOND FACTUAL GROUND RAISED BY THE ASSESSEE IS THA T THE AO HAD WRONGLY TAKEN THE FIGURES IN RESPECT OF THE DATES O F PAYMENTS AND THE AMOUNTS WHICH ARE FACTUALLY INCORRECT. THE OTH ER GROUND RAISED BY THE ASSESSEE BEFORE THE LD. CIT (A) WAS T O THE EFFECT THAT THE LIABILITY OF THE AUTHORITY WITHHOLDING THE TAX ARISES ONLY WHEN THE PAYEES OF THE SUMS FAIL TO DISCHARGE THEIR LIAB ILITY AND IT IS NOT THE PRIMARY LIABILITY OF THE DEDUCTOR. ON THE FACE OF THE CONTENTIONS RAISED BY THE ASSESSEE, THE LD. CIT (A) WAS EXPECTED TO DECIDE THE APPLICABILITY OF 194C OR 194J TO THE FACTS OF THE CASE, AS TO THE FACTUAL CORRECTNESS OF THE DATES AND AMOUNTS MENTIONED BY THE AO AND LASTLY TO VERIFY WHETHER THE PAYEES DISC HARGE THEIR DUE TAX LIABILITY ON THE AMOUNTS RECEIVED FROM THE ASSE SSEE. HOWEVER, THE LD. CIT (A) DISCUSSED THE PROCEDURAL ASPECTS OF THE E-FILING OF 6 ITA NOS. 635 TO 637/DEL/2014 TDS RETURNS AND THE MISMATCHES AUTOMATICALLY GENERA TED BY THE SYSTEM, AND JUMPED TO THE CONCLUSION THAT THE REMED Y SOUGHT BY THE ASSESSEE LIES WITH FILING CORRECT STATEMENTS SO THAT THE DATA MISMATCHES ARE CORRECTED BY THE SYSTEM AUTOMATICALL Y AND WITHOUT RESORTING TO SUCH A COURSE, APPEAL WAS DEVOID OF ANY LEGAL ISSUE. WE ARE NOT CONVINCED WITH THIS APPROACH OF THE LD. CIT (A) AND LD. CIT (A) TOTALLY MISDIRECTED HERSELF WHILE D EALING WITH THE ISSUES INVOLVED IN THE APPEALS, AS SUCH, WE FEEL IT IMPERATIVE TO SET ASIDE THE MATTER TO THE FILE OF THE LD. CIT (A) TO DEAL WITH THE ISSUES RAISED BY THE ASSESSEE BOTH THE QUESTIONS OF LAW AN D FACTS AND THE ORDERS AFRESH. THE ASSESSEE WILL PRODUCE THE NECES SARY MATERIAL AND RAISE ALL THE CONTENTIONS BEFORE THE LD. CIT (A ). WITH THIS VIEW OF THE MATTER, WE SET ASIDE THE MATTER TO THE FILE OF THE LD. CIT (A). 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 18.08.2017 SD/- SD/- (R.S. SYAL) (K. NARSIMHA CH ARY) VICE PRESIDENT JUDICIAL MEMB ER DATED: 18.08.2017 *KAVITA ARORA 7 ITA NOS. 635 TO 637/DEL/2014 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(EXEMPTIONS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 17.08.2017 DRAFT PLACED BEFORE AUTHOR 18.08.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 18.8.17 APPROVED DRAFT COMES TO THE SR.PS/PS 18.8.17 KEPT FOR PRONOUNCEMENT ON 18.8.17 FILE SENT TO THE BENCH CLERK 18.8.17 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.