Chalasani Hospitals Pvt., Ltd., Visakhapatnam V. THE JCIT, Visakhapatnam

ITA 645/VIZ/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6607 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 15-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Keywords: Additional evidence; Non-deduction of tax; Reasonable cause
• Section: 133A

Judgement Text

ITA NO.645/VIZAG/2014 CHALASANI HOSPITALS PVT. LTD., VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.645/VIZAG/2014 ( / ASSESSMENT YEAR: 2012-13) CHALASANI HOSPITALS PVT. LTD., VISAKHAPATNAM JCIT, RANGE - 6(TDS), VISAKHAPATNAM [PAN NO. AAECC0005G ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI C. SUBRAHMANYAM, AR / RESPONDENT BY : SHRI M.K. SETHI, DR / DATE OF HEARING : 03.10.2017 / DATE OF PRONOUNCEMENT : 11.10.1027 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)}, VISA KHAPATNAM VIDE ITA NO.0756/2013-14/ADDL.CIT R-6 TDS VSP/2014-15 DT .14.11.2014 FOR THE ASSESSMENT YEAR 2012-13. ITA NO.645/VIZAG/2014 CHALASANI HOSPITALS PVT. LTD., VSKP 2 2. A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 (H EREINAFTER CALLED AS 'THE ACT') WAS CONDUCTED BY ASSESSING OFFICER(AO ) [(TAX DEDUCTION AT SOURCE) (TDS] IN THIS CASE ON 21.1.2013 AND DURING THE COURSE OF SURVEY, IT WAS FOUND BY THE A.O. THAT THE ASSESSEE HAS MADE THE PAYMENT OF REMUNERATION TO THE DIRECTORS WITHOUT DE DUCTION OF TAX AT SOURCE. THEREFORE, THE A.O. (TDS) HAS INTIMATED TH E JOINT COMMISSIONER OF INCOME TAX, WHO ISSUED THE NOTICE U/S 271C OF TH E ACT INITIATING PENALTY FOR NON-DEDUCTION OF TAX DEDUCTION AT SOURC E(TDS). IN RESPONSE TO THE PENALTY NOTICE, THERE WAS NO RESPON SE FROM THE ASSESSEE. THE JOINT COMMISSIONER OF INCOME TAX ISS UED THE NOTICE ON TWO OCCASIONS AND THE ASSESSEE HAD NOT RESPONDED TO THE NOTICE ISSUED U/S 271C OF THE ACT. THEREFORE, THE JCIT, RANGE-6, VISAKHAPATNAM HAS IMPOSED THE PENALTY OF ` 14,40,000/- EQUIVALENT SUM OF THE TDS REQUIRED TO BE DEDUCTED TAX AT SOURCE U/S 271C OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A). BEFORE THE LD. CIT(A), THE ASSE SSEE ARGUED THAT THE ASSESSEE HAD DEDUCTED THE TDS BUT THE SAME WAS NOT REMITTED TO THE CENTRAL GOVERNMENT ACCOUNT AS ON THE DATE OF SURVEY . FURTHER, THE LD. A.R. ALSO FILED AN AFFIDAVIT BEFORE THE CIT(A) FROM SHRI VENKATESWARA RAO STATING THAT THE TAX WAS DEDUCTED AT SOURCE AND IT WAS SLIPPED FROM THE ATTENTION OF HIS MIND TO DEPOSIT THE TAX IN THE GOVERNMENT ACCOUNT. ITA NO.645/VIZAG/2014 CHALASANI HOSPITALS PVT. LTD., VSKP 3 FURTHER, THE LD. A.R. ARGUED BEFORE THE CIT(A) THAT IT WAS DUE TO THE OVERSIGHT OF THE FINANCE MANAGER, THE TDS COULD NOT BE REMITTED. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTIONS OF THE LD . A.R. AND CONFIRMED THE PENALTY IMPOSED BY THE JCIT. 4. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THIS TRIBUNAL AND RAISED THE FOLLOWING GROUN DS OF APPEAL: 1.0 THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED ULS.271 C OF THE I.T. ACT IS AGAINST THE PRO VISIONS OF LAW AND FACTS OF THE CASE. 1.1 THE LEARNED COMMISSIONER OF INCOME TAX(A) (IN SH ORT 'CIT(A)') HAS ERRED IN CONFIRMING THE PENALTY ULS.271C OF THE I.T. ACT ON MERE SURMISE AND SUSPICION AND ON THE PRETEXT THAT THE SUBJECT C ASE PERTAINS TO DEFAULT FOR NON-DEDUCTION OF TDS WHEN THE CASE OF T HE ASSESSEE COMPANY IS TOTALLY ON A DIFFERENT FOOTING. 1.2 THE LEARNED CIT(A), WHILE DISPOSING OFF THE CAS E, HAS TOTALLY MISLEAD HIMSELF AND CONFIRMED THE PENALTY IMPOSED U /S.27 1 C OF THE I.T. ACT IGNORING THE SUBMISSIONS AND MATERIAL EVIDENCES FILED BEFORE HIM. 1.3 IN AS MUCH AS THE LEARNED CIT(A) CONFIRMED THE PENALTY U/S.271C OF THE I.T. ACT ON MERE SURMISE AND SUSPICION, THE SAME CANNOT STAND THE TEST OF LEGAL SCRUTINY AND THEREFORE THE ORDER DESE RVES TO BE QUASHED. 1.4 THE LEARNED CIT(A) BRUSHED ASIDE THE 'AFFIDAVIT ' OF THE ACCOUNTS OFFICER ON THE PREMISE THAT THE SAME AMOUNTS TO FIL ING OF ADDL. EVIDENCE OF WHICH THE ASSESSEE COMPANY NOT CHOSEN TO FILE A PETITION FOR ADMISSION OF THE SAME, WHICH OBSERVATION IS AGAINST THE FACTS OF THE CASE AND PROVISIONS OF LAW. 1.5 THE LEARNED CIT(A) FAILED TO GIVE FINDING WITH REGARDS TO THE GROUNDS OF APPEAL CONTESTED BY THE ASSESSEE COMPANY WHEREIN THE CONTEST WAS THAT INVOKING PROVISIONS OF SECTION 271 C OF THE I.T. ACT IS UNWARRANTED, UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE, WHEN THE ALLEGED NON-DEPOSIT OF TAX INTO GOVT. A/C IS SUFFIC IENTLY EXPLAINED FOR A REASONABLE CAUSE AND SUCH LEVY IS UNWARRANTED AS PE R LAW. 1.6 FOR THESE AND OTHER REASONS THAT ARE TO BE URGE D AT THE TIME OF HEARING OF THE CASE THE APPELLANT PRAYS THAT THE PE NALTY LEVIED BY THE ASSESSING OFFICER U/S.271C OF THE I.T. ACT AND CONFI RMED BY THE LEARNED CIT(A), FOR THE ALLEGED NON-DEDUCTION OF TDS, IS TO BE QUASHED IN THE INTEREST OF JUSTICE. ITA NO.645/VIZAG/2014 CHALASANI HOSPITALS PVT. LTD., VSKP 4 5. GROUND NOS.1 & 1.6 ARE GENERAL IN NATURE, WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATION. 6. GROUND NOS.1.1 AND 1.5 ARE NOT PRESSED BY TH E LD. A.R. OF THE ASSESSEE, THEREFORE, THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 7. ALL THE REMAINING GROUNDS ARE RELATED TO THE NON DEDUCTION OF TAX AT SOURCE AND IMPOSING PENALTY U/S 271C OF THE ACT. DURING THE APPEAL HEARING, THE LD. A.R. ARGUED THAT THE JCIT H AS LEVIED PENALTY U/S 271C OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE, WHICH WAS CONFIRMED BY THE LD. CIT(A). THE A.R. CONTENDED THAT THE PEN ALTY WAS IMPOSED FOR THE OFFENCE OF NON DEDUCTION OF TAX AT SOURCE AND A RGUED THAT THE ASSESSEE HAS DEDUCTED THE TAX AT SOURCE, WHICH IS E VIDENT FROM THE BALANCE SHEET. REFERRING TO PAGE NO.6 OF THE PAPER BOOK, THE LD. A.R. TOOK OUR ATTENTION TO THE CURRENT LIABILITIES UNDER THE HEAD TRADE PAYABLES AND OTHER CURRENT LIABILITIES WHICH WAS S HOWN AS OUTSTANDING BALANCE OF ` 15,30,93,213/- AS PER NOTE IN PARA NO.7. FURTHER, REFERRING TO NOTE 7, THE LD. A.R. STATED THAT STATUTORY PAYA BLES ARE OUTSTANDING AT ` 19,86,775/- AS PER PAGE NO.10 OF THE PAPER BOOK, W HICH INCLUDES THE TDS DEDUCTED ON PAYMENTS MADE TO THE DIRECTORS . A SSESSEES A.R. FILED A LETTER FROM THE CHARTERED ACCOUNTANT SHRI D . PRASANNA KUMAR FROM SHRI RAM MURTHY & COMPANY, WHO AUDITED THE BOO KS OF ACCOUNTS ITA NO.645/VIZAG/2014 CHALASANI HOSPITALS PVT. LTD., VSKP 5 AND HAS CERTIFIED THAT AN AMOUNT OF ` 11,20,000/- WAS INCLUDED IN THE TDS PAYABLE OF THE DIRECTORS FOR THE ASSESSMENT YEA R 2011-12. THE CERTIFICATE WAS NOT PLACED EITHER BEFORE THE CIT(A) OR BEFORE THE A.O., THEREFORE, THE CERTIFICATE CONSTITUTES AN ADDITIONA L EVIDENCE. ASSESSEE HAS NOT FILED ANY PETITION FOR ADMISSION OF ADDITIO NAL EVIDENCE. HOWEVER, THE LD. A.R. REFERRING TO THE CERTIFICATE ISSUED BY THE CHARTERED ACCOUNTANT SHRI D. PRASANNA KUMAR ARGUED THAT THE A SSESSEE HAD DEDUCTED THE TDS ON THE PAYMENT MADE TO THE DIRECTO RS AS REMUNERATION, HENCE, NO PENALTY U/S 271C OF THE ACT IS CALLED FOR. 8. ON THE OTHER HAND, THE LD. D.R. ARGUED THAT A SU RVEY U/S 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF T HE ASSESSEE. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT THE ASSES SEE HAS NOT DEDUCTED THE TDS ON THE REMUNERATION PAID TO DIRECTORS AMOUN TING TO ` 48 LAKHS. THE TDS ON REMUNERATION PAID TO DIRECTORS WORKS OUT ` 14.40 LAKHS BUT NOT 11.20 LACS AS CLAIMED BY THE ASSESSEE. THE FAC T THAT NO TDS WAS MADE BY THE ASSESSEE WAS ACCEPTED BY THE CEO SHRI T.CHANDRAMOULESWARA RAO AT THE TIME OF SURVEY. ACC ORDINGLY, THE ASSESSEE HAS REMITTED A SUM OF ` 5 LAKHS ON 1.2.2013. THE LETTER FROM SHRI D. PRASANNA KUMAR, CHARTERED ACCOUNTANT WHICH IS PLACED IN THE PAPER BOOK DOES NOT INDICATE THAT THE AMOUNT OF ` 11.20 LAKHS WAS RELATED TO THE REMUNERATION PAID TO DIRECTORS. IN FACT, THE TDS ON ITA NO.645/VIZAG/2014 CHALASANI HOSPITALS PVT. LTD., VSKP 6 REMUNERATION PAID TO DIRECTORS WORKED OUT TO ` 14.40 LAKHS BUT NOT 11.20 LACS, HENCE, THE LD. D.R. ARGUED THAT THE ADD ITIONAL EVIDENCE PRODUCED BY THE ASSESSEE SHOULD NOT BE TREATED AS A N EVIDENCE FOR DEDUCTING THE TDS AND THE SAME SHOULD BE IGNORED. SINCE THE ASSESSEE HAS NOT FILED THE PETITION FOR ADDITIONAL EVIDENCE AS WELL AS THIS BREAKUP WAS NOT FURNISHED BEFORE THE A.O., THE SAME SHOULD NOT BE ACCEPTED. FURTHER THE LD. D.R. ARGUED THAT THE ASSESSEE HAS N OT ONLY FAILED TO DEDUCT THE TDS BUT ALSO NOT REMITTED TO THE GOVERNM ENT ACCOUNT. EVEN IF IT IS ACCEPTED THAT THE ASSESSEE HAS DEDUCTED TH E TDS, THE SAME WAS NOT REMITTED TO GOVERNMENT OF INDIA ACCOUNT AND THE SAME IS ATTRACTED FOR PENALTY U/S 271C OF THE ACT. THEREFORE, THE L D. D.R. CONTENDED THAT THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE PENALTY U/ S 271C OF THE ACT AND IT SHOULD BE UPHELD. 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN THIS CA SE BY THE A.O. (TDS) ON 22.1.2013. AT THE TIME OF SURVEY, THE A.O. FOUN D THAT THE ASSESSEE HAS MADE THE PAYMENTS TO DR. SRI RANGA RAO ` 24 LAKHS AND DR. SMT. VIJAYA LAKSHMI ` 24 LAKHS AS DIRECTORS REMUNERATION BUT NO TDS WAS MADE. DURING THE COURSE OF SURVEY, T. CH. RAO, CEO OF THE COMPANY WHO IS AVAILABLE IN THE BUSINESS PREMISES HAS GIVEN A STATEMENT ITA NO.645/VIZAG/2014 CHALASANI HOSPITALS PVT. LTD., VSKP 7 ADMITTING THAT THE TDS WAS NEITHER DEDUCTED NOR THE SAME WAS REMITTED TO THE CENTRAL GOVERNMENT. THE ASSESSEE HAS PAID T HE REMUNERATION OF ` 48 LAKHS TO BOTH THE DIRECTORS AND THE TDS LIABILI TY ON THE PAYMENT WORKS OUT TO ` 14.40 LAKHS. DURING THE APPEAL PROCEEDINGS, THE ASSESSEE ARGUED THAT THE ASSESSEE HAS DEDUCTED THE TDS BUT NOT REMITTED TO GOVERNMENT OF INDIA ACCOUNT. IN SUPPOR T OF HIS ARGUMENT, THE LD. A.R. REFERRED PAGE NO.6 OF THE PAPER BOOK, AND STATED THAT FROM THE BALANCE SHEET AS AT THE END OF THE YEAR 31.3.20 12, THE ASSESSEE HAS SHOWN TRADE PAYABLES AND CURRENT LIABILITIES AT ` 15,30,93,213/- AND THE BREAKUP GIVEN AT PAGE NO.10 OF THE PAPER BOOK OUTST ANDING THE STATUTORY PAYABLES WERE SHOWN AT ` 19,86,775/-. THE LD. A.R. ARGUED THAT ` 19,86,775/- INCLUDED THE TDS DEDUCTED FROM THE PAY MENT OF REMUNERATION TO DIRECTORS AND AS AN EVIDENCE, THE A SSESSEE HAS FURNISHED THE CERTIFICATE FROM THE CHARTERED ACCOUN TANT STATING THAT ` 11,20,000/- WAS RELATED TO THE TDS OF DIRECTORS FOR THE FINANCIAL YEAR 2011-12. THE CHARTERED ACCOUNTANT HAS NOT CERTIFIE D WHETHER ` 11.20 LAKHS WAS IN FACT PERTAINING TO THE TDS ON REMUNERA TION OR NOT. THE TDS ON REMUNERATION WORKED OUT TO ` 14.40 LAKHS, WHEREAS IN THE CERTIFICATE, THE OUTSTANDING AMOUNT WAS SHOWN AT ` 11.20 LAKHS. FROM THE PAYMENT CHALLANS ALSO THE ASSESSEE HAS REMITTED A SUM OF ` 5,60,000/- ON 1.2.2013 AND ` 5 LAKHS ON 20.12.2013 AND THE BALANCE ITA NO.645/VIZAG/2014 CHALASANI HOSPITALS PVT. LTD., VSKP 8 AMOUNT WAS REMITTED ON 31.3.2013. SINCE THE AMOUNT SHOWN AS OUTSTANDING AS PER CERTIFICATE ISSUED BY THE CA AND THE TDS LIABILITY IS NOT MATCHING, WE ARE UNABLE TO ACCEPT THE CONTENTIO N OF THE LD. A.R. THAT THE ASSESSEE HAS DEDUCTED THE TDS. EVEN IF IT IS PRESUMED THAT THE ASSESSEE HAS DEDUCTED THE TDS AS PER THE PROVISIONS OF SECTION 271C OF THE ACT, NON DEDUCTION OF TDS AS WELL AS NON REMITT ANCE TO GOVERNMENT OF INDIA ACCOUNT BEFORE THE DUE DATE ATTRACTS PENAL TY U/S 271C OF THE ACT. FOR READY REFERENCE, WE EXTRACT SECTION 271C OF THE ACT: 271C. 93 [(1) IF ANY PERSON FAILS TO ( A ) DEDUCT THE WHOLE OR ANY PART OF THE TAX AS REQUI RED BY OR UNDER THE PROVISIONS OF CHAPTER XVII-B; OR ( B ) PAY THE WHOLE OR ANY PART OF THE TAX AS REQUIRED BY OR UNDER ( I ) SUB-SECTION (2) OF SECTION 115-O ; OR ( II ) THE SECOND PROVISO TO SECTION 194B , THEN, SUCH PERSON SHALL BE LIABLE TO PAY, BY WAY OF PENALTY, A SUM EQUAL TO THE AMOUNT OF TAX WHICH SUCH PERSON FAILED TO DEDUCT OR PAY AS AFORES AID.] 10. IN THE INSTANT CASE, AS PER THE DISCUSSION MADE HEREIN ABOVE, THE ASSESSEE HAS NEITHER DEDUCTED THE TDS NOR REMITTED TO GOVERNMENT OF INDIA ACCOUNT. EVEN IF IT IS PRESUMED THAT THE ASS ESSEE HAS DEDUCTED THE TDS OF ` 11.20 LAKHS, THERE WAS NO EVIDENCE TO ESTABLISH TH AT ` 11.20 LAKHS WAS RELATED TO THE TDS ON REMUNERATION PAID TO THE DIRECTORS. THE AMOUNT ALSO DOES NOT MATCH. IN ANY CASE, THE ASSESSEE HAS NOT REMITTED THE IMPUGNED AMOUNT TO GOVERNMENT OF INDIA ACCOUNT. THEREFORE, WE HOLD THAT THE ASSESSEES CASE SQUAREL Y FALLS UNDER THE ITA NO.645/VIZAG/2014 CHALASANI HOSPITALS PVT. LTD., VSKP 9 MISCHIEF OF SECTION 271C OF THE ACT AND ACCORDINGLY , THE ORDER OF THE LD. CIT(A) IS UPHELD. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 11 TH OCT17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 11.10.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT CHALASANI HOSPITALS PVT. LTD., D .NO.50-53-14, SEETHAMMADHARA, GURUDWARA, VISAKHAPATNAM 2. / THE RESPONDENT THE JCIT, RANGE-6 (TDS), VISAKH APATNAM 3. + / THE CIT, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM