Tarsem Singh Saini, Chandigarh V. Dy. Director of Income Tax, Chandigarh

ITA 810/CHANDI/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9898 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 16-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Non-deduction of tax
• Section: 234B; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 810/CHD/2015 ASSESSMENT YEAR: 2009-10 SHRI TARSEM SINGH SAINI, VS THE DY. DIRECTOR OF HOUSE NO. 1229, INCOME TAX, SECTOR 18-C, INTERNATIONAL TAXATION, CHANDIGARH. CHANDIGARH. PAN: AYOPS3875M & ITA NO. 811/CHD/2015 ASSESSMENT YEAR: 2009-10 SMT. PARAMJIT KAUR, VS THE DY. DIRECTOR OF HOUSE NO. 1229, INCOME TAX, SECTOR 18-C, INTERNATIONAL TAXATION, CHANDIGARH CHANDIGARH. PAN: ANDPK8745Q (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 16.06.2016 DATE OF PRONOUNCEMENT : 21.06.2016 O R D E R BOTH APPEALS BY DIFFERENT ASSESSEES ARE DIRECTED AGAINST DIFFERENT ORDERS OF LD. CIT(APPEALS)-43 NEW DELHI DATED 26.08.2015 FOR ASSESSMENT YEAR 2009-10 CHALLENGING THE ORDER UNDER SECTION 201(1A) OF THE INCOME TAX ACT. 2. I HAVE HEARD LD. DR, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MATERIAL ON 2 RECORD. THE ASSESSEE DID NOT APPEAR DESPITE SERVIC E OF THE NOTICE. THE WRITTEN SUBMISSION FILED BY ASSESS EE ON RECORD HAS BEEN CONSIDERED. IT IS STATED THAT I SSUE IS SAME IN BOTH THE APPEALS AND LD. DR ARGUED MAINL Y IN THE CASE OF ASSESSEE SHRI TARSEM SINGH SAINI. THEREFORE, FOR THE PURPOSE OF DISPOSAL OF BOTH THE APPEALS, SAME IS DECIDED AS UNDER. ITA 810/2015 U ( SHRI TARSEM SINGH SAINI ) 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT IN THE Y EAR UNDER CONSIDERATION, ASSESSEE JOINTLY ALONGWITH SMT . PARAMJIT KAUR, WIFE OF SHRI TARSEM SINGH SAINI, PURCHASED PROPERTY BEARING NO. 2178, SECTOR 21-C, CHANDIGARH FOR A TOTAL PURCHASE CONSIDERATION OF RS . 1.35 CRORES FROM NON RESIDENTS I.E. S/SHRI KRISHAN LAL, SOHAN LAL AND MOHAN LAL, RESIDENTS OF U.K. VIDE SAL E DEED DATED 23.05.2008. THE ASSESSING OFFICER NOTED PROVISIONS OF SECTION 195 AND 201 OF THE INCOME TAX ACT IN THE IMPUGNED ORDER AND NOTED THAT AT THE TIM E OF MAKING PAYMENT OF RS. 1.35 CR TO THE ABOVE NRIS, NO TAX HAS BEEN DEDUCTED AT SOURCE BY BOTH THE ASSESSE ES AS WAS REQUIRED UNDER SECTION 195 OF THE INCOME TAX ACT. THEREFORE, PROCEEDINGS UNDER SECTION 201/201( 1A) OF THE ACT WERE INITIATED. THE ASSESSEE IN THE REP LY ADMITTED PURCHASE OF THE PROPERTY AND ALSO EXPLAINE D THAT THOUGH NO TDS WAS DEDUCTED BUT TAXES DUE ALONGWITH INTEREST THEREON WERE PAID BY THE SELLER ON 3 THE CAPITAL GAINS ARISING FROM SALE OF THE SAID PRO PERTY. COPY OF THE INCOME TAX RETURN ALONGWITH COMPUTATION OF INCOME AND PROOF OF PAYMENT OF TAXES WERE FILED. THE ASSESSEE RELIED UPON CERTAIN DECISIONS IN SUPPORT O F THE CONTENTION THAT ASSESSEE IS NOT LIABLE FOR PAYMENT OF TAXES UNDER SECTION 201 OF THE INCOME TAX ACT. 4. THE ASSESSING OFFICER NOTED THAT IT IS ADMITTED FACT THAT AT THE TIME OF MAKING PAYMENT OF CONSIDERATION FOR THE ABOVE MENTIONED PROPERTY TO N ON- RESIDENTS OF U.K., NO TAX WAS DEDUCTED AT SOURCE AS REQUIRED TO BE DEDUCTED UNDER SECTION 195 OF THE INCOME TAX ACT. AS PER PROVISIONS OF SECTION 195 O F THE ACT, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT S OURCE AT THE SPECIFIED RATES FROM THE SALE CONSIDERATION BEFORE MAKING PAYMENT TO THE SELLERS I.E. NRI. IT WAS, THEREFORE, NOTED THAT ASSESSEE FAILED TO DEDUCT TAX AT SOURCE WHILE MAKING THE AFORESAID PAYMENT. THE ASSESSING OFFICER ALSO NOTED FROM THE DETAILS ON RE CORD THAT NON RESIDENT SELLERS, LATER ON DECLARED CAPITA L GAINS ON SALE OF THEIR PROPERTIES AND PAID THE TAX THEREON, THEREFORE, TAX DEDUCTIBLE WAS PAID BY THE SELLER. HOWEVER, IN VIEW OF THE JUDGEMENT OF HON'B LE SUPREME COURT IN THE CASE OF HINDUSTAN COCO COLA REPORTED IN 293 ITR 226, THIS DOES NOT ABSOLVE THE ASSESSEE FROM LIABILITY TO PAY INTEREST UNDER SECTI ON 201(IA) OF THE ACT FROM THE DATE WHEN THE TAX WAS DEDUCTIBLE TO THE DATE WHEN THE TAX WAS PAID BY THE 4 DEDUCTEE OR FROM LIABILITY FROM PENALTY UNDER SECTI ON 271C OF THE ACT. ACCORDINGLY, INTEREST UNDER SECTI ON 201(1A) OF THE ACT WAS CHARGED IN 50% SHARE OF THE ASSESSEE. 5. THE ORDER UNDER SECTION 201(1A) OF THE ACT WAS CHALLENGED BEFORE LD. CIT(APPEALS) AND ASSESSEE REITERATED THE SAME FACTS AND ALSO SUBMITTED THAT T HE SELLER HAVE PAID THE TAX AS WELL AS INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT. THEREFORE, WHEN DEPARTMENT HAS ALREADY BEEN COMPENSATED, NO INTEREST SHOULD BE RECOVERED FROM THE ASSESSEE. TH E ASSESSEE IS NOT IN DEFAULT AND RELIED UPON CERTAIN DECISIONS IN SUPPORT OF THE ABOVE CONTENTION. THE LD. CIT(APPEALS), HOWEVER, DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND DISMISSED APPEAL OF THE ASSESSEE. THE FINDINGS OF LD. CIT(APPEALS) IN PARA 5.1 TO 5.3 OF THE IMPUGNED ORDER ARE REPRODUCED AS UNDER : 5.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE COUNSEL. I HAVE PERUSED THE ORDER AVAILABLE ON RECORD. I HAVE HEARD THE COUNSEL. THE ACTION OF THE ASSESSING OFFICER IS SUMMED UP, IN HI S ORDER, TOWARDS THE END WHICH IS AS FOLLOWS :- HINDUSTAN, COCA COLA. VS. CIT (2007) 178 TAXMAN 355 (SC) IN THIS CASE, THE HON'BLE SUPREME COURT HAS HELD TH AT NO DEMAND VISUALIZED UNDER SECTION 201(1) OF THE INCOME-LAX ACL , 1962 SHOULD BE ENFORCED AFTER THE TAX DEDUCTOR HAS SATISFIED THE O FFICER-IN-CHARQE OF TDS, THAT TAXES DUE HAVE BEEN PAID BY THE DEDUCTEE- ASSESSEE. THE HON'BLE COURT FURTHER HELD THAT THIS WILL NOT ALTER THE LIABILITY TO 5 CHARGE INTEREST UNDER SECTION 201(1A) OF THE ACT TI LL THE DATE OF PAYMENT OF TAXES BY THE- DEDUCTEE-ASSESSEE OR THE L IABILITY FOR PENALTY UNDER SECTION 271C OF THE INCOME-TAX ACT, 1961. HENCE, IT IS CLEAR THAT THE ASSESSEE FAILED TO DEDU CT LAX AT SOURCE FROM THE PAYMENTS TOTALING RS. 1,35,00,000/- MADE T O THE NONRESIDENTS SHRI. KRISHAN LAL. SHRI SOHAN LAL & SHRI MOHAN LAL ALL SONS OF SHRI RAM CHANEL ON 23.05.2008. IT IS ALSO SEEN THAT IN T HIS CASE, THE NON- RESIDENT SELLERS LATER DECLARED THE CAPITAL GAIN AM OUNTING TO RS. 10,12,608/- EACH ARISING ON THE SALE OF PROPERTY BE ARING NO. 2178, SECTOR- 21 C, CHANDIGARH IN THEIR RETURNS OF INCOME FOR THE RELEVANT ASSESSMENT YEAR I.E. AY 2009-10 FILED ON 20.11.2012 AND PAID THE TAX THEREON. THEREFORE, THE TAX DEDUCTIBLE WAS PAID BY THE SELL ER. HOWEVER; IN VIEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN TH E CASE OF HINDUSTAN COCA COLA, REPORTED 293 ITR 226. THIS DO ES NOT ABSOLVE THE ASSESSEE FROM THE LIABILITY TO PAY INTEREST U/S 201(1 A) OF THE ACT FROM THE DATE WHEN THE TAX WAS DEDUCTIBLE TO THE DA TE WHEN THE TAX WAS PAID BY THE DEDUCTEE OR FROM THE LIABILITY FOR PENALTY U/S 271C OF THE INCOME TAX ACT. 1961. ACCORDINGLY, THE ASSESSES IS LIABLE TO PAY INTEREST. @ 12% PER ANNUM ON THE AMOUNT OF TAX- SO DEDUCTIBLE FROM, THE DALE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DA TE ON WHICH SUCH TAX WAS ACTUALLY PAID. AS PER THE DOCUMENTS FURNISH ED BY THE ASSESSEE, SHN. KRISHAN LAL, SHRI SOHAN LAL AND SHRI MOHAN LAL ALL SONS OF SHRI RAM CHAND, THE NON-RESIDENT SELLERS PAID TAX ON CAP ITAL PAINS AMOUNTING LO RS. 10.12,608/- EACH RESPECTIVELY AS U NDER : NRI SELLER CAPITAL GRAIN DATE ON WHICH DATE ON WHICH TAX AMOUNT OF INTEREST TAX (RS.) PAID WAS DEDUCTIBLE U/S 201(1A) (RUPEES) SHRI KRISHAN LAL 229457 14,11,2012 23.5.2008 126201/- SOHAN LAL 229457 14.11.2012 23.05.2008 126201/- MOHAN LAL 229457 14.11.2012 23.05.2008 126201/- --------------------- 378604/- ---------------- 6 THE ASSESSEE. THEREFORE, IS LIABLE TO PAY INTEREST U/S 201(1 A) WHICH WORKS OUT TO RS. 3.78,604/-. HOWEVER, THE ASSESSEE HAS 50% SHARE IN THE PROPERTY. HENCE, THE ASSESSEE IS REQUIRED TO PA Y THE 50% OF THE INTEREST U/S 201(1A) AMOUNTING TO RS. 1,89,302/-. IN VIEW OF THE DECISION OF THE HON'BLE IT AT, MUMBA I, BENCH-C IN THE CASE OF RAYMOND LIMITED VS. DEPUTY COMMISSIONER OF INCOME-T AX (2003) 86 JTD 791 (MUM), 'SINCE THE LIABILITY TO TAX IS BECAU SE OF THE OPERATION OF THE STATUTE ITSELF, THEREFORE, THE DEMAND IS TO BE PAID IMMEDIATELY. ISSUE DEMAND NOTICE. PENALTY PROCEEDINGS U/S 271C O F THE INCOME-TAX ACT, 1961 FOR FAILURE TO DEDUCT TAX AT SOURCE ARE B EING REFERRED TO THE ADD/. DIRECTOR OF INCOME-TAX. INTERNATIONAL TAXATION. CHA NDIGARH.' THE APPELLANT HAS RAISED A PLEA THAT THE PAYEE/DEDU CTEE HAS FILED THE RETURN AND HAS ALREADY BORNE TAXES U/S 234A, 234B A ND 234C. IT IS NOTED THAT THE INTEREST U/S. 201(1 A) IS COMPENSATO RY AND HAS BEEN LEVIED AS A COMPENSATION ONLY. THE APPELLANT'S PLEA THAT THE SAME IS PENAL IN NATURE IS UNFOUNDED. THERE IS NO DOUBLE CH ARGE OF INTEREST U/S 201(1A), AS SECTION 234A. 234B AND 234C OPERATE IN SEPARATE SPHERES. THERE MIGHT NOT HAVE BEEN ANY LOSS TO REVENUE IN TE RMS OF TAX, BUT REVENUE NEEDS TO BE COMPENSATED FOR THE DELAY IN PA YMENT TO THE EXCHEQUER. THIS IS MANDATED AS PER STATUTE. 5.3 FURTHER, THE INTEREST PAID BY THE DEDUCLEE/PAY EE IS U/S 234A, 234B AND 234C OF IT ACT, 1961. THE INTEREST TO BE CHARGE D FROM THE DEDUCTOR/PAYER IS U/S 201(1A), WHICH IS DIFFERENT F ROM INTEREST U/S 234A, 234B AND 234C. IN VIEW OF THE AFORESAID, AND IN VIEW OF THE ORDER OF HON'BLE SUPREME COURT IN THE CASE OF M/S. HINDUSTAN COCA- COLA BEVERAGE PVT. LTD, AS DETAILED ABOVE BY THE AS SESSING OFFICER, THERE IS NO MERIT IN THE CASE OF THE APPELLANT. IT HAS BEEN HELD BY THE HON'BLE SUPREME COURT IN THIS CASE- 'THEREFORE, THE TAX DEDUCTIBLE WAS PAID BY THE SELL ER. HOWEVER, IN VIEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN TH E CASE OF HINDUSTAN COCA COLA REPORTED IN 293 ITR 226, THIS D OES NOT ABSOLVE THE ASSESSEE FROM THE LIABILITY TO PAY INTEREST U/S 20 1(1 A) OF THE ACT FROM THE DATE WHEN THE TAX WAS DEDUCTIBLE TO THE DA TE WHEN THE TAX WAS PAID BY THE DEDUCTEE OR FROM THE LIABILITY FOR PENALTY U/S 271C OF 7 THE INCOME TAX ACT, 1961. ACCORDINGLY, THE ASSESSE E IS LIABLE TO PAY INTEREST @ 12% PER ANNUM ON THE AMOUNT OF TAX SO DE DUCTIBLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DA TE ON WHICH SUCH TAX WAS ACTUALLY PAID.' FURTHER, THE HON'BLE DELHI HIGH COURT, IN THE CASE OF DIT INTL TAXATION VS. G E PACKAGED POWER INC. IN ITA 352/201 4, DATED 12/01/2015, AT PARA 16 (LAST SENTENCE OF THIS PARA) HAS HELD THAT THE 'OBLIGATION OF THE PAYER TO DEDUCTION IS ABSOLUTE.' 5.3 IN VIEW OF THE AFORESAID, THE ORDER OF THE ASSESSING OFFICER IS UPHELD. THE ASSESSEE FAILS IN APPEAL. 6. THE ASSESSEE IN APPEAL HAS CHALLENGED THE ABOVE ORDERS OF THE AUTHORITIES BELOW. THE SOLE CONTENTI ON OF THE ASSESSEE IN THE GROUND OF APPEAL IS THAT TAX HA VE BEEN PAID BY THE SELLER, ASSESSEE IS NOT IN DEFAULT UNDER SECTION 201(1) AND WHEN DEDUCTEE HAVE PAID TH E TAX ON CAPITAL GAINS ALONGWITH INTEREST UNDER SECTI ON 234A, B AND C, NO INTEREST SHOULD BE RECOVERED UNDE R SECTION 201(1A) OF THE ACT FROM THE ASSESSEE. SINC E IS ASSESSEE IS NOT IN DEFAULT, THEREFORE, NO INTEREST IS CHARGEABLE AS PER WRITTEN SUBMISSION OF THE ASSESSE E. THE ASSESSEE IN THE WRITTEN SUBMISSION, MORE OR LES S REITERATED THE SAME SUBMISSIONS WERE MADE BEFORE AUTHORITIES BELOW. 7. THE LD. DR, HOWEVER, RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT CHARGING OF INTEREST UNDER SECTION 201(1A) IS MANDATORY AND HAS BEEN RIGHTLY CHARGED FROM THE ASSESSEE FROM THE DAY OF 8 DEDUCTIBLE TILL THE PAYMENT IS MADE OF THE TAXES BY THE SELLER. THEREFORE, APPEAL OF THE ASSESSEE MAY BE DISMISSED. 8. I HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERIAL ON RECORD. THE FACTS NOTED IN THE FINDINGS OF LD. CIT(APPEALS) HAVE NOT BEEN DISPUTED BY THE ASSESSEE IN ANY MANNER. HON'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCO COLA BEVERAGE P. LTD. (SUPRA) WHILE REFERRING TO THE BOARDS CIRCULAR OBSERVED THAT NO DEMAND VISUALIZE UNDER SECTION 201(1) OF THE INCOME TAX ACT SHOULD BE ENFORCED AFTER THE TAX DEDUCTOR HAS SATISFIED TO OFFICR-IN-CHARGE OF THE TDS THAT TAXES DUE HAVE BEEN PAID BY THE DEDUCTEE ASSESSEE. HOWEVER, THIS WILL NOT ALTER THE LIABILITY TO CHARGE INTERES T UNDER SECTION 201(1A) OF THE ACT TILL THE DATE OF PAYMENT OF TAXES BY THE DEDUCTEE ASSESSEE OR THE LIABILITY FOR PENALTY UNDER SECTION 271C OF THE INCOME TAX ACT. 9. HON'BLE SUPREME COURT IN THE CASE OF CIT V ELILILLY & CO. (INDIA) P. LTD. 312 ITR 225 (S.C) HE LD AS UNDER : THE LEVY OF INTEREST UNDER SECTION 201(1A) IS MANDA TORY AND THE ABSENCE OF LIABILITY FOR TAX WILL NOT DILUTE TH E DEFAULT. THE LIABILITY OF DEDUCTING TAX AT SOURCE IS IN THE NATURE OF A VICARIOUS LIABILITY, WHICH PRESUPPOSES EX ISTENCE OF PRIMARY LIABILITY. INTEREST UNDER SECTION 201(1 A) R EAD WITH SECTION 201(1) CAN ONLY BE LEVIED WHEN A PERSO N IS DECLARED AN ASSESSEE-IN-DEFAULT. THE PERIOD OF DEFAULT STARTS 9 FROM THE DATE OF DEDUCTIBILITY TILL THE DATE OF ACTUAL PAYM ENT. THE PAYMENT BY THE CONCERNED EMPLOYEE CAN BE TREATE D AS THE DATE OF ACTUAL PAYMENT. 10. FROM THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISIONS OF THE HON'BLE SUPREME COURT AND TH E FINDING OF FACT RECORDED BY LD. CIT(APPEALS), IT IS CLEAR THAT ASSESSEE IS LIABLE TO PAY INTEREST UNDER SECTI ON 201(1) OF THE ACT FROM THE DATE WHEN THE TAX WAS DEDUCTIBLE TO THE DATE WHEN TAX WAS PAID BY THE DEDUCTEE. THE SOLE CONTENTION OF THE ASSESSEE HAD BEEN THAT SINCE RETURN HAVE BEEN FILED BY THE PAYEE/DEDUCTEE AND TAXES/INTEREST UNDER SECTION 234 A, B AND C HAVE BEEN PAID, THEREFORE, DEPARTMENT HAVE BEEN COMPENSATED. HENCE, NO INTEREST SHOULD BE CHARGED. THE CONTENTION OF THE ASSESSEE IS NOT TEN ABLE BECAUSE CHARGING OF INTEREST UNDER SECTION 201(1A) AND INTEREST CHARGED UNDER SECTION 234A, 234B AND 234C OF THE ACT OPERATE IN UNDER DIFFERENT FIELDS OF THE IN COME TAX ACT. THERE MIGHT NOT HAVE BEEN ANY LOSS TO THE REVENUE IN TERMS OF TAX BUT THE REVENUE HAVE TO BE COMPENSATED FOR THE DELAY IN PAYMENT OF TAXES TO TH E EXCHEQUER. THE CHARGING OF INTEREST UNDER SECTION 201(1A) SINCE IS MANDATORY THEREFORE, NO INTERFEREN CE IS REQUIRED IN THE MATTER. 11. IN VIEW OF THE ABOVE DISCUSSION, I DO NOT FIND ANY MERIT IN THE APPEAL OF THE ASSESSEE, SAME IS ACCORDINGLY, DISMISSED. 10 ITA 811/2015 (SMT. PARAMJIT KAUR ) 12. THE ISSUE IS IDENTICAL AS HAVE BEEN CONSIDERED IN THE CASE OF SHRI TARSEM SINGH SAINI (SUPRA). FOLLO WING THE REASONS IN DECISION IN THE CASE OF SHRI TARSEM SINGH SAINI (SUPRA), I DISMISS THIS APPEAL OF THE ASSESSEE AS WELL. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA 811/2015 IS DISMISSED. 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE S ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED 21 ST JUNE, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD