The Finance Officer , Shimoga District V. Income Tax Officer TDS Ward , Davangere

ITA 82/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7557 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Keywords: Non-deduction of tax; Condonation of delay
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NOS.82 & 83/BANG/2017 (ASST. YEAR 2009-10 & 2010-11) THE FINANCE OFFICER, KUVEMPU UNIVERSITY, SHANKARAGHATTA, SHIMOGA DISTRICT. . APPELLANT. VS. INCOME TAX OFFICER, TDS WARD, DAVANGERE. . RESPONDENT. APPELLANT BY : SHRI NARENDRA SHARMA, ADVOCATE REVENUE BY : SMT. PADMAMEENAKSHI, J CIT DATE OF HEARING : 25-9-2017 DATE OF PRONOUNCEMENT : -9-2017 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST ORDERS OF COMMISSIONER OF INCOME-TAX (APPEAL), KALABURGI DATED 31/10/2016 FOR ASST. YEARS 2009-10 AND 2010-11. 2. BRIEFLY STATED, THE FACTS RELEVANT FOR DISPOSAL OF THIS APPEAL ARE AS UNDER:- 2.1 THE ASSESSEE IS A PUBLIC STATE UNIVERSITY, OFFE RING UNDER GRADUATE & GRADUATE DEGREE PROGRAMMES. THE ASSESSI NG OFFICER ITA NOS.82 & 83/B/17 2 (AO) CARRIED OUT SPOT VERIFICATION AT THE ASSESSE ES PREMISES IN ORDER TO VERIFY THE APPLICABILITY OF TDS PROVISIONS AND COMPLIANCE THEREON. ON EXAMINATION AND VERIFICATION, IT WAS F OUND THAT THE ASSESSEE HAD MADE PAYMENTS TOWARDS LEGAL CHARGES TO ADVOCATES WITHOUT DEDUCTING TAX AT SOURCE THEREON. THE AO AC CORDINGLY INITIATED PROCEEDINGS U/S 201(1) AND 201(1A) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) AND HELD THE ASSESSE E TO BE AN ASSESSEE IN DEFAULT TO THE EXTENT OF TAX DEDUCTION VIDE SEPARATE ORDERS DATED 13/6/2011 FOR BOTH ASST. YEARS 2009-10 AND 2010-11. 2.2 AGGRIEVED BY THE ORDERS PASSED BY THE AO U/S 20 1(1) AND 201(1A) OF THE ACT DATED 13/6/2011 FOR ASST. YEARS 2009-10 AND 2010-11, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A), KALABURGI. SINCE THE APPEALS WERE FILED BELATEDLY BY 235 DAYS, THE ASSESSEE SOUGHT CONDONATION OF THE SAID DELAY. THE ASSESSEE SUBMITTED THAT THE CAUSES OF DELAY, INTER ALIA, WAS FOR VARIOUS ADMINISTRATIVE REASONS AS WELL AS NOT HAVING THE PA N WHICH WAS APPLIED FOR SUBSEQUENT TO THE ORDERS PASSED BY THE AO. THE ASSESSEES EXPLANATIONS FOR DELAY IN FILING THE APP EALS DID NOT FIND FAVOUR WITH THE LD CIT(A) AND THE LD CIT(A) ACCORDI NGLY DISMISSED THE ASSESSEES APPEALS IN LIMINE, AS BEING BARRED B Y LIMITATION VIDE THE IMPUGNED ORDERS DATED 31/10/2016. 3. AGGRIEVED BY THE ORDERS OF THE CIT(A), KALABURGI DATED 31/10/2016 FOR ASST. YEAR 2009-10 AND 2010-11, THE ASSESSEE HAS RAISED SOMEWHAT SIMILAR GROUNDS. THE GROUNDS RAISE D FOR ASST. YEAR 2009-10 ARE REPRODUCED HEREUNDER:- ITA NOS.82 & 83/B/17 3 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS THEY ARE AGAINST THE APPELLANT, ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES, FACTS AN D CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT[A] IS NOT JUSTIFIED IN REFUSING TO CONDONE THE DELAY OF 235 DAYS IN FILING THE APPE AL ON THE GROUND THAT THE REASONS EXPLAINED BY THE APPELLANT DOES NOT AMOUNT TO SUFFICIENT CAUSE UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT 'S CASE. 2.1 THE LEARNED CIT[A] FAILED TO APPRECIATE THAT TH E DELAY IN FILING THE APPEAL WAS DUE TO REASONABLE CA USE AND THAT, THE DELAY IN FILING THE APPEAL WAS NOT INTENTIONAL, WILLFUL OR DELIBERATE AND THEREFORE, H E OUGHT TO HAVE CONDONED THE DELAY IN FILING THE APPE AL AND ADMITTED THE APPEAL AND DISPOSED OFF THE SAME O N MERITS UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 3. WITHOUT PREJUDICE TO THE ABOVE, THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE TOTAL PAYMENT O F RS. 1,94,557/- CONSISTS OF PAYMENTS MADE TO EIGHT ADVOCATES AND OUT OF WHICH PAYMENT MADE TO THREE ADVOCATES WERE LESS THAN RS.20,000 PER PAYEE AND HENCE THESE PAYMENT WERE NOT COVERED BY THE PROVISIONS OF SECTION 194J OF THE ACT AND THE APPELLANT WAS NOT LIABLE TO DEDUCT ANY TAX AT SOURC E. ITA NOS.82 & 83/B/17 4 4. THE AUTHORITIES BELOW HAVE ERRED BY OVERLOOKING THE FACT THAT THE PAYMENT MADE TON ONE ADVOCATE SRI K.BASAPPA GOWDA, THOUGH EXCEEDED RS.20,000/-, HE IS AN ASSESSEE UNDER THE INCOME TAX ACT AND HAS FILED THE RETURN OF INCOME IN RELATION TO THE ASSESSMENT YEAR 2011-12. 5. THE AUTHORITIES BELOW HAVE COMPLETELY OVERLOOKED THE EXPLANATION TO SECTION 191 OF THE AC T, WHICH STATES THAT 'THE PAYER SHALL BE DEEMED TO BE IN DEFAULT ONLY IF THE TAX IS NOT PAID BY THE PAYEE DI RECT'. 6. THE APPELLANT DENIES ITSELF LIABLE TO BE CHARGED TO INTEREST U/S. 201[1A] OF THE ACT, WHICH UNDER TH E FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S C ASE DESERVES TO BE CANCELLED. 6.1 THE AUTHORITIES BELOW ERRED IN LEVYING INTEREST U/S.201[1A] OF THE I.T ACT WHEN THE PAYEE HAS PAID ADVANCE-TAX AND SELF-ASSESSMENT TAX AND WHEN THERE WAS NO LOSS OF REVENUE [CIT VS. RISHIKESH APARTMENT CO-OPERATIVE HOUSING LTD. [2001] 119 TAXMAN 239 (GUJ)]. 7. THE AUTHORITIES BELOW COMPLETELY OVERLOOKED THE FACT THAT THE SURCHARGE @ 10% IS LEVIABLE IN TH E CASE OF INDIVIDUAL, 10% SUBJECT TO DEDUCTION FORS.10,00,000/- AND IN CASE OF FIRM AND DOMESTIC COMPANY, SUBJECT TO DEDUCTION OF RS.1,00,00,000/- A ND THEREFORE, THE LEARNED A.O. ERRED IN CALCULATING TH E ITA NOS.82 & 83/B/17 5 TDS @ 2.26% ON THE ENTIRE AMOUNT OF RS.18,70,87,523/- UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 8. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PAR T OF THE COSTS. GROUNDS NO.2 & 2.1 CONDONATION OF DELAY OF 235 DA YS IN FILING APPEAL BEFORE CIT(A) 4. ACCORDING TO THE LD AR FOR THE ASSESSEE, THE ASS ESSEE IS A PUBLIC STATE UNIVERSITY AND WAS NOT HAVING ANY PAN PRIOR TO THE ORDERS DATED 13/6/2011 PASSED BY THE AO FOR ASST. Y EARS 2009-10 AND 2010-11. IT IS ONLY ON 28/12/2011 THAT THE ASSE SSEE APPLIED FOR PAN. BEFORE US, THE LD AR REITERATED THE SUBMISSIO NS PUT FORTH BEFORE THE LD CIT(A) AT PARAS 6 OF THE IMPUGNED ORD ERS. IT WAS SUBMITTED THAT AFTER THE AO PASSED THE ORDERS U/S 2 01(1) AND 201(1A) OF THE ACT, THE ASSESSEE SOUGHT THE APPROVA L OF THE SYNDICATE TO SEEK LEGAL REMEDIAL ACTION BY FILING A PPEALS AND APPOINTING A LEGAL COUNSEL FOR ADVICE IN THE MATTER . IT WAS ONLY IN MONTH OF NOV, 2011, AFTER GOING THROUGH THE PAPERS, THAT THE TAX ADVISERS HAVE GIVEN THEIR OPINION FOR FILING THE AP PEALS AGAINST THE ORDERS U/S 201(1) AND 201(1A) OF THE ACT. THEREAFT ER, TAKING NECESSARY ADMINISTRATIVE APPROVAL AND APPROVAL OF T HE FINANCE ITA NOS.82 & 83/B/17 6 DEPARTMENT, THE ASSESSEE PROCEEDED TO COMPLETE FORM ALITIES TO FILE THESE APPEALS. THE ASSESSEE, HOWEVER, WAS INFORMED BY BANKERS THAT PAYMENT OF APPEAL FEES CANNOT BE ACCEPTED BY T HEM IN THE ABSENCE OF THE ASSESSEE HAVING PAN , WHICH WAS APPL IED FOR ON 28/12/2011. IT WAS SUBMITTED BY THE LD AR THAT THE ABOVE PROCEDURE RESULTED IN THE AFORESAID DELAY OF 235 DA YS IN FILING THESE APPEALS FOR ASST. YEAR 2009-10 AND 2010-11 BEFORE T HE CIT(A). IT WAS PLEADED THAT SAID DELAY WAS NEITHER INTENTIONAL NOR DELIBERATE, BUT WAS DUE TO REASONS BEYOND THE CONTROL OF THE AS SESSEE. IT WAS CONTENDED THAT THE LD CIT(A) REJECTED THE ASSESSEE S PETITION FOR CONDONATION OF DELAY WITHOUT CONSIDERING THE ASSESS EES EXPLANATION THAT IT HAD SUFFICIENT CAUSE FOR FILING THE APPEALS BELATEDLY. IN SUPPORT OF THE ASSESSEES SUBMISSION S, THE LD AR PLACED RELIANCE ON THE DECISION OF THE HONBLE KARN ATAKA HIGH COURT IN THE CASE OF CIT VS. ISRO SATELLITE CENTRE (218 TAXMANN 74) (KAR) WHEREIN THE HONBLE HIGH COURT UPHELD THE ORDER OF THE ITAT CONDONING THE DELAY OF 5 YEARS. THE LD AR ALS O RELIED ON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASST. YEARS 2007-08, 2008-09 AND 2011- 12 IN ITA NO.1287 TO 1289/BANG/2016 DATED 31/8/2017 WHEREIN T HE CO- ORDINATE BENCH HAS CONDONED THE SIMILAR DELAY OF 23 5 DAYS IN FILING THE APPEALS FOR THOSE YEARS BEFORE THE CIT(A). 5. PER CONTRA, THE LD DR FOR REVENUE VEHEMENTLY OPP OSED THE ASSESSEES PLEA FOR CONDONATION OF DELAY OF 235 DAY S IN FILING THE APPEALS FOR ASST. YEAR 2009-10 AND 2010-11BEFORE TH E LD CIT(A) AS THE ASSESSEE HAS FAILED TO EXPLAIN AND ESTABLISH RE ASONABLE CAUSE OR ITA NOS.82 & 83/B/17 7 SUFFICIENT CAUSE FOR THE SAID DELAY IN FILING THE A PPEALS. STRONG RELIANCE WAS PLACED ON THE IMPUGNED ORDERS OF THE L D CIT(A). 6.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CA REFULLY PERUSED THE MATERIAL ON RECORD; INCLUDING THE JUDIC IAL PRONOUNCEMENTS CITED. WE FIND THAT IN IDENTICAL F ACTUAL SITUATION IN THE ASSESSEES OWN CASE FOR ASST. YEAR 2007-08, 2008-09 AND 2011-12, WHERE THERE WAS IDENTICAL DELAY OF 235 DA YS ON THE PART OF THE ASSESSEE IN FILING THE APPEALS FOR THOSE YEA RS BEFORE THE LD CIT(A), THE CO-ORDINATE BENCH IN ITS ORDERS IN ITA NO.1287 TO 1289/BANG/2016 DATED 31/8/2017 HAS CONDONED THE DEL AY OF 235 DAYS IN FILING THE APPEALS BEFORE THE CIT(A) AND SE T ASIDE THE MATTER TO THE FILE OF THE CIT(A) FOR ADJUDICATION O F THE APPEALS ON MERITS. AT PARA 6 OF ITS ORDER (SUPRA), THE CO-ORD INATE BENCH HELD AS UNDER:- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS GIV EN THE EXPLANATION OF CAUSE OF DELAY WHICH HAS BEEN REPRODUCED BY THE CIT (APPEALS) IN THE IMPUGNED ORDER. THE CIT (APPEALS) WAS NOT SATISFIED WITH TH E EXPLANATION HOWEVER NEITHER THE CIT (APPEALS) NOR T HE DEPARTMENT HAS CONTROVERTED THE FACTS AS EXPLAINED BY THE ASSESSEE FOR CAUSE OF DELAY IN FILING THE APPEA LS BEFORE THE CIT (APPEALS). UNDISPUTEDLY, THE ASSESS EE IS A PUBLIC STATE UNIVERSITY OFFERING UNDERGRADUATE, GRADUATE AND POST GRADUATE DEGREE PROGRAMMES. THERE ITA NOS.82 & 83/B/17 8 IS ADMINISTRATIVE HIERARCHY MANAGING THE AFFAIRS OF THE ASSESSEE-UNIVERSITY. THEREFORE FOR TAKING ANY DECI SION, AS NOT IN THE CASE OF INDIVIDUAL, THERE IS A PROCE SS FOR APPROVALS FROM THE APPROPRIATE AUTHORITIES IN THE ADMINISTRATION. THIS IS NOT A CASE ARISING FROM REGULAR ASSESSMENT BUT THE ASSESSING OFFICER HAS PASSED THE ORDER UNDER SECTION 201(1) & 201(1A) OF THE ACT HOLDING THE ASSESSEE AS ASSESSEE IN DEFAULT DUE TO NON-DEDUCTION OF TAX IN RESPECT OF CERTAIN PAYMENTS MADE BY THE ASSESSEE TOWARDS LEGAL FEES. THE ASSES SEE HAS CONTENDED BEFORE THE CIT (APPEALS) THAT RECIPIE NT OF THE FEES HAS OFFERED THE SAME TO TAX AND THEREFO RE THE ASSESSEE CANNOT BE HELD AS ASSESSEE IN DEFAULT. TH E CIT (APPEALS) WITHOUT GOING INTO THE MERIT OF THE CASE DISMISSED THE APPEAL OF THE ASSESSEE IN LIMINE BY DECLINING THE CONDONATION OF DELAY OF 235 DAYS. IT IS SETTLED PROPOSITION OF LAW THAT WHILE CONSTRUING TH E SUFFICIENT CAUSE THE COURT SHOULD BE LIBERAL AND LE AN IN FAVOUR OF SUCH PARTY IF IT IS BROUGHT ON RECORD THA T THE PARTIES HAS NOT ACTED IN ANY MALA FIDE BUT THE REAS ONS EXPLAINED ARE FACTUALLY CORRECT. IT IS ALWAYS A QUE STION WHETHER THE EXPLANATION AND REASON FOR DELAY WAS BO NA FIDE OR MERELY A DEVICE TO COVER THE ULTERIOR PURPO SE OR AN ATTEMPT TO SAVE THE LIMITATION IN AN UNDER HAND WAY. IN THE CASE OF THE ASSESSEE THE FACTS EXPLAINED BY THE ASSESSEE BEING THE REASONS FOR DELAY HAVE NOT BEEN ITA NOS.82 & 83/B/17 9 DISPUTED BY THE DEPARTMENT HOWEVER THE CIT (APPEALS ) FOUND THE SAME AS NOT SUFFICIENT OT SATISFY HIM FOR CONDONING THE DELAY. THEREFORE IT IS MANIFEST FROM THE RECORD THAT THE ASSESSEE HAS NOT ACTED IN MALA FIDE AND THE REASONS EXPLAINED ARE FACTUALLY CORRECT. FURTH ER BY FILING THE APPEALS BELATEDLY THE ASSESSEE IS NOT GO ING TO ACHIEVE ANY ULTERIOR PURPOSE OR MOTIVE OR OTHER BEN EFIT WHEN IT WAS EXPLAINED BY THE ASSESSEE THAT THE RECI PIENT OF THE AMOUNT IN QUESTION HAS OFFERED THE SAME FOR TAX. THE HON'BLE SUPREME COURT HAS LAID DOWN THE PRINCIP LE THAT WHENEVER SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE OPPOSED TO EACH OTHER THE CAUSE OF SUBSTANTIAL JUSTICE HAS TO BE PREFERRED. THUS IT A PPEARS TO BE A CASE OF FACING THE LITIGATION FIRST TIME DU E TO THE ORDER PASSED UNDER SECTION 201(1) & 201(1A) OF THE ACT. THEREFORE IN VIEW OF THE FACTS AND CIRCUMSTAN CES OF THE CASE WE ARE SATISFIED THAT THE ASSESSEE HAS EXPLAINED SUFFICIENT CAUSE FOR DELAY IN 235 DAYS IN FILING THE APPEAL BEFORE THE CIT (APPEALS). ACCORDINGLY, WE CONDONE THE DELAY IN FILING THE APPEAL BEFORE THE C IT (APPEALS) AND SET ASIDE THE MATTER TO THE RECORD OF THE CIT (APPEALS) FOR ADJUDICATION OF THE APPEALS ON MERITS. 6.2 FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN ITA NOS.1287 TO 1289/BANG/2017 DATED 31 /8/2017 IN ITA NOS.82 & 83/B/17 10 THE ASSESSEES OWN CASE FOR ASST. YEARS 2007-08, 20 08-09 AND 2011- 12 (SUPRA), WHICH ARE RENDERED ON IDENTICAL FACTUAL MATRIX AS IN THE ASST. YEARS 2009-10 AND 2010-11 BEFORE US, WE ARE S ATISFIED THAT THE ASSESSEE HAS EXPLAINED SUFFICIENT CAUSE FOR DELAY O F 235 DAYS IN FILING THE APPEALS BEFORE THE CIT(A) AND ACCORDING LY SET ASIDE THE MATTER TO THE FILE OF THE CIT(A) FOR ADJUDICATION O F THE APPEALS ON MERITS. 7. CONSEQUENTLY, THE OTHER GROUNDS 3 TO 8 RAISED BY ASSESSEE ON MERITS ARE NOT BEING ADJUDICATED BY US IN THIS ORDE R. 8. IN THE RESULT, THE ASSESSEES APPEALS FOR ASST. YEAR 2009-10 AND 2010-11 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH SEPTEMBER, 2017. SD/- SD/- (SUNIL KUMAR YADAV) (JASON P BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMB ER BANGALORE DATED : 27/9/2017 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5 .DR 6. GF BY ORDER SR. PRIVATE SECR ETARY, ITAT, BANGALORE.