Dr. Rohit Om Prakash, Amritsar V. DCIT, Chandigarh

ITA 822/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6955 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 28-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: PADAM BAHL
• Keywords: Residential status; Bonafide belief
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.822/CHD/2016 (ASSESSMENT YEAR : 2012-13) DR.ROHIT OM PRAKASH VS. THE D.C.I.T., S/O DR.OM PRAKASH, (INTERNATIONAL TAXATION), H.NO.45, ROSE AVENUE, CHANDIGARH. AMRITSAR. PAN: ABBPR5362A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PADAM BAHL, CA RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 06.07.2017 DATE OF PRONOUNCEMENT : 30.08.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-43, NEW DELHI (HEREINAFTER REFERRED TO AS CIT(A) DATE D 8.6.2016 RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE LD.CIT(A) IN CONFIRMING THE ORDER OF THE DCIT, INTE RNATIONAL TAXATION (HEREINAFTER REFERRED TO AS DCIT) LEVYIN G INTEREST U/S 201(1A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT RS.45,760/-. 3. BRIEF FACTS RELEVANT TO THE ISSUE UNDER CONSIDER ATION ARE THE ASSESSEE HAD PURCHASED HALF PORTION OF PROP ERTY, KOTHI NO.10, LINK ROAD, LAJPAT NAGAR, JALANDHAR FOR A TOTAL CONSIDERATION OF RS.2.76 CROROES VIDE TRANSFER DEED OF 2 MARCH, 2012. THE SALE DEED WAS ENTERED INTO WITH S HRI SOHAN SINGH, FATHER AND POWER OF ATTORNEY HOLDER OF SHRI SUKHPAL SINGH. THE ASSESSEE FAILED TO DEDUCT TAX U /S 195 OF THE ACT ON THE SAID PAYMENT. WHEN SHOW CAUSED B Y THE ASSESSING OFFICER AS TO WHY THE ASSESSEE BE NOT DEE MED TO BE AN ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE ON THE PAYMENT MADE TO A NON- RESIDENT AS REQUIRED U/S 195 OF THE ACT. THE ASSESS EE EXPLAINED THAT SINCE THE PAYMENT FOR PURCHASE OF PR OPERTY WAS MADE TO A RESIDENT POWER OF ATTORNEY HOLDER, HA VING AN INDIAN ADDRESS, TAX U/S 195 OF THE ACT WAS NOT DEDU CTIBLE BY THE PAYER. THE ASSESSEE FURTHER SUBMITTED THAT T HE ASSESSEE WAS NOT AWARE THAT THE OWNER OF THE PROPER TY NAMELY SHRI SUKHPAL SINGH S/O SHRI SOHAN SINGH WAS A NON-RESIDENT. UNDER THESE CIRCUMSTANCES, HE WAS NO T SUPPOSED TO DEDUCT TDS ON THE AMOUNT PAID FOR PURCH ASE OF PROPERTY. THE ASSESSEE FURTHER EXPLAINED THAT EVEN OTHERWISE SAID SHRI SUKHPAL SINGH HAD ALREADY DECLA RED CAPITAL GAIN RELATING TO THE SALE OF PROPERTY IN QU ESTION IN HIS RETURN OF INCOME AND, THEREFORE, AS PER THE PRO POSITION OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN TH E CASE OF HINDUSTAN COCA COLA BEVERAGES PVT. LTD. VS. CIT, 293 ITR 226 (SC), THE ASSESSEE CANNOT BE DEEMED TO BE A N ASSESSEE IN DEFAULT ONCE IT IS PROVED THAT THE PAYE E HAS DISCHARGED HIS LIABILITY FOR PAYING FULL TAXES. TH E ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS OF THE AS SESSEE OBSERVED THAT AS PER THE PROVISIONS OF SECTION 195 OF THE ACT, THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURC E FROM 3 THE SALE CONSIDERATION BEFORE MAKING PAYMENT TO THE NON- RESIDENT SELLER. THE FATHER OF THE SELLER SHRI SUK HPAL SINGH JUST ACTED AS AN AGENT OF THE SELLER BEING POWER OF ATTORNEY HOLDER AND AS SUCH THE PAYMENT WAS FINALLY PAYABLE TO THE SELLER SHRI SUKHPAL SINGH. HE FURTHER OBSERVED THAT SINCE SHRI SUKHPAL SINGH PAID DUE TAX IN HIS RETURN OF IN COME, HOWEVER, THIS DID NOT ABSOLVE THE ASSESSEE FROM THE LIABILITY TO PAY INTEREST U/S 201(A) OF THE ACT FROM THE DATE WHEN THE TAX WAS DEDUCTIBLE TILL THE DATE WHEN THE TAX WAS A CTUALLY PAID BY THE PAYEE. HE ACCORDINGLY HELD THAT THE A SSESSEE WAS LIABLE TO PAY INTEREST @ 12% PER ANNUM ON THE S AID AMOUNT SO DEDUCTIBLE TILL SUCH TAXES WERE ACTUALLY PAID BY THE PAYEE. 4. ON APPEAL, THE LD.CIT(A) ALSO CONFIRMED THE FIND INGS OF THE ASSESSING OFFICER REGARDING LEVY OF INTEREST U/ S 201(1A) OF THE ACT. THE ASSESSEE HAS THUS COME IN APPEAL B EFORE US. 5. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT A T NO POINT OF TIME THE ASSESSEE WAS AWARE OF NON-RESIDEN T STATUS OF THE SELLER. THE AGREEMENT WAS ENTERED INTO BY S HRI SOHAN SINGH, FATHER OF SHRI SUKHPAL SINGH, SELLER, BEING POWER OF ATTORNEY HOLDER WHO WAS RESIDENT OF JALAND HAR. ALL THE PAYMENTS HAD BEEN MADE FROM THE ASSESSEES BANK ACCOUNTS TO THE POWER OF ATTORNEY HOLDER IN INDIA. THE REGISTERED ADDRESS OF THE SELLER AS PER THE REGISTE RED SALE DEED WAS 10 LINK ROAD, LAJPAPT NAGAR, JALANDHAR. T HE PAN CARD ISSUED TO THE SELLER AS PER INCOME TAX DATABAS E (CMPPK7280K) WAS ALSO OF RESIDENT. THE ASSESSING OF FICER 4 CODE SHOWED JURISDICTION AT JALANDHAR. NO PAYMENT HAD BEEN MADE OR TRANSFERRED OUTSIDE THE COUNTRY. THER E WAS NO EVIDENCE OF ANY KIND ON RECORD FROM WHICH THE AS SESSEE COULD GATHER THAT THE RESIDENTIAL STATUS OF THE SEL LER WAS OF A NON RESIDENT. HE, THEREFORE, HAD SUBMITTED THA T THE ASSESSEE WAS NOT SUPPOSED TO DO WHAT WAS NOT EXPECT ED FROM HIM IN THE GIVEN FACTS THAT HE WAS NOT AWARE O F THE NON-RESIDENT STATUS OF THE SELLER. THE ASSESSEE IN BONAFIDE BELIEF MADE THE PAYMENT TO SHRI SOHAN SINGH, POWER ATTORNEY HOLDER, WHO WAS AN INDIAN RESIDENT. 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 7. AFTER CONSIDERING OVERALL FACTS AND CIRCUMSTANCE S OF THE CASE AND AFTER GOING THROUGH THE COPIES OF RELE VANT DOCUMENTS SUCH AS COPY OF THE SALE DEED WHEREIN THE ADDRESS OF THE SELLER SHRI SUKHPAL SINGH HAS BEEN W RITTEN AS SUKHPAL SINGH KULAR, S/O SHRI SOHAN SINGH KULAR, RESIDENT OF 10, LINK ROAD, LAJPAT RAI NAGAR, TEHSIL JALANDHAR, COPY OF GENERAL POWER OF ATTORNEY EXECUT ED BY SHRI SUKHPAL SINGH IN FAVOUR OF HIS FATHER WHEREIN ADDRESS OF SHRI SUKHPAL SINGH AND HIS FATHER SHRI SOHAN SIN GH IS THE SAME AS MENTIONED ABOVE AND COPY OF INCOME TAX ONLINE DATABASE WHEREIN ALSO THE TAX JURISDICTION OF SHRI SUKHPAL SINGH HAS BEEN MENTIONED AT JALANDHAR. WE ARE OF T HE VIEW THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT HE WAS PURCHASING THE PROPERTY FROM AN INDIAN RESIDENT. I N THE ABOVE NOTED TRANSACTION OF SALE OF LAND, NO DOCUMEN T HAS 5 EVER COME TO THE KNOWLEDGE OF THE ASSESSEE FROM WHI CH HE COULD GATHER THAT THE SELLER WAS A NON-RESIDENT. M OREOVER, THE PROPERTY HAS NOT BEEN SOLD DIRECTLY BY SHRI SUK HPAL SINGH BUT BY HIS FATHER SHRI SOHAN SINGH WHO WAS ADMITTEDLY AN INDIAN RESIDENT. UNDER THESE CIRCUMS TANCES, THE ASSESSEE BEING NOT AWARE OF THE NON-RESIDENT STATUS OF THE SELLER, WAS NOT SUPPOSED TO DEDUCT TDS AS PROVI DED U/S 195 OF THE ACT. THE ASSESSEE CANNOT BE SUPPOSED TO DO, WHICH OTHERWISE, HE WAS NOT SUPPOSED TO DO IN THE G IVEN FACTS AND CIRCUMSTANCES. UNDER THESE CIRCUMSTANCES , THE ASSESSEE, IN OUR VIEW, CANNOT BE BURDENED WITH THE LIABILITY EITHER U/S 201 OR U/S 201(1A) OF THE ACT. THE LEVY OF INTEREST ON THE ASSESSEE THUS IS NOT JUSTIFIED AND THE SAME IS ACCORDINGLY SET ASIDE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2017. SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 30 TH AUGUST, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH