Oriental Bank Of Commerce, Kolkata V. ACIT, CIR-58 (TDS), KOLKATA, Kolkata

ITA 964/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99684 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 15-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KVSR KRISHNA
• Keywords: Principle of natural justice; Additional evidence
• Section: 201(1)

Judgement Text

I.T.A. NO S . 964 & 965 / KOL ./20 1 4 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH , JUDICIAL MEMBER I.T.A. NO S . 964 & 965 / KOL / 20 1 4 ASSESSMENT YEAR : 200 8 - 20 0 9 ORIENTAL BANK OF COMMERCE,............... .... ... ........ . . APPELLANT 25, BRABOURNE ROAD, BBG BAG, GROUND FLOOR, KOLKATA - 700 001 [PAN: AA ACO 0191 M ] - VS. - ASSISTANT COMMISSIONER OF INCOME T AX, ................... . RESPONDE NT CIRCLE - 58 (TDS), KOLKATA APPEARANCES BY: S HRI K.V.S.R. KRISHNA, FCA , FOR THE ASSESSEE SHRI PINAKI MUKHERJEE , J CIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : AUGUST 0 5 , 2 01 5 DATE OF PRONOUNCING THE ORDER : AUGUST 10 , 201 5 O R D E R PER S.V. MEHROTRA : TH E S E A PPEAL S HA VE BEEN FILED BY THE A SSESSE E AGAINST THE ORDER S OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - XX, KOLKATA D ATED 2 4 . 0 1 .20 1 4 AND 30.01.2014 RESPECTIVELY FOR THE SAME ASSESSMENT YEAR 200 8 - 0 9 BY TAKING THE FOLLOWING EFFECTIVE GROUND S OF APPEAL: - 1. THE ID. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ORDER OF THE AO U/S . 201(1) AND 201(1A). THE ORDER ALLEGING SHORT DEDUCTION OF TDS AND THE CONSEQUENTIAL INTEREST IS WRONG AND BAD IN LAW AND DESERVES TO BE CANCELLED. 2. THE APPELLANT CONTENDS THAT THE ASSESSEE IS DEEMED TO BE IN DEFAULT U/S 201(1) ONLY IN CASES WHERE NEITHER THERE IS DEDUCTION BY THE DEDUCTOR NOR THERE IS DEPOSIT OF TAX BY THE DEDUCTEE DIRECTLY. IN THIS CASE THE DEDUCTEES HAVE FILED THE RETURN AND PAID THE TAXES ON INCOME INCLUDING THE IMPUGNED INCOME, NO DE MAND U/S 201 (1) CAN BE ENFORCED AND HENCE THE DEMAND FOR RS. 43,35,150/ - SHOULD BE DELETED. I.T.A. NO S . 964 & 965 / KOL ./20 1 4 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 2 OF 5 3. THE APPELLANT CONTENDS THAT THE INTEREST U/S 201(1A) AMOUNTING TO RS 16,05,330/- IS NOT LEVIABLE AS THE DEFAULT WAS NOT INTENTIONAL AND IT HAS HAPPENED INADVE RTENTLY DUE TO ENORMOUS TDS ENTRIES MOSTLY PERTAINING TO INDIVIDUAL ASSESSEES AND HENCE THE INTEREST U/S 201(1A) DESERVES TO BE CANCELLED. 4. THE APPELLANT CONTENDS THAT THE INTEREST CHARGED U/S 201(1A) IS EXCESSIVE AND CAN BE CHARGED ONLY UP TO THE DATE OF THE DEDUCTEE DISCHARGING ITS TAX LIABILITY. 5. THE ORDER U/S 201(1) AND 201(1A) RAISING THE DEMAND FOR RS. 59,40,480/ - IS WRONG AND BAD IN LAW AND HAS TO BE CANCELLED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESESE HAD FILED E - TDS RETURN/STATEMEN T AND CORRECTION STATEMENT FOR THE FOURTH QUARTER OF THE FINANCIAL YEAR. THE ASSESSING OFFICER ANALYSED ON THE BASIS OF ENTRIES REPORTED BY THE DEDUCTOR (ASSESSEE), IN SUCH STATEMENT, AND THE INFORMATION AVAILABLE AS PER BANK CHALLAN DETAILS. THIS ANALYSIS REVEALED DEFAULTS, I.E. NON - PAYMENT OF TDS AMOUNT DEDUCTED, THE NON/LOW DEDUCTION OF TDS AT PRESCRIBED RATES AND LATE PAYMENT OF TAXES. ACCORDINGLY, SHOW - CAUSE NOTICE UNDER SECTION 201(1A) OF THE INCOME TAX ACT WAS ISSUED TO THE ASSESSEE ALONG WITH THE DE TAILED JUSTIFICATION INDICATING ENTRY - WISE REASONS OF THE DEFAULT NOTICE IN THE CASE OF DEDUCTOR (ASSESSEE). THE ASSESSEE WAS DECLARED ASSESSEE IN DEFAULT ON THE BASIS OF THE DETAILS AND THE DEMAND AMOUNTING TO RS.43,35,150/ - WAS CREATED ON ACCOUNT OF SHOR T DEDUCTION/ COLLECTION OF TAX UNDER SECTION 201(1) AND INTEREST THEREON UNDER SECTION 201(1A) OF RS.16,05,330/ - WAS LEVIED. 3. LD. CIT(APPEALS) DISMISSED THE ASSESSEE S APPEAL, LINTER ALIA, OBSERVING AS UNDER: - DURING THE APPELLATE PROCEEDINGS, SMT. RI TA CHOWDHURY, OFFICER FROM THE BANK ATTENDED AND STATED THAT SHE DID NOT WANT TO SUBMIT ANYTHING MORE IN THE MATTER. THE FACTS CLEARLY SHOW THAT THERE WAS SHORT/NON - DEDUCTION OF TAX ON THE PART OF THE APPELLANT AS MENTIONED IN THE ORDER PASSED BY THE AO. T HE APPELLANT COULD NOT FILE ANY NEW/ADDITIONAL EVIDENCE/FACTS TO SUPPORT THEIR CONTENTION RAISED IN THE I.T.A. NO S . 964 & 965 / KOL ./20 1 4 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 3 OF 5 GROUNDS OF APPEAL. THEREFORE, THE AO WAS JUSTIFIED TO RAISE THE DEMAND UNDER SECTION 201(1)/201(1A) OF THE I.T. ACT, 1961 . 4. LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THERE WAS SHORT DEDUCTION OF TDS FROM INTEREST PAYMENT TO VARIOUS COMPANIES. T HE T AX WAS DEDUCTED AT THE RATE OF 10% INSTEAD OF THE APPLICABLE RATE OF 20%. IN THIS REGARD, LD. COUNSEL REFERRED TO PAGE 8 OF THE PAPER BOOK WHEREIN DETAIL S OF SHORT DEDUCTION OF TDS WITH PAN, NAME AND AMOUNT I S CONTAINED. HE FURTHER FILED THE COPIES OF ACKNOWLEDGMENT OF RETURN IN RESPECT OF COMPANIES MENTIONED AT PAGE 8 OF THE PAPER BOOK TO DEMONSTRATE THAT THEY HAD FILED THE RETURN OF THEIR INCOME AND THIS BEING THE CASE OF CORPORATE ASSESSES, THE INTEREST INCOME MUST HAVE BEEN INCLUDED BY THESE COMPANIES IN THEIR RETURNS. LD. COUNSEL SUBMITTED THAT IN VIEW OF THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE PVT. LTD. V S. - CIT REPORTED IN 293 ITR 226, THE TAXES CANNOT BE RECOVERED ONCE AGAIN FROM THE ASSESSEE IN A SITUATION IN WHICH THE RECIPIENT OF INCOME HAS PAID DUE TAXES ON INCOME EMBEDDED IN THE PAYMENTS FROM WHICH TAX WITHHOLDING REQUIREMENTS WERE NOT FULLY OR PART LY, COMPLIED WITH. LD. COUNSEL FURTHER SUBMITTED THAT IN VIEW OF THE DECISION OF THE HON BLE ALLAHABAD HIGH COURT IN THE CASE OF JAGRAN PRAKASHAN LTD. VS. - DCIT REPORTED IN (2012) 21 TAXMAN.COM 489 (ALL.), THE ONUS IS ON THE ASSESSING OFFICER TO DEMONSTRA TE BEFORE INVOKING PROVISIONS UNDER SECTION 201(1) THAT THE RECIPIENTS OF THE INCOME HAVE NOT INCLUDED THE AMOUNT PAID BY ALLEGED ASSESSEE IN DEFAULT IN THEIR INCOME. HE SUBMITTED THAT ALL THE DETAILS AVAILABLE WITH HIM HAVE BEEN SUBMITTED BEFORE THE ASSES SING OFFICER AND HE CAN VERIFY FROM THE DETAILS AVAILABLE WITH HIM IN REGARD TO INCLUSION OF INTEREST INCOME BY THE RESPECTIVE COMPANIES. LD. COUNSEL FURTHER SUBMITTED THAT ON THE SHORT - FALL OF DEDUCTION, INTEREST IS LEVIABLE FROM THE DATE ON WHICH SHORT D EDUCTION WAS MADE BY THE ASSESSEE TILL THE DATE OF PAYMENT OF TAXES BY THE DEDUCTEE. HE SUBMITTED THAT THIS EXERCISE CAN BE DONE BY THE ASSESSING OFFICER ON THE BASIS OF INFORMATION AVAILABLE WITH HIM. LD. COUNSEL FOR THE I.T.A. NO S . 964 & 965 / KOL ./20 1 4 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 4 OF 5 ASSESSEE HAS RELIED ON THE FOLLOWI NG DECISIONS IN SUPPORT OF HIS CONTENTIONS: - (I) ALLAHABAD BANK VS. - ITO (TDS AND SURVEY), ALGARH IN ITA NO. 448 TO 454/AGRA/2001 VIDE ORDER DATED 20.06.2014 OF ITAT, AGRA BENCH, AGRA; (II) RAMAKRISHNA VEDANTA MATH VS. - ITO, WARD - 59(1), KOLKATA IN ITA N OS. 477, 478 & 479/KOL/2012 VIDE ORDER DATED 31.07.2012 OF ITAT, KOLKATA 5. LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE RELIED ON THE ORDER OF LD. CIT(APPEALS). 6 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. IT IS WELL SETTLED LAW THAT IF THE DEDUCTEE HAS PAID THE DUE TAXES ON INCOME BY INCLUDING THE AMOUNT ON WHICH TDS WAS TO BE MADE BY THE PAYER, THEN DEDUCTOR/PAYER CANNOT BE TREATED AS ASSESSEE IN DEFAULT IN VIEW OF THE DECISION OF THE HON BLE SU PREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE PVT. LTD. (SUPRA). IF THE RECIPIENT OF INCOME HAS PAID DUE TAXES ON INCOME EMBEDDED IN THE PAYMENTS FROM WHICH TAX WITHHOLDING REQUIREMENTS WERE NOT FULLY OR PARTLY, COMPLIED WITH, THEN THE DEDUCTOR C ANNOT BE TREATED AS ASSESSEE IN DEFAULT. IN THE DECISION RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE, IT HAS BEEN HELD THAT THE ONUS IS ON THE ASSESSING OFFICER TO DEMONSTRATE THAT THE CONDITION PRECEDENT FOR INVOKING THE PROVISIONS OF SECTION 201(1A) VIZ. DEFAULT IN RESPECT OF NON - PAYMENT OF TAX BY THE RECIPIENT EXISTS . LD. COUNSEL HAS POINTED OUT VARIOUS DETAILS WHICH ARE AVAILABLE WITH THE ASSESSING OFFICER TO VERIFY THIS ASPECT AS REGARDS LOW DEDUCTION OF TAX FROM INTEREST UNDER SECTION 201(1A) IS C ONCERNED . W E ARE IN AGREEMENT THAT THE INTEREST IS PAYABLE ON THE SHORT FALL OF DEDUCTION OF TAX FROM THE DATE DUE FOR DEDUCTION OF TAX TILL THE DATE OF PAYMENT OF TAXES BY THE RECIPIENT OF INCOME. THIS ASPECT HAS TO BE VERIFIED BY THE ASSESSING OFFICER. I N VIEW OF THE ABOVE DISCUSSIONS AND IN THE INTEREST OF NATURAL JUSTICE, THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR I.T.A. NO S . 964 & 965 / KOL ./20 1 4 ASSESSMENT YEAR: 200 8 - 20 0 9 PAGE 5 OF 5 FRESH ADJUDICATION IN ACCORDANCE WITH LAW AND IN THE LIGHT OF OBSERVATIONS MADE ABOVE. 7. THE FACTS IN ITA NO. 965/KO L/2014 ARE ALMOST IDENTICAL WITH ITA NO. 964/KOL/2014. HOWEVER, LD. COUNSEL FOR THE ASSESSEE HAS POINTED OUT ONE DISTINGUISHING FEATURE IN THIS APPEAL WHICH IS REGARDING PAYMENT OF INTEREST TO ONE OF THE PARTIES VIZ. GARDEN REACH SHIP BUILDERS & ENGINEERS (A GOVERNMENT OF INDIA UNDERTAKINGS) UNDER MINISTRY OF FINANCE. HE SUBMITTED THAT IN VIEW OF THE PROVISIONS OF SECTION 196, NO TDS WAS REQUIRED TO BE MADE. SINCE WE HAVE ALREADY RESTORED THE MATTER IN ITA NO. 964/KOL/2014 BACK TO THE FILE OF ASSESSING OFFI CER FOR FRESH ADJUDICATION, THE MATTER IN ITA NO. 965/KOL/2014 IS ALSO RESTORED BACK TO THE FILE OF ASSESSING OFFICER IN THE LIGHT OF OUR OBSERVATIONS ABOVE. HE WILL, IN ADDITION, EXAMINE THE APPLICABILITY OF SECTION 196 ALSO. 8 . IN THE RESULT, BOTH THE A PPEAL S FILED BY THE ASSESSE E ARE ALLOW ED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST , 201 5 . SD/ - SD/ - MAHAVIR SINGH S.V. MEHROTRA ( JUDICIAL MEMBER) ( ACCOUNTANT MEMBER) KOLKATA , THE 10 TH D AY OF AUGUST , 201 5 COPIES TO : (1) ORIENTAL BANK OF COMMERCE, 25, BRABOURNE ROAD, BBG BAG, GROUND FLOOR, KOLKATA - 700 001 (2) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 58 (TDS), KOLKATA (3) COMMISSIONER OF INCOME - TAX (APPEALS) - XX, KOLKATA (4) COMMISSIONER OF INCOME TAX - , KOLKATA ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUN AL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .