Income Tax Appellate Tribunal - Jaipur
Office Of X-En Phed, Jaipur vs Assessee on 14 September, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI A.D. JAIN, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 175/JP/14
fu/kZkj.k o"kZ@Assessment Year : 2011-12
Office of XEN, PHED, Jaipur cuke ITO, TDS-1, Jaipur
Vs.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No.
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@Assessee by : Shri Shrawan Kumar Gupta (ADV)
jktLo dh vksj ls@Revenue by :Shri R.A. Verma, (Addl.CIT)
lquokbZ dh rkjh[k@Date of Hearing : 07.09.2016
?kks"k.kk dh rkjh[k@Date of Pronouncement: 14/09/2016.
vkns'k@ORDER
PER SHRI VIKRAM SINGH YADAV, A.M.
This is an appeal filed by the assessee against the order of Ld. CIT(A)-III, Jaipur dated 31.12.2013 wherein the assessee has taken following grounds of appeal:
(1) The impugned penalty order u/s 154 r.w.s. 201(1)/201(1A) dated 18.04.2012 is bad in law and the facts of the case for want of jurisdiction and various other reasons and hence the same may kindly be quashed.
(2) The ld. CIT(A) erred in law as well as on the facts of the case in sustaining the demand of Rs. 1,75,677/- on account of short deduction of TDS and interest thereon raised by the AO u/s 201(1) and 201(1A). The demand so raised by the ITO (TDS) and partly sustained by the Ld. CIT(A) is totally contrary to the provisions of law and facts on the record and hence the additions may kindly be deleted in full.
ITA No. 175/JP/14The XEN PHED, Jaipur vs. ITO(TDS)-1, Jaipur
2. Firstly, during the course of hearing, ground No.1 was not pressed hence the same is dismissed as not pressed.
2.1 In respect of ground No.2, the brief facts of the case are that the assessee has filed its TDS return for the 4th Quarter of F.Y. 2010-11 on 24.07.2011 and while filing the said TDS return, PAN of some of the deductees were wrongly mentioned. Due to such mistake, the AO had raised a demand of Rs. 29,10,290/- including the interest u/s 201(1A) of the IT Act. by applying 20% TDS rate in place of 1 or 2% on such cases. The appellant thereafter filed correction statement on 23.05.2013. Now, out of three persons, the PAN of two persons namely M/s Yadav Construction Co. And Shri Ramdhan Jat have been corrected and consequent demand has already been reduced. The PAN submitted of Shri Lala Ram is still incorrect/defective and the current demand of Rs. 60,256/- is on account of short deduction on payment to Shri Lala Ram and interest of Rs.39,000/-thereon. Hence this appeal before us.
2.2 The finding of the ld. CIT(A) is as under:
I have carefully considered the submission of the appellant and findings of the AO in the remand report. It may be noted the demand of Rs.29,10,290/- including interest demand was raised because of the reason that while filing the TDS return the appellant has mentioned PAN no. of some of the deductees wrong. However, subsequently, such mistake was rectified by the appellant by way of correction statement and by way of furnishing correct PAN's of such deductees. The AO has admitted all such facts to be correct. However, PAN in respect of shri Lala Ram is still found to be incorrect against which the demand on account of short deduction is arrived at Rs. 60,022/-. This fact was also admitted by the AR of the appellant during the appellate proceedings. similarly the short deduction of tax amounting to Rs.36/- is also pointed out by the system and this fact was also not disputed by the appellant. Accordingly raising of such demand to the extent of Rs.60,022/- and Rs. 36/- and consequential interest u/s 201(1A) of IT Act is found to be correct. Accordingly, action of the AO to such an extent is confirmed.2 ITA No. 175/JP/14
The XEN PHED, Jaipur vs. ITO(TDS)-1, Jaipur Regarding the remaining demand, as per appellant as per justification report from the portal of CPC the same is reported to be Rs.1,75,677/- which includes demand of Rs.60,022/- and Rs. 36/- not disputed by the appellant as discussed in the above para. The dispute is in respect of demand raised on account of short deduction of tax in the case of M/s Yadav Construction Co. And Ramdhan Jat. The appellant case is that in respect of these two persons correct PAN have been mentioned while filing the correction statement. The fact that there PANs are correct is even proved from the information downloaded from the CPC portal. In this background the AO is directed to again verify such facts and if the appellant has filed correction statement properly by mentioning correct PANs then such demand may be reduced/deleted. Subject to such verification the grounds of appeal are treated to be partly allowed.
2.3 The ld. AR of the assessee submitted at the very outset that the assessee is a Govt. Department. During the year some payment has been made u/s 194C and the TDS has been deducted well in time and also deposited the same into the account of Central Govt. well in time. This is the admitted facts and not disputed. However, the recipient Shri Lala Ram has provided his PAN No. ABFPV4301L and by taking this PAN No., assessee has filed its tds return. On receiving the intimation u/s 200A it has come to know that the PAN No. of Shri Lala Ram is wrong and the demand has been raised on account of short deduction due to by taking the TDS rate of 20% in place of 2% or applicable rate, deeming the same as non PAN case. The assessee thereafter tried to contract the person Shri LalaRam but he could not provide his correct PAN No, and that is why the assessee could not file the correction statement for correction of the PAN of Shri Lala Ram. Further we also clarify that the above TDS is lying with the department because due to wrong pan the recipient also cannot claim that TDS. Hence also no loss to revenue.3 ITA No. 175/JP/14
The XEN PHED, Jaipur vs. ITO(TDS)-1, Jaipur Alternatively and without prejudice to our other submission, even assuming some default was there, the same at the best was a merely technical and venial breach of law and the conduct of the assessee has not been shown to be contumacious. No deliberate defiance of law is established. In conclusion, firstly there was no short deduction in deducting the TDS and secondly at the worst if there was any short deduction due to wrong PAN the same was beyond, controlled to the assessee or technical or venial breach of law for which no penalty can be imposed kindly refer Hindustan Steel vs. State of Orrisa (supra). Saraswati Electronics vs. ITO 292 ITR 411 (Kar.) also refer Branch Manager, Punjab National Bank vs. Add. CIT 140 TTJ 622 (Luck).
There is no dispute about the fact that the appellant has deposited amount of the tax deducted at source under the provisions of the Act with the government within stipulated time. Further, the tax deducted at source for the relevant period was deposited by the appellant alongwith chargeable interest before the issue of show cause notice for the penalty under reference. The default for which demand has been raised by the AO relates to mentioning wrong PAN. It is seen that the AO has raised the demand in a routine manner without bringing the facts on record to establish that the appellant committed the default without a reasonable cause. If we see in depth about the intention of legislature of bringing the provisions of filing of TDS return, it is clear that the requirement of the TDS return filing is to ensure that whether the assessee has deducted correct tax or not or after deducting the same whether paid to the account of central govt. or not and collection of tax from recipients of income through the deductor. If all the thing has been done and the purpose of the revenue is fulfilled and when there was no loos to the revenue. Than there should not be any question to raise any demand on the assessee only due to the reason of wrong PAN provided by the recipient, when the 4 ITA No. 175/JP/14 The XEN PHED, Jaipur vs. ITO(TDS)-1, Jaipur demand has been raised due to non mentioning the correct PAN No. of recipients. Because as the assessee had paid amount in every month. The assessee has paid after deducting the TDS and this TDS has been deposited by the assessee very well in timely . Here the assessee had done all the work well in timely which were in its hand (i.e. deduction and deposit of tax). In which there was no default of the assessee if any default was of the recipients, which was beyond the control of the assessee for which he should not be suffered or penalized. Although the above decision on penalty but the ratio of the same is also applicable in the present case. Therefore keeping in view the totality of the above facts, circumstances and the legal position, the AO may kindly be directed to delete the demand so raised.
2.4 The Ld DR is heard who has relied upon the order of the lower authorities and submitted that the provisions of law are very clear in respect of defect in furnishing the wrong TDS and the consequent levy of TDS at the rate of 20% in terms of section 206AA.
2.5 We have heard the rival contentions and perused the material available on record. In terms of section 139A(5A) of the Act, every person receiving any sum or income or amount from which tax has been deducted under the provisions of Chapter XVIIB, shall intimate his Permanent Account Number to the person responsible for deducting such tax under that Chapter. Further, u/s 139A(5B) where any sum or income or amount has been paid after deducting tax under Chapter XVIIB, every person deducting tax under the chapter shall quote the Permanent Account Number of the person to whom such sum of income or amount has been paid by him in all the statement prepared and delivered in accordance with the provisions of section 200(3) of the Act.
5 ITA No. 175/JP/14The XEN PHED, Jaipur vs. ITO(TDS)-1, Jaipur 2.6 Further, we refer to section 206AA which provides as under:
(1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereinafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereinafter referred to as deductor) failing which tax shall be deducted at the higher of the following rates, namely-
(i) at the rate specified in the relevant provision of this Act, (ii) at the rate or rates in force, or (iii) at the rate of twenty percent.
Sub-section (6) of section 206AA further provides that "where permanent account number provided to the deductor is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his Permanent Account Number to the deductor and the provisions of sub-section (1) shall apply accordingly."
2.7 On perusal of the above provisions, it is clear that primary onus is on the person entitled to receive income on which tax is deductible at source to furnish his PAN and in case such PAN is invalid or does not belong to the said person by virtue of deeming fiction, it has been stated that he has not furnished his PAN to the deductor. In such a scenario, the onus shifts on the person responsible for deducting the tax that he shall deduct the tax at the rate specified in the relevant provisions of the Act or at the rate of 20% whichever is higher. In the instant case the PAN number of Shri Lala Ram was found to be incorrect by the AO hence the AO applied the rate of 20% as against rate of 2% provided under section 194C of the IT Act. The assessee has mentioned that they have tried to contact Shri Lala Ram but he could not 6 ITA No. 175/JP/14 The XEN PHED, Jaipur vs. ITO(TDS)-1, Jaipur provide his correct PAN No. and that's why the assessee could not file the correction statement. In our view even though the primary onus is on Shri Lala Ram to furnish his correct PAN number to the assessee, what is equally important is that the assessee should verify at the time of making payments or at the time of credit in his books of accounts where Shri Lala Ram has submitted his correct PAN number. In the instant case, the assessee has failed to discharge its obligation to verify the correct PAN and it is only at the time of processing of the TDS return that the department has noticed the submission of incorrect PAN number and thereafter raised the impunged demand. What is important is that the exercise to file TDS returns should be such that it contains correct and accurate data and it is only then that the processing of such data has can happen properly and credit can be given to the income recipient. Given the non-obstante nature of provisions as contained in section 206AA(1) of the Act which overrides section 194C of the Act, we do not see any infirmity in the order of the AO in raising demand of the differential tax that the assessee should have deducted by virtue of submission of incorrect PAN by Shri Lala Ram. At the same time, the assessee shall be at liberty to recover the said amount from Shri Lala Ram. With the above observations the ground taken by the assessee is disposed off.
In the result the appeal filed by the assessee is dismissed.
Order pronounced in the open court on 14/09/2016.
Sd/- Sd/-
( ,-Mh-tSu ) (foØe flag ;kno )
(A.D. JAIN) (VIKRAM SINGH YADAV)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Jaipur
7
ITA No. 175/JP/14
The XEN PHED, Jaipur vs. ITO(TDS)-1, Jaipur
Dated:- 14/ 09/2016
Pillai
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- The XEN, PHED, Jaipur
2. izR;FkhZ@ The Respondent- The ITO (TDS)-1, Jaiur
3. vk;dj vk;qDr@ CIT-(TDS), Jaipur
4. vk;dj vk;qDr¼vihy½@The CIT(A)-III, Jaipur
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 175/JP/2014) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar.8