Income Tax Appellate Tribunal - Pune
Ito vs Shri Shm Gajanan Auto Engg. (P) Ltd. on 7 March, 2001
Equivalent citations: (2002)75TTJ(PUNE)75
ORDER
B.L. Chhibber, A.M. In ITA Nos. 907 to 909/Pn/1998, the common grievance projected by the revenue is that the learned Commissioner (Appeals) is not justified in reducing the tax demand on default under section 201 and in reducing proportionate interest levied under section 201(A) of the Income Tax Act, when the assessing officer had rightly raised the demand under section 201 as the assessee had completely failed to deduct tax at source.
2. The assessee-company had paid to M/s. Praja Associates, Kolhapur, an amount of Rs. 15,03,414 towards construction of factory building being contract payment. The said payments fell in financial years 1991-92 to 1993-94. While paying the contract sums, the company failed to deduct tax at source as contemplated in section 194C. The assessing officer accordingly held the company deemed to be an assessee in default by virtue of sections 201 and 201(1A) of the Act. Accordingly, the assessing officer initiated proceedings under sections 201 and 201(1A) of the Act and after giving an opportunity of being heard to the assessee, raised a demand for the failure to deduct tax at source and also charged interest upto 31-12-1996, in respect of the short deduction as per section 201(1A). The details are as per the chart enclosed with the assessing officer's order.
3. The assessee appealed to the Commissioner (Appeals) who noted the fact that there is no dispute that tax was not deducted at source and there is a failure, but relying on certain decisions gone into the fact as to how the recipient M/s. Praja Associates had accounted for these receipts and how far revenue is deprived and in analysis as per para 6 of his order came to the conclusion that there is only a shortfall of receipts and consequent tax deducted at sources as noted below :
Asst. yrs.
Amount(s) admittedly paid by the assessee Amount(s) shown by the payee as its receipt in annexures to its return of income Shortfall/under- statement in receipts of Praja Associates Shortfall of TDS (inclusive of surcharge) 1992-93 6,15,000 6,00,000 15,000 324 1993-94 6,15,000 5,76,000 40,000 864 1994-95 2,73,414 2,41,414 32,000 691 Accordingly, the Commissioner (Appeals) vide para 11 of his order directed that the demand may be quantified as noted above and interest under section 201(1) reworked on this amount only. The Commissioner (Appeals) relied upon the judgment of the Madhya Pradesh High Court (Indore Bench) in the case of CIT v. Life Insurance Corporation (1987) 166 1TR 191 (MP).
4. K. Srinivasan, the learned Departmental Representative submitted that the Commissioner (Appeals) erred in allowing relief to the extent of tax on receipts declared by the payee in its return against the provisions of section 201 of the Act, relying on the decision of the Madhya Pradesh High Court (Indore Bench) in the case of Life Insurance Corporation (supra), which was rendered on relying upon the facts in the case earlier decided by the same Hon'ble High Court CIT v. Manager M.P. Co-operative Development Bank Ltd. (1982) 137 ITR 230 (MP), in which case the tax deductor had actually deducted the tax, but it was short deducted and the High Court had taken the view that it was not the case that the tax deductor had not deducted the tax at source, but a case where the Income Tax Officer (TDS) was not satisfied with the various deductions which were taken into consideration at the time of computing the tax payable at source and had raised the demand for the remaining tax. He further submitted that on the facts and in the circumstances of the case and in law, the Commissioner (Appeals) failed to appreciate that the action of tax deductee, whatsoever, cannot obliterate the assessee from his statutory obligation as per the Act in general and section 194C in particular.
5. S.P. Joshi, the learned counsel for the assessee, relied upon the order of the Commissioner (Appeals).
6. I have considered the rival submissions and perused the facts on record. In my opinion, the action of the Commissioner (Appeals) has no basis in law and the determination of the receipt in the hands of M/s. Praja Associates has no relevance whatsoever while determining liability to deduct tax at source in the hands of the assessee. The provisions of law on the amount payable, tax deductible and the interest chargeable, all of which are very clearly defined and, therefore, the Commissioner (Appeals)'s decision drawing analogy from the decision of the Hon'ble Madhya Pradesh High Court which was dealing with a case of salary payment has no relevance. Insofar as provisions of section 192 are concerned, tax is required to be deducted on estimated salary income and, therefore, there is ample scope for difference on the amount of tax deductible and the Hon'ble Madhya Pradesh High Court has considered what is equitable and have given their decision in the above case. This analogy has no application in respect of payments under section 194C because here all the terms are very clear and the liability of the tax deductor is clearly defined and cannot be extended further or reduced. In my opinion, the Commissioner (Appeals) has travelled beyond the scope of provisions of sections 194C and 201(1A) and, therefore, his orders have no legs to stand. Accordingly, I reverse the findings of the Commissioner (Appeals) and restore those of the assessing officer.
7. In the result, the appeals are allowed.
ITA Nos. 910 to 912/Pn/1998
8. The common grievance projected in these appeals is that the learned Commissioner (Appeals) is not justified in cancelling penalties levied by the assessing officer under section 272A(2)(c) of the Act.
9. The Income Tax Officer(TDS) Kolhapur noted that the assessee-company had failed to furnish annual returns in Form No. 26C under section 206 of the Act. He accordingly issued show-cause notice under section 274 read with section 272A(2)(c) of the Act and after giving an opportunity of being heard, levied the following penalties:
Asst. yrs.
Penalty 1991-92 13,284 1992-93 13,776 1993-94 6,125
10. On appeal, the Commissioner (Appeals) deleted the penalties, observing as under :
"5. However, it has to be borne in mind that a tax deducted at source return in Form No. 26C, as prescribed by rule 37, has to incorporate therein such tax deducted at source details as amount of tax paid, date of payment into Government Account, challan number, and the serial number of the tax deducted at source certificate.
Accordingly, it is evident that firstly the appellant was required to actually deposit the tax deducted at source into the Central Government Account. Thereafter, it was required to issue the corresponding tax deducted at source certificate. Only then, it would have technically been in a position to furnish a proper return in Form No. 26A. In the present base, the appellant had not even paid the tax into the Government Account. As such, I hold that it was in no position to have furnished the tax deducted at source return in Form No. 26C. In the circumstances, the appellant has to be treated as having been prevented from filing the tax deducted at source return due to reasonable cause. I, therefore hold that in the facts of the case no penalty under section 272A(2)(c) is leviable. The impugned penalties levied by the Deputy Commissioner are therefore, cancelled."
11. K. Srinivasan, the learned Departmental Representative submitted that the above conclusion reached by the Commissioner (Appeals) is begging the issue and penalty is provided for not complying with provisions of law and assessee cannot take shelter under his own contemnour conduct in not complying with the provisions of law and come to plead that he was prevented by reasonable cause and the court cannot accept such plea as reasonable cause. According to the learned Departmental Representative, the Commissioner (Appeals) misdirected himself in deleting the penalties levied by the assessing officer on the ground of reasonable cause and accordingly because one default (failure to deduct tax) cannot be reasonable cause for another default (failure to comply with section 206 of the Act).
12. S.P. Joshi, the learned counsel for the assessee, relied upon the order of the Commissioner (Appeals).
13. I have considered the rival submissions and perused the facts on record. In my opinion, the Commissioner (Appeals) has tried to rewrite the law by holding that when MS was not deposited, the annual tax deducted at source return could not have been filed because details about the payment of tax deducted at source were required to be mentioned in the annual return. In fact, by holding so, the Commissioner (Appeals) has added premium to the assessee's another default of holding back government's money and by not deducting tax deducted at source from contract payments. The provisions of section 206 cast a specific duty on the assessee/tax deductor to file annual returns within the period prescribed under the rules and by granting concession to the assessee in not filing returns upto the date of deposit of tax deducted at source, the Commissioner (Appeals) has rewritten the law in breach of section 206 and such interpretation has to be discarded. Further, as held by the Hon'ble Gujarat High Court in CIT v. J.L. Trivedi & Sons (1993) 115 CTR (Guj) 535, the doctrine of double jeopardy does not apply to income-tax proceedings and by non-deduction of tax deducted at source in time which attracts interest under section 201(1A) and penalty under section 271C, the assessee cannot claim concession/benefit in regard to default attracting penalty under sections 272A(2)(c) and 272A(2)(g). Thus, non-deduction of MS or delay in depositing tax deducted at source to Government Account can certainly not be taken as reasonable cause for not filing returns.
Accordingly, I reverse the findings of the Commissioner (Appeals) and restore those of the assessing officer. These appeals are accordingly allowed.
14. In the results, the appeals are allowed.
ITA Nos. 913 to 915/Pn/1998
15. These appeals relate to penalties under section 271C which have been cancelled by the Commissioner (Appeals) consequent to his own order in appeals ITA Nos. 907 to 909/Pn/1998. These appeals are also allowed for the reasons given in my order relating to ITA Nos. 907 to 909/Pn/1998 (supra).
16. In the result, the appeals are allowed.