Income Tax Appellate Tribunal - Allahabad
The Drawing And Disbursing Officer, ... vs The Acit (Tds) on 23 August, 2007
Equivalent citations: (2008)116TTJ(ALL)952
ORDER
Satish Chandra, Judicial Member
1. This is an appeal filed by the assessee against the CIT(A)'s order dated 28.5.2007 for the assessment year 2003-04.
The brief 'facts of the case are that the assessee is the DDO being an employee in the Mahendra Technical Inter College, Chandauli. While calculating the annual tax of each employee, a few of employees of the college have given the donation receipts issued by M/s. Narendra Educational and Welfare Society and claimed hundred percent exemption of the donation amount under Section 80GGA, The assessee has allowed the deductions as per the donation receipts and deducted the lax thereafter.
2. Later, it was found that the said receipts were not genuine and income was computed less by virtue of giving the so called deduction. For filing the wrong TDS certificates, the Assessing Officer levied the interest under Section 201(1A) and also raised the demand under Section 201 for the shortfall of the tax. The Ld.CIT(A) has confirmed the order. Not being satisfied, the assessee is in appeal before us.
3. Briefly, the Ld.A.R. has relied on circular No. 9/2003 dated 28.11.2003 and contended that there is no bar in allowing deduction under Section 80G and 80GGA for tax deduction at source. It is also contended that when the employees have submitted the returns of income, the role of DDO comes to an end and passing of order Under Section 201 subsequently is perverse. It is also submitted that Under Section 19, the Assessing Officer (TDS) has no jurisdiction to pass this order. He has also contended relying on the decision of Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. v. State of U.P. 118 ITR 326 (S.C.) where it was held that every body cannot be presumed to know law by mentioning that:
There is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not a coned statement: there is no such maximum known to the law.
4. So, the Ld.A.R. submitted that the DDO was not aware of the tax provision and he may be excused.
We have heard both the parties. As regards contention that in view of Section 191, the Assessing Officer (TDS) is not competent to pass an order, Section 191 lays down that in respect of incomes for which provision has not been made under Chapter XVII for deduction/collection of taxes and in any case where income-tax has not been deducted in accordance with the provisions of that Chapter, taxes shall be payable by the assessee directly. It is not known as to how learned A.R. contends based on this provision that the Assessing Officer (IDS) has no any authority to pass an order under Section 201.
5. Circular No. 9/2003 dated 18.11.2003 explains the method of calculation of TDS Under Section 192 the circular is very exhaustive and it explains how the salary is to be computed, which additional incomes can be included, which losses can be considered by the DDO etc. If there was any doubt, the DDO should have got a clarification from the department which is freely available. Various deductions, which could be considered by the DDO, have been dealt with elaborately at para 5.4 of the said circular. The deductions that could be allowed are 80CCC, 80CCD, 80D, 80DD, 80E, 80L, 80G, 80GG and 80U. Sub para (6) of para 5.4 of the circular makes a clear mention that no deduction Under Section 800 shall be allowed by the DDO from the salary income in respect of any donations made for charitable purposes. (Other than to the institutions mentioned in the circular). In the instant case, the Assessing Officer has considered the deductions claimed under Section 80G and 80GGA a inadmissible.
6. We agree with the Assessing Officer that as per circular 6/2004, deductions under Section 80G and 80GGA are clearly not admissible for the purpose of determination of tax deductible at source under Section 192. When the similar donation receipts for hefty amounts were submitted by a number of employees, then it was expected from She DDO by applying commonsense to examine the genuineness of the so called receipts. Therefore, the DDO was not correct in taking into account the claims for deduction Under Section 80G and 80GGA. Hence, the action of the Assessing Officer in treating the DDO to be an assessee in default under Section 201 in respect of the shortfall relatable to these deductions has to be upheld in principle.
7. The next issue for consideration is the plea of the appellant that since the employees have furnished their returns and their assessments have been completed any further demand now would create hardship in issuing revised form 16 and for claiming credit for such amounts by the employees in their assessments as the time limit for filing the revised return is over or the assessments have been completed. This issue has been considered in various judgments of the High Courts and the orders of the ITATs. The courts have by and large held that if the assessments of the employees have been completed and assessment proceedings have become final and the taxes have been paid by the employees including the short deductions, the employer cannot be treated as an assessee in default. This ratio has been laid down by the Hon'ble Kerala High Court in the case of Kannan Devan Hill Produce Co. Ltd. (161 ITR 477). In this light, since the DDO has not established that the employees have filed their returns and that their assessments have since been completed and that they have paid the amounts short deduction by the DDO, the action of the Assessing Officer in raising Additional demand Under Section 201 cannot be faulted. However, if the DDO produces evidence regarding the fact of filing of returns by the employees, completion of assessments in their cases and payment of the requisite taxes, the Assessing Officer shall modify the order suitably and reduce the relevant amounts from the amounts now demanded Under Section 201.
8. The next issue is regarding chargeability of interest Under Section 201(1A) on the short deductions. The Kerala High Court has held in the case of K.K. Engineering Co. 249 ITR 447 that director was liable to pay interest under Section 201(1 A) for short deduction of tax irrespective of the (act that the recipient has paid the taxes in excess and the assessment has resulted in refund. It has been further held that interest Under Section 20l(1A) is mandatory for failure to deduct tax at source if ultimately not ax is payable by the payee.
9. The period for which the interest is to be collected was also the subject matter of consideration in several orders of the I.T.A.T. In the case of Bibcock Power 77 TTJ 357, ITAT, Delhi Bench has held that irrespective of the fact that tax has been paid by the concerned employees, interest is leviable from the date of deductibility of tax till the date of actual payment of tax by the employees. Similar view has been expressed by the ITAT. Mumbai Bench in the case of Manav Greys Exim Pvt. Ltd. 75 TTJ 115.
10. Moreover, we may not agree with the submission made by the l.d.A.R. that the DDO has acted in good faith for the reason when the so called receipts have come not only in the case of one employee but in the case of number of employees, then it was the commonsense of the DDO to examine the genuineness of so called receipts. Moreover, the donation was given in each case at Rs. 6,000 or more while the employees were getting very low salary and it was not expected to give a huge donation. The circumstances indicate that these receipts were obtained/purchased by the concerning employees and were submitted before the DDO to claim the tax exemption only. This is a colourable device and the DDO was expected to unearth it or might have left the exemption at the discretion of the Assessing Officer by advising the tax-payer to file the individual return said deduction but the DDO has failed to do so. Hence we reject the submission made by the Ld.A.R.
11. In the light of above discussion and by considering the totality of the facts and circumstances of the case, we uphold the order of the Ld.CIT(A) who has already discussed a number of case laws and reasonings. However, the Assessing Officer is directed to modify the interest chargeable under Section 201(1 A) from the date of deductibility of the tax till the date of payment of taxes by the recipient or the completion of assessment, whichever is earlier. If no record regarding the completion of assessment and payment of tax is available such interest shall be levied till the date of the order of the Assessing Officer under Section 201.
In the result, the appeal filed by the assessee is dismissed as stated above and announced in the open Court.