Tribunal directs AO to verify TDS on payments to RITES under section 194C

The Tribunal set aside the issues for verification by the Assessing Officer regarding the deduction of TDS under section 194C in transactions between the assessee and RITES. The appellant's arguments regarding the nature of payments and compliance with TDS provisions were considered, with the Tribunal directing the AO to verify tax payments by RITES. The appellant's contention on the timing of interest liability on TDS and the adequacy of opportunity provided by the lower authorities were also acknowledged, leading to the appeal being allowed for statistical purposes.

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Issues:
1. Whether the lower authorities erred in sustaining an addition under various sections of the Income Tax Act for non-deduction of TDS under section 194C.
2. Whether the nature of transactions between the assessee and RITES falls outside the purview of section 194C.
3. Whether the TDS provisions have been properly complied with by the appellant.
4. Whether proper and reasonable opportunity of being heard was provided by the lower authorities.

Analysis:
Issue 1: The Assessing Officer (AO) held that the assessee was required to deduct TDS under section 194C while crediting amounts to RITES. As the assessee failed to provide details, the AO initiated proceedings under section 201(1)/201(1A) and imposed a penalty. The CIT (A) restricted the liability to a certain amount as TDS was not deducted and no evidence was provided. The Tribunal observed that the AO should verify whether taxes were paid by RITES on the amount received from the assessee during the relevant year. The issue was set aside for verification, and the grounds raised by the assessee were allowed for statistical purposes.

Issue 2: The appellant argued that the payments made to RITES were in the nature of an advance and that RITES acted as a pass-through entity, deducting TDS on payments made to contractors. Citing a Supreme Court decision, the appellant contended that they should not be held liable for TDS under section 194C if TDS was deducted and taxes were paid. The Senior DR, however, argued that TDS provisions applied as payments exceeded prescribed limits during the year. The Tribunal decided to remand the issue to the AO for verification of tax payments by RITES.

Issue 3: The appellant claimed that as RITES was a government undertaking, taxes could be presumed to have been paid by the due date of filing returns. Citing relevant case law, the appellant argued that the liability to pay interest on TDS ends with the due date of filing by RITES. The Tribunal referred to the amendment in section 201 and directed the AO to verify whether taxes were paid by RITES on the amount received from the assessee.

Issue 4: The appellant contended that they were not given sufficient time to furnish relevant records before the AO passed the order. The Tribunal considered the submissions of both parties and decided to set aside the issue for verification by the AO. The appeal filed by the assessee was allowed for statistical purposes.

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