2023 (2) TMI 912 - AT - Income Tax

Revenue's Appeal Dismissed by Tribunal, CIT(A)'s Decisions Upheld.

Income Tax Officer, Kota Versus Zila Parishad

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions. The Tribunal found no merit in the Revenue's grounds regarding the ... Demand u/s 201(1) with interest u/s 201(1A) - non deduction of TDS on the interest paid to HUDCO - minor delay in submitting the declaration that the payee (HUDCO) has paid tax on such interest - assessee submitted that the required form 26A being the certificate of chartered accountant as per sub-section 1 of section 201 of the Act, could not be submitted before the assessing officer because the order has been passed before the relevant due date of filling the ITR - HELD THAT:- When there was no dispute about such a declaration being filed in a prescribed format and there was no dispute about the genuineness of such declaration, mere the form is not filed with the office of the assessing officer and that too the order was passed before the due date of filling the return of income and therefore, the assessee was prevented from sufficient cause and the same were filed before the ld. CIT(A) is sufficient compliance and the said declaration filed would not defeat the very claim. The similar view is taken in the case of Siyaram Metal Udyog (P.) Ltd. [2016 (7) TMI 68 - GUJARAT HIGH COURT] held main thrust of sub-section 1A of section 206C thus is to make a declaration as prescribed, upon which, the liability to collect tax at source under sub-section (1) would not apply. When there was no dispute about such a declaration being filed in a prescribed format and there was no dispute about the genuineness of such declaration, mere minor delay in filing the said declaration would not defeat the very claim. The Tribunal therefore, viewed such delay liberally and in essence held that there was substantial compliance with the requirement of filing the declaration - Decided against revenue. Issues Involved:1. Examination of additional evidence by the Assessing Officer under Rule 46A(3) of the Income Tax Rules, 1962.2. Deletion of demand raised for non-deduction of TDS on interest payments to HUDCO.3. Acceptance of Form 26A as additional evidence.4. Raising demand for non-deduction of TDS on payments to Rajasthan Patrika Pvt. Ltd.Issue-wise Detailed Analysis:1. Examination of Additional Evidence by the Assessing Officer under Rule 46A(3):The Revenue contended that the CIT(A), NFAC, Delhi erred by not allowing the Assessing Officer (AO) to examine the additional evidence admitted by him, violating Rule 46A of the Income Tax Rules, 1962. The Tribunal observed that the additional evidence, Form 26A, was not mentioned as such in the CIT(A)'s order. The CIT(A) accepted this evidence without calling for reasons why it was not submitted before the AO, leading to a procedural infirmity. However, the Tribunal noted that the non-submission was due to the AO passing the order before the due date for filing the Income Tax Return (ITR), thus preventing the assessee from submitting the form on time.2. Deletion of Demand Raised for Non-deduction of TDS on Interest Payments to HUDCO:The AO found that the assessee paid interest to HUDCO without deducting TDS, resulting in a demand of Rs. 64,02,075 (including interest). The CIT(A) deleted the demand under Section 201(1) but upheld the interest charge under Section 201(1A). The CIT(A) reasoned that HUDCO, after disinvestment in May 2017, was no longer a 100% government-owned company and thus subject to TDS. However, HUDCO had paid taxes on the interest received, fulfilling the conditions under Section 201(1). The Tribunal upheld this view, citing the Supreme Court's decision in Hindustan Coca Cola Beverages P. Ltd vs CIT, which held that no recovery should be made from the deductor if the deductee has paid the taxes.3. Acceptance of Form 26A as Additional Evidence:The Revenue argued that the CIT(A) accepted Form 26A without giving the AO an opportunity to comment. The Tribunal noted that the form was not submitted to the AO because the order was passed before the due date for filing the ITR. The Tribunal found this to be sufficient cause for the delay and considered the submission before the CIT(A) as substantial compliance. The Tribunal referenced the Gujarat High Court's decision in Commissioner of Income-tax (TDS) v. Siyaram Metal Udyog (P.) Ltd, which held that minor delays in filing declarations should be viewed liberally if there is substantial compliance.4. Raising Demand for Non-deduction of TDS on Payments to Rajasthan Patrika Pvt. Ltd.:The AO raised a demand of Rs. 1,790 for non-deduction of TDS on payments to Rajasthan Patrika Pvt. Ltd. The assessee paid this demand within the designated period. The CIT(A) dismissed the ground, stating that since the demand was paid, it could not be deleted but should be reduced to reflect the tax paid. The Tribunal upheld this decision, noting that the demand was complied with as per the notice under Section 156.Conclusion:The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions. The Tribunal found no merit in the Revenue's grounds regarding the procedural handling of additional evidence and the deletion of demands, given that the taxes were already paid by the deductee. The order was pronounced in the open court on 20/02/2023.