2025 (8) TMI 693 - AT - Income Tax

Assessee gets fresh chance to prove non-deduction of TDS under Section 194C on truck lease payments

M/s. Rita Transport Versus DCIT (TDS), Circle-4 (1), Durgapur

M/s. Rita Transport Versus DCIT (TDS), Circle-4 (1), Durgapur - TMI 1. ISSUES:1.1 Whether the withholding agent is 'an assessee in default' under section 201(1) for failure to deduct tax at source under section 194C on payments to transporters.1.2 Whether the Proviso to section 201(1) absolves the withholding agent where declarations in Form No. 15-I under section 194C(6) were furnished, but the declarations' dates/financial year entries relate to a subsequent assessment year.1.3 Whether interest under section 201(1A) and late fees under section 234E are chargeable for the alleged non-deduction/non-filing of TDS and TDS returns.1.4 Whether remand to the assessing officer is appropriate where the taxpayer contends that relevant documentary evidence exists but proper representation was not made before lower authorities.2. RULINGS / HOLDINGS:2.1 On the question of default under section 201(1): The appellate authority had confirmed the assessing officer's view treating the taxpayer as 'assessee in default' in respect of payments of Rs. 5,85,84,115/- for non-deduction of TDS under section 194C, noting that 'it was not the case of the appellant that the tax was not deductible on these payments.' The Tribunal, however, set aside the orders below and remitted the matter to the assessing officer for fresh adjudication after affording an opportunity of being heard.2.2 On applicability of the Proviso to section 201(1): The appellate authority held that declarations in Form No. 15-I were dated April-May 2017 and 'are related to F.Y. 2017-18' and therefore 'are not relevant to the year under consideration' (F.Y.2016-17); it further found that the requirements of the proviso were not demonstrated. The Tribunal remitted the issue to the assessing officer for fresh consideration.2.3 On interest and late fees: The appellate authority confirmed charging of tax in default along with interest under section 201(1A). The question of interest under section 201(1A) and late fees under section 234E was directed to be reconsidered on remand by the assessing officer.2.4 On remand: The Tribunal held that, 'in the interest of justice and fair play,' another opportunity should be provided to the taxpayer to represent the case properly and file all evidence in possession; consequently the orders of the lower authorities were set aside and the matter remitted for fresh adjudication.3. RATIONALE:3.1 Statutory framework applied: sections 194C (liability to deduct TDS on payments to contractors/transporters), section 201(1) (treatment as assessee in default for failure to deduct), proviso to section 201(1) (conditions under which the person 'shall not be deemed to be an assessee in default'), section 201(1A) (interest on tax in default), and section 234E (late fee for delay in furnishing statements).3.2 The Proviso to section 201(1) was expressly considered; the appellate authority quoted the proviso verbatim: 'Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a payee or on sum credited to the account of a payee shall not be deemed to be an assessee in default in respect of such tax if such payee- 1. has furnished his return of income under section 139 2. has taken into account such sum for computing income in such return of income, and 3. has paid the tax due on the income declared by him in such return of income, INCOME TAX DEPARTMENT and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed.'3.3 Factual basis for the appellate authority's findings included absence of TDS return entries marked 'T' in Form 26Q for the relevant year and the dates/fiscal year entries on Form No. 15-I; on that basis the proviso's conditions were found not to be met. The Tribunal did not decide the substantive merits but remitted because proper representation was not made and the taxpayer claimed possession of additional documentary evidence.3.4 No dissenting or concurring opinions were recorded; no doctrinal shift was announced. The remedial action taken was to 'set aside' the orders below and remit for fresh decision after affording opportunity of being heard.