TaxTMI 
TaxTMI 
2007 (12) TMI 309
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.... default in not deducting tax from the interest paid to deposit-holders. As per ITO (TDS), the total amount of interest paid which was liable to TDS under section 194A was Rs. 13,09,54,590 on which the tax which was required to be deducted was Rs. 1,46,66,910. The assessee was held to be in default under section 201(1) for the above amount of Rs. 1,46,66,910. The interest under section 201(1A) amounting to Rs. 58,66,760 was also charged. When the matter reached to the I.T.A.T. 'E' Bench, Kolkata in ITA No. 1429 (Kol.)/1999 vide order dated 5-1-2005 set aside the matter back to the file of the ITO (TDS). The ITO (TDS) vide order dated 31-3-2006 gave effect to the order of the I.T.A.T. and held the assessee to be in default under section 201(1) for the sum of Rs. 1,34,44,122. He also charged interest under section 201(1A) amounting to Rs. 70,58,153. The CIT(A) upheld the order of the ITO (TDS) passed under section 201(1). However, in respect of interest charged under section 201(1A), he directed the ITO (TDS) to charge the interest for the period of 36 months as against for the period of 42 months charged by the ITO (TDS). Both the parties aggrieved with the order of the CIT(A) are i....
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....able on the maturity of such deposit. The difference between the amount actually received by the assessee and paid on the maturity of the deposit has been treated as interest by the revenue. However, such interest accrued to the deposit holders from year to year i.e., from the year in which deposit is made and up to the year the deposit is matured. The assessee is following the mercantile system of accounting. Therefore, the liability of TDS would arise if the interest accrued to the account of any deposit holder in a year exceeds the limit prescribed under section 194A. He stated that normally the deposit being accepted by the assessee is of a meagre sum ranging in few thousands rupees, therefore, the interest accrued to each deposit holder in each year is below the limit prescribed under section 194A. He pointed out that total number of deposit holders with the assessee-company is more than 2.5 crores at present. He stated that whenever the liability arose under section 194A, i.e., whenever the interest is paid by the assessee exceeded the limit prescribed under section 194A, the assessee has deducted the tax. The ITO (TDS) without pointing out a single instance of the failure of....
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....everal opportunities allowed by the ITO (TDS). When the information is in the specific knowledge of the assessee and the assessee is deliberately withholding the same, the ITO (TDS) had no option but to draw an adverse inference and work out the TDS on estimated basis which the assessee ought to have deducted from the interest paid by it. He. therefore, stated that the order of the ITO (TDS) should be sustained. He also submitted that in alternate, the matter may be set aside again to the file of the ITO (TDS) with the direction to the assessee to furnish the complete details before him. With regard to the territorial jurisdiction of the ITO (TDS), it is stated by the Ld. Departmental Representative that the assessee did not furnish any evidence before the ITO (TDS), Kolkata that it has furnished the required return of TDS before the various TDS officers from the respective branches. In the absence of such information, it was clear that the assessee has neither deducted TDS nor furnished the required information with the ITO (TDS) having jurisdiction over various branches of the assessee. In the above circumstances, the ITO (TDS), Kolkata, who was also having jurisdiction over the ....
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..... Doshi v. CIT [1978] 113 ITR 22. In that case, a reassessment order under section 147 was passed by the Assessing Officer and in an appeal before the AAC against that reassessment order, the assessee gave up the contention regarding the validity of the notice of reassessment. The AAC dismissed the assessee's appeal on merits. On further appeal, the Tribunal remanded the case to the Assessing Officer with directions to cross-examine a witness. On second round of appeal before the AAC from the order passed on remand, the assessee contended that the reassessment proceedings were not validly initiated. The AAC observing that no reasons had been recorded by the Assessing Officer as required by section 148(2), annulled the order of reassessment. On appeal by the department, the Tribunal held that once the Tribunal passed an order, the matter became final and that the order restoring the case to the file of the ITO with clear instructions only to cross-examine a witness meant that the only point that was left open was in respect of the issue set aside and not the legal or jurisdictional aspect whether the reassessment proceedings were correctly initiated. On a reference, the Hon'ble High....
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....inance Act, 2002 with effect from 1-6-2002 whereby the words "referred to in section 200" were inserted. After the amendment, the said section reads as under : "201.(1) If any such person [referred to in section 200] and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct [the whole or any part of the tax] or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax : Provided that no penalty shall be charged under section 221 from such person, principal officer or company unless the [Assessing] Officer is satisfied that such person or principal officer or company, as the case may be, has [without good and sufficient reasons] failed to deduct and pay the tax." The contention of the learned counsel is that before the amendment in section 201(1) by the Finance Act, 2002, the assessee cannot be treated to be in default even if the assessee has failed to deduct or failed to pay the tax to the credit of the Central Government. We are unable t....
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.... whom the assessee has to furnish the return. It was pointed out by the learned counsel that since in the case of the assessee there were several persons responsible for making the payment from which tax has to be deducted, there are several designated authorities under Rule 36A. The assessee has already been allotted TAN No. by those TDS Officers. Therefore, in our opinion, the jurisdiction of each TDS authority is restricted to the territorial area allotted to him by the Chief Commissioner or the Commissioner of Income-tax, who has designated him the TDS Officer. In view of the above, the second limb of argument of the assessee's counsel is accepted and the order of the ITO (TDS), Kolkata, so far it pertained to payments made outside his territorial jurisdiction is vacated. 9. The third argument of the learned counsel was that the ITO (TDS) without pointing out any instance of failure to deduct TDS has presumed the default on the part of the assessee. It is stated by the learned counsel that the ITO (TDS) has even failed to point out that the interest paid to each person was exceeding the limit as prescribed under section 194A and in absence of the same the assessee cannot be ....
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....uld be applicable. As per sub-section (3) no TDS is required to be deducted, if the credit/payment does not exceed Rs. 2,500. Thus, the assessee is liable to deduct tax at source if payment/credit of interest to any person in a year exceeded Rs. 2,500. In this case we find that there is no factual finding by the Assessing Officer about the violation of provision of section 194A. On the other hand, it was the case of the assessee that mostly the interest accrued to each deposit holder in each year was below the limit prescribed under section 194A and whenever it exceeded the limit, the assessee has deducted the tax. It was explained by the learned counsel that the assessee-company is collecting small deposits from large number of people through out India. Therefore, the total number of deposit holders with the assessee is very large which is exceeding 2 crores, but the deposit of each deposit holder is very small in amount. We find that the ITO (TDS) in the order under consideration has not given a specific finding based on material particulars about the violation of section 194A. His finding is based upon presumption. He has not given the names of the persons and the interest paid ....
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....ficer has to give the specific finding giving the name of the person and the amount of interest paid to him. Without giving the particulars with regard to the name of the person and the interest paid to him, in our opinion, the assessee cannot be held to have violated the provisions of section 194A merely on the basis of presumption and suspicion. It has been contended by the Ld. Departmental Representative that the assessee has not furnished the required particulars despite number of opportunities having been allowed by the ITO (TDS). In contrast it has been explained by the assessee's learned counsel that the complete particulars relating to Head Office and 7 branches falling within the territorial jurisdiction of the concerned ITO (TDS) have been furnished. Without going to the controversy whether the assessee has furnished the required particulars or not, in our opinion, even if the assessee has not furnished the details or necessary particulars, the ITO (TDS) can take necessary steps to ensure the furnishing of particulars and can also penalize the assessee in accordance with law if the assessee failed to comply with the notices issued by him. However, the absence of particula....