TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 145
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....g the TDS, and deposited Rs. 1,06,89,369/-. The AO observed that Capt. J.H. Patel who was an Executive Pilot for four months in 1996 (for the period April-August 1996) had complained, that he was paid a net salary of Rs. 7,72,500/- after TDS of Rs. 5,32,380/- and Provident Fund of Rs. 32,250/- but that no Form-16 was issued. The AO stated that similar information was received from the Ludhiana Special Range office of the Income Tax authorities in relation to Capt. A.K. Vohra that though his gross salary was Rs. 15,28,058/- of which TDS was Rs. 6,15,980/-, yet Form-16 issued by the company reflected gross income of Rs. 7,71,600/- and TDS of Rs. 2,75,640/-. The AO also observed that a complaint was received from the Economic Intelligence Bureau of the Department of Revenue, stating that larger sums were deducted towards TDS but the entire amounts were not paid to the authorities. To verify the genuineness of the complaints and the information, the AO scrutinized the assessee's Form 24 and asked it to furnish relevant information. After seeking several dates towards accommodation, the assessee, by letter dated 05.06.2000 stated that its relevant records were destroyed in fire and that....
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.... amounts but deposit of much smaller amounts was not based upon any credible findings. It, therefore, set aside the findings of the AO and also the CIT. The ITAT reasoned inter alia as follows: "16. As per Section 206 of the Act, the assessee has to file the return of TDS in Form No.24 indicating the tax deducted at source and deposited to the government. The assessee company filed such return on 26.3.1998 indicating the TDS of Rs. 1,06,89,369/- and deposited the same to the government. Such TDS included the TDS of Rs. 57,65,092/- deducted from the remuneration paid to 31 pilots. On the basis of complaint by three pilots, the AO concluded that actually the assessee company has deducted tax at source at Rs. 1,20,47,313/- from the remuneration paid to 31 pilots. In other words, it was not the case of the revenue that the assessee company has short deducted tax at source. The case of the revenue is that actually the assessee has deducted tax at source at Rs. 1,20,47,313/- from the remuneration paid to 31 pilots but it has paid to the government only Rs. 57,65,092/-. This observation of the AO has to be therefore, examined. As mentioned earlier, the assessee company filed the return o....
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....case of the revenue. 18. The AO has held the assessee in default of the provisions of Section 201(1) of the Act. This section is applicable where the assessee has defaulted the tax at source (in the case before us) but failed to pay the same to the government as per law. But in order to attract the provisions of Section 201(1) of the Act, the revenue has to prove conclusively that the tax has been deducted at source which the assessee company failed to pay to the government. Except the assertion of the lower authorities on the basis of complaint received from three pilots, there is nothing on record to suggest that higher tax has been deducted as source from the remuneration paid to 31 pilots which the assessee failed to pay to the government. While holding the assessee company in default of payment of TDS to government, the AO did not think it proper to verify that the pilots including these three pilots from whom the complaint was received have filed their returns of income and what salary has been declared by them in their returns. These pilots filed their returns of income, they should have enclosed the TDS certificate issued by the assessee company. Whether such certificates ....
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....and afterthought which was unverifiable and not substantiated in any objective manner. On the other hand, there was credible material for the AO to infer that a variation of 208% between the tax shown in Form 24 and the amount actually deducted by the company existed. 7. Learned counsel for the assessee submits that the ITAT's reasoning is justified. As a matter of fact, the ITAT drew the correct conclusion from the complaint of Capt. Sandhu by holding that his grouse was in respect of non-payment of salary rather than withholding amounts that were not paid by the assessee to the income tax department. Furthermore, the assessee had never admitted that the pay slips relied upon by those individuals who complained to the Revenue were genuine. It was argued on behalf of the assessee that the consistent stand in all proceedings was that there was no discrepancy between the written agreements entered into by the parties and the amounts paid actually. If the written agreements of all the concerned pilots were verified and tallied with Form 24 furnished, there would have been no difficulty. Equally, it was pointed out that none of the complainants or the other pilots answered the summons....
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....mounts were deducted or that lesser amounts of salary was reflected but higher amounts were paid. In other words, at the time of receiving the salaries and signing on the documents which reflected the TDS, the alleged complainants never stated that the documents reflected any incorrect picture. In the case of Capt. B.S. Sandhu, the ITAT noticed that the tenor of his letter and his grievance was that he was not paid salary for substantial periods, rather than complaining that amounts lesser than what was deducted were in fact deposited with the Revenue. As against this, significantly, in reply to the summons issued to all pilots, under Section 131 of the Act, there was no response. Furthermore, there was no attempt on the part of the Revenue to reconcile the records as it were and verify whether in the individual tax returns filed by the pilots, larger amounts were reflected. This failure, in the opinion of the Court, cannot result in penalizing the assessee. 10. The ITAT's reasoning that the Revenue's findings were essentially based upon conjectures and complaints rather than evidence or material is reasonable and sound. The AO's order is primarily premised upon the complaints of ....