TaxTMI 
TaxTMI 
2021 (3) TMI 1199
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....d appellate order dated 21.09.2017 in appeal no. 26/ITO/TDS/Alld/15-16 passed by learned CIT(A) for ay: 2014-15 respectively, the appeals before ld. CIT(A) had arisen from two separate order(s) dated 01.02.2016 passed by learned Assessing Officer( hereinafter called " the AO") u/s. 201 (1)/201 (1A) of the Income Tax Act, 1961 (hereinafter called "the Act"). We have heard both the parties through video conferencing mode through virtual court. 2. The grounds of appeals raised by Revenue in its appeal in ITA No. 329 and 330/Alld/2017 for ay : 2013-14 and 2014-15 and by assessee in its appeal(s) in ITA No. 10 and 11 /Alld/2018, for ay 2013-14 and 2014-15 respectively, in memo of appeal filed with Income-Tax Appellate Tribunal, Allahabad (hereinafter called " the tribunal"), reads as under : The Revenue has raised the following grounds of appeal in its appeal for ay: 2013-14 and 2014-15 in memo of appeal filed with the tribunal: Revenues Appeal in ITA no. 329/Alld/2017 for ay:2013-14 (the grounds are common in both the years and only amounts are varying) "1. That the ld CIT(A) has erred in passing a non-speaking order while reducing the amount of tax default of Rs. 36,....
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....short deduction of Rs. 32,158/-. 2. That on the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in upholding that the payments of Rs. 1,69,00,000/- made under the head "Suspense Service Expenses" which are Confidential in nature, is subject to deduction of tax at source. 2.1 That on the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in ignoring the submissions made by the Appellant that in accordance with the Financial Hand Book issued by the State Government, the Authorities incurring expenditure under the head "Gupt Seva Ke Vyay" (Confidential Service Expenditure), are duty bound not to disclose the details of payments made under this head. 2.2 That on the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in upholding that payments made under this head are subject to deduction of tax at source @20%, as specified u/s 206AA on account of non furnishing of PAN of the payee. 3. That on the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) er....
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....where the payees have failed to pay tax on their income. That the Appellant craves leave to add, alter, modify, vary, delete any ground of appeal before or at the time of hearing." Assessee's Appeal in ITA no. 11/Alld/2018 for ay:2014-15 "1. That on the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in upholding the demand of Rs. 91,631/- on account of non / short deduction of tax at source on payments made for Special Services. 1.1 That the Appellant had under mistaken belief admitted the non / short deduction of Rs. 91,631/-. 2. That on the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in upholding that the payments of Rs. 3,69,00,000/- made under the head "Suspense Service Expenses" which are Confidential in nature, is subject to deduction of tax at source. 2.1 That on the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in ignoring the submissions made by the Appellant that in accordance with the Financial Hand Book issued by the State Government, the Authorities incurring ex....
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....u/s 194C of the Act @ 2%, whereas tax at appropriate rate was deducted by the Appellant. 8. That on the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in holding that there was a short deduction of Rs. 1,81,007/- under the head "Rent & Other Charges" as against Rs. 5,99,677/- as per the assessment order, whereas in the remand report the Assessing Officer had admitted that no tax was deductible and payment was towards House Tax. 8. Without Prejudice, the learned Commissioner of Income Tax (Appeals) erred in confirming that tax was deductible @20%, by applying section 206AA, in cases wherever tax was not deducted at all. 10. Without Prejudice, the learned Commissioner of Income Tax (Appeals) ought to have held that the payer can be treated as assessee in default, for non deduction of tax at source, only in cases where the payees have failed to pay tax on their income. 11.Without Prejudice, the learned Commissioner of Income Tax(Appeals) ought to have directed the Assessing Officer to follow the judgment of the Supreme Court in the case Hindustan Coca Cola Beverages P Ltd. Vs CIT 211 CTR 545. ....
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....e of Rs. 2,35,00,000/- on which no income-tax was deducted at source and the AO further observed that the assessee has not even supplied PAN number of the payees, which led A.O. to hold that the assessee has not deducted income tax at source on payment of Rs. 2,35,00,000/- made for Suspense Service Expenses and the assessee ought to have deducted income tax at source@20% amounting to Rs. 47,00,000/- and the asessessee was held to be in default for non deduction of income tax at source within the provision of section 201 (1) and also for payment of interest u/s 201(1A) of the Act. The assessee on its part had not furnished any details in compliance of notice dated 18.12.2015 issued by the AO. 5.4Further, the Assessing Officer observed that the assessee made payment of honorarium which are paid for availing services which are professional in nature and the assessee has not deducted income tax at source on payment of Rs. 1,82,45,316/- and also the AO observed that the assessee has not furnished PAN of the payees/deductees, on which income tax at source @ 20% u/s 194J read with Section 206AA ought to have been deducted, which led Assessing Officer to hold that the assessee has defau....
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....e Act towards interest on non deduction of income tax at source. The assessee on its part had not furnished any details in compliance of notice dated 18.12.2015 issued by the AO. 5.8 The AO further observed that the assessee has made payments towards rent and other charges to the tune of Rs. 12,99,951/- and the assessee has not deducted income tax at source within the provisions of Chapter XVIIB of the 1961 Act and further the assessee has not furnished PAN as is required u/s 206AA of the 1961 Act, which led AO to hold that the assessee is in default for non deduction of income-tax at source to the tune of Rs. 2,59,990/- under the provisions of Section 201(1) of the 1961 Act and further, the AO observed that the assessee is also liable for interest under the provisions of Section 201(1A) of the 1961 Act. The assessee on its part had not furnished any details in compliance of notice dated 18.12.2015 issued by the AO. 6. Aggrieved by an order dated 01.02.2016 passed by the AO u/s 201(1) and 201(1A) of the 1961 Act, the assessee filed first appeal with Ld. CIT (A). The assessee on its part submitted that the assessee is a State Government Department and making expenditure on the....
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....enditure incurred under this head was Rs. 1,69,00,000/-. It was submitted that with the object to maintain secrecy and confidentiality, no income-tax was deducted at source on the whole expenditure. It was submitted that if TDS was to be deducted then the requirement of PAN and filing of quarterly TDS returns would have arisen and the whole purpose of secrecy and confidentiality would have been lost. Thus, it was submitted that these expenses cannot be disclosed anywhere and a separate Govt. budget is allocated, it cannot be categorized for expenses which are covered under the purview of TDS and hence no default should be attributable against this allocation. The assessee also submitted that A.O. has applied rate of 20% for deduction of income-tax at source on the grounds that the assessee has not furnished PAN of the payees/deductees which is not justified. It was submitted that the assessee has not deducted any income tax at source on these payments made under the head Suspense Service Expenses on the grounds that confidentiality has to be maintained due to nature of these expenses and State Government Policy and hence TDS rate as stipulated u/s 206AA cannot be applied on the gro....
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....l. It was submitted that no income-tax is to be deducted at source for payments made to a person in a year in aggregate is upto Rs. 50,000/-, or less that Rs. 20,000/- in single payment. The assessee submitted before ld. CIT(A) payee wise details of income tax deducted at source which are reproduced in appellate order passed by ld. CIT(A) at page 5 and 6 and the same is reproduced hereunder:- Name of supplier Amount of Payment TDS PAN Bharti Moharwala 16751.00 NA Not required Gaurav Traders 78686.00 1412.00 AMXPD7123J Government Press 989289.00 NA GOVT DEPPT Hightech Graphics 1106557.00 24787.00 AACCH9917Q Jai Shree Enterprises 96823.00 1880.00 AGYPM2841H Jyoti Infotech 34395.00 552.00 Not available Kohli Enterprises 5660.00 NA Not required Naini Gramodyog 116845.00 2442.00 AAATN5270H Panchayat Udyog 11525.00 258.00 AAUPU2199N Pravin Paper Products 193225.00 4328.00 AAFFP1861K Radha Krishna Traders 129778.00 1936.00 Not available Rajesh Corporation 353904.00 7928.00 ABLPS5207K Ramco Trading Co. 108600.00 2433.00 AALP....
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....he applicable rate of TDS is 1% for individual and 2% for other than individual. The assessee submitted that exemption limit for non deduction of TDS for any person is aggregate amount of Rs. 50,000/- in a year or less, and that Rs. 20,000/- or less in single payment. The assessee submitted before ld. CIT(A) that the assessee deducted income tax at source on all eligible payments but the assessee may be treated as assessee in default for non furnishing of PAN of the deductees which comes to 20% of (Rs. 31145 + Rs. 111626), which comes to Rs. 25,471/-. It was submitted that the AO erroneously held assessee to be in default for Rs. 7,00,000/- along with interest, while the default should be restricted to Rs. 25,471/- and interest thereon. 6.7 Advertisement, Sales & Services The assessee submitted that the total expenditure made during the relevant period was Rs. 2,35,00,000/-, whereas the A.O. has wrongly mentioned in its order that the total expenditure was Rs. 47,86,094/-. It was submitted that income tax was deducted at source on all the payments at the time of passing of bill by treasury. It was submitted that the PAN was also provided by assessee before the ITO (TDS) at th....
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....hat verification of actual payments/expenditure may be done and applicability of TDS thereon may be examined. 3. In compliance, the deductor has furnished a copy of its submissions before your honor along with it's annexures, a website (Koshvani of UP Treasuries) downloaded copy of the grant-wise scheme-wise expenditure statements and monthly DDO reconciliation statement for both the financial years. The required cash books have not been produced till date; however the register named 11-C containing bill wise details of payments to different parties and TDS thereon have been produced fur verification only on 30.08.2017. The inferences drawn, on the basis of the TRACES downloaded 26Q statement filed by the deductor, 11-C registers produced for verification and head wise list of expenditure furnished as annexure to the submissions before your honor, are given in Para 5 & 6 below. 4. In the back ground of the case, I would like to submit here that the then TDS AO passed the order u/s 201(1)/201(1A) for A.Y. 2013-14 & 2014-15 in respect of 26Q after affording several opportunities vide his letters dated 18.05.2015, 17.06.2015, 10.07.2015, 04.09.2015, 06.10.2015 18.11.....
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....ovisions of section 194J. For the F.Y. 2012-13 relevant to AY 2013-14, the then TDS AO had worked out short charge of Rs. 32518/- by applying TDS rate of 10% in cases where the deductor had done TDS at lesser rate The aforesaid short charge has been admitted by the deductor in its submission before your honor. Similarly, for the F.Y. 2013-14 relevant to A.Y. 2014-15, the then TDS AO had worked out short charge of Rs. 91631/- which has also been admitted by the deductor in its submission before your honor. (ii) Suspense Service expenses: So far as the verification and identification of payments under this major head and is various sub heads are concerned, the deductor has not furnished any cash book or any details/ documents before the undersigned except the following submissions vide its reply dated 11.08.2017 which reads as under: As per 11-C register, the bill wise details of the amounts transferred to confidential A/c are as under:- F.Y. 2012-13 04.08.2012 Rs. 1,00,00,000 16.01.2013 Rs. 69,00,000 Total Rs. 1,69,00,000 F.Y. 2013-14 05.08.2013 Rs. 75,00,000 26.11.2013 Rs. 1,50,00,000 &n....
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....7000 G D Mehrotra, Lucknow 32000 6400 NIL 6400 Maheshwari Prasad, Varanasl 57000 11400 NIL 11400 R P Singh, Allahabad 31000 6200 NIL 6200 R P Singh, Varanasi 32000 6400 Nil. 6400 2013-14 D N Verma Faizabad 45000 9000 NIL 9000 Farhat Ali, Allahabad 34500 6900 NIL 6900 Gaya Prasad Sharma, Saharanpur 37000 7400 NIL 7400 Hausala Prasad Singh, Allahabad 91500 18300 NIL 18300 Pradeep Sharma, Allahabad 73500 14700 NIL 14700 Ram Krishna Jaiswal, Faizabad 59500 11900 NIL 11900 G C Srivaastav, New Delhi 30500 6100 NIL 6100 (iv) Stationary & Forms: The register 11-C produced for verification contained the party wise details of payments and TDS thereon. The party wise gross bill amount details as per the list of expenses under this head to the tune of Rs. 35,00,000/- for F.Y. 2012-13 and Rs. 35,28,729/- for F.Y. 2013-14, furnished before your honor as well the undersigned, match with details of 11-C registers and....
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....26Q Radha Krishna Traders 31145 6629 698 5931 Not in 26Q Three Star Traders (PAN do not relate) 123887 24777 2324 22453 Not in 26Q 2013-14 Java Enterprises 98700 19740 2211 17529 Not in 26Q Three Star Traders 68590 13718 1450 12268 Not in 26Q (vi) Advertisement, Sales & Services: The register 11-C produced for verification contained the party wise details of payments and TDS thereon. The party wise gross bill amount details as per the list of expenses under this head to the tune of Rs. 2,35,00,000/- for F.Y. 2012-13 and Rs, 2,55,98,658/- for F.Y. 2013-14, furnished before your honor as well the undersigned, match with details of 11 C registers and monthly DDO reconciliation statement of Treasury.The payments under this head, being, contractual in nature, are covered u/s 194C of the I.T. Act, 1961. On verification, it is found that the payments mentioned in the said list attracting TDS provisions are subjected to TDS and also covered in 26Q statements except the payments given in the table below where TDS has been short deducted as payees are in the status of Fi....
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....ssessee has accepted short deduction of income-tax at source of an amount aggregating to Rs. 32,158/- on payments made for special services, and hence consequently the same were confirmed by Ld. CIT (A). 9.3 Suspense Service expenses So far as the payments towards suspense service expenses are concerned, the Ld. CIT (A) observed that the Assessing Officer has mentioned in the order that the assessee has not produced the details of suspense service expenses. The ld. CIT(A) observed that the AO has given a categorical finding that the assessee has not submitted the details of nature of payment and PAN of the recipients and based on these facts, the AO calculated short deduction @20% of the payment which comes to Rs. 47,00,000/-. The ld. CIT(A) observed that the assessee during the course of appellate proceedings submitted that actual payments made under this head Suspense Services Expenses were to the tune of Rs. 1,69,00,000/- and not as was mentioned by the Assessing Officer in its order u/s 201(1) and Section 201(1A). The ld. CIT(A) observed that It was stated by the assessee that due to the secrecy and confidentiality, no income-tax was deducted at source on the total expend....
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..../- which was confirmed by ld. CIT(A) and the balance amount was deleted by ld. CIT(A). 9.5Stationery & Forms The ld. CIT(A) observed that the assessee has agreed with the finding of the ITO(TDS) and, therefore, the addition to the extent of Rs. 49,956/- on account of short deduction of income-tax at source was confirmed by ld. CIT(A) and the balance amount was ordered to be deleted by ld. CIT(A) 9.6 Office Furniture & Equipment The Ld. CIT (A) observed that the assessee and the AO have agreed that there is short deduction of income-tax at source to the tune of Rs. 48,596/- under this head and the ld. CIT(A) was pleased to confirm additions of short deduction of income-tax at source to this extent of Rs. 48,596/- and the balance amount was ordered to be deleted by ld. CIT(A) 9.7 Advertisement, Sales & Services The Ld. CIT (A) observed that the A.O. has recomputed the short deduction of income-tax at source to the tune of Rs. 99,286/- and the assessee agreed for the same, which stood confirmed by ld. CIT(A). 9.8 Rent & Other charges The Ld. CIT (A) observed that A.O. has computed the short deduction of Rs. 1,17,646/- which was confirmed by Ld. CIT (A). 10.A....
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....Haryana in ITA no. 5349-5352/Del/2012, vide orders dated 04.01.2013 and it was submitted that supply of examination papers by printers is a contract of sale and not work contract, as the said printers use their own paper, ink etc. for printing examination paper which is then supplied to the assessee in finished form by the printers. Thus, it is claimed that there is no liability to deduct income tax at source on the supply of examination paper by printer to the assessee as it is a contract of sale and not work contract. Our attention was drawn to written submissions/ paper book (containing 16 pages in all) filed on 02.02.2021, and it was submitted that in letters dated 25.5.2012 and 17.7.2012 for sanction of budget by UP government, there is allocation of Secret Service Expenses(pb/8-11 of w.s./ paper book). With respect to Ground No. 7, it is pleaded that the payments are towards house tax and water tax and hence, no income tax was deducted at source on these payments. It was submitted that the ld. CIT(A) confirmed additions to the tune of Rs. 1.17 lacs which is not correct. With respect to the ground number 8, it was submitted that the said ground is raised without prejudice to t....
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....laimed that no income tax was deducted at source while making payments under this head as otherwise confidentiality would have been breached if the PAN and other details such as of payees etc are uploaded into the system while filing TDS returns. It is claimed that the assessee is an autonomous body under the State Government and concerns itself with various appointments of personnel with State Government for which it conducts examination, hold interviews etc.. It is claimed that the expenses under this head were incurred towards printing of examination paper and payments were made to printers who have supplied pre-printed examination paper to the assessee and the printers have used their own paper, ink etc while supplying pre-printed examination papers to the assessee and hence it is a contract of sale and not work contract. Thus, it claimed that provisions of Section 194C of the 1961 Act has no applicability. It is claimed that there was no liability for deduction of income tax at source with in provisions of Chapter XVII-B of the 1961 Act as supplying of preprinted examination paper is contract of sale is not covered under the provisions of 1961 Act entailing deduction of income....
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.... held that the same was sale of contract and not work contract and hence no income tax was required to be deducted at source under the provisions of Chapter XVII-B. Further, in that case of Board of School Education(supra ) relied upon by assessee, there was evidence on record that the tax-payer has obtained affidavits from the printers that they will include this income in their return of income filed with department and due taxes paid. But, in the instant case before us none of these facts are emerging from the record before us, and there is only an bald assertion made that the amount was spent for supply of pre-printed examination papers while there are no evidence on record before us to hold that these payments were made for the aforesaid purposes. Even affidavit from Secretary, Lok Seva Aayog, U.P.(UP Public Service Commission) averring the nature of expenses incurred has not been filed. It is equally true that the assessee has got allocation from UP State Government for expenditure for secret services. The assessee has to maintain secrecy and confidentiality of these payments and hence it is claimed that no income-tax was deducted at source as otherwise it will breach the con....
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....rocedure to be adopted for claiming refunds and reliefs." Keeping in view totality of the facts and circumstances as discussed above, we are of the considered view, that one more opportunity need to be granted to the assessee and the issue is restored to the file of the AO for fresh adjudication. We clarify that all the contentions are kept open. The AO shall give proper and adequate opportunity to the assessee in accordance with principles of natural justice in accordance with law. The evidences filed by assessee in its support shall be admitted by AO and adjudicated on merits in accordance with law. This will dispose of ground number 2, 2.1 and 2.2 of the assessee's appeal. These grounds are allowed for statistical purposes. We order accordingly. 11.3 Ground No. 7-Assessee's Appeal This ground concerns with default in deduction of income tax at source on payments made towards Rent and other charges. The assessee is claiming that these are payments towards house tax and water tax, but we have observed that apart from house tax and water tax payments, there were further payments as discovered by AO during proceedings conducted for submission of remand report to ld. CIT(....
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....ce with law. The AO is directed to pass speaking and reasoned order. Needless to say that the AO shall grant proper and adequate opportunity of hearing to the assessee in accordance with principles of natural justice in accordance with law in set aside/denovo proceedings. This will dispose of ground number 7 of the assessee's appeal. This ground is allowed for statistical purposes. We order accordingly. 11.4 Ground No. 8-Assessee's Appeal The assessee is challenging vide ground number 8 raised in its appeal the invocation of provisions of Section 206AA of the 1961 Act. The said ground is raised by assessee without prejudice to other grounds raised by it. Since, we have already restored the issue back to the file of the AO for denovo adjudication of the issues concerning deduction of income-tax at source on payments made towards Suspense Service Expenses as well on Rent and other charges as above, since this issue is interlinked with the above issues, it will be appropriate that this issue is also restored back to the file of the AO for denovo adjudication on merits in accordance with law. Needless to say that the AO shall grant proper and adequate opportunity of being heard t....
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....ny stage, it is found by Revenue that the AO has considered wrong amounts of expenditure under different heads while submitting remand report dated 31.08.2017 to ld CIT(A) during appellate proceedings, liberty is hereby granted to Revenue to file MA for recall of this order in ITA no. 329/Alld./2017 for ay:2013-14, provided it is based on cogent evidence/reasons. Thus, Grounds of Appeal bearing number 1 to 6 raised by Revenue in its appeal in ITA no. 329/Alld/2017 for ay:2013-14 stands dismissed with aforesaid directions. Thus, in nutshell the Revenue appeal for ay: 2013-14 stands dismissed. We order accordingly. 13. Thus, in the result appeal filed by assessee in ITA no. 10/Alld/2018 for ay: 2013-14 stand partly allowed for statistical purposes, while Revenue Appeal in ITA no. 329/Alld/2017 for ay: 2013-14 stands dismissed. 14. The issues in cross appeals filed by assessee ( ITA no. 11/Alld/2018) and Revenue (ITA no. 330/Alld/2017) for ay: 2014-15 are identical and our decision in assessee's as well Revenue appeal for ay: 2013-14 shall apply mutatis mutandis to the appeal filed by assessee and revenue for ay: 2014-15. We order accordingly. 15. In the result, appeal filed ....