TaxTMI 
TaxTMI 
TaxTMI 
2021 (3) TMI 1199
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....l 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. 36,40,063/- (Rs. 33,40,285/- in ay: 2014-15) to only Rs. 67....
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.... 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) erred in upholding that the payments made under the head "Honorarium" are subject to deduction of tax at source u/s 194J of the Act. 3.1 ....
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....l 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 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 le....
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.... 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. That the Appellant craves leave to add, alter, modify, vary, delete any ground of appeal before or at the time of hearing." 4. The brief facts of the case are that the assessee is a State Organization being an autonomous body which came into existent by the power conferred in Article 315 to 323 of the Constitution of ....
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....e 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 defaulted u/s 201 (1) of the Act to the tune of Rs. 36,49,063/- and also the assessee is liable to pay interest u/s 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. 5.5The A.O. further observed that the assessee has made payment of Rs. 34,89,081/- toward....
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.... 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 basis of available budget and sanctioned heads by the Government. The assessee submitted before ld. CIT(A) that the assessee had made expenditure under different heads as sanctioned and had also deducted income-tax at source from payments made to various persons/organizations by following the provisions of the 1961 Act. It was submitted by the ass....
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....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 grounds that PAN of the payee/deductee was not submitted and even if the rates of TDS is to be applied, then the applicable rates under provisions of Section 194C/194J should be applied. 6.4 Honorarium The assessee submitted before ld. CIT(A) that the total expenditure made during the relevant period under the head honorarium was Rs. 34,99,720/- whereas....
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....he 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 AALPR3401K SCJ Scanning 117800.00 2639.00 AAOCS8547B SKD Commercial Co. 29787.00 667.00 ADQPV1600A Sunny Enterprises 110375.00 2472.00 Not available Total 3500000.00 53734.00 It was submitted that as per list furnished, income tax was deducted at source in every eligible payment on which income tax was required to be deducted at source, but the assessee may be treated as assessee in default only in....
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....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 the time of regular proceedings. The assessee submitted complete details of payments along with PAN and TDS amount before the Ld. CIT(A) for verification. The assessee submitted that since all the payments were made only after deduction of income tax at source, the default raised by I.T.O. (TDS) for Rs. 9,57,218/- cannot be justified and should be deleted. 6.8Rent and other charges The assessee submitted before ld. CIT(A) that the total expenditure made during the year was Rs. 82,75,175/-, whereas the A.O. has wrongly mentioned in it....
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....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 18.11.2015 and show cause notice dated 18.12.2015. As per record, the deductor furnished only part information through its letter dated 23.07.2015. Thereafter, any compliance to the aforesaid letters and show cause notice was not made except the submission that the information is being collected from different sections of the UPPSC. The then TDS AO, in his orders u/s 201(1)/201(1A) for A.Y. 2013-14 & 2014-15 dated 01.02.2016 considered the figures of the expenditure, under different heads in question, on the basis of the information furnished in the treasury, Allahabad. During the course....
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....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 08.01.2014 Rs. 1,44,00,000 Total Rs. 3,69,00,000 To ascertain the applicability of TDS provisions on payments under the Suspense head & it's sub-heads, the deductor was requested, vide order sheet entry dated 24.08.2017, to furnish a bill wise list of payment amount without disclosing the names and PANs of the parties to maintain confidentiality. On the request of the deductor's representative, the date was fixed for 30.08.2017 but on the said date, no compliance has been made in this regard. The deductor was under statutory obligation to make TDS due to non-possession of no deduction certificate from the payees; on payments at the prescribed rates depending on nature of the payments or at a higher rate us per s....
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....ayments 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 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 PANs of payees were not available with the deductor at the time payment and these payees are also not covered in 26Q statements filed by the deductor. The short charge calculated by applying 20% rate on following payment works out as under:- F.Y. Name of the Party Amount paid Tax deductible @ 20% Tax deducted by the deductor Short deduction Remarks 2012-13 Jyoti Infotech 34395 6879 552 6327 Not in 26Q Radha Krishna Traders 129778 25956 1936 24020 Not in 26Q ....
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.... 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 Firm/Company on which TDS rate of 2% is applicable. F.Y. Name of the party PAN Amount paid Tax deductible @ 2% Tax deducted by the deductor Short deduction Remarks 2012-13 Adnec Adv AAGFA4655H 3581015 71620 40179 31441 Covered in 26Q & Short charge demand already raised by CPC Anu Adv. AACCA0278K 7727345 154547 86702 67845 ---do--- 2013-14 Adnec Adv. AAGFA4655H 1895615 37912 22627 15285 ---do--- Anu Adv. AACCA0278K 8717279 176346 97806 78540 ---do--- Inter Ads AAACI2834D 1329757 26595 14920 11675 ---do--- R D Advt. AACCR4712P 4184866 83692 46954 36743 ---do--- Except on payment of Rs. 1248749/- (vii) Rent & other charges: From the details & documents furnished before the undersigned, it is found that payments under this head are in the nature of house tax only, on which provisions of TDS are not attracted. 7. Apart from the above, on verification of 11-C register, it has been noticed that pa....
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....total expenditure under this head as these are secret funds, if TDS and PAN are uploaded the whole confidentiality will be compromised. The ld. CIT(A) observed that even during remand proceedings before the AO at the direction of ld. CIT(A), the assessee had not submitted details as to nature of services and PAN of the recipients. It was observed by ld. CIT(A) that even during counter to the remand report, the assessee has repeated the same arguments., which it filed before the AO. The Ld. CIT (A) observed that the assessee has not fulfilled its obligation to deduct income tax at source while making aforesaid payments and has defaulted in deduction of income-tax at source, as in view of ld. CIT(A) there are no exemption given to payments for these suspense services and there are no provision in the 1961 Act which exempt the payer of these suspense services from deduction of income-tax at source on the basis of confidentiality of secret funds. The ld. CIT(A) observed that these payments have been made by assessee by cheque, and therefore the identity of the recipient is not secret and it is well known to the banking authorities. The ld. CIT(A) observed that the assessee was under ob....
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....y appellate order dated 21.09.2017 passed by ld. CIT(A), both the assessee as well Revenue are before us and cross appeals are filed. We have heard both the parties through video conferencing through Virtual Court. The ld. Counsel for the assessee submitted that written submission/paper book is filed with the tribunal on 02.02.2021 containing in all 16 pages, which should be taken on record as the same are relied upon by assessee. The ld. Counsel for the assessee submitted before the Bench that in both the years similar issues have arisen. It was submitted by ld. Counsel for the assessee that only Ground of Appeal No. 2, 2.1 & 2.2, as well Ground No 7 and 8 as raised by assessee in its appeal filed with tribunal are pressed for the ay: 2013-14 and prayers were made to dismiss other grounds of appeal raised by assessee in its appeal filed for ay:2013-14. The ld. DR did not raise any objection if Ground No. 1,1.1,3,3.1,4, 4.1, 5,5.1, 6 and 9 raised by assessee in memo of appeal filed by assessee for ay:2013-14 with tribunal are dismissed. After hearing both the parties, we dismiss ground number 1, 1.1, 3,3.1,4,4.1,5,5.1,6 and 9 raised by assessee in memo of appeal filed by it with t....
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....ds and is concerning invocation of Section 206AA of the 1961 Act. It was submitted that for ay: 2014-15, similar issues have arisen as were for ay: 2013-14 and only ground number 2.1, 8 & 9 are pressed, while for other grounds, it was prayed that the said grounds be dismissed. The ld. DR submitted that these documents which are placed in paper book for sanction of budget by UP Government which also contains allocation for Secret Services Expenditure, the same was produced for the first time before tribunal and the same need verification by AO and hence prayers were made to set aside the issue to the file of the AO for fresh consideration. The ld. DR also submitted that examination paper printed by the printers is not a commodity and hence it cannot be excluded from the provisions of Section 194C of the 1961 Act. The ld. DR relied upon explanation to Section 194C of the 1961 Act. The ld. DR relied upon the appellate order passed by ld. CIT(A) so far as the AO order was sustained by ld. CIT(A). The ld. DR also supported the grounds of appeal raised in memo of appeal filed by Revenue with tribunal. The ld. DR also submitted that provisions of Section 206AA was rightly invoked by the ....
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....also claimed that budget for expenses approved for assessee by U.P. Government includes provision for expenses towards secret services, for which evidence by way of budget approved by UP Government is placed on record (page 8-11 of written submission/paper book filed on 02.02.2021). The ld. DR submitted that these are additional evidences placed for the first time before the tribunal and the same need verification by AO and hence prayers were made to restore the issue to the file of AO for denovo adjudication. The assessee has taken a consistent stand that these payments are confidential/secret in nature and the details cannot be revealed owing to matter of State Policy. These are part of approved budget allocated by U.P.Government which include expenses for secret services and the Secretary of the assessee viz. Lok Seva Aayog, U.P.( U.P. Public Services Commission) is authorized to incur the expenses under the head Secret Services expenses. We are in agreement with the assessee that in Government, there could be expenses which are covered under the veil of secrecy as matter of State Policy and the details cannot be divulged as mandated and obligated under State Policy. Thus, the a....
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....of the payee is uploaded while filing TDS returns. The assessee is facing genuine hardship as on the one hand it is bound to maintain complete secrecy of payments as is mandated by State Government as the nature of expenses is claimed to be for supply of pre-printed examination paper, while on the other hand, the provisions of the 1961 Act requires the deduction of income-tax at source under Chapter XVII-B if the payment falls under the said provisions. The assessee has not obtained any certificate from the AO for non deduction of TDS on these payments as is mandated under the provisions of Section 197 of the 1961 Act. Provisions of Section 119 of the 1961 Act empowers CBDT to grant exemption from rigours of provisions of the 1961 Act to redress genuine hardship of the taxpayers. The assessee has also filed additional evidences before tribunal(pb/page 8-11) by way of allocation of budget of the assessee by State Government which also contains allocation for Secret Services Expenses, these evidences are vital to resolve the issue but the same requires verification by the authorities below. It is equally well settled that the duty of all taxing authorities to assist taxpayers so that....
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.... stated by AO in its remand report that payments to the parties covered under the head 'Rent and other charges ' were also made from other heads of expenditure, on which no income tax was deducted at source. The relevant para of the AO in its remand report submitted to ld. CIT(A) is produced as hereunder: "(vii) Rent & other charges: *** *** 7. Apart from the above, on verification of 11-C register, it has been noticed that payments to the parties covered under above heads have also been paid from other heads of expenditure. The details of such payees with their total gross bill amount paid from other heads and TDS made thereon for F.Y. 2012-13 & 2013-14 are given in the table below. Since, the deductor had no PAN of such payees at the time of payment, the TDS must have been done @ 20%. Further, these payees have not been covered in 26Q statements filed by the assessee. F.Y. Name of the party Amount paid Tax deductible @ 20% Tax deducted by the deductor Short deduction Remarks 2012-13 Jaz Enterprises 402358 80472 6875 73597 Not in 26Q Java Enterprises 73153 14630 1418 13212 Not in 26Q Three Star Traders 173155 34631 ....
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....all be admitted by AO and adjudicated on merits in accordance with law. The AO is directed to pass speaking and reasoned order. This will dispose of ground number 8 of the assessee's appeal. This ground is allowed for statistical purposes. We order accordingly. Revenue's Appeal in ITA no. 329/Alld/2017 for ay: 2013-14 12. The Revenue has raised as many as 6 grounds in its appeal filed with tribunal. We have observed that the main grievance of the Revenue is that ld. CIT(A) has passed a non speaking cryptic order while granting relief to the assessee under the heads (i) Honorarium (ii)Stationary and Forms (iii) Office Furniture and Equipments (iv) Advertisement Sales & Services. We have carefully gone through the appellate order passed by ld. CIT(A) and it is observed that relief is granted by ld. CIT(A) based on the computation of default in deduction of income tax at source under aforesaid heads as computed by AO in its remand report submitted by AO to ld. CIT(A) in appellate proceedings vis-à-vis default originally computed by AO in its order dated 01.02.2016 passed u/s 201(1) and 201(1A). It is admitted by AO during remand proceedings vide para 4 of remand report dated ....