GSRVPL-RVNIPL-JV,HYDERABAD vs. INCOME TAX OFFICER, WARD-6(3), HYDERABAD

O R D E R Per Smt. P. Madhavi Devi, J.M. :

This is assessee's appeal for the Assessment Year 2015-16 against the order of Commissioner of Income Tax (Appeals)-6, Hyderabad dt.17.10.2019.

2. At the outset, it is noticed that there is a delay of 70 days in filing of this appeal and the assessee has filed an application requesting condonation of delay stating as under :

Being satisfied with the reasons given by the assessee, we condone the delay of 70 days and proceed to adjudicate the appeal as under.

Subsequently, it was selected for complete scrutiny through CASS for verification of – i) interest expenses; ii) certificate for nil or lower rate of TDS; iii) contract receipts/Fees Mismatch; iv) sales turnover mismatch; v) low income and high loans / advance / investments; vi) refund claim; and vii) Tax Credit mismatch.

Accordingly, a Notice u/s.143(2) was issued to the assessee on 19.09.2016 and Notice u/s.142(1) was also issued. In response thereto, the assessee filed details and after verification of the details, the Assessing Officer accepted the returned income of the assessee.

4. Thereafter, the Assessing Officer found that the assessee had claimed TDS of Rs.27,53,591 as refund which includes TDS of Rs.25,33,614 on mobilization of advance of Rs.12,66,80,683 and TDS of Rs.2,19,977 on contract receipts of Rs.1,09,98,855. He observed that the entire TDS credit is claimed in this year in violation of provisions of section 199 of the Income Tax Act, 1961 ('the Act') r.w. rule 37BA(3) of I.T. Rules, 1962. Therefore, he was of the opinion that there is a mistake apparent from record. Hence a Notice u/s. 154 of the Act dt.20.02.2019 was issued to the assessee and thereafter, since the assessee did not appear before the Assessing Officer, he passed the rectification order disallowing the TDS credit claimed by the assessee. Aggrieved by the order passed u/s. 154 of the Act, the CIT(A) which was dismissed by the CIT(A). The assessee is in second appeal before the Tribunal by raising the following grounds :-

“ 1. The order of the Learned Commissioner of Income Tax -Appeals-6, Hyderabad ['the Ld. CIT (A)] in confirming the order of the Income Tax Officer, Ward 6(3) is unsustainable both in law and on facts.

2. The Ld.CIT(A) failed to appreciate that the issue which is subject matter of 154 order is a debatable issue and does not constitute a mistake apparent from record. Therefore erred in confirming the demand of Rs 29,78,570 being TDS refund withdrawn under section 154 of the Act.

3. Without prejudice to the above grounds, the Ld.CIT (A) having rejected the Appellant's withdrawal of appeal petition ought to have provided opportunity to present its case on merits. Therefore, the order passed by the CIT(A) without providing opportunity is against principles of natural justice and bad in law.

4. Any other ground(s) that may be urged at the time of hearing.”

5. At the time of hearing, the learned counsel for the assessee filed written submissions stating that the mobilization advance received by the assessee has been returned / refunded in the subsequent year and TDS in its entirety in the relevant assessment year is not justified. He submitted that even with regard to the income offered during the relevant assessment year, no TDS credit was given by the assessee and thus sought remand of the issue to the file of the Assessing Officer. When these facts were brought to the knowledge of the Tribunal, we directed the learned counsel for the assessee and also the learned DR to go through the material available on record and come to an understanding as to the issue which needs verification by the Assessing Officer. Accordingly both, the learned counsel for the assessee and the learned DR of ‘A’ Bench together have filed the Memorandum stating as under :-

“ 1. The subject appeal filed by the Appellant M/s.GSRVPL- RVNIPL-JV was heard by the Hon'ble Bench on 12.07.2021.

3. The DR and the assesee's AR have agreed that Rule 37BA(3) is squarely applicable in this case.

a) The TDS credit should be given in the year in which the revenue receipts are offered for taxes out of the mobilization advance or any other advance received by the assessee. b) It is also noticed that the AO has not given credit for TDS in respect of contract receipts offered during the subject AY. c) The TDS credit given in any particular Assessment Year shall not be more than the amount calculated at applicable rate of TDS (in this particular case @ 2% for AOP/Firm and applicable Cess, if any) on revenue receipts offered in that particular Assessment Year. However, in case if the assessee has returned part of the any advance received to the payer on which TDS was already done by the payer, refund of TDS may be given in the year of such refund subjected to the examination of the evidences such as bank statements by the Assessing Officer. This TDS credit may be in addition to the TDS credit admissible on the Revenue Receipts in that particular Assessment Year. d) It is the claim of the Appellant of that all the Mobilization advance, Material advance, Adhoc Advance received during the subject AY were recovered during subsequent AYs by Tata and part of the mobilization advance was refunded by the assessee to Tata. Further, the assessee's AR has stated that the material advance was also refunded to Tata, though the same was mistakenly represented as recoveries from RA bills in the confirmation letter given by Tata. The Departmental Representative opines that the assessee's claim need to be verified by the AO independently.

Taking the above Memorandum into consideration, we deem it fit and proper to remand the matter to the file of Assessing Officer with a direction to verify the points mentioned in the above Memorandum and pass the consequential order in accordance with law. Needles to mention that the assessee shall be given a fair opportunity of hearing.

Order pronounced in the open court on 26th July, 2021.