M/S. UNITED INDIA INSURANCE CO. LTD.,CHENNAI vs. ACIT TDS CIRCLE-, PANAJI

Both the appeals filed by the assessee are directed against separate but identical order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi, both dated 17.02.2023 relevant to the assessment years 2012-13 and 2014-15.

Brief facts of the case are that the assessee is one of the largest public sector general insurance companies of India. Survey proceedings under section 133A(2A) of the Income Tax Act, 1961 [“Act” in short] has been carried out on 07.02.2019. Information pertaining to TDS matters of the organization was called for. After considering the submissions of the assessee, the Assessing Officer issued show cause notice under section 201(1) & 201(1A) of the Act calling for explanation towards non-deduction of TDS for alleged medi-claim payments made on behalf of the employee by the company which was not added back to the salary of the employee as taxable perquisite and payments made to other insurance companies as co-insurance payments to discharge obligation of a co-insurance contract. However, the assessee has not submitted any document or offered any information on the nature of policy for which premium payments are being made or the list of employee along with their salary payments to verify if this perquisite or a portion thereof, is exempt from taxation as per statute. The Assessing Officer has called for various details towards medi-claim payments. However, the assessee has not furnished any details. Therefore, the assessee was held to be an assessee in default on the matter of non deduction of TDS from perquisite portion of salary, as applicable under section 17(2)(iv) of the Act r.w.s. 192B of the Act. Accordingly, the Assessing Officer worked out the TDS amount payable including interest under section 201(1A) of the Act of ₹.1,60,267/- on account of non deduction, short deduction, short payment and non remittance of TDS on alleged medical insurance premium made on behalf of the employee by the deductor, as per various sections of Chapter XVII of the Act. So far as TDS to be deducted on contract payments made to co-insurance companies, which was not done, the Assessing Officer calculated the TDS to be made on contract payments made to co-insurance companies at ₹.1,240/- and raised the total demand at ₹.1,61,507/- for the assessment year 2012-13.

Similarly, for the assessment year 2014-15, the Assessing Officer worked out the TDS to be made on contract payments made to co- insurance companies at ₹.28,600/- and raised the demand.

The assessee carried the matter in appeal before the ld. CIT(A). Since the assessee failed to file any written submission in support of documentary evidence, the ld. CIT(A) confirmed the order passed under section 201(1)/201(1A) of the Act for both the assessment years.

On being aggrieved, the assessee is in appeal before the Tribunal. When the appeals were taken up for hearing, none appeared on behalf of the assessee. Hence, we proceed to decide the appeals on merits after hearing the ld. DR.

We have heard the ld. DR, perused the materials available on record and gone through the orders of authorities below. In this case, the assessee could not file any evidence or explanation with regard to the TDS to be deducted towards medical insurance premium paid on behalf of the assessee as well as TDS to be deducted on contract payments made to co-insurance companies before the Assessing Officer. Thus, the Assessing Officer held the assessee to be an ‘assessee in default’ and raised the demand for both the assessment years. The assessee has not even filed any explanation/evidence either before the ld. CIT(A) or even before the ITAT. There was absolutely no response against the show cause notice issued by the Assessing Officer under section 201(1)/ 201(1A) of the Act. In order to meet the ends of natural justice, we are of the considered opinion that the assessee shall be afforded one more opportunity of being heard to furnish the details. Accordingly, we set aside the order of the ld. CIT(A) and remit the matter back to the file of the Assessing Officer to afford one more opportunity of being heard to the assessee. The assessee is also directed to furnish complete details with evidence before the Assessing Officer without fail.

In the result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced on 18th October, 2023 at Chennai.