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Income Tax Appellate Tribunal, ‘A’ BENCH, KOLKATA
Before: Shri Rajpal Yadav, Vice-(KZ) & Shri Girish Agrawal
Per Rajpal Yadav, Vice-President (KZ):- The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 08.09.2022 passed for A.Y. 2020-21.
ITA No. 618/KOL/2022 Assessment Year: 2020-2021 Graphite India Limited
The assessee has taken five grounds of appeal. However, its grievances revolve around two-folds. In the first fold of contention, it has pleaded that ld.CIT (Appeals) has erred in not condoning the delay of 94 days in filing the appeal before the ld. 1st Appellate Authority and on merit, it has pleaded that ld. CIT(Appeals) has erred in confirming the addition of Rs.14,41,440/-, which was added by the ld. Assessing Officer under section 201(1A) of the Act.
First we take the first fold of contention, i.e. whether delay can be condoned or not in filing appeal before the ld. 1st Appellate Authority.
As far as the delay occurred before the ld. 1st Appellate Authority, the assessee has submitted that intimation under section 200A was received vide Mail dated 28.10.2019 since there was a time-barring assessment proceedings and assessee somehow missed the date of filing the appeal, The 94 days worked out by the ld. 1st Appellate Authority is under wrong calculation of the number of days. The ld. 1st Appellate Authority failed to give credit of 30 days time limit available for filing the appeal.
ITA No. 618/KOL/2022 Assessment Year: 2020-2021 Graphite India Limited 5. On the other hand, ld. D.R. relied upon the order of the ld. CIT(Appeals).
We have duly considered the rival contentions and gone through the record carefully. The assessee has filed following application before the ld. 1st Appellate Authority for condonation of delay:-
“Dear Sir/Madam, Re: Graphite India Limited ('GIL or Appellant') P.A. No. AAACC0457C Assessment Year 2020-21 Petition for condonation of delay in filing appeal against Intimation u/s200A/206CB of the Income- tax Act, 1961 ('the Act')dated 28-10-2019 1.0 This is to bring to your kind notice that the appellant has since received an intimation u/s 200A/206CB of the Income-tax Act, 1961 ('the Act')from the office of the Assistant Commissioner of Income-tax, Centralized Processing Cell (CPC), TDS Aaykar Bhawan, Vaishali, Ghaziabad (UP) ['Ld. AO'] for Assessment Year 2020-21on 28-10-2019. 2.0 In terms of the provisions of Section 249(2) of the Act, an appeal before Learned Commissioner of Income-tax (Appeals) [Ld. CIT(A)] against the intimation u/s 200A/206CB of the Act needs to be filed within thirty days from the date of service of intimation. However, Section 249(3) of the Act states that Ld. CIT (A) may admit an appeal after the expiration of the said period if he is satisfied that the appellant had sufficient cause for not presenting it within that period. 3.0 In this connection, it is humbly submitted that the aforesaid intimation u/s 200A/206CB was received by the appellant vide an e-mail dated 28- 10-2019, when the concerned official of the company entitled to receive the same, was on leave. Further, once the official joined the company, he was engaged in other time barred matters 3
ITA No. 618/KOL/2022 Assessment Year: 2020-2021 Graphite India Limited encompassing Income-tax return filing, assessment proceedings for various years, compliance audit in terms of APA etc. on account of which the said employee lost track of the e-mail due to inadvertent error. As an outcome of above, the executives of the appellant looking after the Income-tax matter were unaware that the intimation been received and appeal could not be filed within the time prescribed u/s 249(2) of the Act. Said intimation has been traced while periodic review of mails and was immediately forwarded to the Authorised Representatives of the company to prefer an appeal before your good-self. 4.0 Further, the appellant has also filed a petition dated 21-01-2020before Central Board of Direct Taxes on 23-01-2020seeking necessary clarification/ Instruction/ guidelines for non-levy of interest u/s 201(1 A) and consequential penalty, if any, for short deduction of tax arising on account of change in rate of surcharge [brought into vide Finance (No. 2) Act, 2019 enacted on 01-08-2019, w.r.e.f. 01-04-2019] applicable on remittances made to non-resident individual during the period 01-04- 2019 to 31-07-2019. 5.0 In light of the above, it is submitted that the delay in filing of appeal u/s 249 of the Act by the appellant is, thus, based on aforesaid bona fide cause and there has been no negligence or inaction or want of bonafide on our part in not submitting the appeal within the stipulated time as prescribed in Section 249(2) of die Act. 6.0 We humbly pray that the matter relating to condonation of delay be considered liberally and may kindly be judged broadly. 7.0 Hence, it is humbly prayed that the delay in filing appeal be condoned and the appeal memo be admitted and the appeal be decided on merits”.
We have perused this explanation of the assessee and find that according to the assessee, the concerned official of the Company entitled to receive the Mail was on leave and thereafter he engaged in other time-barring 4
ITA No. 618/KOL/2022 Assessment Year: 2020-2021 Graphite India Limited matters encompassing income-tax return filing etc. This aspect might have slipped from his mind. To our mind, it is not a very substantive delay, and by making the appeal delayed the assessee will not gain anything. Thus it has not been adopted by the assessee as a strategy to fight litigation with the Revenue. We condone the delay in fining the appeal.
The facts emerging out from the record are that assessee-company is engaged in the business of manufacture and sale of Graphite Electrodes. It has paid commission to its non-resident direct or individual amounting to Rs.20,00,00,000/- on 03.07.2019 (before 01.08.2019). It has deducted the tax under section 195 of the Income Tax Act, 1961. According to the assessee, as per the rates under the prevailing law, i.e. under Part-II of the First Schedule of the Finance Act, 2019, the rate was 35.88% (30% tax rate plus 15% surcharge). This worked out a liability of Rs.7,17,60,000/-. After deduction, this amount was duly deposited on 07.08.2019 and subsequently TDS return was filed on 24.10.2019 in compliance with the Act. However, vide Finance Act, 2019 enacted on 01.08.2019, the rate of surcharge for the purpose of deduction of tax on non- resident individual exceeding Rs.5,00,00,000/- was increased from 15% to 37%, which was retrospectively applicable from 1st April, 2019. Thus CPC has worked out that assessee is liable to the amount of difference in the
ITA No. 618/KOL/2022 Assessment Year: 2020-2021 Graphite India Limited surcharge, i.e. CPC has applied 37% of surcharge as against 15% paid by the assessee. Accordingly it was treated in default and interest has been levied under section 201(1A).
The ld. Counsel for the assessee has brought to our notice CBDT Circular bearing No. 8/2020 and submitted that according to this Circular, assessee ought not be treated in default and should have not been charged interest under section 201(1A) of the Income Tax Act. For the facility of reference, we take note of this Circular as under:-
Circular No. 8/2020 F. No. 370133/5/2020-TPL Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes (TPL Division) ***** Room No, 1470-11, North Block. New Delhi Dated 13* April 2020 Subject: Clarification regarding short deduction of TDS/TCS doe to increase in rates of surcharge by Finance (No.2) Act, 2019-reg.
The Finance (No,2) Bill,2019 was tabled in Lok Sabha on 5* July, 2019 which was passed by both the houses of Parliament and became Finance (No,2) Act, 2019 (the Act) which received assent of the President on j* August, 2019. The Act provided for increase in the rate of surcharge as under:
ITA No. 618/KOL/2022 Assessment Year: 2020-2021 Graphite India Limited
S. Income slab Surcharge before Enhanced surcharge as No, the Act provided by the Act 1 Less than 50 lakh rupees Nil Nil 2 50 lakh rupees but less than I crorc 10% 10% rupees A 1 crorc rupees but less than 2 crorc 15% 15% rupees 4 2 crore rupees but less than 5 crore 15% 25% rupees 5 5 crore rupees and above 15% 37%
The enhanced rates of surcharge were applicable from the I "1 day of April, 2019 2. for previous year 2019*20 relevant to assessment year 2020-21, Thus, every person, as referred to above was required to compute his tax liability after taking into account the enhanced rates of surcharge. Further, TDS/TCS under various provisions of the Income- tax Act is required to be deducted/ collected after taking into account the enhanced rate of surcharge.
Several eases have come to the notice of the Central Government wherein deductors/ collectors were held to be an assessee in default for short deduction of TDS/short collection of TCS in cases where final transaction was done before laying of the Finance (No.2) Bill, 2019 in the Parliament, i.e. 3" luiy, 2019. Since the transaction was completed before the rates of enhanced surcharge were announced and the concerned deductee/payee is required to furnish their Income-tax return for the relevant assessment year, it has been requested that in such cases, deductor or collector should not be held to be an assessee HI default under section 201 of the Income-tax Act
The above issue has been examined by the Board and in this regard, it is clarified a person responsible for deduction/collection of tax under any provision of the Income-tax Act will not be considered to be an assessee in default in respect of transactions where:—
ITA No. 618/KOL/2022 Assessment Year: 2020-2021 Graphite India Limited a) such transaction has been completed and entire payment has been made to the deductee/payee on or before 5th July, 2019 and there is no subsequent transaction between the deductor/collector and the deductee/payee in the financial year 2019-20 from which the shortfall of tax could have been deducted/collected by the deductor/collector; b)TDS has been deducted or TCS has been collected by such deductor/collector on such sum as per the rates in force as per the provisions prior to the enactment of the Act; b) such tax deducted or collected has been deposited in the account of Central Government by the deductor/collector on or before the due date of depositing the same,
c) TDS/TCS statement has been furnished by such person on before the due date of filing of the said statement. 5. However, if the person fails to fulfil any of the conditions as laid down above, such a person will, with respect to short deduction/collection, not be eligible for benefit provided under this circular. Further if the deductor/collector has deducted/collected shortfall of tax after 5th of July, 6. 2019 from the transaction(s) made subsequently after the said date, interest, if any, for delay in deduction/collection of such tax shall not be levied,
The above relaxation does not absolve the deductee/payee to pay proper tax including enhanced surcharge by advance tax or self-assessment tax and file return of income after paying such lax. 8, This issues with the approval of Finance Minister.
Sd/- 13.04.2020 (Ankit Jain) Dy. Commissioner of Income-tax (OSD) TPL Division”
Though at the time of hearing, we are of the view that there is no need to set aside this issue before the ld. 1st Appellate Authority and it can be adjudicated here. The simple reason for forming this view was that if transaction of the assessee is covered by the Circular, then why to multiply the litigation. However, while going through the facts minutely, we find that this Circular is applicable on fulfilment of conditions enumerated in Serial Nos. 4 & 5 of the Circular. At the cost of 8
ITA No. 618/KOL/2022 Assessment Year: 2020-2021 Graphite India Limited repetition, we take note of clauses 4 & 5 of the Circular, which read as under:- “4. The above issue has been examined by the Board and in this regard, it is clarified a person responsible for deduction/collection of tax under any provision of the Income-tax Act will not be considered to be an assessee in default in respect of transactions where:— (a) such transaction has been completed and entire payment has been made to the deductee/payee on or before 5th July, 2019 and there is no subsequent transaction between the deductor/collector and the deductee/payee in the financial year 2019-20 from which the shortfall of tax could have been deducted/collected by the deductor/collector; (b) TDS has been deducted or TCS has been collected by such deductor/collector on such sum as per the rates in force as per the provisions prior to the enactment of the Act;
(c) such tax deducted or collected has been deposited in the account of Central Government by the deductor/collector on or before the due date of depositing the same, (d) TDS/TCS statement has been furnished by such person on before the due date of filing of the said statement. 5. However, if the person fails to fulfil any of the conditions as laid down above, such a person will, with respect to short deduction/collection, not be eligible for benefit provided under this circular”.
A perusal of these clauses would indicate that under sub-clause (b), assessee was required to deposit the TDS/TCS collected by it in the account of Central Government on or before the due date of depositing the same. This fact is to be verified. Therefore, we set aside this issue to the file of ld. Assessing Officer with a direction that ld. Assessing Officer shall adjudicate it on the basis of the CBDT Circular quoted above.
ITA No. 618/KOL/2022 Assessment Year: 2020-2021 Graphite India Limited
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 09 January, 2023. Sd/- Sd/- (Girish Agrawal) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 09 day of January, 2023
Copies to :(1) Graphite India Limited, 31, Chowringhee Road, Kolkata-700016 (2) Assistant Commissioner of Income Tax, Circle-11(1), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata-700069 (3) Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi; (4) Commissioner of Income Tax- ; (5) The Departmental Representative (6) Guard File TRUE COPY By order
Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.