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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH
Per Shri D.S.Sunder Singh, Accountant Member : Delay : There was a delay of 19 days in filing the appeals by the assessee. The assessee filed condonation petition stating that the delay was due to administrative reasons and beyond the control of the assessee. We have gone through the condonation petitions filed by the assessee and after hearing both the parties, we condone the delay and admit the appeals.
These appeals are filed by the assessee against the orders of the Commissioner of Income Tax (Appeals) [CIT(A)]-2, Guntur in and 10006/GNT/CIT(A)-2/2016-17 dated 24.01.2019 for the Assessment Years (A.Y.)2014-15 to 2016-17. Since the facts are identical, these appeals are clubbed, heard together and a common order is being passed for the sake of convenience as under.
The assessee filed additional grounds during the pendency of appeal as under : 1. Taking note of the fact that the interest of Rs.45,28,019/- credited/paid to M/s.Tirumala Cotton and Agro Products Pvt Ltd., was duly accounted for by the recipient-depositor while filing its ROI for the Assessment Year under review, the default if any attributable to the deductor may only become a vicarious liability and hence the impugned liability of the aggregate extent of Rs.1,93,973/- under sec.201(1) &201(1A) may be Devoid of any merit and not sustainable in law. (In substitution of Ground number 5 contained in the original Grounds of appeal
dated 02.05.2019)
2. Taking note of the fact that the interest of Rs.51,969/-credited /paid to M/s.Mahalakshmi Granites was duly accounted for by the recipient-depositor while filling her ROl for the Assessment Year under review, the default, if any) attributable to the deductor may only become a vicarious liability and hence the impugned liability to the aggregate extent of Rs.1,310/- under Sec .201(1) & 201(1A) may be DEVIOD of any merit and not sustainable in Law. (In substitution of Ground number 6 contained in the original Grounds of appeal dated 02.05.2019)
3. Taking cognizance of the judicial precedents existing on the issue which speak to the effect that in the cases where there is no TAX LIABILITY or in the cases where the PAYEES accounted for the interest receipts while filing the Returns of Income, the default, if any, on the part of the DEDUCTOR, should only be construed to be a VICARICUS LIABILITY which does not lead to levy of demand under Sec.201(1) & 201(1A) of the Act, the Ld, CIT(A) ought to have ordered DELETION of the entire demand of Rs.12,77,144/- levied against the assessee.(In substitution of Ground number 8 contained in the original Grounds of appeal dated 02.05.2019.
After hearing both the parties, the additional grounds are admitted. The Grounds of Appeal as well as the additional grounds are related to the assessee’s TDS liability in the case of M/s Polisetty Somasundaram & Nagaratnamma Charities, M/s Tirumala Cotton and Agro Products Pvt Ltd and M/s Mahalakshmi Granites. The Assessing Officer (AO) treated the assessee as assessee in default for non-deduction of tax at source for the interest payments made to the above parties without deduction of tax at source and raised the demand u/s 201(1) and 201(1A) of the Income Tax Act, 1961 (in short ‘Act’).
3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the order of the AO, against which the assessee is in appeal before us.
During the appeal hearing, the Ld.AR submitted that the above parties have admitted the income in the respective returns and filed the income tax returns for the respective assessment years, therefore, requested to delete the addition made by the AO and allow the appeals of the assessee.
On the other hand, the Ld.DR supported the orders of the lower authorities.
We have heard both the parties and perused the material placed on record. In the instant case, the AO raised the TDS liability for non deduction of tax at source in the following cases. (a) M/s Polisetty Somasundaram & Nagaratnamma Charities (b) M/s Mahalakshmi Granites and (c) M/s Tirumala Cotton and Agro Products (P) Ltd The assessee submitted that they have admitted the interest income and filed the returns for the impugned assessment years. In support of the submissions, the assessee also filed copies of income tax returns filed by the respective parties for the respective assessment years. Therefore, we are of the view that issue needs to be examined in the light of proviso to section 201(1) of the Income Tax Act, hence, we remit the matter back to the file of the AO with a direction to examine the issue and not to treat the assessee as assessee in default in the event of deductees have admitted the income for the respective assessment years and filed the returns of income duly admitting the said income for the respective assessment years. Accordingly, we set aside the orders of the lower authorities and remit the matter back to the file of the AO to reconsider the issue afresh on merits after giving opportunity to the assessee.
In the result, appeals of the assessee are allowed for statistical purpose.
Order pronounced in the open court on 4th March, 2020.