ACCOUNTS OFFICER, OandM, PALI, JVVNL vs. THE I.T.O., TDS-1, JODHPUR

-1- IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR. J U D G M E N T Accounts Officer, O&M, Pali v. The ITO, TDS-1, Jodhpur DB Income Tax Appeal No.102/2011 Date of Judgment :: 23rd September, 2014 P R E S E N T HON'BLE MR.JUSTICE GOVIND MATHUR HON'BLE MR.JUSTICE VIJAY BISHNOI Mr. Anil Bhansali, for the appellant. Ms. K.K.Bissa, for the respondent(s). ..... BY THE COURT : The Superintending Engineer (SE) of Jodhpur Vidhyut Vitaran Nigam Limited awarded certain works to various contractors involving supply of material and erection by separate agreements with separate consideration for the payment schedule, performance guarantee, bank guarantee, warranty in respect to material etc. The Income Tax Officer, TDS-I, Jodhpur conducted a survey for verification of the TDS at the office of the Accounts Officer, O & M, Jodhpur Vidhyut Vitaran Nigam Ltd., Pali (hereinafter referred to as 'the appellant') and the appellant was called upon to show cause as to why short deduction of tax under Section 194-C of the Income Tax Act, 1961 (hereinafter referred to as 'the Act of 1961') be not -2- recovered as per provisions of Section 201(1) with interest as per provisions of Section 201(1A) of the Act aforesaid. The notice calling upon the appellant was in respect of three financial years those are 2005-06, 2006-07 and 2007-

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-4- Learned Income Tax Appellate Tribunal by order dated 3.6.2010 dismissed the appeal by relying upon the judgment of Hon'ble Bombay High Court in the case of Ramesh Chandra & Co. v. CIT, (1987) 168 ITR 375 (Bom.). In the case aforesaid it was held that “where an assessee has made a statement of facts, he can have no grievance if the taxing authority taxes him in accordance with that statement. If he can have no grievance, he can file no appeal. Therefore, it is imperative, if the assessee's case is that his statement has been wrongly recorded or that he made it under a mistaken belief of fact or law, that he should make an application for rectification to the authority which passed the order based upon that statement. Until rectification is made, an appeal is not competent.” This appeal as per provisions of Section 260-A of the Act of 1961 is preferred to challenge the order passed by the Income Tax Appellate Tribunal, Jodhpur affirming the order passed by the Commissioner of Income Tax (Appeals). Having considered facts of the case, this Court by order dated 5.5.2011 while admitting the appeal for hearing settled following substantial questions of law for adjudication :- “(i) Whether the Tribunal was justified in upholding the view taken by the CIT(A) wherein it was held by placing reliance upon the decision rendered by the Bombay High Court, Nagput Bench reported in (1987) 168 ITR 375, Ramesh Chandra & -5- assessee has admitted the issues of fact before the Assessing Officer? (ii) Whether the Tribunal was justified in placing reliance upon the law laid down by the High Court in the case of Ramesh Chandra & Co. (supra) and if so, whether it has any application to the facts of this case? (iii) In case if it is held that either law laid down by the Bombay High Court in the case of Ramesh Chandra & Co. (supra) is not applicable to the facts of this case or if it is held that appeal lay before the CIT(A), then whether a case for remand either to the Tribunal or to CIT(A) is made out for deciding the appeal on merits by the first appellate authority?” In appeal, the submission of learned counsel for the appellant is that as a matter of fact no admission was made on behalf of the Jodhpur Vidhyut Vitaran Nigam Ltd. with regard to the liability to deduct tax at source. According to learned counsel the issue was contested and the payment of tax was made only to avoid coercive measures. Such payment of tax, thus, cannot be termed and treated as admission of default. Per contra, as per Shri K.K.Bissa, learned counsel for the revenue, the appellant on receiving the notice to show cause deposited the short deduction of TDS in Government account, thus, admission of default is apparent. The fact about admittance of default before the Income Tax Officer, TDS-I was accepted in unambiguous terms, as such, the Commissioner of Income Tax (Appeals) rightly arrived at the conclusion that no appeal in light of the judgment of Hon'ble Bombay High Court is -6- maintainable and the view taken was rightly affirmed by the Income Tax Appellate Tribunal. Heard learned counsels and examined the orders impugned. True it is, the appellant on calling upon through the notice to show cause by the Income Tax Officer, TDS-I, Jodhpur satisfied the tax liability pertaining to short deduction of TDS, but that ipso facto cannot be treated as admission of the default in view of the fact that a detailed reply in relation to the liability pointed out was given with specific assertion that the TDS shown in the show cause notice and the order under Sections 201(1)/201 (1A) are materially different. It was specifically pointed out by the assessee that the company entered into separate and distinct agreements with various payees viz. One for purchase of machinery/equipment (supply order) and other for erection/ commissioning work (work order). The sample agreements too were advanced with specific assertion that the transaction of erection/commissioning work attracts TDS under Section 194-C and that requirement was complied with. The supply contract as per the assessee was not attracting the provisions of TDS. Pertinent to mention here that this issue has been taken into consideration on merits also by the Commissioner, Income Tax (Appeals). The fact that the assessee contested the application of the provisions pertaining to TDS before the Assessing Authority as well as before the Commissioner of Income Tax (Appeals) is -7- sufficient enough to arrive at the conclusion that there was no absolute admittance by the assessee. In the case of Ramesh Chandra & Co. (supra) the factual position was quite different. In the case aforesaid the assessee made a statement of facts with specific assertion that he agrees with a part of the value of 360 quintals of 'Sarki' which was creating a tax liability. Looking to this factual background Hon'ble the Bombay High Court held that when an assessee has made a statement of facts and accepts his tax liability, then he cannot raise any grievance by way of filing an appeal. It was also observed that if the assessee makes a statement about wrong recording of his version or he made a statement under mistaken belief of fact or law, then the appropriate course is by way of making an application of rectification to the authority that passed the order based upon the fact stated. No appeal is maintainable until rectification. In the case in hand the position is entirely different as the assessee from inception contested the tax liability but deposited the tax just to avoid coercive action. Looking to this factual position we are of the view that in the instant matter the judgment given by Hon'ble Bombay High Court in the case of Ramesh Chandra & Co. (supra) was having no application. The substantial questions of law No.1, 2 and 3 stand disposed of accordingly. The appeal, thus, is allowed. The order passed by the Income Tax Appellate Tribunal dated 3.6.2010, thus, is -8- set aside. The matter is remanded to the Income Tax Appellate Tribunal, Jodhpur for adjudication of the appeal preferred by the appellant assessee afresh on merits. (VIJAY BISHNOI),J. (GOVIND MATHUR),J. kkm/ps.