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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
O R D E R
PER PAVAN KUMAR GADALE, JM:
This appeal is filed the by the assessee against the order of the CIT(A)- National Faceless Appeal Centre (NFAC), Delhi passed u/s 201and 250 of the Act. The assessee has raised the following grounds of appeal:
1. On the facts and circumstances of the case and in law, the order dated 16 March 2022 passed by the Hon'ble National Faceless Appellate Centre ('NFAC") is bad in law as the Hon'ble NFAC erred both on facts and in law confirming the addition made by the Assistant Commissioner of Income-tax (TDS), Range 2 (2), Mumbai
M/s Siemens Financial Services Pvt Ltd., Mumbai. - 2 - (hereinafter referred to as 'the Learned TDS officer'). In doing so, the Hon'ble NFAC also erred in not appreciating the fact that the Learned TDS officer does not exercise jurisdiction over the Appellant.
On the facts and circumstances of the case, and in law, the Hon'ble NFAC erred in alleging that the Appellant did not comply with the e-notice issued vide DIN: ITBA/NFAC/F/APL 1/2021-22/1038664856(1) dated 12 January 2022 without appreciating the fact that the Appellant had responded in full as well as uploaded all relevant submissions on the e-filing portal on 18 January 2022 vide acknowledgement no. 941644331180122.
Appellant held to be an assessee-in-default for non- deduction of TDS on year-end provisions aggregating to Rs. 3,06,63,825.
3. On the facts and in the circumstances of the case and in law, the Hon'ble NFAC has factually and legally erred in upholding the action of the Learned TDS officer who has held the Appellant to be an assessee-in-default for non- deduction of TDS on year-end provision for expenses amounting to Rs. 3,06,63,825 made during the FY 2017-18 and thereby alleging TDS liability u/s 201(1) of the Act amounting to Rs 28,03,559 and interest liability u/s 201(1A) of the Act amounting to Rs.4,29,450. In doing so, inter-alia, the Hon'ble NFAC erred in not appreciating that levy of TDS liability in respect of the following categories of year-end provisions was not warranted: a. Utilized in FY 2018-19 on which TDS was duly deducted and paid to the Government Treasury subsequently; b. Reversed / not utilized in FY 2018-19;
M/s Siemens Financial Services Pvt Ltd., Mumbai. - 3 - c. On which provisions of Chapter XVII-B of the Act are not applicable; d. On which tax is already paid by the payee.
On the facts and in the circumstances of the case and in law, the Hon'ble NFAC has factually and legally erred in holding that since the bifurcation of year-end provisions as mentioned in Ground No. 3 above was not reported in the Tax Audit Report, the said details as provided by the Appellant was merely an afterthought and hence not sustainable. In doing so, the Hon'ble NFAC failed to appreciate that the format of the Tax Audit Report disclosure does not allow for any such details to be provided therein.
Without prejudice to the above, on the facts and in the circumstances of the case and in law the, the Hon'ble NFAC has factually and legally erred in not appreciating that in respect of provisions for expenses which were utilized in FY 2018-19, interest u/s. 201(1A) of the Act could be applicable only from the date of creation of provision to the date on which invoice was credited to party's account / date on which TDS was deducted.
Without prejudice to above grounds, on the facts and in the circumstances of the case and in law, the Hon'ble NFAC has factually and legally erred in not appreciating that in respect of provisions for expenses which were not utilized in FY 2018-19, interest u/s 201(1A) of the Act could be applicable only from the date of creation of provisions to the date of on which said provisions have been reversed.
Without prejudice to above grounds, on the facts and in the circumstances of the case and in law, the Hon'ble NFAC has factually and legally erred in upholding the M/s Siemens Financial Services Pvt Ltd., Mumbai. - 4 - action of the Learned TDS of calculating interest u/s. 201(1A) of Act considering delay in months based on the calendar month, not appreciating that for the purpose of determining delay for calculating interest u/s 201(1A) of the Act, "month" should be considered as a term of 30 days period and not the calendar month.
Appellant held to be an assessee-in-default for short deduction of TDS on payment made to Siemens Technology and Services Private Limited, Transunion Cibil Limited and other parties during FY 2017-18 amounting to Rs 22,16,398.
On the facts and in the circumstances of the case and in law, the Hon'ble NFAC has factually and legally erred in upholding the action of the Learned TDS officer who has held the Appellant to be an assessee-in-default for short deduction of TDS on payment made to Siemens Technology and Services Private Limited, Transunion Cibil Limited and other parties during FY 2017-18 amounting to Rs. 22,16,398 and thereby levying TDS liability u/s 201 of the Act amounting to Rs. 1,77,312 and interest liability u/s 201(1A) of the Act amounting to Rs. 21,277.
On the facts and in the circumstances of the case and in law the Learned NFAC has factually and legally erred in not appreciating that said payment to Siemens Technology and Services Private Limited, Transunion Cibil Limited and other parties towards global shared services charges, risk related check charges are in the nature of contractual payments and accordingly, TDS is required to be deducted u/s 194C of the Act.
On the facts and in the circumstances of the case and in law the Hon'ble NFAC has factually and legally erred in not appreciating that Siemens Technology and Services
M/s Siemens Financial Services Pvt Ltd., Mumbai. - 5 - Private Limited, Transunion Cibil Limited and other parties have paid tax on Rs. 22,16,398 and therefore the Appellant should not be treated as "assessee-in-default" for short deduction of TDS on the said amount. Further the Hon'ble NFAC failed to take cognizance of the submission dated 18 January 2022 filed by the Appellant wherein the Appellant had clearly mentioned that Form 26A as obtained from the parties could be provided on request.
On the facts and in the circumstances of the case and in law the Hon'ble NFAC has factually and legally erred in upholding the action of the Learned TDS officer in levying interest u/s 201(1A) of the Act amounting to Rs 21,277 when the Appellant has not attracted any default u/s 201(1) of the Act for non-deduction of TDS on payment made to Siemens Technology and Services Private Limited, Transunion Cibil Limited and other parties.
Initiation of penalty proceedings
On the facts and in the circumstances of the case and in law, the Hon'ble NFAC has factually and legally erred in upholding the action of the Learned TDS officer in initiating penalty proceedings u/s 221 of the Act.
On the facts and in the circumstances of the case and in law, the Hon'ble NFAC has factually and legally erred in upholding the action of the Learned TDS officer in referring penalty proceedings u/s 271C of the Act to Addl. CIT(TDS), Range -2(2), Mumbai.
Without prejudice to the above ground, in an unlikely situation of upholding the TDS demand, the Appellant prays that there was reasonable cause for non-deduction of TDS and accordingly no penalty can be imposed as per section 273B of the Act.
M/s Siemens Financial Services Pvt Ltd., Mumbai. - 6 -
On the facts and in the circumstances of the case and in law, the Hon'ble NFAC has factually and legally erred in upholding the action of the Learned TDS officer in referring penalty proceedings u/s 272A(2)(c) of the Act to the Addl. CIT(TDS), Range -2(2), Mumbai.
On the facts and in the circumstances of the case and in law, the Hon'ble NFAC has factually and legally erred in upholding the action of the Learned TDS officer in referring penalty proceedings u/s 272A(2) (g) of the Act to the Addl. CIT(TDS), Range -2(2), Mumbai. 17. The Appellant submits that the above grounds are independent and without prejudice to one another. 18. The Appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal herein above and to submit such statements, documents and papers as may be considered necessary either at or before the hearing of this appeal as per the law.
2. The brief facts of the case are that the assessee company is primarily engaged in the asset finance business of providing asset backed loans and leases. In the post survey operations in the premises of Siemens Ltd on 23.01.2019, the revenue authorities found the nature of transactions and payments by the assessee company are without deduction of TDS on certain payments during the business activities and the AO has issued the show cause notice in respect of non deduction of TDS on the expenditure debited to M/s Siemens Financial Services Pvt Ltd., Mumbai. - 7 - profit &Loss account and applying the provisions u/s 40(a)(i) and 40(a)(ia) of the Act. Similarly the assessee has claimed professional and technical services expenditure and were the TDS has to be deducted u/s 194C &194J of the Act. Whereas the assessee has filed the detailed submissions on 19.03.2019 referred at page 2 of the order. The AO on perusal of the information and explanations filed found that the assessee has not deducted TDS and in some cases lower deduction of TDS certificate were not obtained. The A.O. observed that there is no deduction of TDS under provisions of Sec.194C,194I and 194J of the Act on the rent, professional fee and contractual payments. Finally the AO has directed the assessee to pay Rs. 34,37,600/- towards non deduction of TDS u/s 201(1) of the Act along with interest and passed the order u/s 201 and 201(A) of the Act dated 22.03.2019.
Aggrieved by the order the assessee has filed an appeal before the CIT(A).Whereas the CIT(A) considered the grounds of appeal and findings of the AO and observed that the assessee has not complied with the notice and based on the information filed in statement of facts(SAF) in Form. no. 35 has dealt on the facts and M/s Siemens Financial Services Pvt Ltd., Mumbai. - 8 - relied on the various judicial decisions and confirmed the action of the assessing officer in raising the demand and dismissed the assessee appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal with the Honble Tribunal.
4. At the time of hearing, the Ld. AR submitted that the CIT(A) erred in not considering the factual information filed in the course of appellate proceedings and further the CIT(A) has overlooked the legal jurisdictional issue and substantiated the submissions with the paper book containing the information filed before the CIT(A) on line and prayed for an opportunity before the lower authorities to explain the nature of income, nature of expenses claimed and details of TDS and prayed for allowing the appeal. Contra, the Ld.DR relied on the order of the CIT(A).
5. We heard the rival submissions and perused the material on record. The main grievance of the assessee that the CIT(A) has overlooked the various material information filed in the course of hearing and the CIT(A) erred in observing that the assessee has not M/s Siemens Financial Services Pvt Ltd., Mumbai. - 9 - submitted the information. The Ld. AR demonstrated at page 20 of the paper book where the acknowledgement of online submission was filed on 18.01.2022 with the first appellate Authority (CIT(A). The Ld.AR emphasized that the CIT(A) has not considered any of this vital information and has erred in concluding and confirming the action of the A.O. Prima-facie the CIT(A) has passed the order considering the fact that there is no information was filed in spite of providing adequate opportunity of hearing and the notices were issued. We find the Ld.CIT(A) has issued the e-notice of hearing referred at page 7 Para 1.3 of the order, but there was no response and thus the Ld.CIT(A) decided the appeal based on the information available on record. We find that the assessee has raised grounds of appeal challenging the jurisdiction and TDS demand U/sec201(1) of the Act raised by the assessing officer and the Ld.AR has demonstrated with the evidence in paper book at page 20 with the supporting details filed in ITBA on line. We considering the facts, circumstances and principles of natural justice shall provide one more opportunity of hearing to the M/s Siemens Financial Services Pvt Ltd., Mumbai. - 10 - assessee to substantiate the case before the CIT(A) along with evidences and information. Accordingly, we set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh on merits and the assessee should cooperate in submitting the information for early disposal of the appeal and allow the grounds of appeal of the assessee for statistical purpose.