M/S JYOTI CERAMIC INDUSTRIES PRIVATE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, TDS CIRCLE, NASHIK, NASHIK

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ITA 605/PUN/2022Status: DisposedITAT Pune27 December 2022AY 2015-166 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) passed the order before the expiry of the time granted to the appellant for making submissions, which violated the principle of natural justice. Therefore, the matter was remanded back to the CIT(A) for fresh adjudication.

What were the facts?

The appellant challenged orders confirming the AO's decision to treat them as an assessee in default for non-deduction of TDS on salary. A key ground was that the CIT(A) passed the order before the due date for submissions, violating natural justice.

What were the issues?

Whether the order passed by the CIT(A) violated the principle of natural justice by curtailing the opportunity for the assessee to make submissions. Whether TDS on salary should be deducted on an accrual or payment basis.

Which sections of the Income-tax Act were involved?

Section 201(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE “C” BENCH, PUNE

Before: HON’BLE SHRI S. S. GODARA & SHRI G. D. PADMAHSHALI

Pronounced: 27/12/2022

ORDER

Per G. D. Padmahshali, AM

1.

The present bunch of six appeals is challenged against separate orders of National Faceless Appeal Centre [for short “NFAC” or CIT(A)”] passed u/s 250 of Income-Tax Act, 1961 [for short “the Act”] which confirms the orders passed u/s 201(1A) of the Act by Deputy Commissioner of Income Tax, TDS Circle Nashik [for short “AO”], for six assessment years [for short “AY”] 2014-15 to 2019-20.

ITAT-Pune Page 1 of 6 M/s Jyoti Ceramic Industries to 609/PUN/2022 AY: 2014-15 to 2019-20 2. Since the legal issue involved in these bunch of appeals is identical, with the agreement of parties present, the matter is heard together for a consolidated order, resultantly the adjudication in lead case ITA/604/PUN/2022 positioned in succeeding paragraphs, shall mutatis mutandis apply to ITA/605 to 609/PUN/2022.

3. Before travelling to facts, it’s necessary to reproduce the identical grounds assailed by the appellant in all these appeals as; Ground No. 1 The Dy. Commissioner of Income-tax TDS, Circle, Nashik [“learned assessing officer”] has erred in treating the Appellant as an assessee in default under section 201(1) of the Act and charging interest thereon by inadvertently considering that the TDS on salary is to be deducted on accrued / due basis by referring to section 15 of the Act rather than on payment basis at the average rate of tax on annual estimated income as per section 192 of the Act. Ground No. 2 The learned assessing officer has erred in treating the Appellant as an assessee in default under section 201(1) of the Act for non-deduction of TDS on monthly accrual basis without appreciating the fat that the commission / ITAT-Pune Page 2 of 6 M/s Jyoti Ceramic Industries to 609/PUN/2022 AY: 2014-15 to 2019-20 performance incentive bonus is paid / provided on annual basis as per the directors’ agreement & board resolution.

Ground No. 3 The Hon’ble Commissioner of Income-tax (Appeals), National Faceless Appeal Centre has passed the order on 2 June 2022 under section 250 of the Act before the due date of filing the submission (6 June 2022) in response to the hearing notice dated 26 May 2022. The Appellant has been denied the opportunity of being heard by curtailing sufficient and reasonable time for making representation and submission and as such, the order passed by the Hon’ble CIT(A) is invalid as per the principle of natural justice.

Your appellant craves leave to add to and/or to amend and/or to modify and/or to cancel any one or more grounds of appeal at the time before or at the time of hearing.

4. When case was called up at pre-scheduled physical hearing, none represented the assessee, having regards to grounds of appeal, in the interest of justice we proceed to adjudicate the matter following rule 24 of the ITAT-Rules, which empowers the Tribunal to decide the appeal ex–parte on merits where appellant does not appear in person or through its authorised representative and the same is done placing on record ITAT-Pune Page 3 of 6 M/s Jyoti Ceramic Industries to 609/PUN/2022 AY: 2014-15 to 2019-20 a no-objection from the respondent revenue. It is needless to mention that, proviso to said rule carves out an exception empowering the Tribunal to recall ex–parte order if appellant appears afterwards and satisfies placing evidential material to the effect that, there was sufficient cause for its non–appearance when appeal was called for hearing, however in the event of failure to substantiate non-appearance in the evince of evidentiary material, the recall exercise turns futile.

5.

During the course of physical hearing, the learned departmental representative [for short “DR”] at the outset, adverting to ground number 3, entreated that, the appellant has alleged the violation of principle of “audi alteram partem”, for the reasons case deserves to be remanded back to the file of NFAC.

6.

After hearing to the rival contentions of both the parties; and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT, Rules”] perused the material placed on records ITAT-Pune Page 4 of 6 M/s Jyoti Ceramic Industries to 609/PUN/2022 AY: 2014-15 to 2019-20 and duly considered the facts of the case in the light of settled legal position and the case laws relied upon by the appellant assessee as well the respondent revenue.

7.

Without touching the merits of the case, we note that, the Ld. NFAC by service of notice dt. 26/05/2022 called upon the appellant to substantiate its claim by 06/06/2022, however before the expiry of said notice period accorded to make representation, the Ld. NFAC adjudicated the matter by an order dt. 02/05/2022 i.e. well before the expiry of time period allowed to the appellant to refute its case on the basis of evidentiary documents, which evidently is violative of basic principle natural justice and for the reason concurring with Ld. DR, we find merit in the ground number 3 raised by the appellant; consequently the matter deserves to be remanded back to the file of Ld. NFAC for de-nova adjudication with a direction to observe the principle of natural justice by effectively providing reasonable opportunity to the appellant to make representation in rebuttal, ergo ordered accordingly. ITAT-Pune Page 5 of 6 M/s Jyoti Ceramic Industries to 609/PUN/2022 AY: 2014-15 to 2019-20 8. Resultantly, the bunch of appeals of the appellant assessee is ALLOWED FOR STATISTICAL PURPOSE in aforestated terms. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Tuesday 27th day of December, 2022.

-S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 27th day of December, 2022. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1.अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent.

3.

The Pr. CIT, Nashik (Mh-India) 4. The NFAC (New Delhi-India) 5. दिभ गीय प्रदिदनदि,आयकर अपीलीय न्य य दिकरण, पुणे “सी” बेंच, पुणे / DR, ITAT, Pune “C” Bench, Pune. 6. ग र्डफ़ इल / Guard File. आिेश नुस र / By Order िररष्ठ दनजी सदचि / Sr. Private Secretary आयकर अपीलीय न्य य दिकरण, पुणे / ITAT, Pune.

ITAT-Pune Page 6 of 6

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