M/S INTERGLOBE AVIATION LTD.,GURGAON vs. DEPUTY COMMISSIONER OF INCOME-TAX, GHAZIABAD

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ITA 3390/DEL/2015Status: DisposedITAT Delhi23 April 2019AY 2014-157 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that several aspects of the case required verification by the Assessing Officer, including the functionality of the online verification facility for LTDC, the submission and consideration of Form 26A, and whether the payees had paid taxes. The case was therefore remitted back to the Assessing Officer.

What were the facts?

The assessee company deducted TDS and filed TDS statements. They received an intimation for a demand due to short deduction, partly due to cancellation of lower tax deduction certificates (LTDC) which were not communicated. The assessee argued they were not aware of the cancellations and were not given an opportunity to be heard.

What were the issues?

Whether the demand raised under Section 200A was valid when LTDC cancellations were not communicated and principles of natural justice were violated. Whether interest under Section 201(1A) is leviable without verifying payee tax payment and providing an opportunity to furnish Form 26A.

Which sections of the Income-tax Act were involved?

Section 154,Section 200A,Section 201(1),Section 197,Section 201(1A)

AI-generated summary — verify with the full judgment below

Before: Shri Amit Shukla & Shri L.P. Sahu

Hearing: 18.02.2019Pronounced: 23.04.2019

ORDER Per L.P. Sahu, A.M.: This is an appeal filed by the assessee against the order of ld. CIT(A)-41, New Delhi dated 24.03.2015 for the assessment year 2014-15 on the following grounds :

“1. That the Commissioner of Income Tax (Appeals) - 41, New Delhi [“Ld. CIT(A)”] erred in law and in facts in upholding a demand of Rs. 40,55,630 as payable by the appellant.

2.

That the “Ld. CIT(A)” erred in law and in facts in not appreciating that the intimation dated 14 December 2013 issued by Deputy Commissioner of Income Tax, TDS CPC, Ghaziabad (“Ld. AO”) under Section 154 read with Section 200A of the Income-tax Act, 1961 (“the Act”) is bad in law.

3. That the “Ld. CIT(A)” erred in law and in facts in not appreciating that the demand raised pursuant to processing of statement of tax deduction at source under section 200A was erroneous to the extent such demand did not arise on account of any arithmetical error in the statement or an incorrect claim apparent from any information in the statement and therefore such could not be raised under the provisions of section 200A of the Act.

4. That the “Ld. CIT(A)” erred in law and in facts in not appreciating that the intimation dated 14 December 2013 issued by Ld. AO under Section 154 read with Section 200A of the Act was issued in violation of section 154(3) of the Act and principles of natural justice to the extent the appellant was not provided an opportunity to show cause as to why the appellant should not be considered as an assessee in default in accordance with the provisions of section 201 (1) of the Act.

5. That the “Ld. CIT(A)” erred in law and in facts in not appreciating that the cancellation of certificates, issued by Ld. AO under section 197 of the Act for authorizing deduction of taxes at lower rate, was against principle of natural justice and was bad in law.

5.1 That the “Ld. CIT(A)” erred in law and in facts in not appreciating that the fact regarding cancellation of certificates issued by Ld. AO was not intimated by the Ld. AO to the appellant as mentioned at the time of issuance of certificates by Ld. AO.

5.2 That the “Ld. CIT(A)” erred in law and in facts in not appreciating that the cancellation of certificates issued by Ld. AO was not communicated in accordance with provisions of the Act.

6. The “Ld. CIT(A)” erred in facts and circumstances of the case and in law in not appreciating the fact that online facility for verification of validity of lower/ nil tax deduction certificates was not functional at the time of deduction of taxes by appellant on payments to the payees.

7.

That the “Ld. CIT(A)” erred in law and in facts in not appreciating that appellant should not be considered to be an assessee in default’ in accordance with the first proviso to section 201 (1) of the Act.

7.1 The “Ld. CIT(A)” erred in facts and in law in upholding the order of the Ld. AO, without having due regard to the fact that the appellant has duly furnished Annexure A to Form 26A obtained from the payee in accordance with the provisions of first proviso to section 201(1) of the Act.

8.

That the “Ld. CIT(A)” erred in law and in facts in not appreciating that the demand is raised without conducting verification whether payee has paid taxes on the income or not.

9.

That the “Ld. CIT(A)” erred in law and in facts in not appreciating that the demand is raised without complying with the first proviso to section 201 and without giving any opportunity to the assessee to furnish Form 26A.

5. The “Ld. CIT(A)” erred in facts and in law in upholding the levy of interest under section 201(1 A) of the Act on account of alleged short-deduction of taxes.

That the above grounds of appeal are without prejudice to each other.”

2. The brief facts of the case are that the assessee company deducted TDS from payments made to various Indian Parties. Accordingly, the appellant filed its quarterly TDS statement in prescribed Form No. 26Q for the quarter ending June, 2013 for F.Y. 2013-14. The appellant received intimation dated 14.12.2013 from TDS CPC wherein total sum of Rs.6,04,76,650/- was to be payable by the appellant. The above demand was raised by the TDS CPC(Central Processing Centre) due to short deduction of TDS made to some specified parties. The assessee filed revised return because there were some mistakes on the part of the assessee, wherein the LTDC (low tax deduction certificate) was rectified which was considered by the TDS, CPC except in the case of following parties :

Name LTDC No. Mumbai International Air Port Pvt. Ltd. 0213QN561J Ram Krishna Travels Pvt. Ltd. 0913AE803J The quarterly TDS return was processed u/s. 154 on 10.02.2014 by raising the demand of Rs.40,55,630/-. Against this rectification order, the assessee filed appeal before the ld. CIT(A), where the assessee submitted detailed reply that the Assessing Officer had issued LTDC u/s. 197 which has been cancelled in respect of following three parties and their LTDC were cancelled by the Assessing Officer, the information of which was not available on ITD Website. Therefore, the assessee deducted lower tax :

Name of the party Amount of TDS demand (Rs.) Mumbai International Airport Ltd. 35,51,501/- (PAN: AAECM6285C) Ram Krishna Travels Pvt. Ltd. 510/- PAN: AABCR1016M The Federal Travel and Tour Pvt. Ltd. 26,003/- PAN : AADCT9952C Total 35,78,014/- The ld. CIT(A) gave direction to the Assessing Officer to verify whether the cancellation certificate was uploaded on ITD website and if the cancellation was uploaded on ITD then the claim of the appellant should be rejected. He also directed to verify the contention of the assessee that the assessee had deposited interest u/s. 201(1A) of Rs.5,07,264/- and to give its credit if it is found verified. Aggrieved, the assessee is in appeal before the Tribunal.

3.

The ld. AR of the assessee submitted that the assessee is not in default once he was not made aware of the cancellation of LTDC and no opportunity of being heard was given before cancellation of LTDC. Once, the assessee was supplied LTDC, the only obligation of the assessee was to deduct tax as per LTDC issued. Thereafter, there was no obligation of the assessee to examine for its cancellation from ITD once he was not supplied any cancellation order of LTDC. Hence, no interest liability is payable by the assessee. The Assessing Officer has violated the provisions of section 197(2) of the IT Act. The assessee had also filed form No. 26A duly certified by CA which was not considered by the ld. CIT(A) before deciding the appeal. He has also filed a written synopsis which is placed on record.

4.

On the other hand, the ld. DR placed reliance on the order of the lower authority and submitted that the ld. CIT(A) has given direction to the Assessing Officer for verification of cancellation of LTDC and its uploading on ITD. Even if the tax has been paid by the deductee on the amounts liable for TDS, the interest cannot be waived off u/s. 201(1A) of the Act. Interest is compensatory in nature and therefore, the assessee shall be treated as assessee in default.

5.

After hearing both the sides and perusing the materials available on record, we are of the opinion that before reaching to any definite conclusion in this appeal, various aspects of the case need verification at the stage of Assessing Officer. With reference to ground No. 6, the assessee has taken a plea that online facility for verification of validity of LTDC was not functional at the time of deduction of taxes by the appellant on payments to the payees and therefore, the assessee cannot be termed as assessee in default. This fact needs verification to ascertain the default of the assessee, particularly when no cancellation order of LTDC was supplied to the assessee. In ground No. 7, the assessee has objected that Annexure to Form 26A obtained from the payees was filed but the same has not been considered by the ld. CIT(A), whereas in ground No. 9, the assessee states that no opportunity was given to the assessee to furnish Form 26A. In this context, it is necessary to examine Form No. 26 and all its annexures filed by the payees and the assessee is required to furnish the same in its support for verification. Similarly, in ground No. 8 the assessee has challenged that the ld. CIT(A) has failed to verify whether the payees have paid taxes on the income or not before saddling interest liability against the assessee. This fact also requires verification at the stage of Assessing Officer before holding the assessee in default. In presence of all these facts, we remit the case back to the Assessing Officer for deciding the core issue involved in this appeal after making due verification of the aforesaid aspects. Needless to say, the assessee shall be given reasonable opportunity of being heard to put up its case on merits and to produce all necessary evidences in support of its claim.

6.

In the result, the appeal is allowed for statistical purposes.

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