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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Shri Waseem Ahmed & Shri Siddhartha Nautiyal
आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-8, Ahmedabad in Appeal no. CIT(A)-8/10177/2016-17 vide order dated 20/09/2018 passed for the assessment year 2015-16.
The assessee has taken the following grounds of appeal:- 2.
Page No. 2 Strategic Infosystems Pvt. Ltd. vs. DCIT
“1. The Learned Commissioner of Income Tax (Appeals)-8, Ahmedabad has erred in law and on facts of the case by not allowing the credit of DDT of Rs.3,88,761/-.
The Learned Commissioner of Income Tax (Appeals)- 8, Ahmedabad has erred in law and on facts of the case by levying interest u/s. 115P of Rs. 1,24,404/-.
3. Your Appellant reserves the right to add, alter, amend and/or withdraw any of the above Grounds of Appeal.
Total Tax Effect 5,13,165”
At the outset, we note that the appeal is time-barred by 671 days. In this respect, the counsel for the assessee has submitted that the reason for the inordinate delay in filing appeal is owing to the fact that the assessee was continuously following alternate remedy, thereby causing delay in filing the appeal. Firstly, against the 143(1) intimation issued by the CPC whereby the assessee was denied credit of DDT paid by him during the impugned year, and in order to get the TDS credit, the assessee filed first rectification application on 24-10-2016 with CPC and 154 order against the same was received on 02-02-2017. The appeal against the 154 order was dismissed by CIT (Appeals) vide order dated 20-09-2018. Meanwhile, the assessee again filed rectification application on 28-05-2022 with CPC, Bangalore and CPC passed 154 order on 11-07-2020 without considering rectification request. Thereafter, the assessee filed an application with CPC, Bangalore on 04-08- 2020 and till date no reply has been received from CPC. Since the assessee was waiting for the reply from CPC, this caused delay in filing appeal against the CIT (Appeals) order. The assessee has submitted that it has not been doubted that the assessee has paid dividend distribution tax, a copy of Page No. 3 Strategic Infosystems Pvt. Ltd. vs. DCIT the challan in respect thereof has also been closed, however since the assessee inadvertently filed the wrong column by depositing the challan, the Department is not giving credit for the same. It is against this order that the assessee has filed the instant appeal. We have heard the assessee’s contentions and perused the material on record. In our considered view, the assessee has good case in merits. The Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji 1987 taxmann.com 1072, analyzed the provisions of law qua limitation Act and held that the expression 'sufficient cause' employed by the legislature in the Limitation Act is adequately elastic to enable the Courts to apply the law in a meaningful manner which sub-serves the ends of justice-that being the life purpose for the existence of the institution of Courts. It was further observed that a liberal approach is required to be adopted on principle as ordinarily a litigant does not stand to benefit by lodging an appeal late. Further refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. The Apex Court further held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so. The Supreme Court in N. Balakrishnan v. M. Krishnamurthy 2008 (228) ELT 162, while condoning the delay of 883 days in filing an application for setting Page No. 4 Strategic Infosystems Pvt. Ltd. vs. DCIT aside the ex parte decree held "That the purpose of Limitation Act was not to destroy the rights. It is founded on public policy fixing a life span for the legal remedy for the general welfare. The primary function of a Court is to adjudicate disputes between the parties and to advance substantial justice. The time limit fixed for approaching the Court in different situations is not because on the expiry of such time a bad cause would transform into a good cause. The object of providing legal remedy is to repair the damage caused by reason of legal injury. If the explanation given does not smack mala fides or is not shown to have been put forth as a part of a dilatory strategy, the Court must show utmost consideration to the suitor." In a considered view, in view of the factual situation presented before us, in the interests of justice, we are condoning the delay in filing the appeal.
The brief facts of the case are that the assessee is a Private Limited Company engaged in the business of providing service. The return of income was filed on 28.09.2015 showing total income at Rs.28,26,650/-. The return was processed u/s. 143(1) by the Assessing Officer (CPC). During the year under consideration, the Appellant have declared dividend of Rs.22,87,500/- and have paid Dividend Distribution Tax (DDT) u/s. 115- O of the I.T. Act, 1961, of Rs.3,88,761/- vide challan no. 32423 dated 04.06.2014. However on going through the intimation, it was found that the Assessing Officer (CPC) has not given credit of DDT of Rs.3,88,761/- and have raised demand for DDT of Rs.5,13,165/- along with interest u/s. 115P of Rs.1,24,404/-. The reasons for not granting of TDS is that in the challan, by mistake, the tick was made on code "(107) Tax On Distributed Income To Unit Holders" instead of code "(106) Tax On Distributed Profits Of Page No. 5 Strategic Infosystems Pvt. Ltd. vs. DCIT Domestic Companies". Against the said intimation u/s. 143(1), the Appellant have filed rectification application u/s. 154 on CPC portal on 24.10.2016. However, the Assessing Officer vide rectification order u/s. 154 dated 02.02.2017 rejected the rectification application stating as under:
"As seen from the e-filed return of income and rectification filed by you, there is a variance in the tax credits claimed and allowed. On examination, it is found that there is mismatch in DDT major head / minor head is wrongly mentioned, the assessee has to get the same corrected by the bank / jurisdictional assessing officer for the corrected data uploaded to OLTAS database. After updation, you may file online rectification. "
The assessee filed appeal against the above rectification application dated 02-02-2017. However, the Ld. CIT(Appeals) dismissed the assessee’s appeal with the following observations:
“4. I have carefully gone through the impugned Rectification Order u/s. 154 and the submission made by the appellant Ground no,1 & 2 of the appellant pertains to grievance of the appellant in not granting the credit of DDT [(Dividend Distribution tax) amounting to Rs.3,88,761/-. The facts of the case are that appellant while admitted that he paid the DDT by wrong challan and hence the DDT was not mapped while processing the return by CPC, Bangalore. Appellant filed a rectification application to CPC. The CPC, Bangalore vide Rectification Order dated 02/02/2017 rejected the rectification application for the following reasons:
"As seen from the e-filed return of income and rectification filed by you, there is a variance in the tax credits claimed & allowed. On Page No. 6 Strategic Infosystems Pvt. Ltd. vs. DCIT examination, it is found that there is mismatch in DDT major head/minor head is wrongly mentioned, the assessee has to get (he same corrected by the bank/jurisdictional assessing officer for the corrected data uploaded to OLTAS databse. After updation, you may file online rectification. Note: The taxpayer is requested to view the video on the procedure for filing the rectification application and upload the same, the link for which is as under - https://m.youtuhe.come/walch?fealure=youtube&qcTOZionV3u.” In the course of appellate hearing, Ld. A.R. stated that they have not approached the Bank/jurisdictional Assessing Officer for the correction of data uploaded by them as advised by the CPC in the impugned rectification order. Since appellant has not taken steps to rectify as advised by the CPC, Bangalore, in the impugned rectification order, I do not find any merit in the contention of the appellant in this ground of appeal
. Hence ground no. 1 & 2 are dismissed.
6. In the result, the appeal is dismissed.”
Before us, the counsel for the assessee submitted it is an undisputed fact that the assessee has paid dividend distribution tax (DDT) amounting to � 3,88,761/- vide challan number 32423 dated 04-06-2014. The Assessing Officer (CPC) did not give credit of DDT of � 3,88,761/-only due to the inadvertent mistake of the assessee while filling the challan, wherein by mistake, tick was made in the code “(107) Tax on Distributed Income to Unit Holders” instead of code “(106) Tax on Distributed Profits of Domestic Companies)”. The counsel for the assessee submitted that it may be noted that the payment of dividend distribution tax is also made in time, as is evident from copy of challan enclosed at page number 1 of the paper book. The counsel for the assessee submitted that owing to inadvertent mistake committed at the time of filing of challan, the vested legal right of the Page No. 7 Strategic Infosystems Pvt. Ltd. vs. DCIT assessee to get credit of dividend distribution tax deposited within time cannot be denied. The Ld. DR has also disputed the fact that the assessee has deposited DDT within time.
We have heard the rival contentions and perused the material on record. In our view, the instant case is one where the assessee has been denied credit of DDT deposited within time only on account of a technical default committed at the time of filing of challan, wherein a wrong column was tick marked by the assessee inadvertently. The assessee has filed three rectification applications with CPC, on which there has been no relief despite continuous follow-ups. In fact vide order dated 02-02-2017, the CPC has directed the assessee to get the mistake corrected by the bank/jurisdictional Officer for the corrected date uploaded to OLTAS database so as to enable him to get the credit of DDT, thereby shifting then entire onus of getting the DDT credit upon the assessee. The Ld. CIT(Appeals) has also dismissed the assessee’s appeal on the ground that since the assessee has not approached the bank/jurisdictional assessing Officer for correction of data uploaded by them as advised by CPC, the appeal is dismissed. It has been never disputed that the assessee has deposited DDT within time. The Delhi High Court in the case of Court On Its Own Motion v. Ld. CIT(Appeals) [2013] 31 taxmann.com 31 (Delhi)issued seven mandamus in response to a Public Interest Litigation regarding difficulties faced by assessees after computerisation and central processing of income tax returns. One of the seven mandamus is in relation to credit of TDS to an assessee when tax deducted has been deposited with Page No. 8 Strategic Infosystems Pvt. Ltd. vs. DCIT revenue but incorrect particulars have been uploaded by deductor. In this case, the High Court made the following relevant observations: • Denying benefit of TDS to a taxpayer because of the fault of the deductor, which is not attributable to the deductee, causes unwarranted harassment and inconvenience. The deductee feels cheated. The Revenue cannot be a silent spectator, wash their hands and pretend helplessness. The problems highlighted here are normally faced by small or middle class taxpayers, including senior citizens as they do not have Chartered Accountants or Advocates on their pay rolls. The marginal amount involved in several cases and inconvenience/harassment involved makes it an unviable and a futile exercise to first approach the deductor and then the Assessing Officer. Rectification and getting corrections made by the deductor and to get them uploaded is not an easy task. The second phase of filing a revised return or an application under section 154 is equally 'daunting and expensive'. Invariably the assessees write letters or even visit the office of the deductors, but when there is no response or desired result, they get frustrated and suffer. This causes distrust and feeling that the assessee has not been treated justly, fairly and in an honest manner. [Para 49]
• Therefore, it is directed that when an assessee approaches the Assessing Officer with requisite details and particulars, the said Assessing Officer should verify whether or not the deductor has made payment of the TDS and if the payment has been made, credit of the same should be given to the assessee. These details Page No. 9 Strategic Infosystems Pvt. Ltd. vs. DCIT or the TDS certificate should be starting point for the Assessing Officer to ascertain and verify the true and correct position. The Assessing Officer will be at liberty to get in touch with the TDS circle, in case he requires clarification or confirmation. He is also at liberty to get in touch with deductors by issuing a notice and compelling them to upload the correct particulars/details. The said exercise must be and should be undertaken by the Revenue i.e., the Assessing Officer as an assessee who suffers in such cases is not due to his fault and can justifiably feel deceived and defrauded. The stand of the Revenue that they can only write a letter to the deductor to persuade him to correct the uploaded entries or to upload the details cannot be accepted. Power and authority of the Assessing Officer cannot match and are not a substitute to the beseeching or imploring of an assessee to the deductor. Section 234E will also require similar verification by the Assessing Officer. In such cases, if required, order under section 154 may also be passed. [Para 50] 7.1 In our view, the above ruling highlights the difficulties faced by the assessee’s in genuine circumstances and the role that the Department may undertake in assisting the assessee’s in case of genuine difficulties being faced by them. In our view, in the instant case, the assessee has deducted and deposited DDT within time, but due to an inadvertent mistake in filing the challan, the assessee has been denied credit of DDT. The assessee has filed several applications under section 154 of the Act with the CPC, but the same have been rejected citing technical reasons. The appeal of the assessee was Page No. 10 Strategic Infosystems Pvt. Ltd. vs. DCIT also dismissed on the ground that the assessee did not take up necessary follow-up action. In our view, the assessee has already approached the CPC thrice and also approached Ld. CIT(Appeals) for redressal of its grievance and there is no denial that the assessee has paid and deposited DDT within the due date. In view of the above circumstances cited before us, in our considered view, it is a fit case where the assessee should be granted necessary credit of DDT paid. Accordingly, the revenue is directed to grant credit of DDT to the assessee by giving necessary directions to the jurisdictional assessing Officer to correct the data uploaded to the OLTAS database and grant credit of DDT to the assessee.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 22-06-2022 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 22/06/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद