USHA SHARMA,NEW DELHI vs. ITO (INTERNATIONAL TAXATION), NEW DELHI

In the Income-Tax Appellate Tribunal, Delhi Bench ‘G (Friday)’, New Delhi Before : Shri Bhavnesh Saini, Judicial Member And Shri L.P. Sahu, Accountant Member ITA No. 6564 & S.A. No. 588/Del./2016 Assessment Year: 2015-16 Mrs. Usha Sharma, E-180, vs. ITO(International Taxation, 1st Floor, Greater Kailash-I, Circle 3(1)(2), New Delhi. New Delhi. PAN – AWWPS5419D (Appellant) (Respondent) Applicant by Sh. Ankur Sharma, Advocate Respondent by Sh. S.S. Rana, CIT/DR

Date of Hearing 21.06.2017 Date of Pronouncement 31.07.2017

ORDER Per L.P. Sahu, A.M.: The present appeal is filed by the assessee against the order of ld. CIT(A)-43, New Delhi dated 03.10.2016 for the assessment year 2015-16. The assessee has raised as much as 22 grounds in this appeal, which are argumentative, but all of them challenge the sustenance of tax liability of Rs.33,00,400/- made by the AO u/s. 195, 201(1) and 201(1A) of the Income-tax Act, 1961. The assessee has also filed stay petition in this appeal.

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through registered sale deed No. 4538 on 08.08.2014 for Rs.1,20,00,000/-. The appellant while making the payment deducted TDS of Rs.14,00,000/- as per provisions of section 195 and TDS notification u/s. 194-IA. The appellant, however, did not deposit the same to the government account. The AO issued show cause notice stating that the appellant was required to deduct and deposit the TDS at the rate of 20% on the sale consideration plus surcharge and education cess and therefore, the appellant was asked to show cause as to why the requisite liability should not be fastened against the assessee along with interests u/s. 201(1A)(ii) and 201(1A)(i) of the IT Act. Plenty of opportunities were afforded to the assessee, as mentioned in the assessment order. On 26.08.2015, the appellant attended along with her husband and she was asked to deposit the amount of tax already deducted at source as well as the balance amount of tax along with due interest and penalty. The assessee, however, explained vide letter dated 28.08.2015 that if the entire amount of tax had been deducted and deposited, the NRI would have sought refund of the entire TDS amount from the tax authorities, as the tax authorities were bound by the tax laws to refund the

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amount and the only gainer would have been the NRI sellers. After considering the explanation of the appellant, the Assessing Officer referring to the provisions of section 195(1) and 195(2) observed that the appellant had failed to discharge his duty as contemplated u/s. 195(1) and 195(2) of the Act and, therefore was in default in respect to such tax within the meaning of section 201(1) and 201(1A) of the Act. Accordingly, the AO held the assessee liable to pay Rs.33,00,400/- [Rs.27,19,200/- as amount of TDS @ 20% on sale consideration +surcharge + Edu. Cess] +[Rs.3,57,000 as interest u/s. 201(1A(ii)] + [Rs.2,24,200 as interest u/s. 201(1A)(i)].

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“a. The facts-and circumstances of the matter are such that TDS could not be deducted - non-deposit of deducted TDS and interest/penalty thereupon is a non-issue. e. The entire amount which ought to have been deducted as TDS was extorted and taken by the NRI vendors. f. The same vendors then filed the complaint against me that I have deducted and not deposited the TDS with the tax authorities. k. The amount which should have been the TDS has been extorted by the vendor NRIs and is additional income in their hands. As no TDS could be deducted, they are required by the provisions of Section 115G to file their returns. Any tax payable by them is taxable at this stage. Section 198 further clarifies that tax deducted is income received in the hands of the assessee. In this case the tax amount is already with the NRI vendors and the incidence of taxability and its exemptions is interse the department and the assessee - the NRI vendors in this case. All applicable laws have been ignored by the AO to bring the NRI vendors to accountability.”

The appellant's plea therefore is that- 1. She did not deduct TDS while making payment to the NRI sellers for purchase of property being 1st Floor, E-180, GK-I, New Delhi- 110048. 2. The entire amount which ought to have been deducted by her as TDS was extorted from her by the NRI sellers. 4.4.2 The appellant, with a view to establish the supposed- extortion of money from her by the NRI sellers has produced copies- (i) An MOU (ii) A Receipt of Rs. 14,00,000/- having been received by the NRI sellers. The contents of receipt dated 08.08.2014 and the MOU dated 08.08.2014 as follows:- MOU This MOU is being entered into between the two parties, Mr. Ramesh Kumar Vahi son of Shri L.R. Vahi and Mrs. Promila Vahi wife of Mr. Ramesh Kumar both resident of E-180, First Floor, G.K.-I, New Delhi- 110048, (hereinafter called the "First Part)'") and Mrs. Usha Sharma wife of Mr. Ankur Sharma resident of B-179, LGF, G.K.-l, New Delhi- 110048 (hereinafter called the "Second Party") with respect to sale of the Property' bearing No, E-180, First Floor, situated at G.K.-I, New Delhi- 110048, It is agreed that the balance consideration of Rs. 12,80,000/- i.e. being kept aside for in case of deduction on account

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of capital gain tax, payable the Vendee as per section 195 of the income tax act will be deposited by the Vendee in case of non obtaining of the tax exemption certificate by the First Party on or before 15/09/2O14. It is expressly agreed that in case the Tax exemption certificate is provided by the First Party (Mr. Ramesh Kumar Vahi and Mrs. Promila Vahi) on or before 15/09/2014 then Mrs. Usha Sharma shall pay this amount (Rs. 12,80,000/-) by cheque at the time of producing the capital gain tax exemption certificate. Dated;-08/ 08/2014 Place:- New Delhi" An examination of the MOU reveals a mutual arrangement between the parties to contract out of a statutory obligation. The statutory obligation being the absolute duty of the buyer of the property Smt. Usha Sharma to comply with provisions of Section 195 of the IT Act, 1961. Receipt Received a sum of Rs. 14,00,000/- (fourteen lakh only) from Mrs. Usha Sharma wife of Mr. Ankur Sharma resident of E- 179, LGF, GK-I, New Delhi-110048 being the amount deducted as TDS in the sale deed registered by us in her favour with respect to sale of property bearing no. E-180, First Floor, situated at GK-I, New Delhi-110048 on 08.08.2014. Dated: 08.08.2014 Place: New Delhi" An examination of the contents of the receipt shows that a sum of Rs. 14,00,000/- had been withheld by Smt. Usha Sharma as TDS, and the same was then given to the NRI sellers. The same should have been deposited in the Government Account (since the same was TDS), as per provisions of Section 200 of the IT Act, 1961. However, Smt, Usha Sharma actually gave this amount to Sh. Ramesh Kumar Vahi and Smt. Promila Vahi, the two NRI sellers of property. Smt. Usha Sharma was duty bound to pay this amount to the credit of Central Government. She did not do so. It is established position of law, that when the tax has been deducted at source, it does not lie at the risk of the revenue, and therefore, the person making the deduction is bound to account for it to the revenue even if the sum deducted and set aside is stolen or otherwise lost by inevitable accident.

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4.5.1 It is noted that as per registered sale deed dated 08.08.2014 (at pages 8 and 9 of the deed) Smt. Usha Sharma had deducted a sum of Rs. 14 lacs while making payment of consideration to the sellers. The relevant portion of the sale deed is reproduced as under:- "1. That in consideration of the sum of Rs.1,20,00,000/- (Rupees One crore twenty lacs only) which sum, has been paid by the vendee to the vendors, in the following manner:- CH./P.O. No. & Date Amount Drawn on i. 521698 27.07.2014 (in favour of Rs.5,00,000/- Yes Bank Ramesh Kumar Vahi) ii. 521699 27.07.2014 (in favour of Rs.5,00,000/- Yes Bank Promila Vahi) iii. 020987 08.08.2014 (in favour of Rs.48,00,000/- Yes Bank Ramesh Kumar Vahi) iv. 020988 08.08.2014 (in favour Rs.48,00,000/- Yes Bank of Promila Vahi) v. Deducted on A/c of Capital gain Rs.12,80,000/- ---- tax payable by the vendee as per section 195 IT Act. Vi. 1% deducted on account of TDS as Rs.1,20,000/- ---- per Govt. of India Notification Rs.1,20,00,000/- (the sale consideration has been paid by the vendees after tax deduction at source (TDS) @ 1% as per Govt. of India Notification, amounting to Rs. 1,20,000/- for which Form QB 26 will be provided in due course). The receipt of which the vendors hereby admit, confirm and acknowledge, in full and final settlement and. nothing is left due to be paid by the vendee to the vendors against the purchase of the said portion of the said property." 4.5.2 The appellant's claim, made before me and before the AO that she had not deducted Tax at Source (i.e. TDS) while making payment of sale consideration to the NRI sellers is at variance with what has been stated in the registered sale deed dated 08.08.2016. The appellant, Smt. Usha Sharma, as Vendee, has duly signed and executed the sale deed. 4.5.3 The appellant, before me claimed that the sum of Rs. 14 lacs, which ought to have been the TDS amount was extorted from her by the NRI sellers. To this effect, she has produced receipt dated

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08.08.2016, contents of which have been reproduced earlier in this order. 4.6 I find that there are two situations- (A) Appellant's case. That the appellant did not make deduction of tax at source, while making payment to the NRI sellers as consideration for acquiring property being 1st Floor, E-180, GK-I, New Delhi-110048. The consideration being Rs. 1,20,00,000/-. Though the appellant claims that the sum of Rs. 14 lacs which ought to have been deducted as TDS was extorted from her by the NRI sellers. (B) AO's case. That the appellant deducted tax at source, amounting to Rs. 14 lacs, while making payment to the NRI sellers as consideration for acquiring property being 1st Floor, E-180, GK-I, New Delhi-110048. The consideration being Rs. 1,20,00,000/-. The AO notes that the amount of Rs. 14 lacs was not deposited with Government. I am now proceeding to consider both the situations. (A) Appellant's case. As per provisions of Section 195 of the IT Act, 1961, any person responsible for paying to a non-resident any sum chargeable under provisions of this Act is required to deduct income-tax thereon at the prescribed rates. Provisions of Section 195(1) are as follows:- "195(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest (not being interest referred to in section 194LB or section 194LC) (or section 194LD) or (***) or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries” (***) shall, at the. time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force." The appellant herself admits that she had not deducted tax at source, while making payments as aforesaid to the NRI sellers. This makes herself liable to be treated as an assessee in default within meaning of Section 201(1) and 201(1A) of the IT Act, 1961. (B) AO's case. The AO's case is that as per the sale deed, signed by the appellant, she had deducted tax at source amounting to Rs. 14 lacs while making payments to the aforesaid NRI sellers. According to the AO, she did not deposit the amount so deducted with the Government making

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her liable to be treated as assessee in default within the meaning of Section 201(1) and 201(1A) of the IT Act, 1961. I find that in both the situations, the appellant is to be treated as in default as per provisions of Sections 201(1) and 201(1A) of the IT Act, 1961. In fact, the heading of Sections 201(1) and 201(1A) is - Consequences of failure to deduct or pay. Relevant portions are as hereunder:- "201. [(1) Where any person, including the principal officer of a company,— (a.) who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed, to be an assesses in default in respect of such tax:" …………………………………………… [(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub- section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest,— (i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and” (ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid."

Thus, as per the mandate of law, being Section 201(1) and 201(1A), an assessee is to be treated as an assessee in default (i) if he or she does not deduct tax while making payment to a Non-Resident person as per provisions of Section 195 of the IT Act, 1961, (ii) If he or she does not pay tax to the credit of Central Government after having so deducted. In light of the above analysis, I hold that the appellant's default u/s 201(1) and u/s 201(1A) is established, under both the situations discussed above.

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I find that the appellant while paying consideration totaling to Rs. 1.20 crore, had kept aside a sum of Rs. 14 lacs. The breakup of this sum as given in the sale deed dated 08.08.2014 is as follows:- Deducted onA/c of Capital Gain tax payable by the Rs. 12,80,000/- vendee as per section 1 95 of the IT Act 1% deducted on account of TDS as per Government of Rs. 1,20,000/- India notification

(The sale consideration has been paid by the Vendees after tax deduction at source (TDS) @ 1% as per Govt. of India notification, amounting to Rs. 1,20,000/-for which form. QB 26 will be provided in due course). Further, vide receipt dated 08.08.2014, contents of which have been reproduced above, the appellant gave a sum of Rs. 14 lacs to Sh. Ramesh Kumar Vahi, and Smt. Promila Vahi, the NRI sellers, being the amount deducted as TDS. It is specifically noted in the receipt dated 08.08.2014 as follows:- "Received a sum of Rs. 14,00,000/- (fourteen lakhs only) from Mrs. Usha Sharma wife of Mr. Ankur Sharma resident of E-179, LGF, GK-I, New Delhi-110048 being the amount deducted as TDS in the Sale Deed registered by us in her favour with respect to sale of property bearing No. E-189, 1st Floor, situated at GK-1, new Delhi-110048 on 08.08.2014." Signed by Sh. Ramesh Kumar Vahi and Smt Promila Vahi at New Delhi on 08.08.2014. It is clear from an examination of the registered sale deed, as well as of the receipt dated 08.08.2014, that a sum of Rs. 14 lacs was withheld by the assessee, Smt. Usha Sharma, on account of TDS. This amount of Rs, 14 lacs rather than being deposited to the credit of Central Government, was given to the NRI sellers. The nature of the said Rs. 14 lacs as withheld by the assessee appellant, Smt. Usha Sharma, is thus of the nature of TDS. The appellant though claims that the sum of Rs. 14 lacs withheld by her was not on account of TDS. I hold that the sum of Rs. 14 lacs withheld by her was on account of TDS. Having arrived at the inference that the appellant is 'an assessee in default' within the meaning of Sections 201(1.) and 201(1A) of the IT Act, 1961, I proceed to discuss/ adjudicate other issues. 4.7 Whether claim of the assessee that the money (which was supposedly the TDS amount, and ought to have been TDS) was

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extorted or given to the NRI sellers under blackmail/ coercion), should absolve her from her statutory duty as per provisions of Section 195 acceptable ? It has been held by the Hon'ble High Court of Andhra Pradesh in the case of CIT vs. Barium Chemicals Ltd, 175 ITR 243, order dated 07.06.1983 (at para 8 thereof) – "Section 195 casts a statutory obligation upon every person in this country to deduct tax at the prevailing rates from out of any sum which is remitted to a nonresident/foreign company. It is not open to the parties to contract out of this statutory obligation. When the assessee in this case agreed to remit a particular amount without any deduction for taxes or otherwise, it would be reasonable to construe that the assessee has undertaken to pay taxes thereon by itself. It is not possible to agree that the assessee was not aware of the legal position and that in ignorance of it, it agreed to remit the entire income earned by the foreign company to it." (Emphasis supplied) It is therefore clear that deduction of tax while making the payment to non-resident is a statutory obligation upon every person in this country, and it is not open to parties to contract out of this statutory obligation. Whether the plea of the appellant that the amount kept aside as TDS (I deem it to be amount deducted as tax), was extorted from her, help the cause of the appellant? As per provisions of Section 200 of the IT Act, 1961 it is the duty of the person deducting tax, to pay the same to the credit of the Central Government. In the magnum opus of Sh. Palkhivala, The Law and Practice of Income-Tax, Ninth Edition, at page 2117, it is elaborated that liability of the payer for paying the amount deducted as tax to the credit of Government is absolute. When the tax has been deducted at source, it does not lie at the risk of the revenue, and therefore, the person making the deduction is bound to account for it to the revenue even if the sum deducted and set aside is stolen or otherwise lost by inevitable accident. (Attorney General vs. Jeanne Antoine 31 TC 213). Accordingly, the plea of the appellant does not help her cause. 4.9 The appellant has claimed variously that the amount is with the NRI venders and that the tax department has the alternate remedy/ recourse of recovering the same from the venders directly. To this extent, items (a’ and 'j' of grounds of appeal are as follows:- "a That the entire amount chargeable as tax is with the NRI vendors

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j. That the Tax Department has the alternate remedy/recourse of recovering the entire taxable amount from the vendors directly who in any case have taken the entire amount by fraud and extortion" Further, item nos. 'g, h, i, j and k' of letter dated 17.05.2016 of the appellant raises the following plea(s). "g. The tax authorities, totally ignoring documents and facts and circumstances of the matter, have raised, a demand, on me for the amount, including interest. h. This demand is in addition to the amount which the NRI vendors have already taken from me. Once deposited by me with the tax authorities, I shall be made to pay the money in question many times over, causing me and family grave hardships. i. The NRI vendor may then simply claim refund of the capital gains tax under applicable exemptions and provisions of the income tax act. j. The tax authorities are willingly being used by the fraudulent NRI further illegal gains. k. The amount which should have been the TDS has been extorted by the vendor NRIs and is additional income, in their hands. As no TDS could be deducted, they are required by the provisions of Section 115G to file their returns. Any tax, payable by them is taxable at this stage. Section 198 further clarifies that tax deducted is income, received in the hands of the assessee. In this case the tax amount is already with the NRI vendors and the incidence, of taxability and its exemptions is interse the department and the assessee - the NRI vendors in this case. All applicable laws have been ignored by the AO to bring the NRI vendors to accountability.” I find that the Hon’ble Supreme Court in the case of Aggarwal Chambers of Commerce Ltd. Vs Ganpat Rai Hira Lal (1958) 33 ITR 245 (SC) has held that persons who are bound u/s 195 to make deduction of tax at the time of making payment are not concerned with the ultimate result of the assessment of the non-resident person who is the payee, (the last 5 paragraphs of this order may please be seen). It has been specifically held that those persons who are bound under the Act to make deduction at the time of payment of any income, profits or gains are not concerned with the ultimate result of the assessment.

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The Hon’ble Supreme Court in the case of M/s Vodafone International Holdings BV vs. Union of India, 341 TTR 1, order dated 20.01.2012 (para 89 per S H Kapadia, J) has held that - "Section 195(1) casts a duty upon the payer of any income specified therein to a non-resident to deduct therefrom the TAS unless such payer is himself liable to pay income-tax thereon as an agent of the payee. Section 201 says that if such person fails to so deduct TAS he shall be deemed to be an assessee-in-default in respect of the deductible amount of tax (Section 201). Liability to deduct tax is different from "assessment" under the Act. Thus, the person on whom obligation to deduct TAS is cast is not the person who has earned the income. Assessment has to be done after liability to deduct TAS has arisen. The object of Section 195 is to ensure that tax due from nonresident person is secured at the earliest point of time so that there is no difficulty in collection of tax subsequently at the time of regular assessment." [Emphasis Supplied] The appellant's plea that the Tax Department has the alternate remedy/ recourse of recovering the entire taxable amount from the Vendors directly who in any case have taken the entire amount by fraud and extortion (Item No. “j” of her appeal) is therefore not, acceptable. In light of the aforesaid position of law, as elaborated in the aforesaid two orders of Hon'ble Supreme Court, above, I hold that the aforesaid plea of the appellant does not help her. 4.10 Whether the plea of fraud/ coercion absolve the appellant? Even if the appellant has a reasonable cause, he or she is not absolved for the failure to pay the taxes deducted to the credit of Government. In this connection, reliance is placed on the order of Hon’ble ITAT Delhi, B-Bench, in the case of T.H.E. Makers P. Ltd. vs. ITO (TDS) 1 ITRfTrib.) 611 (Delhi) (2010) dated 11.12.2009, in ITA Nos, 3756 till 3759/ Del. Of 2009. At paras 6 and 7 it has been held:- "6. We have considered the rival submissions. The fact to be noted is that the assessee has already deducted tax at source and it is not the case of the assessee that the assessee was required to deduct tax at source which he has not deducted. The fact of having deducted tax at source has been admitted only after the survey was conducted at the premises of fine assessee at default. Section 201(1) provides that where any person who is required to deduct any sum in accordance with the provisions of this Act, does not deduct or does not pay, or after so deducting fails to pay, the whole or any part of the tax, then, such person shall be deemed to be an assessee in default in respect of such tax. There is no provision in the Act which holds that if the assessee

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having deducted the tax does not pay to the credit of the Government will be absolved from the said liability on the demonstration of reasonable cause. Under the scheme of the Act, the assessee deducts tax at source on behalf of other person as an agent of the Government. Therefore, the assessee is not only under an obligation but owes a duty to immediately pay the tax deducted at source on behalf of of other persons to the credit of the Government. The financial difficulties will not absolve the assessee from the liability to deposit the tax deducted at source. Therefore, the assessee was rightly treated as an assessee in default under section 201(3) of the Act. Interest under section 201(1A) is merely compensatory and consequential in nature. The assessee was holding the tax on behalf of the Government and hence for depriving the Government of its dues will qualify interest liability also. 7. In the result, all the appeals are dismissed, "(emphasis supplied)

4.11 The assessee's act of not paying the amounts withheld as TDS amount to defalcation. In this connection, guidance is derived from circular no. 5 dated 03.06.2010 of CBDT as follows:-

"50.3 However, no time-limits have been prescribed for order under sub-section (1) of section 201 where :— (a) the deductor has deducted but not deposited the tax deducted at source, as this would be a case of defalcation of Government dues, (b) the employer has failed to pay the tax wholly or partly, under subsection (1A) of section 192, as the employee would not have paid tax on such perquisites (c) the deductee is a non-resident as it may not be administratively possible to recover the tax from the non-resident." 4.12 Consequences of failure to deduct or failure to pay the taxes as deducted. The power to treat the person, who ought to have made the deduction, or to have made the payment, if deducted, as the case may be, as an assessee in default has been held to be independent of and without prejudice to any other consequence, which would include, if not merely contemplate, prosecution for an offence under section 276B of the IT Act, 1961. Reliance in this case is placed upon order of Hon'ble Delhi High Court in the case of PNB Finance and Industry Ltd, vs. ITO, 1986, 157 ITR 385 (Del.); SLP dismissed (1991) 191 ITR (St.) 9, and also

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in the case of ITO vs. Roshan Cold Storage Pvt, Ltd. (2000), 245 ITR 322 (Madras).

4.13 Liability u/s 201(1) and u/s 201(1A) is absolute. The plea of bona fide belief and reasonable cause are not relevant. It has been held by the Hon'ble Supreme Court in the case of M/s Hindustan Coca- Cola Beverages vs. CIT 293 ITR 226 that liability u/s 201(1A) is mandatory. The payment of interest is not a penal provision and the plea, that the default is not intentional is not acceptable. (It has been so held by the Hon'ble Delhi High Court in the case of M/s CIT vs. Premnath Motors Pvt. Ltd. (2002) 120 Taxman 584 Delhi). Further, it has been held by the Hon'ble Delhi High Court in the case of CIT vs Majestic Hotel Ltd (2006) 155 Taxman 447 (Delhi), that bonafide belief and reasonable cause are not relevant for provisions of section 201(1) and 201(1A). 4.14 The object of Section 195 is to ensure that the tax due from non-resident persons is secured at the earliest point of time. Circular No. 152 dated 27.11.1974 of CBDT explains the object of Section 195 as follows:- "The object of section 195 is to ensure that the tax due from non- resident persons is secured at the earliest point of time so that there is no difficulty in collection of lax subsequently at the time of regular assessment. Failure to deduct tax at source from payment to a non- resident may result in loss of revenue as the nonresident may sometimes have no assets in India from which tax could, be collected at a larger stage. Tax should, therefore, be deducted in all cases where it is required to be deducted under section 195 before the payment is made to the non-resident and the tax so deducted should be paid to the credit of the Central Government as required by section 200 read with Rule 30. Failure to do so would render a person liable to penalty under section 201 read with section 221, and would also constitute an offence under section 276B." If plea of the appellant is accepted, then provisions of Section 195 would be defeated. 4.15 The proceedings at this stage are not penal in nature. What is being demanded as per the AO's order, is the tax amount which the appellant did not pay to the credit of Central Government arid interest thereupon u/s 201(1A). The plea of reasonable cause is relevant at the stage of levying of Penalty u/s 221 of the IT Act, 1961, OR prosecution u/s 276B of the IT Act, 1961, which are independent proceedings. It has been laid down that when a person responsible to deduct tax

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within the prescribed time he is deemed to be an assessee in default in respect of the tax u/s 201 (Flour and Food Ltd. vs. CIT, 1983, 140 1TR 648 (MP)). Further, such a person becomes personally liable to pay the same (Phaltan Sugar Works Ltd. vs. CIT, 1949, 17 ITR 499 (Bom), and Bacha Guzdar vs. CIT, 1952, 22 ITR 158 (Bom). Prosecution can also be launched for delayed payment, or non- payment of tax deducted to the credit of Government u/s 276B of the IT Act, 1961, (ITO vs. East India Coal Co. Ltd. (1983) 139 ITR 450 (Pat); Rayala Corpn Pvt. Ltd. vs. ITO (1981) 129 ITR 675 (Mad); Hallay Mathew (V) vs. State of Kerala (1971) 79 ITR 72 (Ker). The power to treat the person who ought to have made the deduction, ought to have made the payment, if deducted, as the case may be, as an assessee in default has been held to be independent of and without prejudice to any other consequence, which obviously would include, if not merely contemplate, mere prosecution relating to an offence u/s 276B of the IT Act, 1961. It has been so held in a plethora of cases, viz.- PNB Finance 85 Industries Ltd. vs. ITO (1986) 157 ITR 385 (Del); SLP Dismissed (1991) 191 ITR (St.) 9; ITO vs. Roshan Cold Storage Pvt. Ltd. (2000) 245 ITR 322 (Mad).

4.16 Challenge by the appellant to the action of the AC). In the description to the main ground at item nos. 'b,c,d,e,f,g,h and i', the appellant had variously challenged the action of the AO. I find that once the failure of the appellant (within the meaning of provisions of Section 201(1) and 201(1A)) having come to the knowledge of the AO, he was left with no alternative but to take action against the erring assessee. In fact, it becomes his duty. I do not, therefore, find the action of the AO lacking. Since liability of the payer (which in this case is the appellant), as detailed above, is absolute, the Assessing Officer would have been failing in his duty had he not taken action against this assessee appellant, in securing the interest(s) of Revenue. As such, I find the action of the AO is fully justified. The fact that the appellant intended to move a Civil Court of Competent Jurisdiction restraining the NRI vendors from claiming refund of the amount (and depositing thereof as per directions of Civil Court), is of no consequence to the proceedings at hand. This has been so elucidated by judicial forums, as detailed in paras 4.7, 4.8 and 4.10 above. The appellant at Item no. ‘i' of her grounds has claimed that the amount that was deducted was only on paper and has been extorted

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from her by the NRI sellers is of no help to her. In fact, this establishes the wrong doing of the appellant. As detailed earlier in this order, at paras 4.7 and 4.8 above, based upon elucidation of law by the Courts, it was the duty of the appellant to pay the amount so deducted to the credit of the Government. The liability to pay the amounts withheld as TDS to the credit of the Government is absolute. The plea of extortion or reasonable cause will be of help only at the stage of penalty proceedings and prosecution proceedings (if any), which as detailed at para 4.15 above, are independent of these proceedings. At this stage, what is being demanded is the tax as has not been deposited and the prescribed interest thereupon. The appellant might have been a victim of fraud or coercion, but in the scheme of the act, the liability of a person making payment to a Non- Resident is absolute within the meaning of Section 195, Section 200, Section 201(1) and 201(1A) of the IT Act, 1961. This has been elaborated earlier in this order. In fact, as elaborated earlier in this order, the scheme of the act in introducing such provision, is inferable from the order of Hon'ble Supreme Court, which held in the case of in the case of M/s Vodafone International Holdings BV vs. Union of India, 341 ITR 1, order dated 20.01.2012 (Para 89, per S H Kapadia, J) that – "Section 195(1) casts a duty upon the payer of any income specified therein to a. non-resident to deduct therefrom the TAS unless such payer is himself liable to pay income-tax thereon as an agent of the payee. Section 201 says that if such person fails to so deduct TAS he shall be deemed to be an assessee-in-default in respect of the deductible amount of tax (Section 201). Liability to deduct tax is different from "assessment" under the Act. Thus, the person on whom obligation to deduct TAS is cost is not the person who has earned the income. Assessment has to be done after liability to deduct TAS has arisen. The object of Section 195 is to ensure that tax due from nonresident person is secured at the earliest point of time so that there is no difficulty in collection of tax subsequently at the time of regular assessment." [Emphasis Supplied] Further, the documents sought to be provided by the appellant being the receipt dated 08.08.2016 and the MOU dated 08.08.2016 have been duly considered by me, and have been found to be not helping the cause of the appellant at all. In fact, these establish the default of the appellant. This has been considered in this appeal order at paras 4.4.2, 4.5.1, 4.5.2, 4.5.3 and 4.6 above. The appellant pleads that the Income-Tax Department could have recovered the amount of TDS from the NRI sellers (Item no. 'j' of her appeal). At para 4.9 of this order, based upon elaboration of law by

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the Hon’ble Supreme Court in the cases reported in 33 ITR 245, and 341 1TR 1 it has been held by me that the persons who are bound under the act to make deduction at the time of payment of any income, profits or gains are not concerned with the ultimate result of the assessment. As such, this plea of the appellant is not acceptable. To this extent also, I find the action of the AO to be justified.”

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assessee has utterly failed to repudiate the conclusions reached by the ld. CIT(A) in the impugned order. Accordingly, the impugned order does not call for any interference. As a result, the appeal of the appellant is found to have no merits and is liable to be dismissed. Since the appeal of the assessee stands disposed of, the stay application filed in this appeal is rejected.

7 In the result, the appeal and stay application of the assessee are dismissed. Order pronounced in the open court on 31.07.2017.

Sd/- Sd/- (Bhavnesh Saini) (L.P. Sahu) Judicial member Accountant Member Dated: 31.07.2017 *aks* Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order Assistant Registrar Income Tax Appellate Tribunal Delhi Benches, New Delhi