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Facts
The assessee, City Elevators Pvt. Ltd., failed to deduct TDS on salary paid to M/s Sushila Rajgopalan. The Assessing Officer treated the assessee as 'assessee in default' under section 201(1)/201(1A) and raised a liability. The CIT(A) upheld this liability, stating the assessee did not file requisite details to prove the payee had paid tax and filed their return.
Held
The Tribunal noted that the assessee had filed an application for admission of additional evidence, including a Form 26A certificate. Since this evidence was submitted, the Tribunal set aside the CIT(A)'s finding and restored the matter to the Assessing Officer for consideration of the new evidence.
Key Issues
Whether the assessee can be treated as an assessee in default for non-deduction of TDS, and whether additional evidence submitted at the appellate stage should be considered.
Sections Cited
201(1), 201(1A), 139, 31ACB
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Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
This appeal has been preferred by the assessee against order dated 01.02.2024 passed by the Ld. Additional/Joint Commissioner of Income-tax (Appeals) -2, Coimbatore for assessment year 2015- 16, raising following grounds:
City Elevators Pvt. Ltd. 2 ITA No. 1429/MUM/2024
On the given facts, circumstances and judicial pronouncements, CIT 1. On the given facts, circumstances and judicial pronouncements, CIT 1. On the given facts, circumstances and judicial pronouncements, CIT (Appeals) erred in confirming the action of TDS O (Appeals) erred in confirming the action of TDS Officer by treating appellant fficer by treating appellant as 'assessee in default' us 201(1)/ 201(1A) for non as 'assessee in default' us 201(1)/ 201(1A) for non-deposition of tax of Rs. deposition of tax of Rs. 7,45,980/-. Such action of treating the appellant as assessee in default is . Such action of treating the appellant as assessee in default is . Such action of treating the appellant as assessee in default is erroneous and bad in law and liable to be quashed. erroneous and bad in law and liable to be quashed.
On the given facts, 2. On the given facts, circumstances and judicial pronouncements, CIT circumstances and judicial pronouncements, CIT (Appeals) erred in confirming the action of TDS Officer by treating appellant (Appeals) erred in confirming the action of TDS Officer by treating appellant (Appeals) erred in confirming the action of TDS Officer by treating appellant as 'assessee in default' and levying the interest u/s 201(1A) for non as 'assessee in default' and levying the interest u/s 201(1A) for non as 'assessee in default' and levying the interest u/s 201(1A) for non- deposition of tax of Rs. 6,73,785/ deposition of tax of Rs. 6,73,785/-. Such action of treating the appellant as the appellant as assessee in default & levying interest is erroneous and bad in law and assessee in default & levying interest is erroneous and bad in law and assessee in default & levying interest is erroneous and bad in law and liable to be quashed. liable to be quashed. 3. On facts and circumstances, Ld. CIT(A) has erred in confirming the TDS 3. On facts and circumstances, Ld. CIT(A) has erred in confirming the TDS 3. On facts and circumstances, Ld. CIT(A) has erred in confirming the TDS demand & interest without providing proper opportunity of hearing which demand & interest without providing proper opportunity of hearing which demand & interest without providing proper opportunity of hearing which is against the principle of natural justice. Such TDS demand & interest is is against the principle of natural justice. Such TDS demand & interest is is against the principle of natural justice. Such TDS demand & interest is bad in law and erroneous in facts and liable to be deleted as the same is bad in law and erroneous in facts and liable to be deleted as the same is bad in law and erroneous in facts and liable to be deleted as the same is confirmed without providing proper opportunity of hearing confirmed without providing proper opportunity of hearing 2. Briefly stated, facts of the case are that the Briefly stated, facts of the case are that the Assessing Officer Assessing Officer noticed that the assessee failed to deduct TDS on salary paid to assessee failed to deduct TDS on salary paid to assessee failed to deduct TDS on salary paid to M/s Sushila Rajgopalan and therefore, held the assessee as M/s Sushila Rajgopalan and therefore, held the assessee as M/s Sushila Rajgopalan and therefore, held the assessee as “assessee-in-default” as as per per the the provisions provisions of of section section 201(1)/201(1A) of the Income 201(1)/201(1A) of the Income-tax, 1961 (in short ‘the Act’ tax, 1961 (in short ‘the Act’) and raised liability of Rs.14,90,765/ liability of Rs.14,90,765/- vide order u/s 201 vide order u/s 201(1)/201(1A) of the Act passed on 01.03.2023 for assessment year 2016-17. the Act passed on 01.03.2023 for assessment year 2016 the Act passed on 01.03.2023 for assessment year 2016
On further appeal, the Ld. CIT(A) upheld the liability on the On further appeal, the Ld. CIT(A) upheld the liability on the On further appeal, the Ld. CIT(A) upheld the liability on the ground that the assessee did not file the requisite details as ground that the assessee did not file the requisite detail ground that the assessee did not file the requisite detail required under the proviso to section 201 of the Act to support that required under the proviso to section 201 of the Act to support that required under the proviso to section 201 of the Act to support that payee has paid the tax and filed return of income. The relevant payee has paid the tax and filed return of income. The relevant payee has paid the tax and filed return of income. The relevant finding of the Ld. CIT(A) is reproduced as under: finding of the Ld. CIT(A) is reproduced as under:
“9. The evidence filed by the appellant are perused. For the 9. The evidence filed by the appellant are perused. For the 9. The evidence filed by the appellant are perused. For the provisions to section 201 to apply, the conditions set there in ons to section 201 to apply, the conditions set there in ons to section 201 to apply, the conditions set there in have to be met cumulatively. The return of income has to be have to be met cumulatively. The return of income has to be have to be met cumulatively. The return of income has to be furnished with in the time u/s 139(1). it is seen that furnished with in the time u/s 139(1). it is seen that furnished with in the time u/s 139(1). it is seen that the return for AY 2016 return for AY 2016-17 has been filed on 02.01.2017 without 17 has been filed on 02.01.2017 without
City Elevators Pvt. Ltd. 3 ITA No. 1429/MUM/2024 payment of tax which payment of tax which makes it a invalid return. Hence the makes it a invalid return. Hence the first condition for filing of return u/s 139 cannot be said to first condition for filing of return u/s 139 cannot be said to first condition for filing of return u/s 139 cannot be said to have been fulfilled. have been fulfilled. 9.1 Secondly the income or such sum paid without deduction 9.1 Secondly the income or such sum paid without deduction 9.1 Secondly the income or such sum paid without deduction of TDS should have been taken into account and tax paid of TDS should have been taken into account and tax paid of TDS should have been taken into account and tax paid and declared in such and declared in such return. it is seen that that the return return. it is seen that that the return has been filed without payment of tax. has been filed without payment of tax. 9.2 the third condition of furnishing certificate in form 26A 9.2 the third condition of furnishing certificate in form 26A 9.2 the third condition of furnishing certificate in form 26A from a CA could not be produced by appellant due to from a CA could not be produced by appellant due to from a CA could not be produced by appellant due to technical error. technical error.
Therefore the conditions laid out in 10. Therefore the conditions laid out in proviso to sec 201 has 201 has not been fulfilled. In these circumstances the AO(TDS) has not been fulfilled. In these circumstances the AO(TDS) has not been fulfilled. In these circumstances the AO(TDS) has rightly held the appellant as rightly held the appellant as 'assessee in default' as per the 'assessee in default' as per the provisions of section 201(1)/201(1A) of the Act for non provisions of section 201(1)/201(1A) of the Act for non provisions of section 201(1)/201(1A) of the Act for non- deposition of TDS of Rs. 7,45,980/ deposition of TDS of Rs. 7,45,980/-. The order u/s 201/201A 201/201A in the case of appellant for AY 2016 in the case of appellant for AY 2016-17 levying demand of Rs 17 levying demand of Rs 14,19,765 is upheld. 14,19,765 is upheld.”
Aggrieved the assessee is in appeal before the Tribunal by way Aggrieved the assessee is in appeal before the Tribunal by way Aggrieved the assessee is in appeal before the Tribunal by way of raising the grounds as reproduced above. of raising the grounds as reproduced above.
We have heard rival submission of the parties and We have heard rival submission of the parties and We have heard rival submission of the parties and perused the relevant material on record. Before us, the Ld. counsel for the relevant material on record. Before us, the Ld. counsel for the relevant material on record. Before us, the Ld. counsel for the assessee has filed an application for admission of additional assessee has filed an application for admission of additional assessee has filed an application for admission of additional evidences containing certificate issued by the Chartered Accountant evidences containing certificate issued by the Chartered Accountant evidences containing certificate issued by the Chartered Accountant in Form 26A as required under Rule 31ACB of the Income-tax in Form 26A as required under Rule 31ACB of the In in Form 26A as required under Rule 31ACB of the In Rules, 1962 for admitting and Rules, 1962 for admitting and requested that matter matter might be restored back to the file of the Assessing Officer for verification. restored back to the file of the Assessing Officer for verification restored back to the file of the Assessing Officer for verification Under the proviso to section 201 of the Act nder the proviso to section 201 of the Act, the assessee is required the assessee is required to satisfy three conditions to satisfy three conditions, firstly, the payee should have filed should have filed return of income, secondly return of income, secondly, the sum of income which was paid which was paid without deduction of TDS should have taken into account of TDS should have taken into account in return of TDS should have taken into account
City Elevators Pvt. Ltd. 4 ITA No. 1429/MUM/2024 of income and tax paid and tax paid, and thirdly, certificate in Form No. 26A certificate in Form No. 26A from the Chartered Accountant should be filed from the Chartered Accountant should be filed. Since, before us, . Since, before us, the assessee has filed necessary documents by way of additional the assessee has filed necessary documents by way of additional the assessee has filed necessary documents by way of additional evidence, therefore, we set aside the finding of the Ld. CIT(A) on the therefore, we set aside the finding of the Ld. CIT(A) on the therefore, we set aside the finding of the Ld. CIT(A) on the issue in dispute and restore the matter back to the file of the issue in dispute and restore the matter back to the file of the issue in dispute and restore the matter back to the file of the Assessing Officer for considering the Assessing Officer for considering the additional evidence of the additional evidence of the assessee and decide the issue in accordance with law. The grounds assessee and decide the issue in accordance with law. The grounds assessee and decide the issue in accordance with law. The grounds of appeal raised by the assessee are allowed for statistical purposes. of appeal raised by the assessee are allowed for statistical purposes. of appeal raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.