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Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA
Before: Shri Waseem Ahmed & Shri S.S. Viswanethra Ravi
आदेश /O R D E R PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-24,Kolkata dated 03.11.2015. Assessment was framed by ITO Ward-59(3), Kolkata u/s 201(1)/201(1A) r.w.s. 194J of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 30.05.2008 for assessment year 2004-05.
ITA No.165/Kol/2016 A.Y. 2004-05 Subhag Mecantile (P) Ltd. Vs. ITO,TDSs Wd-59(3), Kol. Page 2 Shri Manoj Kataruka, Ld. Advocate appeared on behalf of assessee and Shri S. Dasgupta, Ld. Departmental Representative appeared on behalf of Revenue. 2. The assessee has taken the following grounds:- “1) that on the facts and circumstances of the case the Ld. CIT(A) has erred in confirming the order of the Assessing Officer u/s. 201(1)/201(1A) of the Income Tax Act, 1961 2) that on the facts and circumstances of the case the Ld. CIT(A) has erred in confirming the payment of interest of Rs.9,58,748/- and Rs.2,65,901/- to different companies, while both are payments to individuals of which on Rs.9,58,708/- they submitted Form 15G and on Rs.2,65,901/- TDs was properly deducted and paid. 3) that on the fact and circumstances of the case the Ld. CIT(A) has erred in confirming the order of the Assessing Officer charge in the interest of Rs.1,25,522/- whereas there was no liability to deduct TDS or payment of TDS. 4) that on the facts and circumstances of the case the Ld. CIT(A) has erred in not considering the submission, that before Assessing Officer there was reasonable cause of non compliance of notice fixing the hearing. 5) that other grounds of all if any, may kindly be allowed to be submitted at before the time of hearing.” 3. At the outset, it is observed that there is a delay of 28 days on the part of the assessee in fling this appeal before the Tribunal. In this regard, the assessee has filed an application seeking condonation of the said delay and keeping in view the reasons given therein, which is duly supported by an affidavit filed by the assessee. We are of the view that there is a sufficient cause for the delay on the part of the assessee in filing this appeal. Hence, we condone the said delay and proceed to dispose of this appeal of the assessee on merit.
Only issue raised by assessee is that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining the disallowance of ₹3,76,566/- including the interest of ₹1,25,522/- on account of non-deduction of TDS on interest u/s.194-A of the Act.
Briefly stated facts are that assessee is in the present case is a limited company and engaged in trading business of securities. During the year, AO observed that
ITA No.165/Kol/2016 A.Y. 2004-05 Subhag Mecantile (P) Ltd. Vs. ITO,TDSs Wd-59(3), Kol. Page 3 assessee has incurred interest expenses of ₹9,58,708 and ₹2,65,901/- which was paid to different companies without deducting TDS u/s 194I of the Act. On question for none deduction of TDS u/s 194-A of the Act. On question for non deduction of TDS on the interest expenses, assessee failed to make any reply. Therefore, AO treated the assessee in default on account of non-deduction of TDS u/s. 201(1)/201(1A) of the Act and made the disallowance of ₹2,51,044/- being TDS amount on Interest expense of Rs.12,24,609.00 under section 201(1) of the Act along with the amount of interest for ₹1,25,522/- under section 201(1A) of the Act only.
Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT(A) submitted that the observation of AO that assessee failed to deduct TDS on interest payment to different companies is based on wrong-assumption of facts. As such, assessee has deducted TDS on the interest expense to all the companies except in case of individual who had filed Form 15G/15H for non- deduction of TDS. The assessee also filed the details of interest expense on which TDS was deduced and on which TDS was not deducted which is reproduced as under:- Amount paid Interest paid to Tax deducted 1. to a lists o 13 companies 7,57,073/- 1,56,202 @ 205% 2. To individual 2,65,941 26,595 @ 10.0% 3 To individuals who submitted their 9,58,708 Nil 15G 4. to an individual (non-taxable) 4,511 Nil 19,86,233 1,82,797
The assessee also submitted that the parties (individual) who have field Form 15G were not subject to TDS under section 194A of the Act. The Ld. CIT(A) called for remand report from AO vide letter dated 19.08.2014 who filed the same vide letter No.F.CIT/Kol/II/Kol/15G/2014-15 dted 01.09.14 which is reproduced:-
ITA No.165/Kol/2016 A.Y. 2004-05 Subhag Mecantile (P) Ltd. Vs. ITO,TDSs Wd-59(3), Kol. Page 4 “With reference to your letter dated 22.08.2014 vide memo no.ITO(TDS)/Wd.59(3)/Kol/Remand Report/14-15/474-75, I have been directed to intimate you that the receipt register for the year 2004 could not be retrieved. Therefore, the claim of the assessee company regarding filing of 20 sets of Form 15G could not be claimed.” In view of above, remand report, Ld. CIT(A) confirmed the order of AO by observing as under:- “10. In view of the above records being not traceable a discussed above, the time to which the matters relate being far too away in the past and failure on the part of the appellant to comply to the AO's requisition the appellant’s plea of use of wrong address by the AO cannot be accepted. No reasonable cause seems to exist for the appellant’s inability to respond to the Assessing Officer's requisition in the course of working liability u/s. 201(1)/(1A). Additional evidences filed cannot therefore be admitted. Therefore, there does not appear to be any reasonable cause for failure on the part of the appellant for the act of non-deduction of tax at source. The ground of filing form 15G cannot be allowed at this stage because verification relating to F.Y 2003-04 cannot be carried out as reliable records cannot be found at relevant ends.” Being aggrieved by this order of Ld. CIT(A) assessee is ins second appeal before us.
Before us. Ld. AR for the assessee filed paper book which is running pages from 1 to 31 and TDS submitted that the parties who have Form 15G no TDS was deducted on the payment of interest to them. Ld. AR also submitted that it has claimed total interest expense of ₹19,86,233/- and out of same TDS was deducted on the payment of interest of ₹10,27,525/- only. In respect of remaining amount of ₹9,58,708/- no TDS was deducted as the payment was made to the individual who have filed Form 15G. Ld AR in support of assessee’s claim drew our attention on page 29 of the paper book where the detail of parties to whom the interest was paid was placed. Ld. AR also submitted that the intimation in respect of 21 individual parties was duly made to the Commissioner of Income-tax which is placed on paged 20 of the paper book. Ld. AR also submitted that there was no deduction of TDS in respect of same parties even in the AY 2003-04. Thus the TDS was not deducted due to fact that Form 15G were duly filed before Ld. CIT and copy of the letter written to Ld. CIT on page 28 of the paper book. Ld. AR also submitted that TDS has been deducted by AO
ITA No.165/Kol/2016 A.Y. 2004-05 Subhag Mecantile (P) Ltd. Vs. ITO,TDSs Wd-59(3), Kol. Page 5 @ 20% whereas per the provision of Section 194-A TDS required to be deducted @ 10% only. On the other hand, Ld. DR vehemently relied on the order of Authorities Below. 8. We have heard the rival contentions of both the parties and perused the material available on record. In the present case, the demand was raised for the amount of TDS which assessee failed to deduct from the payment of interest u/s.194- A of the Act. Accordingly, AO was charged interest u/s 201(1)/201(1A) of the Act along with the amount of TDS. The view taken by AO was subsequently confirmed by Ld. CIT(A). Now the limited issue before us arises for adjudication so as to whether the assessee has filed Form 15G before Ld. CIT. in the given facts and circumstances. On perusal of paper book we note that assessee claimed to have filed Form 15G before Ld. CIT which is evident from the letter placed on page 20 of the paper book. The impugned letter fled by assessee was not considered by Ld. CIT(A) on the basis of remand report, wherein it was stated that the records of the assessee are not traceable. Now the issue relates whether the letter filed by the assessee to Ld. CIT on 07.04.2004 is true. In the instant case, records were traceable by the Authorities Below, therefore, benefit of doubt goes in favour of assessee. It is because the Revenue has not proved that assessee has failed to furnish the Form 15G collected from the parties before Ld. CIT. In holding so, we find support and guidance from the order of ITAT Delhi Bench in the case of Pragati Construction vs. ITO reported in 60 IT 201(Del), wherein it was held as under:- “The assessee placed on record ample evidence which the ITO did not case to test by bringing on record anything in rebuttal. The enquiry through the Intelligence Wing at the most created a suspicion. The ITO should have taken the enquiry to its logical conclusion since suspicion, howsoever, strong could not take the place of evidence. The contention of the assessees that onus or degree of proof must be reasonable and an assessee cannot be expected to do the impossible was valid. An assessee cannot be asked to go back to the ITO to enable the latter to conduct enquiries after a lapse of many years when the entire complex of the case has changed and there is an initial failure on the part of the ITO to conduct such enquiries in the first stage of the proceedings. In the instant case, such enquiries were not conducted by the ITO initially and the entire case proceeded on suspicion although the assessee had placed on record adequate material which could not be rejected without placing anything in
ITA No.165/Kol/2016 A.Y. 2004-05 Subhag Mecantile (P) Ltd. Vs. ITO,TDSs Wd-59(3), Kol. Page 6 rebuttal by the revenue. IT was a very plausible explanation that the assessee did not know the whereabouts of the depositors after so many years specially when the amounts were stated to have been paid back. In allowing the benefit of doubt to the assessee the addition of Rs.1,15,000 was to be deleted.” Similarly, we also note that assessee has filed Form 15H for the immediate preceding Assessment Year i.e. 2003-04 which was duly accepted by Ld. CIT and according no disallowance was made. We also not that assessment was framed us. 143(3) for the year under consideration vide order dated. 09.11.2016 but no disallowance on account of non-deduction of TDS u/s. 194-A r.w.s. 40(a)(ia) of the Act. In view of above, we are inclined to reverse the order of Ld. CIT(A). AO is directed accordingly. This ground of assessee is allowed. 9. In the result, assessee’s appeal stands allowed. Order pronounced in the open court 14/06/2018 Sd/- Sd/- (�या�यक सद�य) (लेखा सद�य) (S.S. Viswanethra Ravi) (Waseem Ahmed) (Judicial Member) (Accountant Member) Kolkata, *Dkp, Sr.P.S #दनांकः- 14/06/2018 कोलकाता । *Dkp, Sr.P.S #दनांकः- /05/2018 कोलकाता । आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ� /Appellant-Subhag Mercantile (P) Ltd. 6, Old Post Office, St.Kolkata-001 2. ��यथ� /Respondent-ITO,TDS Wd-59(3), 10B,Middleton Row, Kolkata-71 3. संबं/धत आयकर आयु0त / Concerned CIT Kolkata 4. आयकर आयु0त- अपील / CIT (A) Kolkata 5. 3वभागीय �6त6न/ध, आयकर अपील�य अ/धकरण, कोलकाता / DR, ITAT, Kolkata 6. गाड9 फाइल / Guard file. By order/आदेश से, /True Copy/ Sr. Private Secretary, Head of Office/DDO आयकर अपील�य अ/धकरण, कोलकाता ।