M/S OPTICAL PARADISE,DAVANGERE vs. ITO, DAVANGERE

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ITA 823/BANG/2016Status: DisposedITAT Bangalore13 April 2017AY 2007-085 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that neither the AO nor the CIT(A) had examined whether the recipient of the rent had offered the income to tax. The matter was set aside to the AO for verification of this fact and to decide afresh, providing the assessee an opportunity of hearing.

What were the facts?

The assessee, an optician, failed to deduct TDS on rent payments. The Assessing Officer (AO) initiated proceedings under sections 201(1) and 201(1A) for non-deduction of TDS. The assessee appealed to the CIT(A) but was unsuccessful.

What were the issues?

Whether the assessee can be held in default for non-deduction of TDS if the recipient of the income has already paid tax on it. Whether the authorities below properly examined the tax compliance of the rent recipient.

Which sections of the Income-tax Act were involved?

Section 201(1),Section 201(1A),Section 133A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH : BANGALORE

Before: SHRI A. K. GARODIA & SHRI VIJAY PAL RAO

For Respondent: Smt. Swapna Das, JCIT
Hearing: 16.03.2017Pronounced: 13.04.2017

These appeals by the assessee are directed against the composite order of CIT(A) dated 30.11.2015 arising from the order passed under section 201(1) and 201(1A) of the Income Tax Act for the assessment years 2007-08 to 2010-11 respectively.

2.

Common grounds have been raised by the assessee in these appeals as under:

1.

That the order of the learned Commissioner of Income tax (Appeal). In so far it is prejudicial to the interest of the appellant is bad and erroneous in law and against the fact and circumstances of the case.

2. That the learned CIT (Appeals) erred in law and on facts by dismissing the case.

3. Since the rent paid has already suffered tax, the appellant is not liable to pay tax once again. It has been already held in Hindustan Coco Cola beverages Vs CIT that when the deductee has already paid tax on the income received, there is no need to tax the same income once again.

4. The learned CIT(Appeals) ought to have given opportunity to furnish Form 26 A and reasonable time to make submissions.

5. Form 26A duly certified by a Chartered Accountant is herewith enclosed. So we request you honour to consider the same and allow the appeal

6. From and among the grounds that may be urged at the time of hearing. Appellant hereby request your honour to reject the assessment order made by the Assessing officer and drop the recovery proceedings. And for this act of kindness, my client, as duty bound, shall ever pray.

3.

None appeared on behalf of the assessee when these appeals were called for hearing. It is transpired that the assessee has filed a letter in the Registry on 10.03.2017 whereby it has been prayed that the assessee is not able to appear in these appeals and the written submissions filed along with the said letter may be considered as arguments of the assessee. Accordingly, we propose to hear and dispose off these appeals ex-parte.

4.

We have heard the learned DR and perused the written submissions filed by the assessee as well as relevant material on record. The assessee is carrying out business as opticians in the name and style as M/s. Optical Paradise. There was a survey under section 133A of the Act at the business premises of the assessee to verify the deduction of TDS and compliance for the financial year 2006-07 to 2010-11. The AO noted that the assessee has been paying the annual rent of Rs. 1,26,500 for hiring the building without deducting the tax at source. Accordingly, the AO proceeded to pass the order under section 201(1) and 201(1A) of the Income Tax Act. The assessee challenged the action of the AO before the CIT(A) but could not succeed.

5.

In the written submissions, the assessee has raised the contention that the recipient of the rent has offered the amount to tax and therefore as per the provisions of section 201, the assessee cannot be held as assessee in default. On the other hand, the learned DR has submitted that the assessee has not raised this contention before the authorities below. She has relied upon the orders of the authorities below.

6.

Having considered the rival submissions and careful perusal of the record, we find that neither the AO nor the CIT(A) has examined this fact whether the recipient of the rent has offered the same to tax. The assessee in the written submissions has specifically pleaded that the recipient has already paid tax on the income received and therefore, no need to tax the assessee once again. Accordingly, in view of the fact that the authorities below have not examined this fact, we set aside the entire matter to the record of the AO for proper verification of this fact and then decide the same as per law. Needless to say, the assessee be given appropriate opportunity of hearing.

7.

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

Pronounced in the open court on this 13th day of April, 2017.

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