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Income Tax Appellate Tribunal, “E” BENCH
Before: SHRI PAVAN KUMAR GADALE & SHRI RENU JAUHRI
सुनवाई क� तार�ख/Date of Hearing 27.06.2024 घोषणा क� तार�ख/Date of Pronouncement 29.07.2024 ORDER
PER PAVAN KUMAR GADALE, JM:
The assessee has filed the appeal against the common order of the Commissioner of Income Tax (Appeals)(CIT(A))- 59 Mumbai passed u/sec 201(1)/201(1A) and u/sec 250 of the Act.
2. At the time of hearing, it was brought to the knowledge of the bench that, the assessee has filed the appeal electronically on 07.12.2018 and emphasized on facts and relied on the affidavit of the director of the assesse company as under:
2 (A.Y.: 2009-10) Expertease (India) Pvt Ltd, Mumbai . “Ajay Bhagwatkumar Srivastava, son of Shri Bhagwat Kumar Srivastava Director of Expertease (India) Private Limited residing at 3102, Gokul Concorde, Thakur Village, Kandivalį East hereby solemnly affirm and declare as under: Mumbai 400101, 1 your appellant was engaged in service industry and mainly acting as direct sales associates of HSBC Bank for its credit cards and personal loans during the TDS Survey previous year 2003-2004 (AY 2004-2005) to previous year 2008- 2009(Α.Υ.2009-2010);
Your appellant employed school/ colleague drop outs/ teenagers for pick-up of credit card and personal loan applications from prospective customers and paid a remuneration /daily allowance fixed/variable based on application procured in a day/month and targets achieved, and debited in the accounts the amount so paid as "Incentives and Payouts" as per industry norms and practice
3. The busing activities includes telephone operators, pick-up persons, drop persons, filing of credit de forms, verification and authenticity of forms,
The learned Assessing officer during survey proceedings rejected your appellant's plea that these school/colleague drop outs and teenagers are employees and held that these are commission agents and passed the order dated 26/03/2011 holding your appellant to be the assessee in default for non- deduction of tax at the rate of 5.61% under section194 H of Income Tax Act 1961 on the amount paid as incentives and pay out,
5. During tds survey/assessment proceedings under section 201 of the Income Tax Act, 1961 in 2011 for the previous year 2003-2004 (AY 2004-2005) to previous year 2008- 2009(Α.Υ.2009-2010), I co-operated with survey team and filed all the details/ statements except for audited accounts for the financial year 2008-2009 3 (A.Y.: 2009-10) Expertease (India) Pvt Ltd, Mumbai . 6 the audited accounts for the previous year 2008-2009 were not ready and could not be produced as the accounts were finalized and audited and approved on 02/09/2011 7 Learned assessing officer passed the order dated 26/03/2011 under section 201/201(1A) of the income Tax for previous year 2008-2009 holding your appellant the assesses in default for non-deduction and payment of TDS of Rs. 39,00,000/- at the rate of 5.61% under section 194H of the Income Tax Act, 1916 on an estimated basis of incentive and payout of Ra 7,00,00,000/-,
The learned Commissioner of Income Tax (Appeal) rejected the audited accounts for the previous year 2008-2009 furnished as additional evidence merely on the ground that the audited accounts were finalized too late in September 2011 and confirm the estimated amount of Rs. 7,00,00,000/- adopted by the learned assessing officer for the reason that it is only marginally higher than the preceding assessment years amount of Rs. 6.95.34.108/- and that it is not something fanciful.
The learned Commissioner of Income Tax (Appeals) disregarded the fact that as per audited accounts for the financial year 2008-2009 there was turnover of Rs. 3,45,09,056/- and Payout Doventi of Rs. 1,50.06.640/- and directed the assessing officer to levy withholding tax pplicable under section 194C of the IT Act.1961;
I received the learned Commissioner of Income Tax (Appeals) order dated 21/09/2018 on 08/10/2018 11.I paid the appeal fees of Rs. 500/- on 06/12/2018 and filed the appeal on 11/12/2018 Vide an acknowledgment number1544206393; 13 1 approached the Registrar for listing of the appeal for hearing, but was instructed to file another appeal, as the online appeal was not available in their record along with condonation of delay
I am instructed to file this Condonation of delay;
I hereby state that the appeal as filed in time through efiling mode. There is no delay in filing the said appeal, however, serial number of the appeal was not coming up for hearing, I was asked to file another set of appeal, which was to be treated to be fresh appeal along with proof of filing appeal earlier, I state that there is no delay, and if any, the same should be condoned and appeal be decided on merits;
Your appellant filed its return of income for assessment year 2009-2010 on 29/03/2016 in response to notice issued on 27/03/2015 under section 148 of the Income Tax Act, 1961 and received the assessment order dated 30/03/2016 issued under section 143(3) r.w.s 147 of the Income Tax Act, 1961
the copy of assessment order issued dated 30/03/2016 issued under section 143(3) r.w.s 147 of the Nicome Tax Act, 1961 were not produced before learned Commissioner of Income Tax as for the reasons that audited accounts produced before learned Commissioner of Income Tax (Appeals) as additional evidence on 13/10/2017 and it was not envisage that the learned Commissioner of Income Tax Appeals shall disregard and reject the audited accounts.
We have considered the facts, submissions and affidavit and find that the delay in filing the appeal before the Honble Tribunal by the assessee company is supported 5 (A.Y.: 2009-10) Expertease (India) Pvt Ltd, Mumbai . with sufficient cause and a pragmatic approach should be considered for condonation of delay and the Ld. DR has no specific objections. Accordingly the delay is condoned and admit the appeal. The assessee has raised the following grounds of appeal:
1] On the Facts and circumstances of the case and in law the Commissioner of Income Tax (Appeals) [CIT (A)] erred in confirming your appellant to be the assessee in default for non- deduction of income tax on estimated and adhoc amount payout and incentives of Rs. 7, 00, 00,000/- by rejecting your appellant additional evidence for actual payout and incentives of Rs. 1, 50, 06,640/-; and 2] The Appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal
4. The brief facts of the case are that, the assessee company is engaged in the business as service industry and its main activities include direct sale associates of HSBC Bank for its credit cards and their personal loans. The assessee has been filing the return of income regularly and was deducting the TDS on payment of salary, interest, commission etc and filing the TDS returns as per the provisions of the Act. Whereas the survey operations u/sec 133A of the Act was conducted by the Income Tax TDS Wing at the assesse premises and have found certain discrepancies in deduction of TDS on the expenses and the statement was recorded. Whereas the assessee’s main business activities includes telephone operators, pick up persons, drop persons, filing of forms, verification of forms, 6 (A.Y.: 2009-10) Expertease (India) Pvt Ltd, Mumbai . verification of the authenticity of the filled forms. These works are undertaken from HSBC bank is voluminous and to carry out the business activities, the assessee company is required to deploy huge man power at various places at Mumbai, Delhi, Ahmadabad and Pune.
Whereas the AO has issued the notice considering the facts that (i) the assessee has filed the TDS Returns with the delay (ii) TDS certificates were not issued in time (iii) non-payment of TDS liability on time and (iv) non deduction of TDS and short deduction of TDS. In compliance, the Ld. AR of the assessee appeared from time to time and submitted the details. The A.O on verification of the details found that in the F.Y 2008-09m there is a delay in depositing the TDS and short deduction of TDS and accordingly dealt on the provisions of the Act and the A.O on the expenditure claimed by the asssessee has raised the demand u/sec 201(1)and u/sec 201(1A) of the Act in the order read as under:
“F). F.Y. 2008-09 relevant to A.Y. 2009-10 1. Non/Short deduction of TDS on payment as Incentive & Fees-The assessee has not furnished any details for the assessment year 2009-10 despite ample opportunities given to the assessee. The assessee has defaulted on many occasions in the earlier year in making the TDS payments & deduction. It is stated by the AR that the books of accounts for the Y.E 31/03/2009 has not yet been finalized and so no 1.T return as well as TDS return of the last quarter has been filed. Hence, in this circumstances, by considering the past history of the assessee, the liability u/s 201(1) & 201(1A) is estimated as under- As per the Profit & Loss account for the Y.E 31/03/2008 Le. A.Y 2008-09 that the assessee has debited "Incentive Fees" of Rs.6,95,34,108/ However in the current year these figures have not been provided & hence estimated to Rs. 7,00,00,000/-(Rs.seven Crores). Based on the carlur years facts the same Incentive payment has been treated as covered under the provisions of sec. 194-11 of the Act. Accordingly, TDS was required to be deducted at the prescribed rate. The assessee has thus committed a default under sec. 201(1)/201(1A). Working of TDS liability and interest thereon is as under; Amount TDS TDS Default Delay Interest Total Liability Paid in @ 5.61 Period 7,00,00,000 39,27,000 0 39,27,000 22 10,79,925 50,06,925 2.Demand raised on account of processing e TDS return- Assessee's annual / quarterly e TDS returns for Quarters mentioned has been processed on system and following demands on accounts of Short deduction, Short payments and interest on delay in payment of TDS have been raised. Therefore assessee is directed to pay the said demand. Details / working of the said demand is attached with this order. Period Short Short payments Interest u/s Total Deduction 201(1A) 26Q 1 Nil Nil 520 520 26Q 3 Nil Nil 440 440 Total demand 960 3.Non Deduction of TDS on Rent-Default u/s 201(1)/201(1A)- During the course of survey proceeding it is noticed that the assessee company failed to deduct TDS on rent amounting to Rs.41,72,943/-.In reply to Q.No.16 of the statement recorded on that date it is stated that the necessary details would be provided alongwith the proof within a week's time However, the assessee failed to provide such details/proof in this regard. Hence, I hold the assessee company in default for non deduction of TDS on the above payments. The default and interest is calculated as under S.No Total Section Rate of TDS Rate of Delay in Interest Amount Interest Amount interest months paid 1 4172943 1941 20.60 859626 1.00 36 309465 Hence, on account of Non deduction of TDS, the total default is as under: Default U/s 201(1) 859626 Interest u/s 201(1A) 309465 Total demand payable 4 Non Deduction of TDS on web Designing Charges-Default u/s 201(1)/201(1A)- During the course of survey proceeding it is noticed that the assessee company failed to deduct TDS on payment to M/s Primeteck for web Designing work debited under the head Printing & Stationary amounting to Rs.58428/- .In reply to Q.No.19 of the statement recorded on that date it is stated that if any TDS was to be deducted on the said payments the company would deduct the same and remit into govt a/c alongwith interest for late payment. However, the assessee failed to provide such details/proof in this regard. Hence, I hoid the assessee company in default for non deduction of TDS a/s 1944 on the above payments. The default and intereat is calculated as under S.No Total Section Rate of TDS Rate of Delay in Interest Amount Interest Amount interest months paid 1 58428 194J 10.3 6018 1.00 36 2167 Hence, on account of Non deduction of TDS, the total default is as under: Default U/s 201(1) 6018 Interest u/s 201(1A) 2167 Total demand payable 8185 Short Deduction of TDS on Courier charges-Default u/s 201(1)/201(1A)-During the course of survey proceeding it is noticed that the assessee company failed to deduct TDS on certain payments to M/s Blue Dart as courier charges of Rs. 20388+Rs. 17665. In reply to Q.No. 18 of the statement recorded on that date, it is stated that if any TDS was escaped to be deducted on the said payments the company would deduct the same and remit into govt a/c alongwith interest for late payment. On going through the details filed in this regard it is noticed that there is short deduction of TDS. Hence, I hold the assessee company in default for short deduction of TDS 194C on the above payments. The default and interest is calculated as under- S.No Total Section Rate of TDS Rate of Delay in Interest Amount Interest Amount interest months paid 1 38053 194C 2.244 854 1.00 36 307 Hence, on account of Non deduction of TDS, the total default is as under: Default U/s 201(1) 854 Interest u/s 201(1A) 307 Total demand payable 1161 Less-Paid on 20.06.2008 813 Balance Payable 348 6.Interest on Late payment of TDS on RENT u/s201(1A) During the course of survey proceeding it is noticed that the assessee company failed to pay the interest shown at Rs.29094/-as current liability in the Balance sheet as on 31/03/2009. In reply to Q.No.22 of the statement recorded on that date it is stated that the Company will pay the same at the earliest. The same is paid on 29/07/2009 as per the copy of challans filed. Hence I hold the assessee company in default for late payment of above payments. The default and interest is calculated as under TDS Due date TDS paid Delay in Rate interest amount for TDS months payment 29094 31.05.2009 29.07.200 2 1% 582 9 Hence, on account of late payment of TDS, the total interest is worked out at Rs. 582/-. SUMMARY of total TDS default payable including interest of F.Y. 2008-09 relevant to 2009-10: S.No/Point No. Shortfall Interest Total (in Rs.) Incentive & Fees/1 39,00,000 10,79,925 50,06,925 On a/c of proceedings 43070 1470 44540 Rent 859626 309465 1169091 Web Designing 6018 2167 8285 Courier charges ----- 2167 348 Interest on late ----- 582 582 Total demand 62,29,671 payable Summary of all defaults and interest (A.Y wise) calculated as discussed above S.No A.Y Total Demand payable (in Rs.)
A 2004-05 7,84,245 B 2005-06 12,02,313 C 2006-07 21,05,243 D 2007-08 44,50,003 E 2008-09 52,85,980 F 2009-10 62,29,671 Grand Total 1,99,64,272 Penalty proceedings, in the context of the above defaults/delays, are being referred to the Addl./Joint Commissioner of Income Tax(TDS), Rg.-1, Mumbai separately. Assessed accordingly. Issue Demand Notice accordingly. The deductor (assessee) is directed to pay the total tax liability of Rs. 1,99,64,272/- inclusive of interest.
Finally the AO raised has raised the demand of Rs. 62,29,671/- u/sec201(1) and U/sec201(1A) of the Act for A.Y.2009-10 and passed the common order dated 30-03- 2011.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) considered the grounds of appeal
, submissions of the assessee, findings of the AO and the assessee has also filed additional evidence which was rejected by the CIT(A) dealt at page
13. Para 25.9 of the order and the CIT(A) directed the TDS officer to take amount of payouts and incentives at Rs.7 Crores and determine the TDS Liability and further the CIT(A) has granted relief in other grounds of appeal and partly allowed the assessee appeal. Aggrieved by the CIT(A) order on the rejection of additional evidence, the assessee has filed an appeal before the Hon’ble Tribunal.
8. At the time of hearing, the Ld. AR submitted that the CIT(A) has not considered the submissions, information 11 (A.Y.: 2009-10) Expertease (India) Pvt Ltd, Mumbai . and has rejected additional evidence filed by the assessee supporting the payout and incentives at Rs.1,50,06,640/- as per the Audited financial statements as against Rs.7 Crores and the Ld. AR contentions are that the books of accounts are audited and prayed for admission of the additional evidence. Further the Ld.AR emphasized that the assessee has good case on merits and pleaded for an opportunity to substantiate the case with evidences and information before the lower authorities and relied on the factual paper book. Per Contra, the Ld.DR supported the order of the CIT(A).
9. We heard the rival submissions and perused the material on record. The sole crux of the disputed issue envisaged by the Ld.AR that the CIT(A) has erred in ignoring the reply filed by the assessee and rejecting the additional evidence filed. The Ld.AR emphasized that the assessee has submitted the details as called for by the appellate authorities. The assessee is filling the application for admission of additional evidences to substantiate the payout and incentives at Rs.1,50,06,640/- as per the Audited financial statements for F.Y.2008-09 which could not be furnished in the course of proceedings before the TDS officer, as the accounts were not finalized placed at Page10 to 24 of the paper book. Further the evidences play a important role in decision making in the adjudicating proceedings. Therefore considering the facts, circumstances and additional evidences, the assessee 12 (A.Y.: 2009-10) Expertease (India) Pvt Ltd, Mumbai . should not suffer for non filing of material information, as the evidences played vital role in decision making and we admit the additional evidence. Accordingly, to meet the ends of justice, we set aside the order of the CIT(A) on this disputed issue, and restore the issues along with the additional evidence to the file of the assessing officer to examine the quantification of expenditure payout and incentives of Rs.1,50,06,640/- as per audited financial statement and decide afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. And we allow the grounds of appeal
of the assessee for statistical purposes.
10. In the result, appeal filed by the assessee is allowed for statistical purposes.