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Facts
The assessee, an Educational Society, failed to deduct Tax at Source (TDS) on various expenditures incurred during Assessment Years (AYs) 2011-12 to 2013-14. The Assessing Officer (AO) determined the total TDS default and interest, creating a significant demand. The assessee's appeals before the CIT(A) were dismissed for non-compliance and lack of response.
Held
The Tribunal noted that the assessee claimed non-receipt of notices as the reason for non-compliance. However, the authorities below had held the assessee in default without a reasoned finding on how the defaults under Section 194C occurred.
Key Issues
Whether the assessee was rightly held in default for non-deduction of TDS without proper notice and opportunity to present its case.
Sections Cited
201(1), 201(1A), 250, 194C
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Income Tax Appellate Tribunal, JABALPUR BENCH, JABALPUR
Before: SH. KUL BHARAT & SH. NIKHIL CHOUDHARY
O R D E R PER NIKHIL CHOUDHARY, A.M. These three appeals have been filed by the assessee against the separate orders of the ld. CIT(A) NFAC under section 250 of the Income Tax Act, 1961 for the assessment years 2011-12 to 2013-14, wherein in all the assessment years, the ld. CIT(A) has dismissed the appeals of the assessee against orders under section 201(1) /(1A) of the Income Tax Act, 1961, passed by the Assessing Officer on 28.01.2015 for all the assessment years in question. As all these appeals arise out of the same order under section 201(1) /(1A), the same are taken up together for disposal. The grounds of appeal
1. in the said appeals are as under:- “1. That, on the facts and circumstances of case, the order of the Hon'ble Commissioner of Income Tax-Appeal (Faceless) is bad in law, perverse and contrary to the information/material available in the file. More so order of the CIT appeal has been passed without considering or waiting for the remand report to be issued by the Ld. AO.
2. On the fact and circumstances of the cases, the CIT appeal is not justified in passing the appeal order u/s 250 of the Income Tax Act and ITO TDS in passing the order u/s 201(1) of the Income Tax Act, ex-party in as much as no notice of 1 , 90 & 91/JAB/2024 A.Ys. 2011-12 to 2013-14 Jagannath Das Premvati Welfare Society appeal as well as during the course of proceeding of u/s 201(1) were ever received by the assessee.
The appellant craves leave to add, amend, alter, vary and / or withdraw any or all the above grounds of appeal.”
The facts of the case are that the assessee is an Educational Society and is engaged in the business of School Education. The ld. AO, TDS observed that the assessee had incurred various expenditures and not deducted tax at source with respect to the payments made to various parties as under:-
F.Y. Name of the Amount TDS TDS to be Section TDS Default Head/party Paid deducted made applicable 2010-11 Advertisement 56810 00 11362 194C and 11362 206AA(@20%) Bus exp. 113566 00 22713 194C and 22713 206AA(@20%) Festival and 409984 00 81996 194C and 81996 Function 206AA(@20%) Rep. and maint. 145925 00 29185 194C and 29185 Exp. 206AA(@20%) Building 1160215 00 232043 194C and 232043 Construction 206AA(@20%) Total- 3,77,299/- 2011-12 Advertisement 81371 00 16274 194C and 16274 206AA(@20%) Bus exp. 236667 00 47333 194C and 47333 206AA(@20%) Festival and 378906 00 75781 194C and 75781 Function 206AA(@20%) Rep. and maint. 130469 00 26094 194C and 26094 Exp. 206AA(@20%) Building 697740 00 139548 194C and 139548 Construction 206AA(@20%) Total 3,05,030/- 2012-13 Advertisement 40538 00 8108 194C and 8108 206AA(@20%) Bus exp. 280133 00 56027 194C and 56027 206AA(@20%) Festival and 305820 00 61164 194C and 61164 Function 206AA(@20%) Rep. and maint. 183826 00 36766 194C and 36766 Exp. 206AA(@20%) Building 857259 00 171452 194C and 171452 Construction 206AA(@20%) Annual Function 53746 00 10749 194C and 10749 206AA(@20%) Total 3,44,266/- , 90 & 91/JAB/2024 A.Ys. 2011-12 to 2013-14 Jagannath Das Premvati Welfare Society 3. Therefore, the ld. AO issued various notices to the assessee, but the assessee did not make compliance to any of them. He, therefore, sent a show cause notice to the assessee, but these notices were also not responded to. Therefore, the ld. AO computed the total TDS default of Rs.3,77,299/- for the F.Y. 2010-11 along with interest of Rs.2,18,833/-; total TDS default of Rs.3,05,030/- for the F.Y. 2011- 12 along with interest of Rs.1,40,314/- and total TDS default for the F.Y. 2012-13 of Rs.3,44,266/- along with interest of Rs.1,17,050/-, under sections 201(1) and 201(1A) respectively. Thus, he created a demand of Rs.15,02,792/- in respect of all three assessment years, for which he held the assessee to be in default and he required the assessee to pay the same.
Aggrieved with the said order, the assessee filed appeals before the ld. CIT(A)-1, Jabalpur. Subsequently, all these appeals were migrated to the National Faceless Assessment Centre. The ld. CIT(A) records in each of his orders, that he gave five opportunities to the assessee to represent the case but the assessee did not respond even once. Therefore, he held that the assessee had not controverted the findings of the ld. AO, as per the assessment order. The assessee had not submitted any sustainable explanation or documentary evidence during the course of assessment proceedings or appeal proceedings. It had only mentioned that the notices were sent to the wrong address. Moreover, no submissions had been filed by the assessee during the appellate proceedings also. Therefore, the ld. CIT(A) held, that after considering the facts and circumstances of the case, he was of the opinion that the ld. AO had rightly levied penalty under section 201(1) /(1A) for the assessment years 2011-12 to 2013-14, respectively. Accordingly, he dismissed all three appeals filed by the assessee and upheld the orders passed by the ld. AO.
The assessee is aggrieved at these orders passed by the ld. CIT(A) and has accordingly come before us in appeal. Sh. Anil Kumar Gupta, C.A. (hereinafter referred to as the ld. AR) appearing on behalf of the assessee society, submitted that no notice of appeal or notice of proceedings had been received by the assessee, , 90 & 91/JAB/2024 A.Ys. 2011-12 to 2013-14 Jagannath Das Premvati Welfare Society either during the proceedings conducted by the ITO, TDS or by the ld. CIT(A). It was submitted that the assessee had not committed any default, as contemplated under section 201(1) of the Act, as the assessee had not made any payment on which liability of TDS arose. It was further submitted that since the assessee had not received the notices, it could not make submissions in support of such assertions before the ld. AO or the ld. CIT(A). It was, therefore, submitted that the TDS default and the interest computed thereon was totally unjustified and the assessee was in a position to demonstrate that, if the matter was restored back to the file of the ld. AO.
On the other hand, Sh. N.M. Prasad, Sr. DR (hereinafter referred to as the ld. Sr. DR) submitted that the assessee had been given ample opportunities by both the ld. AO and the ld. CIT(A), but had not made any compliance. In the circumstances, his plea was fit to be rejected and the addition was deserving of being confirmed.
We have duly considered the facts and circumstances of the case. We find that the additions that have been made against the assessee have been made for the reason that the assessee did not make compliance before either the ld. AO or the ld. CIT(A). The assessee submits that he could not make compliance because he was not in receipt of the notices. While the true facts of the non-compliance are a matter of enquiry, the fact remains, that in view of the fact that the assessee has not complied and submitted responses, it has been held to be an assessee in default without any reasoned finding as to how it had committed defaults under section 194C, in respect of the various expenditures shown by it in its books of accounts. We, therefore, deem it appropriate, in the interest of justice, to restore these matters back to the file of the ld. AO, so that the assessee may make submissions along with evidences to demonstrate its claim that it had not committed any TDS default and we direct the ld. AO to consider such evidences, if produced, and thereafter pass a fresh order, in accordance with law. As the matters have been