M. N. DASTUR & CO. PVT. LTD.,KOLKATA vs. ACIT, CIR-2 (TDS), KOLKATA, KOLKATA

आयकर अपील�य अधीकरण, �यायपीठ – “D” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “D” KOLKATA Before Shri Waseem Ahmed, Accountant Member and Shri S.S.Viswanethra Ravi, Judicial Member ITA No.919-920/Kol/2016 Assessment Years:2008-09 & 2010-11 M.N. Dastur & Co. Pvt. ACIT, Circle-2(TDS) बनाम / Ltd.,P-17, Mission Row 10B, Middleton V/s. Row,7th Floor, Extension, Kolkatda-13 [PAN No.CALMO 0350 A] Kolkata-71 .. अपीलाथ� /Appellant ��यथ� /Respondent Shri P.K. Acharyya, Advocate आवेदक क� ओर से/By Assessee Shri Saurabh Kumar. Addl. CIT-DR राज!व क� ओर से/By Revenue 24-10-2017 सुनवाई क� तार�ख/Date of Hearing 06-12-2017 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER Waseem Ahmed, Accountant Member:- Both appeal by the assessee are directed against the orders of Commissioner of Income Tax (Appeals)-24, Kolkata dated 11.02.2016 passed u/s200A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for assessments year 2008-09 & 2010-11. Shri P.K.Acharyya, Ld. Advocate appeared on behalf of assessee and Shri Sauarabh Kumar, Ld. Departmental Representative appeared on behalf of Revenue. 2. Both appeals are heard together and being disposed off by this consolidated order for the sake of convenience.

First we take up ITA No.919/Kol/2016 for A.Y. 08-09. 3. The assessee has raised following grounds of appeal, which reproduced below:-

ITA No.919-920/Kol/2016 A.Ys 08-09 & 10-11 M.N. Dastur & Co. Pvt. Ltd. Vs. CIT, Cir- (TDS) Ko. Page 2 “1.(That on facts and circumstances of the case the ld. CIT(Appeals)-24 has erred in not allowing the appellants ground that there was an excess payment of Rs.73,360 in the month of July 2007. 2. That on facts and circumstances ld. CIT(Appeals)-24 of the case the ld. CIT(Appeals)-24 has erred in not allowing the appellant’s ground that the excess payment of Rs.73,360 made in the previous month i.e. in July 2007 been set off against the payment for the month of August 2007 in the same quarter of TDS Return. 3. That on facts and circumstances of the Case ld. CIT(Appeals)-24 has wrongly confirmed the interest of Rs.42550 u/s 201(1A). 5. That the appellant craves leave to add, alter or withdraw any ground or grounds of appeal at or before the hearing of appeal.” 4. First issue raised by assessee in ground No.1 & 2 is that Ld. CIT(A) erred in not adjusting the excess amount paid for ₹73360.00 only towards the amount Tax Deducted at Source (TDS) in the subsequent month. 5. Briefly stated facts are that assessee is a private limited company and engaged in the business of consultancy, advisory services, engineering project and various other allied jobs. The assessee in the second quarter of financial year 2007-08 has deposited/ paid the amount of TDS as detailed under:- Date of deposit Related to month Amount (Rs) Challan Sr. No. 07/8/07 July 2007 2093500 1458 07/09/07 August, 2007 1939990 1204 06/10107 September, 2007 5845515 1259

However, assessee further submitted that the liability to deposit the TDS amount for the month of July, 2007 was at ₹22,20,140/- but assessee has deducted and deposited a sum of ₹20,93,500/- dated 07.08.2007. Thus, the excess amount of ₹73,360/- was deposited towards the TDS. The assessee in the subsequent month i.e. August, 07 has adjusted the excess amount of TDS and deposited the remaining amount for ₹19,39,990/- (2013350 – 73360). However, Assessing Officer failed to allow the credit of the excess amount paid by the assessee for ₹73,360/- in its intimation issued u/s 200A of the Act. Thus, a demand of ₹73,360/- on account of short payment of tax was raised. The AO consequentially charged the amount of interest for ₹42,550/- on the short amount of TDS.

ITA No.919-920/Kol/2016 A.Ys 08-09 & 10-11 M.N. Dastur & Co. Pvt. Ltd. Vs. CIT, Cir- (TDS) Ko. Page 3 6. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who confirmed the order of AO by observing as under:- “4. The details of short payment amount and interest are given in justification report which is part of the order u/s 200A of the IT Act dated 31.10.2011. The copy of the said justification report has not been filed. Without referring to the said justification report it is difficult to appreciate what is wrong in the computation of amount and interest towards short payment as given in the intimation u/s 200A of the IT Act. In the copy of application for rectification dated 05.06.2012 enclosed as “Annexure-V” to the submission in appeal, the appellant’s A/R is not clear what is wrong, if any, with the ‘without specifically pointing out the default picked up by the Assessing Officer as per justification report. On the basis of this rectification request it is difficult to appreciate whether there is any error in the AO's calculation. Vaguely raising the claim that the above amounts of TDS payment were not allowed credit does not meet the purpose which is to point out the mistake. 5. In the submission dated 02.02.2016 filed in the appeal hearing on 4.2.2016 slightly more specific claim has been made as reproduced above in para 3. The claim is that he deposit in July was in excess of deductible by Rs.73,360/- which was adjusted in the month of August against the deductible to Rs.20,13,350/-. In other words the claim is that Rs.73,360/- was adjusted against deduction of August and accordingly deposit in August was less than the deducted amount. The claim is made that the statement dated 7.9.2007 is enclosed as Annexure-IV but the said Annexure is only a table self-prepared by the ape. Though explanation seems convincing, it cannot be accepted because any claim has to be mad with reference to the justification report forming part of the intimation u/s. 200A which has been challenged. It is surprising why the explanation of such nature has been filed without even a copy of the justification report. Even 154 application to the AO is vague and much short of even indicating the error if any in the Assessing Officer's intimation dated 31.10.2011. No copy of the TRACES has been made available even in appeal. There is no reference to the return of TDS statements filed to the department. 6. I, therefore, find it difficult to allow the grounds merely on the basis of the submission dated 02.02.2016 as it does not rely on the primary papers from which the amount of TDS deductible, deducted and deposited can be worked out.” Aggrieved by the above finding of LD. CIT(A), the assessee is in appeal before the Tribunal. 7. Ld. AR before us submitted that claim of assessee was rejected by Ld. CIT(A) on the ground that it failed to file the copy of justification report. He further submitted that at the time of hearing before Ld. CIT(A) the justification report was not submitted due to a fire broke out in the building premises of Income Tax Department.

ITA No.919-920/Kol/2016 A.Ys 08-09 & 10-11 M.N. Dastur & Co. Pvt. Ltd. Vs. CIT, Cir- (TDS) Ko. Page 4 Ld. AR further submitted that the justification report is now available with it and therefore he prayed before the Bench that the matter can be restored back to the file of Ld. CIT(A) for fresh adjudication in accordance with law. On the other hand, Ld. DR agreed to the submission of the Ld. AR for the assessee. 8. We have heard the rival contentions of both the parties and perused the material available on record. At the outset, we find that the appeal was rejected by Ld. CIT(A) on the ground of non availability of justification report. However, Ld. AR for the assessee before us claimed that the justification report is now available which in our view requires to be considered by Ld. CIT(A). In view of the above proposition, in the interest of natural justice and fair play we restore the matter back to the file of Ld. CIT(A) for fresh adjudication in accordance with law. Hence, this ground of assessee’s appeal is allowed for statistical purpose. 9. Next issue is consequential in nature and does not require any adjudication. 10. Last issue is general in nature and does not require any separate adjudication. Coming to ITA No.920/Kol/2016 for A.Y 10-11. 11. The grounds as raised by the assessee reads as under:- “1. That on facts and circumstances of the case ld. CIT(Appeals)-24 has erred in confirming that there is a late payment of Tax in the Second Quarter of the Financial Year -2009-2010. 2. That on facts and circumstances of the case the Ld. CIT(Appeals)-24 has erred in confirming the interest of Rs.44816- Under Section 201(1A) 3. That on facts and circumstances of the case the ld. CIT(Appeals)-24 has erred in confirming that there is a short deduction of Rs.27580 in the fourth quarter of Financial Year 2009-10. 4. That the appellant craves leave to add alter or withdraw any ground or grounds of appeal at or before the hearing of appeal.”

ITA No.919-920/Kol/2016 A.Ys 08-09 & 10-11 M.N. Dastur & Co. Pvt. Ltd. Vs. CIT, Cir- (TDS) Ko. Page 5 amount of TDS on 08.08.2009 so the delay in depositing the TDS amount occurred due to no fault on the part of assessee. In view of above, Ld. AR prayed before us for waiver of interest. On the other hand, Ld. DR vehemently relied on the order of Authorities Below. 14. We have heard the rival contentions of both the parties and perused the material available on record. The issue in the instant case relates to the amount of interest charged u/s 201(1A) of the Act on account of late deposit of TDS amount. Indeed, there was a delay for just one day in the deposit of TDS amount. Moreover the reason for delay in the depositing of TDS was beyond the control of assessee as there was All India Bank strike on 6th and 7th, August, 2009. It is well-settled that an obligation gets discharged due to impossibility of performance. The assessee in the instant case has been paying the amount of TDS well in time but for the impugned month the payment was delayed for a day for the reasons beyond the control of the assessee i.e. due to all India banks strike. The law of impossibility of performance does not necessarily require absolute impossibility, but also encompass the concept of severe impracticability. In our humble opinion, the doctrine of impossibility of performance applies in this case. Due to uncontrollable circumstances, the performance of the obligation to deposit the tax at source to the Government Exchequer became impossible within the time. The impossibility of performance releases the assessee from its obligation to deposit the tax at source within in the time. A default occurs only when an obligation is not performed. When the assessee is released from the obligation, it cannot be said that it is in default. Thus, when the assessee was prevented from depositing the tax to Government Exchequer within the time, the question of its not performing the obligation under law does not arise and thus it cannot be held a defaulter. We also find support from the legal maxim “lex non cogit ad impossibilia” meaning thereby that the law does not compel a man to do what he cannot possibly perform. In holding so we find support & guidance from the judgment of Hon’ble Supreme Court in the case of Krishna Swamy S. PD. & ANR Vs. Union of India & ors reported in 281 ITR 305 wherein it was held that : “The other relevant maxim is, lex non cogit ad impossibilia—the law does not compel a man to do what he cannot possibly perform. The law itself and its administration is

ITA No.919-920/Kol/2016 A.Ys 08-09 & 10-11 M.N. Dastur & Co. Pvt. Ltd. Vs. CIT, Cir- (TDS) Ko. Page 6 understood to disclaim as it does in its general aphorisms, all intention of compelling impossibilities, and the administration of law must adopt that general exception in the consideration of particular cases. [See : U.P.S.R.T.C. vs. Imtiaz Hussain 2006 (1) SCC 380, Shaikh Salim Haji Abdul Khayumsab vs. Kumar & Ors. 2006 (1) SCC 46, Mohammod Gazi vs. State of M.P. & Ors. 2000 (4) SCC 342 and Gursharan Singh vs. New Delhi Municipal Committee 1996 (2) SCC 459].” Thus in view of above we hold that the assessee would be discharged from such an obligation and hence cannot be regarded a defaulter. Thus the ground of appeal raised by the assessee is allowed and AO is directed accordingly. 15. Next issue raised by assessee in this appeal is that Ld. CIT(A) erred in confirming the order of AO by holding that there was short deduction of TDS amount for ₹27,580/- in the fourth quarter for financial year 2009-10. 16. During the course of proceedings, AO issued intimation u/s. 200A of the Act by raising the demand of ₹27,580/- on account of short payment of TDS along with interest for ₹5,240/- only.

ITA No.919-920/Kol/2016 A.Ys 08-09 & 10-11 M.N. Dastur & Co. Pvt. Ltd. Vs. CIT, Cir- (TDS) Ko. Page 7 On the other hand, Ld. DR fairly agreed with the submissions of Ld. AR for the assessee. 19. We have heard the rival contentions of both the parties and perused the material available on record. At the outset, we have already decided the same issue in assessee’s appeal in ITA No.919/Kol/2016 for A.Y. 2008-09 and taking a consistent view and in the interest of natural justice and fair play we restore the matter back to the file of Ld. CIT(A) for fresh adjudication in accordance with law. Hence, this ground of assessee’s appeal is allowed for statistical purpose. 20. Last issue is general needs no adjudication. 21. In the result, for the statistical purpose, both the appeal of assessee is treated as allowed. Order pronounced in open court on 06/12/2017 Sd/- Sd/- (�या(यक सद!य) (लेखा सद!य) (S.S.Viswanethra Ravi) (Waseem Ahmed) Judicial Member Accountant Member *Dkp, Sr.P.S *दनांकः- 06/12/2017 कोलकाता / Kolkata आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. आवेदक/Assessee-M.N.Dastur & Co. Pvt. Ltd., P-17, Mission Row Extension, Kolkata-13 2. राज!व/Revenue-ACIT, Circle-2(TDS), 10B, Middleton Row, 7th, Fl, Kolkata-71 3. संबं-धत आयकर आयु.त / Concerned CIT 4. आयकर आयु.त- अपील / CIT (A) 5. /वभागीय �(त(न-ध, आयकर अपील�य अ-धकरण कोलकाता / DR, ITAT, Kolkata 6. गाड3 फाइल / Guard file. By order/आदेश से, /True Copy/ Sr. Private Secretary Head of Office/DDO आयकर अपील�य अ-धकरण, कोलकाता