Loading judgment…
Facts
The assessee, a private limited company, incurred expenses for online advertising, web hosting, and professional services to foreign vendors. The Assessing Officer (AO) held the assessee as deemed to be in default for non-deduction of TDS under Section 195 and levied interest under Section 201(1A). The assessee appealed before the CIT(A).
Held
The CIT(A) dismissed the appeals as withdrawn, stating that the assessee had opted for the Vivad Se Vishwas Scheme, which was a mistaken fact as the scheme was not applied to the issues concerning TDS non-deduction, penalty, and interest. The Tribunal found it necessary to remand the appeals back to the CIT(A) for adjudication on merits.
Key Issues
Whether the assessee's appeals were correctly dismissed as withdrawn under the Vivad Se Vishwas Scheme when the scheme did not cover the issues of TDS non-deduction, penalty, and interest. Whether the CIT(A) erred in not adjudicating the appeals on merits.
Sections Cited
201(1), 201(1A), 195
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH : BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeals arises out of the separate orders both dated 17.10.2023 passed by the Ld.Addl./JCIT (A)-2, Chennai for A.Ys. 2014-15 and 2015-16.
Page 2 of 6 IT(IT)A Nos. 1080 & 1081/Bang/2023 Grounds raised by the assessee for A.Y. 2014-15 Similar grounds have been raised by assessee for A.Y. 2015-16 also.
Page 3 of 6 IT(IT)A Nos. 1080 & 1081/Bang/2023
Brief facts of the case are as under: 2.1 The assessee is a private limited company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of retargeting, i.e., targeting the customers based on their movements on the customers website, social media, etc. The customers of the assessee are located at different geographical locations across the world. It is submitted that the assessee incurred certain expenses towards online advertising, Web hosting Charges and professional charges during the impugned FY 2014-15 and the payments in respect of the same were made to the foreign vendors.
2.2 It is submitted that the assessing officer issued notices u/s 201(1) & 201(1A) of the Act and the assessee was asked to provide details/documents. In response to the notice, the assessee submitted the required details / documents / information from time to time. It is submitted that after considering all the submissions by the assessee, the Ld.AO concluded the proceedings vide order u/s 201 & 201(1A) of the Act dated 30/03/2021 and 26/02/2022 for A.Ys. 2014-15 and 2015-16 respectively. The Assessing officer held the Assessee Company as Assessee deemed to be in default u/s 201(1) for non-deduction of tax at source u/s 195.
2.3 Aggrieved by the order of the Ld.AO, the assessee filed appeals before the Ld.CIT(A).
Page 4 of 6 IT(IT)A Nos. 1080 & 1081/Bang/2023 2.4 The Ld.CIT(A) while considering the issues dismissed the appeal as withdrawn by holding as under: “2. During the pendency of appeal proceedings, the appellant has opted for Vivad Se Viswas Scheme (VSVS), 2020 and has since been issued order in Form No.5 for full and final settlement of tax arrears under section 5(2) read with section 6 of the Direct Tax Vivad Se Viswas Act, 2020 (3 of 2020) by PCIT vide Acknowledgement No.244670150080221 dated 08.02.2021 certifying therein that a sum of Rs.0 has been paid by the declarant towards full and final settlement of tax arrears determined in the order No.220290010190121 dated 19.01.2021.
Keeping the above facts in view, appeal filed by the appellant against the order dated 30.03.2021 passed u/s 201 of the Income-tax Act, 1961 by DCIT (IT) CIRCLE 2 (2) ) BANGALORE or the A.Y.2014-15 is deemed to have been withdrawn by the ap ellant in terms of the VSVS and accordingly, the appeal is hereby dismissed as withdrawn.” Identical order was passed for A.Y. 2015-16 also.
2.5 Aggrieved by the orders of the Ld.CIT(A), the assessee preferred appeals before this Tribunal.
3. The Ld.AR submitted that, the assessee preferred Vivad Se Vishwas Act, 2020 scheme benefits for issues alleged in IT(TP)A Nos. 2635 & 2636/Bang/2019 for A.Ys. 2014-15 and 2015-16, whereas the present appeals are against the proceedings u/s. 201 and 201(1A) of the Act. It is submitted that these appeals deserves to be remanded to the Ld.CIT(A) to consider the issues on merits as the issues alleged herein have not been settled by the assessee under Vivad Se Vishwas Act, 2020.
3.1 The Ld.DR supported the argument of the Ld.AR
Page 5 of 6 IT(IT)A Nos. 1080 & 1081/Bang/2023 We have perused the submissions advanced by both sides in the light of records placed before us.
We note that this Tribunal passed the order dismissing the appeal wherein assessee has settled different issues under Vivad Se Vishwas Act, 2020 vide order dated 21.01.2021, a copy of the said order has been placed on record for perusal. The issues raised by the assessee in present appeals are in respect of penalty and interest levied u/s. 201 and 201(1A) of the Act for non-deduction of TDS u/s. 195.
Further, the Ld.CIT(A) did not consider the issues on merits and dismissed the appeals as withdrawn under Vivad Se Vishwas Act, 2020 under mistaken fact. It is necessary therefore to remand these appeals back to the Ld.CIT(A) for readjudicating the issues contested on merits by the assessee. The Ld.CIT(A) is directed to pass a detailed order on merits by granting proper opportunity of being heard to the assessee.
Accordingly, the grounds raised by the assessee stands allowed for statistical purposes.
Applying the same mutatis mutandis, the grounds raised by the assessee for Assessment Year 2015-16 also stands allowed for statistical purposes.
Page 6 of 6 IT(IT)A Nos. 1080 & 1081/Bang/2023 In the result, both the appeals filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on 31st January, 2024.