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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri Sunil Nahta Department by: Shri M. C. Omi Ningshen सुनवाईकीतारीख / Date of Hearing: 02.01.2017 घोषणाकीतारीख /Date of Pronouncement:. 15.02.2017 आदेश / O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 25.01.2016 passed by the Commissioner of Income Tax (Appeals)-21, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2013- 14.
2. The assessee has raised the following grounds:- “1. On the facts and circumstances of the case and in law CIT(A) erred in dismissing the appeal in merit.
ITA No.2205.M.16 A.Y. 2013-14
The learned CIT(A) failed to appreciate that your appellant cannot be expected to produce Form 16A when deductor has not deposited the tax deducted at source.
The learned CIT(A) erred in not accepting circumstantial evidence as detailed below in support of its claim that such deduction was towards tax deducted at source: (a) Copy of leave and license agreement registered with Sub-Registrar’s office which defines the monthly rent. (b) Copy of Bank Statement evidencing receipt of rent after deduction of Tax of source. 4. The learned CIT(A) failed to appreciate that leave and license agreement does not provide for any other deduction from monthly rent payable to appellant. 5. The Learned CIT(A) further failed to appreciate that Sector 205 of the Income Tax Act, 1961 bar direct demand on assessee where tax is deductible under the provisions of the Act. 3. The brief facts of the case are that the intimation u/s.143(1) of the Income Tax Act, 1961 ( in short “the Act”) was received from the BPC, Bangalore. The e-return of income was filed on 28.09.2013 showing total income to the tune of Rs.4,94,558/-. Intimation u/s.143(1) of the Act was issued on 26.09.2014. The sole issue arising in this appeal is in respect of the appellant not being granted credit for TDS of Rs.80,000/-. According to the assessee, it had entered into the leave and license agreement with M/s. Om Sai Auto World of one Shri Gangadhar Shivram Shetty for Rs.2,00,000/- which received. The assessee received the compensation of Rs.8,00,000/- during the year on which TDS @ 10% was deducted. As per 26AS, that party has not paid any amount toward tax deducted at source and ITA No.2205.M.16 A.Y. 2013-14 failed to deposit Rs.40,000/- with Central Government. The assessee also relied upon in communication dated 01.01.2015 with Secretary to Govt. of India but the assessing officer disallowed the said amount and added to the income of the assessee. On appeal the CIT(A) dismissed the appeal, therefore the assessee has filed the present appeal before us. ISSUE NO.1 TO 5:- 4. All the above said issues raised only one issue in which the assessee has sought that the assessee was not under obligation to pay the TDS amount because in accordance with the agreement the payee was under obligation to deduct the tax and to deposit with the Government of India but the revenue has imposing the liability upon the assessee wrongly and illegally, therefore the order passed by the CIT(A) is wrong against law and facts and is liable to be set aside and also placed reliance upon the law settled by the Hon’ble Bombay High Court [2007] 165 taxman 144 (Bom) in case titled as Yashpal Sahni Vs. Rekha Hajarnavis, Assistant Commissioner of Income Tax. However, on the other hand the learned representative of the department has placed reliance upon order passed by the CIT(A) in question. Before going further it is necessary to advert the finding of the CIT(A) on record:- “4. I have perused the aforesaid communication of the Under Secretary referred to by the appellant. Firstly, there is no evidence that the tax has been deducted at source as no such TDS certificate has been issued to the appellant which would establish this contention. Thus, it is not clear whether Rs.80,000/- is the TDS amount. Further, as per the ITA No.2205.M.16 A.Y. 2013-14
communication of the Under Secretary dated 01.01.2015 referred to by the appellant, it only directs the Assessing Officer to refrain from coercive recovery of such demand on account of tax credit mismatch. It nowhere says that the credit of claim of TDS should be given even if the same has not been paid to the Government account. Further, it is not even clear that such amount has been deducted as TDS. On merits, the ground of appeal is dismissed. Nevertheless, the Assessing Officer is directed to verify the credit now appearing in 26AS and allow credit based on the amount appearing in the department records.”
5. On appraisal of the above mentioned order the reason which has been given by the CIT(A) for not accepting the contention of the assessee is that the assessee failed to show any evidence that the tax has been deducted at source because no such TDS certificate was issued to the appellant. It is also not clear that an amount of Rs.80,000/- is the TDS amount. The assessee entered into an agreement of leave and license with M/s. Om Sai Auto World which lies at page 15 to 21 of the paper book. According to the said agreement the assessee was entitled to recover an amount of Rs.2,00,000/- per month. The assessee received an amount of Rs.1,80,000/- per month in accordance with bank statement lies at page 25 which speaks that the licensee deducted the TDS but nothing came into the notice that the licensee deposited the same with the Central Government or not. But is not the liability of the appellant to pay the TDS when the TDS has already been deducted by the licensee. In this regard, we are also found support of law 4
ITA No.2205.M.16 A.Y. 2013-14 settled in Yashpal Sahni Vs. Rekha Hajarnavis, Assistant Commissioner of Income Tax (Supra) in which the issue has been decided in favour of the assessee. The finding of the said law is hereby reproduced as under for ready reference. “In the instant case, the assessee had established that from his salary income-tax had been deducted at source by the employer-respondent No.6 and, therefore, the revenue had to recover the said TDS amount with interest and penalty from respondent No.6 alone and the revenue could not seek to recover the said amount from the assessee in view of the specific bar contained under section 205. The fact that the assessee was not entitled to the credit of the tax deducted at source for the non-issuance of the TDS certificate by the respondent No.6, could not be a ground to recover the amount of tax deducted at source from the assessee. In other words, even if the credit of the TDS amount was not available to the assessee for want of TDS certificate, the fact that the tax had been deducted at source from salary income of the assessee would be sufficient to hold that as per section 205, the revenue could not recover the TDS amount with interest from the assessee once again. In the result, the petition succeeded. As respondent No.6 had deducted the tax at source from the salary income of the assessee, the revenue could not have recovered the said amount with interest at the rate of 6 per cent from the date of recovery till the date of payment. Thought the credit of the tax deducted at source was not available to ITA No.2205.M.16 A.Y. 2013-14 the assessee, since the said liability was not recoverable from the assessee, the revenue was directed to earmark the said TDS liability as ‘not recoverable’ from the assessee’.