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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 13.07.2023 passed by learned Commissioner of Income-Tax (Appeals), NFAC, Delhi [“CIT(A)”], which in turn arises out of order dated 15.02.2021 passed by learned Dy. CIT-(TDS), Bhopal [“AO”] u/s 201(1) & 201(1A) of Income-tax Act, 1961 [“the Act”] for the Financial Year [Q-1 to Q-4] relevant to Assessment-Year [“AY”] 2014-15, the assessee has filed this appeal on following effective grounds:
“(1) That on the facts and circumstances of the case and in law the ld. AO erred in considering the payee EPCO (a society formed and owned by Government of M.P. and also registered u/s 12A of the Act) as a professional service provider, whereas the said payee EPCO is not engaged in any business activity nor does it have any objective of providing the professional services in the course of its activities as defined in explanation to section 194J of the Income-tax Act, 1961, Page 1 of 4 Executive Engineer Construction, Division No. 2, Bhopal vs. Dy. CIT (TDS), Bhopal. AY 2014-15 and ignoring that EPCO was only an arranger or facilitator contractor and not a professional payee as defined in section 194J of the Income- tax Act, 1961.
That on the facts and circumstances of the case and in law the Ld. AO erred in deeming the assessee as assessee in default u/s 201(1) of the Income-tax Act, 1961, as the payee society i.e. EPCO has correctly included the stated receipts in its income and filed valid income tax return for the A.Y. 2014-15 and as such it cannot be deemed to be assessee in default u/s 201(1) of the Act.
3. That on the facts and circumstances of the case and in law the ld. AO erred in not considering that the appellant is a government department and has only allotted the total work as a contract to, the payee i.e. EPCO.”
2. The registry has informed that that the present appeal is filed after a delay of 3 days. Ld. AR for assessee submitted that the assessee has filed a condonation-application supported by an affidavit and prays for condonation. The reason of delay as averred in the affidavit is such that the assessee is an office of Govt. and the small delay of 3 days has occurred due to unavoidable urgent Govt. work. Ld. DR for revenue did not object to the prayer of assessee. In view of this, the marginal delay is condoned and the appeal is admitted and proceeded for hearing.
The background facts leading to present appeal are such that a TDS survey was conducted by income-tax authorities in the premise of assessee on 18.12.2015 pursuant to which notices were issued to assessee and ultimately an order u/s 201(1)/201(1A) dated 15.02.2021 was passed in which the assessee is deemed to be in default for non-deduction/short- deduction of tax at source. In the said order, the AO created demand of tax u/s 201(1) at Rs. 19,85,424/- and interest u/s 201(1A) at Rs. 17,19,145/-; total demand aggregating to Rs. 37,04,569/-. Aggrieved, the assessee carried matter in first-appeal but could not succeed. Now, the assessee has come in next appeal before us.
Executive Engineer Construction, Division No. 2, Bhopal vs. Dy. CIT (TDS), Bhopal. AY 2014-15
Ld. AR for assessee made a straightforward submission. He invited our attention to following provisos in section 201(1)/201(1A) effective from 01.07.2012:
1st proviso in section 201(1): “Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a payee or on the sum credited to the account of a payee shall not be deemed to be an assessee in default in respect of such tax if such payee— (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed: 1st proviso in section 201(1A): “Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a payee or on the sum credited to the account of a payee but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such payee:”
Then, Ld. AR submitted that the assessee has collected all documents required by aforesaid 1st proviso to section 201(1), copies of which are also filed before ITAT in the form of a paper-book. Therefore, the assessee is entitled to the benefit of 1st proviso to section 201(1) as well as 1st proviso to section 201(1A). He prayed that this matter should be remanded back to the AO for giving statutory benefit in terms of those provisos to the assessee.
Ld. DR for revenue fairly agreed to the prayer of Ld. AR. He, however, requested that the assessee be directed to represent his case fully before AO without seeking unnecessary adjournments.
Executive Engineer Construction, Division No. 2, Bhopal vs. Dy. CIT (TDS), Bhopal. AY 2014-15
In view of above, we are inclined to remit this matter back to the file of AO who shall consider the claim of assessee and decide matter afresh. The assessee is also directed to make full representation before AO without seeking unnecessary adjournments.
Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court immediately after conclusion of hearing and subsequently reduced in writing on the same day.