WOCKHARDT HOSPITALS LTD,MUMBAI vs. ASST CIT (TDS) 3(1), MUMBAI

Instant appeal by the assessee is directed against the order dated 15th January 2014, passed by the learned Commissioner (Appeals)–16, Mumbai, for the assessment year 2009–10.

Following grounds have been raised by the assessee:–

“GROUND I: 1. On the facts and in the circumstances of the case in law, the Ld. CIT(A) erred in confirming the order of the AO in treating the Appellant as "assessee in default" on short deduction of WOCKHARDT HOSPITALS LTD. 2 tax deducted as source without appreciating the facts that the recipient/payee would have already paid taxes on their income and recovering the same again from the Appellant amounts to recovery of tax twice.

2. The CIT(A) failed to appreciate and ought to have held that once the basic information like declaration from the recipients, PAN and income tax acknowledgement number of the recipients are given, the onus to verify whether the recipients have paid taxes on their income shifted to the Department.

3. The Appellant prays that it be held that the Appellant is not 'assesse in default'. Alternatively, the AO he directed to verify, on the basis of declaration, whether the recipients have paid taxes on their income and pass an appropriate order. GROUND II:

1. 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the order of the AO in holding the Appellant as "assessee in default" under section 201 of the Act and thereby levying the interest under section 201(1A) of the Act.

2. The Appellant prays that the interest levied under section 201(1A) of the Act be deleted or be appropriately reduced.”

WOCKHARDT HOSPITALS LTD. 3 Officer, assessee preferred appeal before the learned Commissioner (Appeals).

WOCKHARDT HOSPITALS LTD. 4 confirmation issued by both the companies do not specify whether they have paid taxes on the amount received from the assessee and, if so, the date of payment. He, therefore, upheld the action of the Assessing Officer in treating the assessee as an assessee in default and raising the demand under section 201(1) of the Act.

WOCKHARDT HOSPITALS LTD. 5 CIT, [2007] 293 ITR 226 (SC). Further, learned counsel submitted, if the Assessing Officer still had any doubt with regard to the fact, whether the receipts subject to deduction of tax has been declared as income in the return of income filed by the deductee and taxes were paid thereon, it is for the Assessing Officer to exercise his powers conferred on him and can get the fact verified on the basis of details furnished by the assessee. In this context, he relied upon the decision of the Tribunal in case of Vodafone Essar Ltd. v/s DCIT, [2011] 45 SOT 82 (Mum.). He, therefore, pleaded for restoring the matter back to the file of the Assessing Officer to verify the claim of the assessee by making necessary enquiry.

WOCKHARDT HOSPITALS LTD. 6 of income filed for the assessment year under consideration and paid taxes. In this context, assessee has filed before the Departmental Authorities confirmation letters issued by both the recipients. Assessee has also furnished before the Departmental Authorities the assessment details of both the recipients along with their Permanent Account Number. As could be seen from the order of the learned Commissioner (Appeals), though, he does not deny the fact that assessee has furnished confirmation from both the recipient companies but he has rejected assessee’s claim by stating that confirmation letters do not specify whether taxes have been paid on the amount received and, if so, the date of payment of tax. In our view, the decision of the learned Commissioner (Appeals) is unacceptable. On a perusal of the confirmation letters, it is clearly evident that both the recipient companies have admitted the fact that the amount received from the assessee which were subject to deduction of tax at source have been shown by them in the return of income filed by them for the assessment year 2009–10. That being the fact, keeping in view the principle laid down by the Hon'ble Supreme Court in Hindustan Coca Cola Beverage (P.) Ltd. (supra), assessee cannot be treated as an assessee in default under section 201(1). If the Assessing Officer had any doubt with regard to the claim of the assessee that deductees have shown the receipts as income and paid taxes thereon, he could have made necessary enquiry as all necessary details relating to the WOCKHARDT HOSPITALS LTD. 7 deductee with their assessment jurisdiction have been furnished by the assessee before the Departmental Authorities. Without doing so, Assessing Officer cannot fasten the liability on assessee. The Tribunal, Mumbai Bench, in Vodafone Essar Ltd. (supra), has observed as under:– “34. ……. However, the question is whether as a fact it has been established that the payees have included the income in their returns and paid taxes thereon. This requires factual verification. We are, however, unable to share the view of the CIT(A) that the onus is entirely on the assessee to prove that the taxes have been paid by the payees. It is true that the onus is initially on the assessee who takes up the plea but when sufficient details which would enable the Assessing Officer to verify the factual position have been filed before the Assessing Officer it was for the Assessing Officer, with his vast powers, to invoke them and have the details furnished by the assessee verified. In the present case the assessee has furnished the Permanent Account Numbers of nineteen parties and letters of confirmation have been filed from eight of them before the CIT(A). The Permanent Account Numbers would facilitate an enquiry to be made by the Assessing Officer from the Assessing Officers assessing the payees. It is also to be noted that from eight out of the nineteen parties the assessee has also furnished letters of confirmation. The assessee would appear to have done what it could under the circumstances and it would be a somewhat extreme position to take if it is argued that the burden is entirely upon the assessee. The assessee, it must be remembered, is dealing with its competitors, i.e., the other service providers, who may not be willing to part with their accounts and the details regarding their tax payments or returns of income to the assessee except confirming that the taxes have been paid. But when their Permanent Account Numbers are made available to the Assessing Officer, it would not be unreasonable on the part of the assessee to ask the Assessing Officer to have the payments verified from the records of the Assessing Officers within whose jurisdiction the payees are assessed. We are, therefore, unable to appreciate or uphold the decision of the CIT(A) placing the onus entirely on the assessee and in refusing to accept the plea that the taxes cannot be recovered twice in respect of the same income on the ground of inadequate evidence. In our view, the CIT(A) ought to have directed the Assessing Officer to invoke his powers under the Act and have the payment of taxes by the payees verified from the respective Assessing Officers assessing the payees with the help of the WOCKHARDT HOSPITALS LTD. 8 Permanent Account Numbers of the payees made available by the assessee. We direct the Assessing Officer to do so. If upon verification it is found that the taxes have been paid by the payees fully in respect of the roaming charges received by them from the assessee, nothing survives. In such an event no taxes can be recovered from the assessee and the assessee cannot be treated to be in default. The issue is, accordingly, restored to the Assessing Officer with the above directions.”