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Income Tax Appellate Tribunal, AGRA BENCH: AGRA
Before: SHRI A. D. JAIN & DR. MITHA LAL
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH: AGRA
BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER AND DR. MITHA LAL, ACCOUNTANT MEMBER
I.T.A No. 207/Agra/2016 (ASSESSMENT YEAR-2011-12)
Executive Engineer Construction, Vs..DCIT,(TDS) Division PWD-CD Civil Line Agra. Near, Police Station, Etawah. PAN No.AGRC10480B (Assessee) (Revenue)
Assessee by Shri Anurag Sinha, AR. Revenue by Shri Waseem Arshad, Sr. DR.
Date of Hearing 14.09.2017 Date of Pronouncement 11.10.2017
ORDER PER, A.D. JAIN, JUDICIAL MEMBER: This is assessee’s appeal for Assessment Year 2012-13 [wrongly stated in the CIT(A)’s order as A.Y. 2011-12], against the CIT(A)’s order upholding the AO’s action in treating the assessee as an assessee in default for not making timely TDS and on the rates prescribed and thereby confirming the demand of Rs. 4,17,508/- raised under sections 201(1) and 201(1A) of the I.T. Act. 2. The facts are that the assessee is a deductor, i.e., the U.P. Government Construction Division. Survey proceedings were conducted on 16.12.2013 in order
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to verify the correct applicability of the TDS provisions. It was observed by the AO that the assessee had failed to deduct and deposit TDS u/s 194C of the Act on an amount of Rs.3,27,460/- during the F.Y. 2011-12. It was also seen that the deductor had also not been filing quarterly statement of 24Q & 26Q for F.Y. 2011- 12 and hence, assessee had rendered itself liable to be treated as an assessee in default u/s 201(1) of the I.T. Act, 1961. 3. The ld. CIT(A) has held as follows: “5.3 I have gone through the assessment order, submissions of the assessee and legal position in this regard. It is seen that it is not a case where assessee has not deducted TDS. Assessee has deducted TDS by treating the contractors as having PAN, and hence at a rate of 2.25%, whereas AO held that as PAN for these contractors were not available, assessee should have deducted TDS at the rate of 20%. Assessee has also not filed its quarterly statements of 24Q and 26Q, hence it has rendered itself liable to be treated as assessee in default under section 201 (1). Although assessee later furnished the quarterly statements and requisite taxes were also paid, but that would not absolve the assessee from being treated as assessee in default. I agree with the stand of the AO that the assessee has to be treated as assessee in default for not deducting timely TDS and on the rates prescribed. Hence the demand of Rs.4,17,508/- raised 201 (1A) is hereby confirmed. In the result, appeal of the assessee is dismissed.” 6.
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The AO observed that the assessee had short deducted the due TDS amounts
against several PANs; that the total short deduction came to Rs.3,27,460/-; and that
the assessee had not been filing quarterly statements in 24Q and 26Q for the year.
Before the ld. CIT(A), the assessee stated that the short deduction was
worked out due to mismatch of PANs and not due to absence of PANs; that the
short deduction was worked out by the AO at 20% of the total amount of
Rs.18,44,957/-, which came to Rs.3,68,991/-, while the assessee had charged TDS
@ 2.25%, worth Rs.41,541/-; that the AO had treated the contractors as having no
PANs and had worked out the short deduction at Rs.3,27,460/-; and that after
correction of PANs, there remained no short deduction and the demand of
Rs.4,17,508/- stood revised to that of Rs.2,460/-. As evidence, the assessee filed
copies of returns in 24Q and 26Q and receipts.
The CIT(A) observed that it was not a case where the assessee had not made
TDS; that the assessee had made TDS by treating the contractors as having PANs
@ 2.25%; and that the AO had observed that since the PANs for these contractors
were not available, the assessee should have made TDS @ 20% and that since the
assessee also had not filed its quarterly statements in 24Q and 26Q, it had rendered
itself liable to be treated as an assessee in default u/s 201(1) of the Act. The ld.
CIT(A) agreed with the stand of the AO.
I.T.A No. 207/Agra/2016 4
We have heard the parties and have perused the material on record. The order under sections 201(1)/201(1A) of the Act was passed on 28.03.2014, treating the contractors as having no PANs and working out short TDS at Rs.3,27,460/-. Before the ld. CIT(A), the assessee filed written submissions (APB 6-11), stating that the incorrect PANs had been rectified, where after, the total demand of Rs.4,17,508/- stood revised to that of Rs.2,460/-. Supporting evidence in the shape of copies of quarterly statements for all the four quarters of the year was filed. The ld. CIT(A) observed (impugned order, para 5.3, second sub- para, first sentence) that: “Although the assessee later furnished the quarterly statements and requisite taxes were also paid, but that would not absolve the assessee from being treated as assessee in default.” 8. The question is whether the ld. CIT(A) is correct. As admitted by the ld. CIT(A) herself, the assessee, after passing of the order dated 28.03.2014, had furnished quarterly statements and due taxes stand paid. If it is so, is the assessee entitled to be absolved of being treated as an assessee in default? The Department says that subsequent events cannot be taken into consideration. 9. As per section 202 of the Act, deduction of tax at source is only one mode of recovery. In the present case, as observed by the ld. CIT(A) herself, due taxes, including interest, have been, in fact, recovered. The fault in deduction stands rectified and also accepted by the Department, in as much as the outstanding
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demand now amounts to a total of Rs.2,460/-. The rest of the demand no longer survives. Recovery of taxes was made. As such, the Department has accepted the assessee’s stand that it was not a case of no PANs, but that of mismatch of PANs. That being so, the assessee cannot be treated as an assessee in default. 10. Coming to the question whether later incidents / developments can be considered or not, an appeal is a continuation of the assessment proceedings. An order u/s 201(1) of the Act is an order assessing an assessee as an assessee in default. In first appeal, the assessee challenges such treatment. It is basic and trite that during the progress of proceedings from the taxing Authority to the Appellate Authority, in order to make the right or remedy claimed by the assessee just and meaningful, the Appellate Authority itself, subject to all just exceptions, must examine and evaluate events and developments, if any occurring subsequent to the institution of the proceedings, and mould the relief accordingly. In the present case, clearly, this has not been done. Though the ld. CIT(A) has noted the assessee having, post the passing of the AO’s order, furnished the quarterly statements and paid requisite taxes, in spite thereof, the assessee has been held not absolved of being treated as an assessee in default. No reason for this has been ascribed which, in the facts and circumstances of the case and the legal position, as discussed, is not tenable in law.
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Accordingly, the impugned order is reversed. The assessee is absolved of
being treated as an assessee in default. The demand of Rs.4,17,508/-, raised u/s
201(1) and section 201(1A) of the Act is as reduced to that of Rs.2,460/-,
cancelled.
In the result, the appeal is allowed.
Order pronounced in the open court on 11/10/2017.
Sd/- Sd/- (DR. MITHA LAL MEENA) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated 11/10/2017 *AKV* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR
I.T.A No. 207/Agra/2016 7
Date 1. Draft dictated (DNS) 04.10.2017 PS 2. Draft placed before author 05.10.2017 PS 3. Draft proposed & placed before the second member JM/AM 4. Draft discussed/approved by Second Member. JM/AM 5. Approved Draft comes to the Sr.PS/PS PS/PS 6. Kept for pronouncement on PS 7. File sent to the Bench Clerk PS 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.