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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER
I.T.A. No.123/Asr/2022 Assessment Year: 2015-16
Sh.Harinder Pal Singh, Vs. Dy, Commissioner of 335, Guru Teg Bahadur Nagar, Income, Central Circle-1, Jalandhar. Jalandhar. [PAN: ABLPS8660A] (Appellant) (Respondent)
Appellant by Sh. S. S. Kalra,CA. Respondent by Sh. Hitendra Bhauraoji Ninawe, CIT DR
Date of Hearing 20.12.2022 Date of Pronouncement 27.12.2022
ORDER Per:Anikesh Banerjee, JM:
The instant appeal of the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeal)-5,Ludhiana, [in brevity the ‘CIT (A)’]
bearing appeal 10721/IT/CIT(A)-5/LDH/2014-15, date of order 23.05.2022, the order passed u/s 250 (6) of the Income Tax Act 1961, [in brevity the Act] for A.Y. 2015-16.The impugned order was emanated from the order of the ld. Joint
I.T.A. No.123/Asr/2022 2 Assessment Year: 2015-16
Commissioner of Income Tax (OSD) Central Circle-1, Jalandhar,(in brevity the
AO) order passed u/s 154 of the Act date of order 26.02.2021. The assessee took
the following grounds which are extracted as below: “1 The Order of the Ld. CIT(A) - 5, Ludhiana confirming the Order of the A.O. is against law and facts of the case. 2 That the Ld. C.I.T.(A) has erred in not allowing the TDS credit amounting to Rs. 1,71,585/- which was made by the tenant ‘Vasan Healthcare Pvt. Ltd.’ whose rental income stands duly shown and assessed by the Deptt. and for which application u/s 154 was made to the A.O. who had rejected the claim on erroneous grounds. 3 That the C.I.T.(A) while rejecting the claim of the assessee has lost sight of the judicial pronouncements relied upon by the assessee and has thus travelled beyond the judicial discipline. 4 That the assessee cannot be made to suffer if the deductor has not deposited the amount of TDS in Govt. Treasury and for that the Deptt. has its own resources to catch hold of the deductor. 5 Such other grounds as may be urged on hearing.”
Brief fact of the case is that the assessee has agitated the appeal on the
ground that the revenue has denied to allow the TDS from rental income from his
party, M/s Vasan Healthcare Pvt. Ltd. amount of Rs.1,71,585/-. The assessee had
I.T.A. No.123/Asr/2022 3 Assessment Year: 2015-16
received the rental income from the party amount of Rs.17,15,850/-. The party has
deducted TDS on the rent paid balance amount but not deposited in the
government treasury. During search proceeding, the department has acquired
information that the TDS amount was not credited on behalf of the assessee and
the assessment was completed u/s 153A/143(3) of the Act by denying the claim of
TDS of the assessee. The assessee filed a rectification petition before the ld. AO
u/s 154 and prayed for accept the claim of TDS deducted by the party. But there is
no credit in the 26AS or there is no such any departmental proof as benefit of TDS
credit against the assessee. The ld.AO had rejected the petition u/s 154 of the
assessee and denied the claim of TDS. Aggrieved assessee filed an appeal before
the ld. CIT(A). The ld.CIT(A) has confirmed the observation of the ld. AO and
rejected the appeal of the assessee. Being aggrieved assessee filed an appeal before
us.
During hearing, the ld. counsel for the assessee has submitted the written
submission and argued that the assessee has offered the rental income in the
computation of total income. The copy of the computation is annexed in APB page nos. 1 &2. The TDS was accordingly claimed in relation to the rental income. The
assessee further submitted that a rectification petition was also submitted before
the ld. AO for claiming of the TDS and the ledger of the party as proof of the
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deduction of TDS is also submitted in APB page no. 9. The assessee had claimed that the assessee is eligible for this benefit u/s 205 of the Act and the deductor has liable to pay the tax and assessee is eligible for the credit of the TDS. 3.1 During hearing, the assessee relied on the order of the Hon’ble Bombay High Court in the case of Pushkar Prabhat Chandra Jain vs. Union of India & Anr. (2019) 309 CTR (Bom) 218 relevant para is extracted as below: “7. Section 205 of the Act carries the caption “Bar against direct demand on assessee”. The section provides that where tax is deducted at the source under the provisions of Chapter XVII, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income. This provision came up for consideration before division bench of this Court in case of Yashpal Sahni v. Rekha Hajarnavis (2007) 293 ITR 539 (BOM). It was a case where the employer while paying salary to the employee had deducted tax at source Rs. 6.66 lakhs. Subsequently, disputes arose between the employer and employee due to which service of the employee was terminated. The employee filed the return of income claiming credit of TDS of Rs. 6.66 lakhs. The Assessing Officer issued intimation under Section 143(1)(a) of the Act denying credit of TDS of Rs. 6.66 lakhs on the ground that
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such amount was not deposited by the employer. This Court in such background after referring to Section 205 of the Act held and observed.”
3.2 The ld. counsel for the assessee further relied on the order of the Karnataka High Court in the case of Smt. Anusuya Aiva vs. Dy. Commissioner of Income Tax 278 ITR 206 (Karn). The observation of the Hon’ble High Court in page 16 para no. 2 is reproduced as under: “2. The assessee had responded to the notice, pointing out that the demands for the years 1999-2000 to 2001-02 were not correct or justified; that the said demand included even the amounts that had been deducted by her tenant, one M/s Krisen Development Corporation, who had taken the property belonging to the petitioner on a monthly rent of Rs 1,35,000; that the said tenant had punctually deducted 20 per cent of the rent amount in terms of Section 194-I of the Act by remitting the rent less 20 per cent to the petitioner every month, but, in fact, had not issued the corresponding deduction certificate in Form 16A and though this aspect had also been brought to the notice of the Department, no action as such had been taken, but nevertheless, the amount having not been remitted to the credit of the Department by the tenant and the Department having not realized the amount, is now looking to the petitioner for recovery of this amount and to such extent, the demand cannot be raised on the petitioner. It is on such stand, the present writ
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petition is filed praying for quashing of this demand notice to the extent of the amount mentioned therein, being the amount which had already been deducted by the tenant of the petitioner whether remitted or not to the Department.”
3.3 Further the relevant para 8 is also reproduced as under:
“8. Section 205 of the Act reads as under:
"205. Bar against direct demand on assessee : Where tax is deductible at the source under Sections 192 to 194, Section 194A, Section 194B, Section 194BB, Section 194C, Section 194D, Section 194E, Section 194EE, Section 194F, Section 194G, Section 194H, Section 194-I, Section 194J, Section 194K, Section 195, Section 196A, Section 196B, Section 196C and Section 196D, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income."
On a plain reading of this provision, it is very clear that in a situation where the tax is deductible at source under Section 194-I of the Act, as in the present case, and to the extent to which the tax has been deducted from the income, the assessee shall not be called upon to pay the tax himself/herself to such extent. That means what the section provides for is to put an embargo or prohibition from raising a demand on the assessee in respect of the amount, which was deductible and actually deducted to the extent it has been deducted. The section by itself does not say that the amount should also be paid to the Central Government. There is no doubt that such an
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obligation is cast on the person responsible namely, the person who has deducted the amount and the Act also provides for initiation of proceedings against the person on his/her failure to do so, right upto the prosecution of the person for recovery of the amount with interest. The condition of remittance is not referred to or made a requirement for the protection to the assessee under Section 205 of the Act. Even if one reads the earlier provisions such as 192, 194-I, 199, 200, 201, 202 and 203 to presume that payment being on behalf of the assessee having expressly made applicable when the amount is remitted and granted to give credit to the amount of the tax payable by the assessee also, only when the amount deducted is also remitted, whereas, there is a clear departure in the case of Section 205 by not mentioning the words 'remittance of the amount' in this section. Here again, for imposing the bar on the Revenue for making a direct demand on the assessee, what is indicated in the section is a requirement in law for deduction and factual deduction and nothing more. Insofar as such requirements are concerned, in the present case, it is not much in dispute that it has happened or fulfilled. In fact, the bar only is not to raise demand on the assessee herself or to enforce recovery on the assessee after the deduction is made in respect of the amount deducted. That means, once deduction is made, the Revenue is expected to look upto the person who had deducted the tax for realizing the amount, if such person fails in remitting the amount to the Central Government.”
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The ld. counsel further relied on the order of the Coordinate Bench of ITAT, Delhi in case of Sanjay Gupta vs. ITO ITA No.1031/Del/2022 order dated 19.10.2022. The relevant para is reproduced as under: 9. Even otherwise Section 205 of the Act is very crystal clear in its intention and clarifies that where tax stands deducted at source the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from the income. In the case in hand as noticed above, the deduction of tax from the salary of assessee is not disputed and Government’s claim of TDS stands satisfied under CRP and cannot be said to be still outstanding so as to deny its credit to the assessee.
The ld. CIT. DR vehemently argued and mentioned that the amount was not
credited in the 26AS, so, the assessee is not eligible for claim of TDS.
We heard the rival submission and relied on the documents available on the
record. In our considered view that the assessee is genuinely eligible for the claim
of TDS amount of Rs.1,71,585/- which was deducted from his rental income. The
income was also offered for tax. So, assessee is eligible for claim of TDS. It is duty
of the party to deduct the tax and to submit before the government treasury u/s 205
of the Act. We set aside the matter to the ld.AO to verify the TDS from respective
authority and allow the claim of the assessee after a proper verification. The
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assessee should also get a reasonable opportunity of hearing for substantiate its
claim. In the result, the appeal of the assessee bearing ITA No. 123/Asr/2022 is 7.
allowed for statistical purposes.
Order pronounced in the open court on 27.12.2022
Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member
AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T.