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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आदेश /O R D E R Per Shri Balakrishnan S, Accountant Member These appeals are filed by the revenue against the order of
Commissioner of Income Tax (Appeals) [CIT(A)], Vijayawada in Appeal
No.442, 443, 445 & 444/CIT(A)/ VJA/12-13 dated 29.04.2013 u/s
201/201(1A) of the Income Tax Act, 1961 (in short ‘Act’) for the
Assessment Year (A.Y.) 2011-12 and 2012-13 and the cross objections are
filed by the assessee. Since the grounds raised in these appeals are
common, these appeals are clubbed, heard together and a common order
is being passed for the sake of convenience as under.
The Revenue has raised the following grounds in ITA No :
The order of the CIT(A) is erroneous and prejudicial to the interest of the Revenue. 2. The CIT(A) erred in concluding that TOS need not be deducted from the payments made to contractors under various schemes. 3. The CIT(A) ought to have confirmed the Order of the Assessing Officer since it was passed after affording opportunity to the assesses and after considering the picas of the assesses. 4. The CIT(A) ought to have appreciated the stand of the Assessing Officer that charging of interest on delay in remittance is mandatory according to Statute. 5. The CIT(A) erred in not accepting the fact that with effect from
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01.04.2010, if the recipient does not furnish his PAN to the deductor, tax has to be deducted at the rate of 20%. 6. Any other ground that may be urged during the course of appellate proceedings.
Brief facts of the case are that the assessee is a state government
department incharge of executing the government schemes, having
jurisdiction over 26 mandals, duly covering five assembly constituencies
to supply water to the public on emergency basis, where the schemes
defunct. A survey was conducted u/s 133A on 28.03.2012 in the office
premises of Executive Engineer, Rural Water Supply Project,
Viswanadhapuram, Podili, Prakasam District to verify the compliance to
TDS provisions. During the survey, it was noticed that the assessee has
made payments on account of work contracts under various schemes to
contractors and various Habitation / Village Works Committees which are
non government entities during the respective financial years and has
failed to effect TDS on these payments as required u/s 194C of the Act.
The AO issued show cause notice and in response to show cause notice of
the AO, the assessee furnished details as required by the AO. The AO after
considering the submissions, concluded that the assessee failed to deduct
4 I.T.A. No.511&512/Viz/2013 & CO No.132&133/Viz/2013 A.Y.2011-12 & 2012-13 The Executive Engineer, Podili
TDS on various contract payments. He is therefore treated as deemed to
be in default u/s 201(1) of the Act and demanded short deduction of TDS
u/s 201(1) for Rs.49,51,782/- for the A.Y. 2011-12 and Rs.50,42,916/- for
the A.Y. 2012-13. The AO also calculated penal interest u/s 201(1A) and
raised total demand of Rs.66,11,236/- for A.Y. 2011-12 and Rs.62,06,477/-
for the A.Y.2012-13.
Aggrieved by the order of the AO, the assessee filed appeal before
CIT(A), Vijayawada. During the course of appeal hearing, the assessee
submitted written submissions and relied on various case laws as
mentioned in his submissions. The Ld.CIT(A) after going through the
written submissions allowed the appeal of the assessee. The findings of
Ld.CIT(A) is extracted below :
I have gone through the facts of the case, submissions made by the appellant, orders made under sections 201(1) and 201(IA) for both the assessment years under consideration besides perusing case laws relied upon The facts of the case are that the appellant is a state government department in charge of executing the government schemes and having jurisdiction over 26 mandals duly covering 5 assembly constituencies and it is essential to supply water to the public on emergency basis where the schemes defunct In view of such an emergency, and as they have a norm of allotment the works to rural poor, who are immediately available and work with dedication, since they belong to the areas of work It is seen from the records that payment to contractors are divided into 2 categories, viz., total payments during each years, where total receipts were less than Rs. 5,00,000 and more than Rs. 5,00,000. The AR during the hearing pointed out that in as much as the receipts
5 I.T.A. No.511&512/Viz/2013 & CO No.132&133/Viz/2013 A.Y.2011-12 & 2012-13 The Executive Engineer, Podili
per year are less than Rs. 5,00,000, there would not be tax liability and as such deduction of TDS under section 194C is irrelevant is acceptable. In as much as the receipts being more than Rs. 5,00,000, it is submitted that they have filed the returns/revised returns disclosing the receipts and paid taxes there on is also an acceptable proposition, because, if the tax liability is discharged by the recipient and filed returns, in that case as per the Apex Court's decision in the case of Hindustan Coca Cola Beverages Pvt. Ltd vs. CIT, reported in (2007) 293 ITR 226 (SC), again the same tax need not be recovered again. It is also submitted by the AR that the recipients, wherever necessary obtained PAN numbers and filed revised TDS returns is a relevant point to be noted. Thus, taking totality of facts and circumstances into account and after reappraisal of the position in view of the submissions made and material filed, I am of the considered opinion that there is no liability under section 201(1) and 201(1A) for both the assessment years under consideration and accordingly, the AO is directed to delete the same.
Aggrieved by the order of the Ld.CIT(A), the revenue is in appeal
before us. The Ld.DR argued that the Ld.CIT(A) has made no specific
finding with respect to section 201(1) and 201(1A) of the Act. The Ld.DR
also referred to section 139(5)(a), where it is necessary to include PAN in
the return or correspondence with any Income Tax authority. He also
invited our attention to section 139(5)(c) to quote PAN in all documents
pertaining to such transaction as may be prescribed by the Board in the
interest of revenue and entered into by the assessee. The Ld.DR also
referred to section 201(1) of the Act and stated that any person who does
not deduct or does not pay, or after deducting fails to pay, the whole or
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any part of the tax will be deemed to be an assessee in default in respect of
such tax. He also referred to proviso to section 201(1) of the Act.
Per contra, the Ld.AR relied on the order of the Ld.CIT(A). The Ld.AR
also objected to the argument of the Ld.DR that proviso to sub section
201(1) is w.e.f. 01.07.2012 only. The Ld.AR also argued that for the
A.Y.2011-12, the tax effect is below the limits as prescribed in Circular
No.17/2019 dated 08.08.2019 and argued that the appeal is not
maintainable.
We have heard both the parties, perused the material placed on
record and also the orders of the authorities below. We find from the
records submitted by the assessee and the payments made to contractors
are below the taxable limits and there is no requirement of PAN and
consequently, no deduction of tax is envisaged u/s 194C. We refer to
section 139 (5B) of the Act which is reproduced below for the sake of
convenience.
(5B) Where any sum or income or amount has been paid after deducting tax under Chapter XVIIB, every person deducting tax under that Chapter shall quote the permanent account number of the person to whom such sum or income or amount has been paid by him—
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(i) in the statement furnished in accordance with the provisions of sub- section (2C) of section 192; (ii) in all certificates furnished in accordance with the provisions of section 203; (iii) in all returns prepared and delivered or caused to be delivered in accordance with the provisions of section 206 to any income-tax authority; (iv) in all statements prepared and delivered or caused to be delivered in accordance with the provisions of sub-section (3) of section 200 : Provided that the Central Government may, by notification in the Official Gazette, specify different dates from which the provisions of this sub-section shall apply in respect of any class or classes of persons: Provided further that nothing contained in sub-sections (5A) and (5B) shall apply in case of a person whose total income is not chargeable to income-tax or who is not required to obtain permanent account number under any provision of this Act if such person furnishes to the person responsible for deducting tax, a declaration referred to in section 197A in the form and manner prescribed there under to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.
The proviso clearly states that nothing contained in subsection
(5A)and (5B) shall be applied to a person whose total income is not
chargeable to income tax and who does not obtain PAN under any
provision of the Act. The very intent of section 201(1A) makes it
conditional for every person who wish to have a transaction invariably to
have PAN, is contrary to provisions of 139(5A) which was introduced by
the legislature. The persons whose income is below the taxable limits
need not have PAN, nor they need not furnish any income declaration
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return is not disputed. Hon’ble High Court of Karnataka in the case of
Smt.A.Kowsalya Bai vs. Union of India held that in view of the specific
provision section 139A of the Act, section 206A of the Act is made
inapplicable to persons whose income is less than the taxable limits as
per the Finance Act, 1991. We also note that in terms of section 139A(5A)
of the Act, every person receiving any sum or income or amount from
which tax has been deducted under the provisions of Chapter XVIIB, shall
intimate his permanent account number to the person responsible for
deducting such tax under that Chapter. However the second Proviso
exempts certain categories of persons from the applicability of section
139(5A) & 139(5B). We also find from the records that the assessee has
segregated the contractual payments more than Rs.5,00,000/- and less
than Rs.5,00,000/- and submitted a statement before us. The Ld.CIT(A),
in his findings also has observed that where the receipts are more than
Rs.5,00,000/-, the contractors have submitted their returns disclosing the
receipts and paid the taxes on the same and hence, it cannot be taxed in
the hands of the assessee. We also find from the RTI application filed by
the assessee that the judgement of Hon’ble High Court of Karnataka in the
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case of Smt.A.Kowsalya Bai has not been challenged before higher forum. We, therefore, find no infirmity in the order passed by the Ld.CIT(A) and no interference is required. In the result, appeal of the revenue is dismissed.
The assessee filed cross objections which are supportive in nature. Since the appeals of the revenue are dismissed, the cross objections filed by the assessee become infructuous, hence dismissed.
In the result, the appeals of the revenue as well as the cross objections of the assessee are dismissed.
Order pronounced in the open court on 08th April, 2022.
Sd/- Sd/- (दुव्िूरु आर.एऱ रेड्डी) (एस बाऱाकृष्णन) (DUVVURU RL REDDY) (S.BALAKRISHNAN) न्याययकसदस्य/JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER Dated :08.04.2022 L.Rama, SPS
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आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. रधजस्व/The Revenue – Income Tax Officer (TDS), Ward-3(3), Guntur 2. निर्धाररती/ The Assessee– The Executive Engineer, Rural Water Supply Project, Viswanadhapuram, Podili, Prakasam Dist. 3. आयकर आयुक्त / The Commissioner of Income Tax (TDS), Hyderabad 4. आयकर आयुक्त (अपीऱ)/ The Commissioner of Income Tax (Appeals), Vijayawada 5. ववभधगीय प्रनतनिधर्, आयकर अपीऱीय अधर्करण, ववशधखधपटणम/ DR,ITAT, Visakhapatnam 6.गधर्ा फ़धईऱ / Guard file
आदेशधिुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam