Sri Teki Venkata Ramana Rao v. ITO (ITAT Visakhapatnam)
In the instant case deductor is the resident and the recipient is the non resident and the payment is covered by section 195 of the Act and the concessions given in respect of exceptions as per proviso to section 20 1(1) are not extended to the non-residents covered by section 195 of the Act. Sub section 2 of section 195 allows the beneficiary to obtain the certificate from the assessing officer to submit the non deduction certificate in case the deductee is not liable for tax. Though Sub section 2 of section 201 enable the AO to hold charge on all the assets of the person in the case of second situation of deduction of tax at source but not remittance to government account, it does not bar the deductor to treat the assessee in default for the principal amount. Sub section 2 of section 201 cannot be read in isolation and both the sections 201(1) and 201(2) must be read harmoniously. Conjoint reading of section 201(1) and 201(2) establish that if the ass essee failed to deduct the tax at source and does not remit to the Government account and tax deducted but not remitted to government account covers both the situations and makes the assessee deemed to be assessee in default in respect of the principal amount as well as interest u/s 201(1) and 201(1A) of the Act except the cases covered by proviso. Sub section 2 deals with the charge on assets of the person who fails to make payment of tax deducted but not the treatment of assessee in default. Therefore, the rigors of section 201(1) are clearly applicable in the case of assessee.. The Ld.CIT(A) considered the decision of Hon’ble Gujarat High Court in the case of Commissioner of Income Tax Vs. Ranoli Investment Pvt. Ltd. and others reported in 235 ITR 433 and held that if no deduction is made and the deducted amount is not paid, the person whose duty it was to deduct the tax at source and to pay is to be treated as ‘assessee in default’ in respect of the taxes and no penalty is to be charged u/s 221 on such person if the ITO is satisfied that such failure to deduct the tax had occurred due to good and sufficient reasons.
FULL TEXT OF THE ITAT JUDGMENT
This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-10, Hyderabad vide I.T.A.No.0459/CIT(A)-10/2015-16 dated 30.09.2016 for the assessment year 2012-13.
2. The assessee raised six grounds in this appeal as under:
1. The Ld. AR is not at all correct and the Ld. CIT (Appeals) is not correct in treating the assessee as an assessee in default for non deduction of tax at source under section 195 when it is very much acknowledged by the Ld. AO himself that all the three non-residents have filed their return of income in India for the relevant assessment year declaring nil capital gains from the transfer of immovable property to the assessee. This is contrary to the decision of the Honourable Supreme Court..
2. The liability to tax if any has to be determined in the hands of the non-resident sellers and collected from them once they have filed their returns of
3. The Ld. AO is not at all correct in treating the assessee as an assessee in default for non deduction of tax at source under section 195 for the principal amount of tax of Rs.9,83,538/-. In view of the clear mandate of sub-section (2) of section 201 that such a charge can be created only when tax was deducted and not paid to the Government and not when tax was not
4. The Ld. AO is not at all correct in the computation of long term capital gains by adopting an estimated value of the property as on 01.04.1981 without reference to any comparable cases.
5. All the above grounds are mutually exclusive and without prejudice to one another.
6. The appellant craves leave to add to, amend, alter all or any of the above grounds of appeal.
7. During the appeal hearing, the Ld.AR did not press ground No.1,4,5 and 6 therefore ground No.1,4,5 and 6 dismissed as not pressed.
3. Ground No.2 and 3 are related to the non-deduction of tax at source as required u/s 195 of Income Tax Act, 1961 (hereinafter to as ‘Act’), consequently the assessee is treated as assessee in default for the tax liability u/s 201(1) and 201(1A) of the Act.
4. The assessee purchased property admeasuring 560 sq.yards in survey No.779, Kakinada on 22.06.2011 from 5 persons vide registered document No.6930/2011 for a consideration of Rs.65,12,000/-. The Assessing Officer(AO) noted from the sale deed that out of 5 sellers, 3 sellers are non-residents and the remaining 2 sellers are residents and details of the sale consideration received by the sellers of the property are as under :
