JCIT(OSD) Vs Sistema Shyam Teleservices Ltd (ITAT Delhi)
ITAT Delhi held that initiation of action u/s. 154 of the Income Tax Act on the basis of shortfall in TDS on year end provisions reported in Form 3CD of the assessee cannot be faulted. Accordingly, matter remanded to AO.
Facts- The Assessing Officer (AO) found that for F.Y. 2012-13 the assessee deductor was required to deduct TDS aggregating to Rs. 15,59,44,667/- (including interest) on gross amount of Rs. 2,87,53,24,755/- under various TDS provision of the Income Tax Act, 1961 which the assessee had failed to do. AO, therefore, issued notice u/s. 154 of the Act to rectify the order passed by him u/s. 201(1)/201(1A) of the Act whereby demand of Rs. 4,39,84,927/- was raised.
Aggrieved, the assessee appealed before the CIT (A). CIT(A) quashed the impugned order of the AO. Being aggrieved, revenue has preferred the present appeal.
Conclusion- It is not in dispute that the AO proceeded to initiate action under Section 154 of the Income Tax Act on the basis of shortfall in TDS on year end provisions reported in Form 3CD of the assessee for FY 2012-13. If that be so, we are of the view that action of the AO to resort to the provisions of Section 154 of the Income Tax Act cannot be faulted. We also observe that no finding on merits of the case has been recorded by the CIT (A). We, therefore hold that in the interest of justice and fair play the issue needs to be restored to the file of the AO with a direction to decide the issue under consideration afresh in accordance with law after allowing reasonable opportunity to the assessee to explain its case.
FULL TEXT OF THE ORDER OF ITAT DELHI
The appeal filed by the Revenue arises out of the order dated 11.02.2020 of the Ld. Commissioner of Income Tax, (Appeals) (“CIT(A)”) Delhi – 41 pertaining to Assessment Year (“AY”) 2013-14.
2. The Revenue has raised the following grounds:-
“1. Whether on the facts and circumstances of the case and in law, the CIT(A) failed to appreciate the fact and quashed the order and finding on the applicability of TDS on provisions in the balance sheet is not required to be made? Whereas the auditor of the assessee has reported TDS default in the statutory Audit Report i.e.in 3CD.
2. Whether on the facts and circumstances of the case and in law, the CIT(A) failed to appreciate the fact and quashed the order o f AO, which is based on the facts mentioned in Audit report i.e. 3CD Report and is covered by the provisions of section 154 of Income Tax Act? “
3. That the order of the CIT(A) being erroneous in law and on facts needs to be vacated and the order of the ACIT is to be restored.
4. That the appellant craves leave to add or amend any one or more of the ground of the appeal as stated above as and when need for doing so any arise. ”
3. In brief the Ld. Assessing Officer (“AO”) found that for Financial Year (“FY”) 2012-13 the assessee deductor was required to deduct TDS aggregating to Rs. 15,59,44,667/- (including interest) on gross amount of Rs. 2,87,53,24,755/- under various TDS provision of the Income Tax Act, 1961 (the “Act”) which the assessee had failed to do. He, therefore, issued notice dated 18.01.2017 under section 154 of the Act to rectify the order passed by him on 27.03.2015 under section 201(1)/201(1A) of the Act whereby demand of Rs. 4,39,84,927/- was raised. In response, the assessee furnished explanation vide reply dated 20.02.2017 which was not acceptable to the Ld. AO. He, therefore computed the liability of the assessee as under and raised demand accordingly:
