Case Law Details

Case Name : ACIT- LTU Vs. M/s. Bajaj Auto Limited (ITAT Mumbai)
Appeal Number : ITA Nos. 3638, 3639, 3640, 3641 & 3642/Mum/2010
Date of Judgement/Order : 27/05/2011
Related Assessment Year : 1998- 99
ACIT, Mumbai Vs M/s Bajaj Auto Limited (ITAT Mumbai)- From the language of section 205 of the Act, it is clear that the bar operates as soon as it is established that the tax has been deducted at source and it is wholly irrelevant as to whether the tax deducted at source is paid to the credit of the Central Government of not and whether the TDS certificate in Form No. 16 has been issued or not. Also the mere fact that the employer may not issue the TDS certificate to the employee does not mean that the liability of the employer ceases. The liability to pay income-tax if deducted at source is upon the employer.

IN THE INCOME TAX APPELLATE TRIBUNAL
“B” Bench, Mumbai

Before Shri R.V. Easwar, President
and Shri T.R. Sood, Accountant Member

ITA Nos. 3638, 3639, 3640, 3641 & 3642/Mum/2010

(Assessment Years: 1998- 99, 1990- 91, 1999- 2000, 2001- 02 & 2003- 03)

ACIT – LTU Vs. M/s. Bajaj Auto Limited

ORDER

Per T.R. Sood, A.M

These appeals filed by the Revenue are directed against separate orders of the CIT(A) XXIV, Mumbai dated 11.02.2010 in respective assessment years.

2. Revenue has raised the  following common ground in all the assessment years:-

“1. 0n the facts and in the circumstances of the case and in law, the learned CIT(A) erred in directing the A. 0. not to recover the amount from the assessee to the extent of TDS certificate not received by the assessee though the assessee failed to comply in respect of his liability towards his claim even after lapse of substantial period of time.”

3. The brief facts of the case are that assessee had claimed credit for tax deducted at source but could not submit all the certificates. It was pleaded that whatever certificates have not come that issue may be kept in abeyance. It seem that because of this issue and some other issues the matter travelled before the CIT(A) and the issues were decided. When the Revenue pressed for collection of demand assessee again filed application under section 154 for claiming the credit of TDS without filing the TDS certificates in some cases. Credit for tax deducted at source was given wherever certificates were filed. However, no credit was given where the certificates were not filed. Some of the applications under section 154 were dismissed being beyond 4 years. The learned CIT(A) has held that the application is not beyond 4 years and since this issue has not been agitated before us and, therefore, we are not required to adjudicate the same.

4. The CIT(A) finally adjudicated the issue vide para 1.3 in A.Y. 1998-99, which is as under: –

“1.3 I have considered the submissions made by the AR. I am of the view that the appellant filed application against order giving effect to the Commissioner of Income-tax (Appeals) well within the time limit prescribed under section 154 of the Act. Further, the appellant had taken up the said issue even in the appeal against 143(3) order. Inspite of clear directions of the Commissioner of Income-tax (Appeal) the Assessing Officer did not grant credit and the reasons for not doing so are also not available on record. In light of the above the Assessing Officer cannot pick the appellant’s letter dated 29th March, 2007 by ignoring all earlier correspondence to evaluate the timeliness of such action. This is a clear case of appellant being denied of his rightful claim. In my view the issue is no longer subjudice. Accordingly, I direct the AO to verify the claim of the appellant and give required credit. In case for any reason credit for the same is not given then, I direct the Assessing Officer not to recover the amount to the said extent and to keep the same in absence as per the decision of the Bombay High Court in case of Yashpal Sanhni vs. Rekha Hajarnavis, Assistant Commissioner of Income-tax & Others.”

5. Before us the learned D.R. submitted that as per section 199 Revenue was bound to give credit for any tax deducted on behalf of the assessee which has already been deposited with the Central Government. Obviously such credit to be given if certificates were filed, which are required to be issued in terms of section 203 of the Act. He contended that the learned CIT(A) has given a direction following the decision of the hon’ble Bombay High Court in the case of Yashpal Sanhni vs. ACIT & Ors. 293 ITR 593 to keep the balance of payment in abeyance, which is contrary to the provisions of section 199 r.w.s. 203. In any case, in case of Yashpal Sanhni salary slips, bank statement, etc. were available and that is why the hon’ble High Court observed that balance of demand should not be recovered but in relation assessee no evidence has been given that tax has really been deducted. The ratio of the decision would not be applicable to the instant case.
6. On the other hand, the learned counsel for assessee referred to the provisions of section 205 and pointed out that once tax has been deducted then of course in the absence of evidence credit may not be given but at the same time demand can also not be enforced because there is clear bar in section 205. The Honourable Bombay High Court clearly held in the case of Yashpal Sahni (supra) that once tax was deductible whether the same has been paid to the Central Government of not, the same could not be recovered from the person against whom such tax has been deducted.
7. We have considered the rival submissions carefully. In case of Yashpal Sahni vs. ACIT & Ors. 293 ITR 539(Bom) assessee was appointed as Managing Director of a company, which deducted tax at source from his salary. However, TDS certificates were not issued. Some dispute arose between assessee and his employer and ultimately services of the assessee were terminated. Assessee filed return and claimed the amount of tax deducted at source. Credit for the same was not given in the absence of certificate and even interest under section 234B and 234C was also levied. Even the rectification application under section 154 was not entertained. Ultimately penalty proceedings under section 221(1) were initiated and assessee filed writ petition before the Honourable Bombay High Court. The Honourable High Court, reproducing provisions of section 205, observed that once it is established that tax has been deducted at source from the salary of the employee then bar under section 205 of the Act comes into operation. Vide para 22 it was observed as under: –

“22. In the present case, though respondent No. 6 has deducted the tax at source from the salary income of the petitioner, respondent No. 6 has not issued the TDS certificate in Form No. 16 to the petitioner. As a result, the petitioner is not entitled to avail credit of the tax deducted at source. However, once it is established that the tax has been deducted at source, the bar under section 205 of the Act comes into operation and the Revenue is barred from recovering the TDS amount once again from the employee from whose income, the TDS amount has been deducted. It is pertinent to note that the purpose of issuing the TDS certificate under section 203 of the Act is to enable the assessee to avail credit of the tax deducted at source in the relevant assessment year. If the TDS certificate is not issued, then under section 199 of the Act, the assessee from whose income, tax has been deducted at source will not be entitled to take credit of the said amount. In that event, on account of the non-availability of the credit, the assessee would be liable to pay the tax once again even though the tax was deducted at source. Thus, it would be a case of double taxation which is not permissible in law. To avoid such anomaly, section 205 has been enacted, to the effect that, once the tax is deducted at source by the employer-company, then, the person from whose income, the tax has been deducted at source shall not be called to pay the said tax again. From the language of section 205 of the Act, it is clear that the bar operates as soon as it is established that the tax has been deducted at source and it is wholly irrelevant as to whether the tax deducted at source is paid to the credit of the Central Government of not and whether the TDS certificate in Form No. 16 has been issued or not. Also the mere fact that the employer may not issue the TDS certificate to the employee does not mean that the liability of the employer ceases. The liability to pay income-tax if deducted at source is upon the employer.”

The highlighted portions very clearly shows that the bar under section 205 would operate as soon as it is established that tax has been deducted at source. Therefore, it is clear that there has to be some evidence showing that tax has been really deducted, even if TDS certificates are not there. Therefore, in the interest of justice we set aside the order of the CIT(A) and remit the matter back to the file of the A.O. with a direction to request the assessee to furnish some evidence to the satisfaction of the A.O. to show that tax has really been deducted by the other party. Credit for the same may not be given till the TDS certificates are filed but if assessee is able to furnish some evidence by which the A.O. is satisfied that tax has really been deducted then Revenue should keep the demand in abeyance till the time such certificates are filed.

8. In the result, appeals of the Revenue are allowed for statistical purposes.

Order pronounced in the open court on 27th May 2011.

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