Accounts Officer, BSNL Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) Delhi partly allowed an appeal filed by the Accounts Officer of Bharat Sanchar Nigam Limited (BSNL) against an order by the Commissioner of Income Tax (Appeals) [CIT(A)], Noida. The CIT(A) had upheld the Assessing Officer’s action of levying interest under Section 201(1A) of the Income Tax Act, 1961, for the delayed deposit of Tax Deducted at Source (TDS) for the Assessment Year 2008-09.
BSNL had initially deducted TDS under Section 194J (for professional or technical services) instead of Section 194C (for payments to contractors). During verification proceedings, BSNL voluntarily agreed with the tax department’s contention that Section 194J was applicable to the payments in question. Subsequently, BSNL deducted and deposited the shortfall in TDS along with filing revised returns and issuing TDS certificates. The Assessing Officer did not pass any order under Section 201(1) of the Act, acknowledging that TDS was eventually deducted, albeit under the wrong section initially.
However, the Assessing Officer levied interest under Section 201(1A) for the delay in depositing the TDS. The CIT(A) upheld this interest levy, noting that BSNL had admitted to short deduction due to the incorrect application of Section 194C. The CIT(A) stated that the levy of interest under Section 201(1A) is mandatory under the Income Tax Act and the Assessing Officer has no discretion in this matter. Nevertheless, the CIT(A) directed the Assessing Officer to ensure the calculation of interest was accurate as per the law.
The ITAT acknowledged the delay of 357 days in filing the appeal but condoned it, accepting BSNL’s explanation regarding the non-receipt of the CIT(A)’s order and the subsequent internal approval processes required for filing an appeal. On the merits of the case, the ITAT observed that the primary dispute was solely regarding the charging of interest under Section 201(1A) for the delayed deposit. While the ITAT found no fault in the CIT(A)’s order upholding the levy of interest, it allowed ground number 7 of BSNL’s appeal for statistical purposes. This ground pertained to the contention that the interest under Section 201(1A) was incorrectly levied and sought a fresh order after providing BSNL an opportunity to be heard. The ITAT clarified that other grounds raised by BSNL concerning the applicability of Section 194J or 194C were not relevant as they did not arise from the Assessing Officer’s order under Section 201(1A). Consequently, the appeal was partly allowed for statistical purposes, implying that while the levy of interest was upheld, the Assessing Officer may need to re-examine the interest calculation.
FULL TEXT OF THE ORDER OF ITAT DELHI
