Ravi Shree Narayan Transport Vs ACIT (Chhattisgarh High Court)
Chhattisgarh High Court held that imposing liability u/s. 201(1) of the Income Tax Act for failure to deduct TDS without providing opportunity of being heard is not sustainable in law. Accordingly, matter remitted back for fresh consideration.
Facts- The appellant is a partnership firm engaged in transportation business. The respondent-revenue authority has conducted verification of TDS (Tax Deducted at Source) compliance vis-a-vis deduction of TDS on various expenses and found that the appellant had failed to deduct TDS on aggregate payments made towards Labour Charges, Transportation Charges (u/s. 194C) and Interest (u/s. 194A) to the Non-Banking Financial Companies (for short the “NBFCs”), namely, (i) SREI International Finance Ltd., (ii) Magma Leasing Ltd. and (iii) Tata Motors Ltd., for the financial years 2006-07, 2007-08 & 2008-09 respectively.
Consequently, the Assessing Officer vide order passed u/s. 201(1) of the Act of 1961, dated 19.03.2010, by holding the appellant as “assessee deemed to be in default”, has determined the amount of TDS alongwith interest.
ITAT affirmed the orders passed by the Assessing Officer and the CIT (Appeals) by holding that the appellant failed to satisfy the Assessing Officer that receipts of payments have duly been proved by them and they have failed to discharged their burden of proving their case that no TDS on finance charges/interest paid to the NBFCs are due on them because the receipients have incoproated the receipts in their books and paid tax on corresponding income and there also exits a good and sufficient cause for failure to deduct said TDS charges. Feeling aggrieved, the appellant has filed instant appeals.
