We find that necessary TDS has been deducted by the assessee with regard to the labour charges paid and the required documents are also on record which essentially means that there has been no loss to the Revenue. The TDS was deducted and deposited in the Government Treasury and in the challan, in which amount was deposited, instead of TAN it was mentioned PAN. The Assessing Officer should have looked into the entirety of the proceedings being a quasi judicial authority whether there is any loss to the Revenue or whether there is any fault on the part of the assessee so as to not following the required procedure laid down by the law. Here we find, as appearing on record, especially in the order of the ld. CIT(A) that necessary TDS was deducted and it was deposited in the Government Treasury. All these are on record and only there is a technical error that in the challan PAN number of the assessee is mentioned instead of TAN in the relevant column on account of bona-fide mistake, for which assessee should not be penalized or punished when there is no loss to the Revenue.
FULL TEXT OF THE ITAT JUDGMENT
This appeal preferred by the Revenue emanates from the order of the ld. CIT(A)-1, Lucknow dated 26/7/2016 on the following grounds of appeal:-
1. The CIT(A) has erred in law and on facts in deleting the addition of Rs. 2,08,42,101/- which was made u/s 40a(ia) of the I.T. Act, 1961 without appreciating the fact that the assessee was claiming that he had deducted tax of Rs.4,29,646/- on 31.03.2009 on total labour payment of Rs.2,08,42,1017-, but surprisingly this amount of Rs.4,29,646/- was not appearing in the 26Q return filed by the assessee for last quarter. Thus, the assessee’s claim that he had deposited amount of Rs.4,29,646/- on 29.09.2009 is not correct as according to TDS return for quarter IV, only tax of Rs.1,87,793/- was deducted in the last quarter.
2. The CIT(A) has erred in law and on facts in ignoring the fact that the Assessing Officer has observed in the assessment order that the number of deductees records with PAN is also not reflecting in the documents furnished by the assessee relating to TDS return.
3. The CIT(A) has erred in law and on facts in relaying upon the assessee’s submission that he had inadvertently mentioned PAN on TDS challan instead of TAN, if so, the minor head i.e. 200 for TDS should have been mentioned on challan which was not mentioned. It is clear from the 26AS that challan deposited by assessee was not for TDS payment because the minor head mentioned on challan is 400 i.e. for regular payment of tax.
4. Appellant craves leave to add or amend the grounds of appeal, as stated above as and when need of doing so arises with the prior permission of the Hon’ble Bench.
2. The crux of the grievance of the Revenue is against the deletion of addition of Rs.2,08,42,101/- which was made under section 40 (a)(ia) of the Act.
3. The brief facts of the case are that the assessee filed its return of income and thereafter it was selected for scrutiny. During the course of the assessment proceedings, scrutiny of the books of the assessee was undertaken by the Assessing Officer on a number of occasions. While framing of the assessment, the Assessing Officer has made addition of Rs.2,08,42401/- under section 40(a)(ia) of the Act for alleged non-deduction of TDS of Rs.4,29,646/- from labour payments of Rs.2,08,42,101/- which were accounted for by the assessee during the year under consideration. The said addition is detailed in the Assessing Officer’s order in para 3 at pages 2 to 4.
4. Being aggrieved, the assessee preferred an appeal before the Id. CIT(A) and a detailed written submission was filed. The assessee submitted that the observations made by the Assessing Officer are contrary to the facts on record inasmuch as complete details of labour contractors, in whose case tax amounting to Rs.4,29,646/- was deducted at source by the assessee, were filed before the Assessing Officer. This payment of Rs.4,29,646/- was deposited by the assessee on 29/9/2009 and was included in the total deposit of TDS amounting to Rs.5,99,548/-. The assessee has furnished para-wise details before the Assessing Officer in respect of parties in whose case TDS of Rs.5,99,548/- has been deposited by the assessee, which included the names of the parties in whose case the amount of Rs.4,29,646/- was relatable. The case of the assessee is that inadvertently TDS was deposited on a non-TDS challan and PAN number of the assessee was mentioned in place of TAN number. Mainly because of this technical error, the Assessing Officer has proceeded to add labour payments of Rs.2,08,42,101/- to the income of the assessee. The assessee vide reply dated 27/12/2011, 28/12/2011 and 29/11/2011 furnished complete evidence in respect of deposit before the Assessing Officer. The ld. CIT(A) after considering the submissions of the assessee and the assessment order held as follows:-
“4. I have carefully considered the written submission filed by the appellant during appellate proceedings, assessment of AO and order of Hon’ble ITAT, l.ucknow and I find that the assessing officer has made the addition u/s 40a(ia) of the l. T. Act of Rs.2,08,70,974/- under the head of labour charges paid to contractor. The AO has considered the written submission of appellant and rejected the claim of appellant that he had deducted TDS on labour charges amounting to Rs.2,08,70,974/-paid to contractors. The appellant preferred the appeal before Hon’ble ITAT, against the order of CIT(Appeals) vide dated 16.10.2012. The Hon’ble ITAT vide order dated 16.09.2013. has set aside the order of CIT(Appeals) with the directions to examine the issue or deduction of TDS on labour charges as claimed by the appellant. During appellate proceedings the appellant has filed detailed written submission along with evidences which, were also filed before AO during regular assessment proceedings and contended that due TDS was made on the payment of labour charges of Rs. 2,08,42,101/- and in support of its version the appellant has filed the copy of challan cum computerized receipt issued by SBI, MG Marg, Lucknow in which the figure of income tax deposited mentioned amounting to Rs.5,99,548/- and the relevant section mentioned 94C. The appellant stated that the TDS amount of Rs.5,99,548/- which was deducted on payment of labour charges paid to contractor amounting to Rs. 2,08,42,101/-, but inadvertently in the said challan the PAN No. of appellant mentioned instead of TAN in the relevant column, therefore, the said figure of TDS which was deducted and deposited in Government account on 29.09.2009 in A.Y 2000-01 has not been reflected in 26AS of appellant account. The appellant has mentioned in his written submission that while filing the ITR the said amount never claimed and shown as advance tax paid, as evident from the computation sheet and copy of ITR filed for A.Y. under consideration. The appellant has also filed in support of its version that the labour charges recipient contractors have been duly disclosed the labour receipt in their ITR and claimed the TDS amount in their respective ITR which was deducted by appellant on total payment of labour charges of Rs.2,08,42,101/-. In support is its version, the appellant has filed the copy of ITR of labour recipient contractor of A.Y.2009-10 of S/Shri Arvind Kumar Yadav, Naveen Srivastava, Brij Kishore Sharma, Manoj Kumar, Laxmi Devi, Anita Kushwaha Prop. Satya Nirman,and Narendra Lal Kushwaha Prop. Space Associates etc. The appellant has also vehemently argued that, he has made serious efforts to rectify the said challan on system and made several request to I.T. authorities to rectify the mistake to insert PAN to TAN on system but the concerned authority did not provide necessary help for which the appellant cannot be punished.
I find much force in the argument of appellant mentioned in written submission and evidences filed in support of its version. The Assessing Officer has made the addition only on the labour charges paid at Lucknow in respect of Lucknow contract work whereas on similar facts, the AO did not make any disallowances u/s 40a(ia) in respect of labour charges paid at Delhi for contract work executed of work at Delhi.
5.1 Considering the above facts and circumstances, I hold that the AO was not justified in making the addition of Rs.2,08,42,101/-u/s 40a(ia) of the I. T. Act. The appellant cannot be punished for small mistake mentioned in the challan of PAN instead of TAN, specifically when all the relevant papers, documents, books of account and the copy of ITR and form No.26AS strengthen the claim of appellant that due TDS was made and paid on labour charges paid of Rs.2,08,42,101/- to contractors during the A.Y. under consideration. The appellant has also filed the details of the labour charges paid during the year under consideration and tax deducted at source thereon. In view of the above facts, the AO is directed to delete the addition of Rs.2,08,42,101/-. The appellant gets relief of Rs.2,08,42,101/-. Thus, ground No.1, 2, 3 and 4 are allowed in favour of appellant. ”
5. We have perused the case records, analysed the facts and circumstances of the case and we find that necessary TDS has been deducted by the assessee with regard to the labour charges paid and the required documents are also on record which essentially means that there has been no loss to the Revenue. The TDS was deducted and deposited in the Government Treasury and in the challan, in which amount was deposited, instead of TAN it was mentioned PAN. The Assessing Officer should have looked into the entirety of the proceedings being a quasi judicial authority whether there is any loss to the Revenue or whether there is any fault on the part of the assessee so as to not following the required procedure laid down by the law. Here we find, as appearing on record, especially in the order of the ld. CIT(A) that necessary TDS was deducted and it was deposited in the Government Treasury. All these are on record and only there is a technical error that in the challan PAN number of the assessee is mentioned instead of TAN in the relevant column on account of bona-fide mistake, for which assessee should not be penalized or punished when there is no loss to the Revenue. We are of the considered view that we do not find any infirmity with the findings of the ld. CIT(A) and relief given to the assessee is sustained.
6. In the result, appeal of the Revenue is dismissed. Order pronounced in the open Court on 02/05/2018.