2014 (12) TMI 1148 - AT - Income Tax

Default u/s 201(1) - non deduction of taxes u/s 194C and 194J - Held that - According to the assessee on the payments made with regard to Brain Lara Event, it had deducted the tax and deposited to the govt. treasury. These facts ought to have been verified by the Assessing Officer before raising a demand against the assessee. Taking into consideration these details, we are of the view that the issue needs to be re-looked at the end of the Assessing Officer. The assessee is directed to submit complete details of the payments including the challan Nos. indicating that the TDS was deducted and it was paid to the govt. treasury. Our observation will not impair or injure the case of the Assessing Officer and will not cause any prejudice to the defense/explanation of the assessee. The assessee will be at liberty to raise any plea or submit any evidence in support of its explanation. - Matter remanded back - Decided in favour of assessee.

Summary

Issues Involved: Appeal against the order of the CIT (A) for assessment year 2007-08 regarding non-deduction of taxes under sections 194C and 194J, interest u/s 201(1A) chargeability, disputed TDS liability, and interest liability.

Analysis:

1. Non-Deduction of Taxes and Interest U/S 201(1A):
The appeals were filed against the CIT (A)'s order confirming the Assessing Officer's decision to treat the assessee in default under section 201(1) for non-deduction of taxes under sections 194C and 194J. The Assessing Officer determined the TDS liability at Rs. 21,73,259/- and interest at Rs. 9,12,718/-. The assessee contended that certain payments were mere provisions and not subject to TDS deduction. The CIT (A) directed the Assessing Officer to verify the disputed payments and their inclusion in the payee's income tax return. The Tribunal held that the issue required re-verification by the Assessing Officer and remitted it back for detailed examination.

2. Verification of TDS Deduction:
The assessee argued that TDS was deducted on various payments, including one related to the Brain Lara Event. The Tribunal emphasized the importance of verifying whether TDS was deducted and deposited with the government treasury. It directed the assessee to provide complete details of all payments to ensure proper verification by the Assessing Officer. The Tribunal's decision aimed at ensuring a fair assessment of the TDS liability and preventing any prejudice to either party.

3. Interest Liability:
The Tribunal noted that the interest liability under section 201(1A) was consequential to the TDS liability determination. As the first issue regarding TDS liability was set aside for re-verification, the interest liability was also remitted to the Assessing Officer for appropriate assessment. Both appeals were allowed for statistical purposes, indicating that the decisions were made to facilitate further examination without prejudicing either party.

In conclusion, the Tribunal's judgment focused on the need for thorough verification of TDS deductions, fair assessment of liabilities, and ensuring procedural fairness in tax matters. The remittance of issues back to the Assessing Officer aimed at achieving a just and well-informed decision-making process.