2015 (10) TMI 2176 - AT - Income Tax

Rectification of order - Non deduction of tax at source u/s 194J - rectification application as incorrect finding has been recorded and directed to provide the list of such aggregators/service providers by ITAT - Held that - Assessee was rightly directed to provide the list of such aggregators/service providers (a) Who are deducting or not deducting TDS from their Thyrocare billing, if not, (b) whether the assessee is depositing due taxes in the state exchequer. Even otherwise, it is the mandate of the constitution to levy and collect due taxes, therefore, to safeguard the interest of the assessee/Revenue, the matter was remanded back to the file of the ld. Assessing Officer to examine the facts and then decide in accordance with law after providing due opportunity to the assessee, therefore, no grievance is caused to the assessee. Even otherwise, if the business associates of the assessee (aggregator or service provider) has not deducted the TDS, there is a loss to the nation and it is the duty of such aggregators/service provider/assessee to ensure that due taxes are deducted. Collector /aggregators/TSPs are bound by the terms and conditions agreed upon with the assessee, therefore, there is a direct master agent relationship. CIT(Appeals) has not controverted the factual finding recorded by the ld. Assessing Officer and blindly followed some decisions, which are not even applicable the facts of the appeals of the assessee. Even otherwise, as mentioned earlier, no grievance will be caused to either side, if the matter is examine afresh in the light of the direction contained in the order of the Tribunal dated 31/03/2015 and discussion made in the present order, while deliberating upon the miscellaneous applications filed by the assessee as the mandate of the constitution is to levy and collect due taxes. If the conscious of the assessee is very much clear, then, its not afraid from fresh adjudication by the Assessing Officer in the light of the orders passed by the Tribunal. So far as, the contention of the ld. DR is that during hearing on 06/02/2015 and 31/03/2015, no indication was given by the Bench with respect to non-satisfactory reply by the assessee is concerned, we note that on 18/12/2014, the appeals were kept as part heard as the assessee could not reply to the query raised by the Bench. Identically, the matter was heard on 02/01/2015, 09/01/2015 and finally was heard on 13/02/2015. The submissions made by the assessee were duly considered and thereafter a decision was arrived at, therefore, the assertion of the assessee is factually incorrect. - Rectification application dismissed - Decided against assessee.

Issues Involved:
1. Rectification of the Tribunal's order dated 31/03/2015.
2. Non-production of documents by the assessee.
3. Non-deduction of tax at source (TDS).
4. Nature and type of contracts with Thyrocare service providers and aggregators.
5. Examination of expenses and income declared by the assessee.
6. Relationship between the assessee and Thyrocare service providers/aggregators.
7. Scope and ambit of application under section 254(2) of the Income Tax Act.

Detailed Analysis:

1. Rectification of the Tribunal's Order:
The assessee sought rectification of the Tribunal's consolidated order dated 31/03/2015, claiming incorrect findings were recorded regarding the non-production of documents and the non-deduction of tax at source. The Tribunal noted that the assessee's application was an attempt to review the order, which is not permissible under section 254(2) of the Income Tax Act. The Tribunal emphasized that the scope of section 254(2) is limited to rectifying apparent mistakes and does not allow for rehearing or reappraisal of facts.

2. Non-production of Documents:
The Tribunal found that the assessee had not satisfactorily explained the queries raised by the Bench, particularly regarding the non-production of documents. The assessee claimed to have provided necessary documents in a note furnished on 18/12/2014, including sample copies of TDS certificates. However, the Tribunal concluded that the Commissioner of Income Tax (Appeals) did not adequately consider the observations made in the assessment order, leading to the remand of the matter for fresh examination.

3. Non-deduction of Tax at Source (TDS):
The Tribunal highlighted the importance of ensuring TDS compliance under section 194J of the Income Tax Act. The assessee was directed to provide a list of aggregators/service providers who were either deducting or not deducting TDS from their Thyrocare billing. The Tribunal noted that failure to deduct TDS results in a loss to the nation and emphasized the duty of the assessee and its business associates to ensure due taxes are deducted.

4. Nature and Type of Contracts:
The Tribunal raised several queries regarding the nature and type of contracts between the assessee and Thyrocare service providers/aggregators. These included questions about the deduction of tax at source, the income declared by the assessee, and the expenses claimed for promotional material. The Tribunal found that these queries were not adequately addressed by the Commissioner of Income Tax (Appeals) and required further examination.

5. Examination of Expenses and Income Declared:
The Tribunal noted that the Commissioner of Income Tax (Appeals) did not explain the logistics and promotional materials provided to business associates and whether these were given free of charge or charged to the associates. The Tribunal emphasized the need for the assessee to clarify these points before the Assessing Officer. Additionally, the Tribunal found that the Commissioner of Income Tax (Appeals) did not address whether the assessee was claiming any damages as expenditure or whether courier charges were claimed and recovered from business associates.

6. Relationship Between Assessee and Thyrocare Service Providers/Aggregators:
The Tribunal examined the relationship between the assessee and Thyrocare service providers/aggregators, concluding that there was a principal-agent relationship. The Tribunal found that the service providers/aggregators were bound by the terms and conditions of their agreement with the assessee and were required to use the assessee's logo and materials. The Tribunal also noted that the Commissioner of Income Tax (Appeals) did not adequately address this relationship in its order.

7. Scope and Ambit of Application under Section 254(2):
The Tribunal reiterated that the scope of section 254(2) is limited to rectifying apparent mistakes and does not allow for rehearing or reappraisal of facts. The Tribunal cited various judicial precedents to support this position, including CIT vs ITAT (2006) and Popular Engineering Company vs ITAT (248 ITR 577). The Tribunal concluded that the assessee's application for rectification lacked merit and was an attempt to review the order, which is not permissible under the Act.

Conclusion:
The Tribunal dismissed the miscellaneous applications filed by the assessee, finding no merit in the arguments presented. The Tribunal emphasized the need for fresh examination of the issues raised, particularly regarding TDS compliance and the relationship between the assessee and its business associates. The Tribunal concluded that no mistake apparent from the record existed in its order dated 31/03/2015, and therefore, no rectification was warranted.

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