2017 (5) TMI 577 - AT - Income Tax

Short payment/non payment of TDS pertaining to Form No.24Q4 - assessee in default - Held that - Assessee is a Government Company. The Revenue does not have a case that the TDS collected by assessee has not been paid to the Government account. The mismatch is only on account of processing of data by the computerized system, for which assessee cannot be penalised. The assessee, on the other hand had substantiated that it had deposited all the taxes that was deducted at source into the government account. There is no error in the conclusion of the CIT(A). Therefore, we uphold the same as correct and in accordance with law. It is ordered accordingly.- Decided against revenue.

Summary

Issues:
1. Justification of deleting demand under section 201(1) of the IT Act for short deduction/non-deposit of tax.
2. Justification of deleting demand under section 201(1A) of the IT Act for late deposit of tax.
3. Application of Board's Instruction No.5/2013 dated 08.07.2013 on a matter arising before the date of issue of the instruction.

Analysis:
1. The appeal involved the question of whether the CIT(A) was justified in deleting the demand of ?64,83,640 raised under section 201(1) of the IT Act for short deduction/non-deposit of tax. The Assessing Officer had held the assessee as an "assessee in default" for non-payment of TDS. The CIT(A) allowed the appeal of the assessee by considering it a technical flaw and relying on CBDT Instruction No.5/2013 dated 08.07.2013. The CIT(A) concluded that the demand was raised due to a system-generated error and the appellant, a Government company, cannot be held liable for a mismatch in data between the TDS return and the bank records. The Hon'ble Delhi High Court's judgment was also cited to support the decision. The Tribunal upheld the CIT(A)'s decision, stating that the demand was based on system-related issues and the appellant had deposited all deducted taxes into the government account, thus dismissing the Revenue's appeal.

2. The second issue revolved around the justification of deleting the demand of ?39,79,790 raised under section 201(1A) of the IT Act for late deposit of tax. The CIT(A) had allowed the appeal of the assessee by considering it a technical flaw and relying on CBDT Instruction No.5/2013 dated 08.07.2013. The CIT(A) emphasized that the demand was system-generated and the appellant, a Government company, had substantiated that it had deposited all deducted taxes into the government account. The Tribunal concurred with the CIT(A)'s findings, stating that the mismatch was due to processing errors by the computerized system and the appellant cannot be penalized for it, ultimately dismissing the Revenue's appeal.

3. The final issue centered on the application of Board's Instruction No.5/2013 dated 08.07.2013 to a matter arising before the issuance of the instruction. The CIT(A) relied on this instruction to justify deleting the demands raised under sections 201(1) and 201(1A) of the IT Act. The instruction provided a method of due verification in cases of TDS mismatches, emphasizing the need for the Assessing Officer to verify the TDS payment and credit it to the assessee if found in order. The Tribunal found the CIT(A)'s reliance on the instruction appropriate, as it outlined a procedure for verification in cases of mismatched TDS, ultimately leading to the dismissal of the Revenue's appeal.