2020 (9) TMI 489 - AT - Income Tax

Intimation u/s 200A - rectification is passed u/s 154 - rate of tax on gross payment cannot be automatically applied in the case of deduction of TDS u/s 192 - as contended that sec. 206AA is inapplicable to persons whose income is below taxable limit - HELD THAT - CIT(A) has erred in dismissing the appeal solely for the reason that demand has been raised vide intimation u/s 200A of IT Act and assessee ought to have filed appeals against the same. Once an order of rectification is passed u/s 154 of IT Act, the original order passed u/s 200A itself is modified and what remain thereafter is, not the order of rectification, but the orders u/s 200A of the Act as rectified. Therefore though demand was raised in intimation passed u/s 200A of the IT Act, the same demand continued in the intimation passed u/s 154 of IT Act. Hence, we are of the view that assessee has a legal right in filing an appeal against the said intimation. Moreover, there is no restriction/prohibition in challenging the intimation passed u/s 154 of the IT Act without challenging the intimation passed u/s 200A. For the aforesaid reasons, we set aside the CIT(A) orders for 2011-12 2012-13 and remand the case to him. CIT(A) is directed to pass orders on merits/grounds raised before him for asst. Years 2011-12 2-12-13. Appeal filed by assessee is allowed for statistical purposes.

Summary

Issues Involved:
Appeal against orders of CIT(A) for asst. Years 2011-12 and 2012-13 challenging intimation under section 154 read with section 200A of the Income Tax Act, 1961.

Analysis:

1. Grounds of Appeal:
The appeals raised identical issues regarding the intimation under section 154 read with section 200A of the Income Tax Act, 1961. The appellant challenged the orders of the CIT(A) for both assessment years, primarily contesting the short deduction of tax at source and interest levied on the same. The appellant sought to quash the orders based on various grounds related to the computation of tax, application of section 206AA, and the legality of the demand raised.

2. Short Deduction of Tax at Source:
The appellant contended that the tax deduction at source was determined incorrectly, emphasizing that the flat rate of tax at 20% on gross payment should not automatically apply under section 192 of the Act. The appellant argued that the demand raised under section 200A was beyond its scope and should be quashed. Additionally, the appellant highlighted the prohibition against double recovery of tax and the liability of the payee directly under section 191.

3. Interest on Short Deduction:
The appellant disputed the levy of interest on the short deduction amount, asserting that interest on short deduction was not applicable based on the facts and circumstances of the case. The appellant denied liability to pay interest on the short deduction amount, seeking its deletion.

4. CIT(A) Orders and Appellate Tribunal Decision:
The CIT(A) rejected the appeal without delving into the merits, citing that the appellant should have challenged the intimation under section 200A instead of section 154. However, the Appellate Tribunal found that once an order of rectification is passed under section 154, the original order under section 200A is modified. Therefore, the appellant had the legal right to appeal against the intimation under section 154. The Tribunal set aside the CIT(A) orders and remanded the case for consideration on merits for both assessment years.

In conclusion, the appeal filed by the assessee was allowed for statistical purposes, and the case was remanded to the CIT(A) for further consideration based on the grounds raised by the appellant.