2023 (1) TMI 848 - AT - Income Tax

Demand raised u/s 200A - inadvertent mistake in mentioning wrong TAN while applying lower percentage of tax rate u/s 194C - CIT(A) thus directed the AO to grant relief from the demand arising for wrong mention of TAN after due verification of facts - HELD THAT - We find that the order of the CIT(A) in granting relief to the assessee is founded on fair play and natural justice. In the instant case, the assessee has obtained two TAN from the Department in its name, one is taken for office at Bina Madhya Pradesh and another one is taken at Delhi. The assessee has deducted TDS on contractual payments to its holding company u/s 194C of the Act @0.25% as per the lower deduction certificate issued u/s 197 to the holding company of the assessee company. Based on the certificate issued, the assessee has deducted TDS @ 0.25% as mandated in the certificate. While depositing the TDS deducted, the assessee has wrongly mentioned the TAN allotted for Delhi office instead of Bina Madhya Pradesh Office. This fact was also brought to the notice of the Department immediately but the defect could not be cured in the absence of any provision for such type of rectification. CIT(A), in the factual matrix, has taken a just and fair decision and reversed the demand under Section 200A attributable to merely wrong mention of TAN in the TDS deposit challan. We see no error in the relief granted by the CIT(A) on equitable grounds. Consequently, the order of the CIT(A) is upheld. Appeal of the Revenue is dismissed.

Issues:
- Appeal against the order of the Commissioner of Income Tax (Appeals) concerning lower deduction of tax on payments.
- Allegation of lesser deduction of tax due to incorrect TAN mentioned in TDS return.
- Relief granted by the CIT(A) based on fair play and natural justice.
- Decision to uphold the order of the CIT(A) in granting relief to the assessee.

Analysis:
1. The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) concerning the lower deduction of tax on payments made to the holding company. The assessee, a subsidiary of a government undertaking, deducted TDS at a lower rate of 0.25% as per a certificate from the holding company. However, an inadvertent error occurred when the assessee mentioned the wrong TAN while depositing the TDS, leading to a demand created by the Assessing Officer under Section 200A of the Income Tax Act, 1961.

2. The CIT(A) considered the plea of the assessee regarding the mistake in mentioning the wrong TAN and directed the Assessing Officer to grant relief after verifying the facts. The CIT(A) acknowledged the factual position that the payments made by the assessee were related to a specific project and that the mistake in TAN was bona fide. The CIT(A) ordered relief for the assessee based on the principles of fair play and natural justice.

3. Upon reviewing the first appellate order and the facts presented by the assessee, the Appellate Tribunal found that the relief granted by the CIT(A) was just and fair. The assessee had two TANs, one for the Delhi office and another for the Bina office. Despite deducting TDS correctly as per the lower deduction certificate, the error in mentioning the wrong TAN was promptly reported but could not be rectified due to the absence of provisions for such corrections. The Appellate Tribunal upheld the decision of the CIT(A) to grant relief to the assessee, emphasizing equitable grounds and fair treatment.

4. Ultimately, the Appellate Tribunal dismissed the appeal of the Revenue, affirming the decision of the CIT(A) to provide relief to the assessee based on the circumstances and the inadvertent error in mentioning the incorrect TAN during TDS deposit. The order of the CIT(A) was upheld, and the appeal was concluded in favor of the assessee.

This detailed analysis highlights the key legal and factual aspects of the judgment, focusing on the issues raised, the decisions made by the authorities involved, and the final outcome of the appeal.

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