2023 (5) TMI 693 - AT - Income Tax

Penalty u/s 271C - assessee has not submitted the PAN number - AO contended that the TDS is required to be deducted @ 20 % on all such payments as per provision of section of 194C - HELD THAT - In this case the bench noted that all the EDCs since the assessee has not given the details of PAN number the ld. AO has raised the demand @ 20 % and if the ld. AO consider the PAN number of these case the assessee will get the substantial relief on the levy of TDS defaults as well as on the levy of penalty on the TDS defaults. The bench also noted that the assessee is part of the state government and the defaults if any is on account of the peculiar circumstances of the case and on the facts these EDCs are working under the direct supervision of the assessee on no profit no loss basis. In light of these facts we deem it fit in the interest of justice to admit the details of the payee with the PAN numbers. As this details were not before the lower authority we admit it in the interest of equity and justice and restore the matter to the file of the AO to examine the case afresh but by providing adequate opportunity of being heard to the assessee. The assessee is also directed to produce the documentary evidences concerning the issue in question and will cooperate the AO. Thus, the appeal of the assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Levy of TDS demand on the alleged default of the assessee.
2. Levy of penalty under Section 271C.

Summary:

Issue 1: Levy of TDS Demand
The assessee, a Rajasthan Government Forest Department office, faced TDS demand for payments made to Eco Development Committees (EDCs) without deducting tax at source. The Assessing Officer (AO) raised the demand under Section 201(1) and 201(1A) after the assessee failed to provide PAN details of the payees, resulting in a 20% TDS rate. The CIT(A) upheld the AO's decision, rejecting the assessee's claim that EDCs were exempt from being treated as contractors under a Rajasthan Government notification, as no such notification was provided. The Tribunal condoned the delay in filing the appeal, citing the Supreme Court's decision in Collector, Land Acquisition vs MST Katiji, and admitted the appeal for adjudication on merits. The Tribunal restored the matter to the AO to re-examine the case with the newly submitted PAN details, providing the assessee an opportunity to present documentary evidence.

Issue 2: Levy of Penalty under Section 271C
The AO also levied a penalty under Section 271C for the TDS defaults. The CIT(A) confirmed the penalty, stating that the limitation for passing the penalty order was adhered to and the appellant failed to provide any substantial defense on merits. The Tribunal, considering the restoration of the TDS liability matter, also restored the penalty issue to the AO for a fresh decision based on the outcome of the re-examination of the TDS liability.

Conclusion:
The appeals related to both TDS demand and penalty were allowed for statistical purposes, with directions to the AO to re-examine the cases afresh, considering the newly submitted PAN details and providing the assessee an opportunity to present their case. The Tribunal's decision in lead cases ITA No. 180/JPR/2023 and ITA No. 185/JPR/2023 was applied mutatis mutandis to the other similar appeals.