2023 (6) TMI 124 - AT - Income Tax

Assessee in default u/s 201(1) on non-payment of TDS - non deposit of TDS deducted to the account of the Central Government - assessee pleaded that in view of the second proviso to section 201(1) of the Act the assessee cannot be treated as an assessee in default - CIT(A) observed that the second proviso to section 201(1) was introduced in the statute only w.e.f. 01.07.2012 and hence the said certificate filed by the assessee in Form No.26A from the Chartered Accountant of Payee cannot be used for the year under consideration as a shelter for not to be treated as an assessee in default. HELD THAT - The second proviso to section 201(1) of the Act though introduced w.e.f. 01.07.2012 have been held to be retrospective in operation by the decision of Ansal Landmark Township Pvt. Ltd. 2015 (9) TMI 79 - DELHI HIGH COURT - Hence the contention of the ld.CIT(A) in this regard is dismissed. AO in his order had treated the assessee as an assessee in default in respect of various payments made which falls within the ambit of provisions of sections 194C 194A 194I and 194J but on perusal of Form No.26A filed by the assessee we find that only the payments that are covered u/ss 194A and 194J of the Act were included therein. The said certificate is silent with regard to the payments that are covered u/s 194I and 194C of the Act. Moreover the figures mentioned in Form No.26A does not exactly match with the figures pointed out by the ld. AO in his order. Thus we restore this issue to the file of AO for denovo adjudication in accordance with law. assessee is also directed to furnish complete reconciliation of the payments with the corresponding TDS element thereon and also reconcile the same with Form No.26A issued by the Chartered Accountant of SREI Infrastructure Finance Ltd - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues involved:
The judgment deals with the assessment of default under sections 201(1) and 201(1A) of the Income-tax Act, 1961, related to non-payment of TDS by the assessee.

Assessment of Default under Section 201(1):
The appellant was held in default for not paying TDS amounting to Rs. 1,32,27,488 and interest under section 201(1A) of Rs. 2,78,95,420. The dispute centered around whether the appellant could be considered an 'assessee in default' for payments made to SREI Infrastructure Finance Ltd. The appellant contended that the payee had duly accounted for the receipts as income and paid taxes. The second proviso to section 201(1) was a key point of contention, as it was introduced in the statute from 01.07.2012. The appellant argued that this proviso should shield them from being treated as an 'assessee in default'. However, the CIT(A) noted that the proviso was not applicable for the year under consideration. The appellant challenged this decision.

Retrospective Application of Second Proviso to Section 201(1):
The Tribunal held that the second proviso to section 201(1) of the Act, introduced from 01.07.2012, was retrospective in operation based on a decision by the Jurisdictional High Court. Consequently, the contention of the CIT(A) regarding the non-applicability of the proviso was dismissed. However, it was observed that the AO's order had inaccuracies in treating the assessee as in default for payments falling under sections 194C, 194A, 194I, and 194J. The Form No.26A submitted by the assessee only covered payments under sections 194A and 194J, omitting sections 194I and 194C. Discrepancies in figures were also noted. To ensure justice and fairness, the issue was remanded to the AO for fresh adjudication in line with the retrospective application of the second proviso. The assessee was directed to provide complete reconciliation of payments, TDS elements, and further evidence if necessary.

Conclusion:
The Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the need for accurate assessment and adherence to legal provisions. The decision was pronounced on 01.06.2023.