2003 (12) TMI 263 - AT - Income Tax

Summary

Issues:
- Appeal against orders passed by CIT(A) under sections 201 and 201(IA) of the IT Act, 1961 for assessment years 1996-97 to 1999-2000.
- Determination of tax deduction at source (TDS) shortfall and default by the assessee.
- Charging of interest under section 201(1A) in relation to the TDS shortfall.

Analysis:

Issue 1: Appeal against orders under sections 201 and 201(IA)
The appeals by the assessee were directed against the orders passed by the CIT(A) in relation to assessment years 1996-97 to 1999-2000 under sections 201 and 201(IA) of the IT Act, 1961. The issue raised in these appeals revolved around common facts related to tax deduction at source.

Issue 2: Determination of TDS shortfall and default
The assessee, a Chief Agricultural Officer, had made payments to contractors without deducting tax at source under section 194C of the IT Act. The Assessing Officer raised a demand for TDS on the gross payments made. The CIT(A) considered the contractor's tax payments under section 140A and concluded that the assessee was in default for a shortfall in TDS deduction. The Tribunal, however, held that since the tax due on the contract payments was paid by the contractor, the assessee could not be treated as in default for the TDS shortfall.

Issue 3: Charging of interest under section 201(1A)
The AO initiated proceedings under section 201(1A) to levy interest on the TDS shortfall determined earlier. The assessee contended that charging interest would amount to double taxation as the contractor had already paid interest under sections 234A to 234C. The Tribunal held that interest under section 201(1A) is mandatory and separate from other provisions. Even if the tax amount is later paid, interest is still chargeable for the period of delay. The Tribunal directed the AO to determine the interest amount under section 201(1A) as per law after providing a hearing to the assessee.

In conclusion, the Tribunal allowed the appeals, holding that the assessee was not in default for the TDS shortfall and directing a reevaluation of the interest amount under section 201(1A).