2024 (7) TMI 1276 - AT - Income Tax

Demand u/s 201(1) - assessee in default in respect of the payments made by the assessee to BDA without deducting TDS - HELD THAT - AO has taken into consideration some amounts received by the BDA from the departments other than the assessee and therefore, the calculation mistakes/errors cannot be ruled out. The assessee has now filed the certificate in Form No.26A. Thus, all these factual aspects of the matter are required to be properly verified while computing the quantum of default if any made by the assessee. The assessee has relied upon the order of the Co-ordinate Bench in case of District Organiser Tribal Welfare, Ujjain Vs ITO 2013 (6) TMI 934 - ITAT INDORE for the assessment year 2008-09 however, it is pertinent to note that the factual point that the BDA is also retaining some percentage on account of supervision charges was not brought to the notice of the Tribunal in the said case. Since the impugned orders were passed by the CIT(A) ex-parte therefore, these relevant details as well as the certificate in Form No.26A were not produced before the CIT(A) and consequently the same remained unexamined. Hence, in the facts and circumstances of the case and in the interest of justice the impugned orders of CIT(A) are set aside and the matters are remanded to the record of the A.O for fresh adjudication after considering the relevant details as well as certificates issued u/s 26A and verification of the factual mistake as pointed out by the assessee. Appeals of the assessee are allowed for statistical purposes.

Issues Involved:
1. Condonation of delay in filing appeals.
2. Non-receipt of impugned order in physical form.
3. Calculation errors in TDS liability.
4. Applicability of Section 194C for TDS.
5. Consideration of payments in BDA's income and filing of returns.
6. Issuance of certificate under Section 26A.
7. Ex-parte dismissal of appeals by CIT(A).

Detailed Analysis:

1. Condonation of Delay in Filing Appeals:
The assessee, a government department, filed an application for condonation of a 320-day delay in filing appeals. The delay was attributed to the non-receipt of the impugned order in physical form and the engagement of staff in election duties. The Tribunal condoned the delay, noting that the impugned order was not served physically and the assessee became aware of it only upon receiving a summons under Section 131 of the Income Tax Act in October 2023.

2. Non-receipt of Impugned Order in Physical Form:
The assessee argued that despite specifying in Form 35 the preference for physical notice, the impugned order was communicated only through email. The Tribunal acknowledged this and noted that the order was passed ex-parte without physical service, leading to the assessee's lack of awareness until the summons was issued.

3. Calculation Errors in TDS Liability:
The assessee pointed out discrepancies in the calculation of TDS liability by the Assessing Officer (A.O). For instance, for Assessment Year 2013-14, the payment made to BDA was Rs. 1,57,22,600, but the TDS default was calculated on Rs. 2,31,38,600. Similar errors were noted for other assessment years. The Tribunal recognized these potential calculation mistakes and highlighted the need for proper verification.

4. Applicability of Section 194C for TDS:
The A.O held the assessee in default for not deducting TDS under Section 194C on payments made to BDA, which acted as a construction agency. The Tribunal noted that BDA deducted TDS on payments to contractors, and the assessee argued that the payments to BDA should not attract TDS under Section 194C as it was a transfer between government departments.

5. Consideration of Payments in BDA's Income and Filing of Returns:
The assessee submitted that BDA included the payments in its income and filed returns, supported by certificates under Section 26A. The Tribunal noted that the A.O did not accept this explanation due to the absence of Form 26A certificates at the time of assessment.

6. Issuance of Certificate under Section 26A:
The assessee provided certificates under Section 26A, indicating that BDA considered the payments in its income. The Tribunal emphasized the need for the A.O to verify these certificates and reconsider the TDS liability accordingly.

7. Ex-parte Dismissal of Appeals by CIT(A):
The appeals were dismissed ex-parte by CIT(A) due to non-prosecution, as the assessee did not receive notices sent electronically. The Tribunal set aside the ex-parte orders and remanded the matters for fresh adjudication, ensuring the assessee is given an appropriate opportunity of hearing.

Conclusion:
The Tribunal allowed the appeals for statistical purposes, setting aside the impugned orders and remanding the matters to the A.O for fresh adjudication. The A.O was directed to verify the relevant details, including the certificates under Section 26A and the alleged calculation mistakes, and to provide the assessee with an opportunity for a hearing before passing fresh orders.

← Previous Next →