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TMI Blog2017 (7) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... he opinion of the Court, cannot result in penalizing the assessee. ITAT’s reasoning that the Revenue’s findings were essentially based upon conjectures and complaints rather than evidence or material is reasonable and sound. There is no discussion for instance, as to the contractual amount in the agreement signed by each pilot and the assessee; the AO has ignored the important fact that no pilot joined the proceeding and answered summons under Section 131 and most importantly, to reject the Form 24 furnished by the assessee, mere complaints were insufficient. If the assessee’s explanation about lack of records due to fire seemed suspicious, nevertheless, the AO was under a duty to cross-check and reconcile the returns filed by the individual pilots from the concerned Wards and Circles before rendering its findings. Decided in favor of the assessee - ITA 240/2004 - - - Dated:- 3-7-2017 - S. Ravindra Bhat And Sanjeev Sachdeva, JJ. For the Appellant : Sh. Raghvendra Singh, Sr. Standing Counsel and Sh. Rahul Chaudhary, Advocate For the Respondent : Sh. Amar Dave and Sh. Abhinav Sharma, Advocates ORDER Mr. Justice S. Ravindra Bhat 1. The question of law fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Lufthansa, and its Senior Vice President (Operations). It was also stated that salaries depended on the individual contracts entered into between the employer and the officer concerned. The assessee s position was that individual contracts were made available to the revenue and that since they were authentic documents binding on both parties, they were adhered to by the company. It was further stated that the salaries were worked out on the basis of agreements and that taxes were paid accordingly. It was further stated that the TDS certificate in Form 16 in the case of Capt. A.K. Vohra was received by him and even contained his signatures. This signified that he had no objection with regard to the contents, i.e. amounts deducted and deposited. In the absence of any complaint or letter from Capt. A.K. Vohra, claiming that TDS certificate for amounts more than what was paid to him were issued, the revenue s stand could not be accepted. It was further stated that the company had ceased its operation in the middle of 1996 after which it did not have any records. 4. The AO observed on the basis of information furnished by the three Executive Pilots and further information thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicating higher remuneration and higher deducted at source. The AO wanted to verify the contents of such complaints. He issued summons to some pilots. In response to such summons, some pilots appeared/confirmed the remuneration paid to them and tax deducted at source which confirmed to the claim of the assessee company. In none of the cases any pilot converted the stand of the assessee company. The AO has also referred to the information received from one pilot Shri B.S. Sandhu. The contents of the complaint have been mentioned by the AO on page 5 of his order. The reading of the complaint nowhere whispers that higher tax was deducted at source and he was issued TDS certificate of lesser amount. Actually, the complaint was to the effect that he has not been paid his outstanding dues and he has not been issued TDS certificate due to which he would not file his income tax return. However, this complaint has nothing to do with the provisions of Section 201(1)/201(A) of the Act. If the outstanding dues have not been paid to him, the revenue cannot help it. If the TDS certificate was not issued to him, there was violation and different section of the Act deals with such situation. Bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the TDS certificate in Form No.16 was issued to the pilots including the pilots from whom the complaints have been received, the same was received by them and their signatures were also obtained as a token of having received their TDS certificates. In one of the cases any pilots informed the assessee company that higher tax was deducted from their remuneration and the TDS certificate of lower was issued to them. We also find that the AO has mentioned about certain pay slips and TDS certificate allegedly issued by the assessee company to some pilots. But once the assessee company has flatly denied the issuance of such pay slips, there was no evidence with the revenue to result such submissions. Thus, reliance on such alleged pay slips also cannot be placed. On the basis of above facts, it is clear that the revenue has failed to evidence its claim that the assessee was in default of not paying the tax deducted at source as per law . 6. The revenue argues in its appeal as well as before this Court that the ITAT misappreciated the facts and evidence. The versions of the pilots, particularly Capt. Sandhu and Capt. A.K. Vohra were damaging for the assessee and it was incumbent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her based upon conjectures in the absence of any concrete findings. 8. The heart of the allegations leveled by the assessee against the Revenue in this case is that ₹ 2,01,89,369/- deposited as TDS was not the entire amount but that further amounts had in fact been deducted from the salaries of no less than 31 pilots and unlawfully detained by it. The direction of the enquiry was triggered by the complaints made by three individual pilots and later by one Capt. Sandhu during the course of the proceedings. The AO as well as CIT primarily went by the documents provided by the three complainants, i.e. Capt. J.H. Patel, Capt. A.K. Vohra and Capt. S.C. Mehta. The AO s order discusses the relevant details in respect of Capt. A.K. Vohra alone. During the course of the AO s proceedings, the entire enquiry was extended to include allegations leveled by one Capt. Sandhu. Basing itself upon the conclusions and analysis arising out of the amounts mentioned by the complainants, the AO found that over ₹ 67 lakhs was payable as balance TDS that should have been deposited and a further sum in excess of ₹ 60 lakhs was due as interest. 9. A careful reading of the AO s order w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued under Section 131 of the Act. The entire tenor of the AO s order is accusatory and prosecutorial in requiring the assessee to discharge almost a presumption that it had not paid the amounts. The AO first had to establish the foundational fact that in respect of each of the 31 pilots, the amounts actually paid or deposited were less than the amounts deducted from the salary. Such a determination had to be preceded by the procedure known to law, i.e. in the form of show cause notice outlining the exact amounts and the basis for such amounts. Instead the AO merely acted upon the basis of some complaints and refused to look into all material factors. There is no discussion for instance, as to the contractual amount in the agreement signed by each pilot and the assessee; the AO has ignored the important fact that no pilot joined the proceeding and answered summons under Section 131 and most importantly, to reject the Form 24 furnished by the assessee, mere complaints were insufficient. If the assessee s explanation about lack of records due to fire seemed suspicious, nevertheless, the AO was under a duty to cross-check and reconcile the returns filed by the individual pilots from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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