No requirement to file separate appeals against TDS default u/s 201(1) and interest default 201(1A) to work tax effect
In a recent judgment, ITAT, New Delhi has dismissed the contention of the assessee that the Revenue ought to have filed separate appeals against the order u/s 201(1) and 201(1A) for each year. The assessee had argued that since the tax effect in some of the separate appeals was less than Rs.10 lac per appeal, the same should be dismissed in view of the latest circular issued by the CBDT
Case Details:
ITA Nos.4791 & 4792/Del/2011 Assessment Year : 2006-07 ITA Nos.4793 & 4794/Del/2011 Assessment Year : 2007-08
C.J. International Hotels Ltd vs. Addl.CIT
Date of Order: 10/03/2016
Brief Facts of the Case:
The assessee company was engaged in the business of running a hotel. A survey operation was conducted u/s 133A of the Income-tax Act, 1961 at the business premises of the assessee which highlighted certain defaults in the matter of deduction of tax at source from the payments made by the assessee. This resulted into treating the assessee in default u/s 201(1) of the Act and consequently, interest u/s 201(1A) was also levied for four years. The CIT(A) allowed relief in respect of the alleged short deduction of tax at source u/s 194C instead of 194J in respect of payment made to two parties.
Relevant Part of the Judgment is extracted here under:
COMBINED OR SEPARATE APPEALS AGAINST ORDER U/S 201(1)/(1A) FOR ONE YEAR ?
The Revenue initially filed two appeals, one for each year, against the order of the ld. CIT(A) against the relief in first appeal. During the course of hearing on an earlier occasion, the ld. AR argued before the Bench that the Revenue ought to have filed separate appeals against the order u/s 201(1) and 201(1A) for each year. The Revenue filed separate appeals stating to be `on the advice of the Bench’ for quantum and interest in respect of each of the years with accompanying letter for condonation of delay. That is how, there are three appeals by the Department for each of the years, namely, one original consolidated appeal by the Revenue under both the sub-sections of section 201 and then separate appeals for quantum and interest.
4.2. The ld. AR argued that separate appeals filed by the Revenue for quantum and interest have become time barred and are liable to be dismissed. It was further argued that since the tax effect in some of the separate appeals is less than Rs.10 lac per appeal, the same should be dismissed in view of the latest circular issued by the CBDT mandating nonfiling/withdrawal of appeals filed by the Revenue with tax effect of less than Rs.10 lac. On a specific query, it was candidly admitted that the tax effect on the consolidated appeals of the Revenue for each year is more than Rs.10 lac. In support of the contention that separate appeals should have been filed, the ld. AR relied on certain orders by largely focusing on the decision of Mumbai Bench of the Tribunal in ITO vs. Vodafone Essar Ltd. (2011) 44 SOT 304. On a pointed query, it was admitted that though there is no direct precedent on the point laying down that separate appeals should be filed in respect of quantum and interest u/s 201, the ld. AR submitted that in these orders separate appeals were preferred, which has not been disputed. The ld. AR fortified his contention of filing separate appeals by submitting that in certain cases there may be the only levy of interest under section 201(1A) de hors any liability u/s 201(1) because of the deductee including the amount received from the deductor in his total income.
4.3. The primary question which arises for our consideration is as to whether separate appeals are required to be filed against the order u/s 201(1) [Quantum] and 201(1A) [Interest]. In this regard, we find that section 246A deals with appealable orders before Commissioner (Appeals). Sub-section (1) provides that any assessee or any deductor aggrieved by any of the specified orders (whether made before or after the appointed day) may appeal to the Commissioner (Appeals).
Clause (ha) of this list containing appealable orders refers to : `an order made under section 201’. This deciphers that the legislature has made an order u/s 201 appealable before the CIT(A). It has drawn no further distinction between the order under sub-sections (1) or (1A) of section 201. The order passed by the CIT(A) against the order u/s 201 [covering order passed by the AO(TDS) under sub-section (1) and also (1A)] falls u/s 250(6) of the Act. It means that the AO(TDS) is required to pass a common order u/s 201 covering sub-sections (1) and (1A) and accordingly, CIT(A) is also obliged to pass one common order u/s 250(6) covering the liability of the assessee under both the sub-sections of section 201. Section 253 deals with appeals to the appellate tribunal. This section lists the orders which can be appealed before the tribunal. Subsections (1) and (2) respectively authorize any assessee or the Department to file appeal before the tribunal against the orders passed under specific sections. In both the sub-sections of section 253, there is a mention of an appeal against the order passed by the CIT u/s 250, which obviously refers to a common appellate order passed against order under subsections (1) and (1A) of section 201 of the Act. This shows that the law requires passing of one order by the AO(TDS) u/s 201, then one appeal against such order before the CIT(A); and then one appeal against the order of CIT(A) u/s 250 before the tribunal. The ld. AR could not draw our attention towards any provision in the Act, mandating the filing of separate appeals either before the CIT(A) or the tribunal against the order covering defaults under sub-section (1) and sub-section (1A) of section 201. In the absence of any such provision, we fail to appreciate as to how such a requirement can be imported in the statute. If the contention of the ld. AR is taken to its logical conclusion, then that would automatically imply that in all cases of assessments where additions are made and consequently interest is charged, there would arise a need to file two appeals – one against the additions and another against the interest – which proposition is absurd and illogical. When this position was put across, the ld. AR was fair enough to concede that none of the decisions cited by him has a precedent value of having a ratio decidendi by the Tribunal requiring separate filing of appeals against liability u/s 201(1) and interest u/s 201(1A). We, therefore, jettison this contention urged on behalf of the assessee. It is ergo held that two original consolidated appeals filed by the Revenue for both the years in respect of defaults u/s 201(1) and 201(1A) are sufficient to protect the interest of the Department and the four separate appeals filed subsequently are infructuous. In view of our this decision, the question of delay in filing of separate appeals by the Revenue becomes academic and so is the argument of the ld. AR for dismissing some of the Revenue’s appeals, each with tax effect of less than Rs.10 lac.
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