The processing of TDS statements are fully centralized at CPC (TDS) Vaishali Ghaziabad and the AO has no power to revise the order. ITAT rejected Revenue’s appeal on this ground taken against CIT(A) order directing ITO(TDS) to make factual verification and pass suitable order.
ABCAUS Case Law Citation:
944 2016 (06) ITAT
Date of Judgment/Order: June 2016
Brief Facts of the Case:
In the present case, the Assessing Officer (AO) passed an order u/s 201/201(1A) in respect of short deduction of Tax deducted at source with respect to TDS return form 26Q for the 4th quarter of the financial year concerned. The short deduction was computed at Rs. 4,21,620/- u/s 201 and interest u/s 201(1A) was computed at Rs. 1,64,430/-. Thus, total liability was determined at Rs. 5,86,050/-.
Against the order of the AO, the assessee preferred an appeal before CIT(A) and claimed that it had paid the due tax in time. CIT(A) after considering written submissions by assessee, directed the ITO(TDS) to make factual verification and pass suitable order. The assessee was also directed to cooperate with the ITO(TDS).
However, being aggrieved with the order of CIT(A), the department filed the present appeal before ITAT.
Grounds of Appeal by Revenue:
l. The Ld. CIT (Appeal), Bareilly has erred in facts and law by accepting new evidence from the deductor without allowing reasonable opportunity to the AO in terms of Rule 46A (3) of the IT Rules1962. The deductor submitted before the CIT (A) that he has deducted and paid the due tax and that short deduction/ non-payment is due to mismatch. This fact was neither produced before the AO nor it was reflected on the ITD System when this order u/s 201(1)/201 (1A) was passed. The CIT (A) has erroneously accepted the claim of assessee and directed the AO to verify the claim by calling for necessary documents for required verification and revise the order accordingly.
2. The Ld. CIT (A) has erred in directing the AO to call for necessary documents for required verification and revise the order accordingly. The processing of TDS statements are fully centralized at CPC (TDS) Vaishali Ghaziabad and the AO has no power to revise the order. The only remedy for the deductor is to file correction statements on-line and get the demand reduced through CPC(TDS).
3. The CIT(A) being a quasi-judicial body has erred further in directing the AO(TDS) to carry out rectifications without understanding the process of rectification/corrections laid down by CPC(TDS). No proof has been submitted by the deductor before the CIT(A) to show that the necessary correction statements have been filed with CPC(TDS). Being a person from the Department, the CIT(A) is required to understand actual processes laid down by the Department and whether directions issued by him are executable or not.
4. By doing so in 1,2,3 above,’ the CIT(A) has mechanically disposed off the Appeal, while no implementation of his directions are possible at A.O. (TDS) end. In case of mismatch, the remedy lies in filing of correction statement which are automatically processed by the CPC (TDS). Till correction statement is processed, the AO(TDS) order stands, and cannot be cancelled.
5. That the applicant craves leave to amend/add anyone or more of the grounds of appeal as stated above as and when need for doing so may arise.
Held by ITAT:
I have considered the submissions of the parties and do not find any reason to interfere with the order of ld. CIT(A) because he has merely directed the ITO(TDS) to do the needful after verification of the assessee’s plea that full compliance has been made in regard to TDS and the tax has been duly deposited. Accordingly, revenue’s appeal has no force and is liable to be dismissed.