The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that It is not in dispute that the Assessing Officer proceeded to initiate action under Section 154 of the Income Tax Act, 1961 on the basis of shortfall in TDS (Tax deducted at source) on year end provisions reported in Form 3CD of the assessee for FY(Financial Year) 2012-13 and restored the case to the AO and directed to freshly adjudicate the issue in accordance of law.
In the present case the assessee is Sistema Shyam Teleservices Ltd. The Assessing Officer (AO) found that for Financial Year(FY) 2012-13 the assessee deductor was required to deduct TDS aggregating to Rs. 15,59,44,667/- (including interest) on gross amount of Rs. 2,87,53,24,755/- under various TDS provision of the Income Tax Act which the assessee had failed to do.
Therefore, issued notice under Section 154 of the Income Tax Act to rectify the order passed by him under Section 201(1)/201(1A) of the Income Tax Act whereby demand of Rs. 4,39,84,927/- was raised. Aggrieved, the assessee appealed before the CIT (A), challenging the legality of proceedings taken by the AO under Section 154 of the Income Tax Act as also action of the AO on merits.
The CIT(A) quashed the impugned order of the AO and allowed the assessee’s appeal by observing that the substantive issue of applicability of TDS on year end provisions is not taken up in this order as the demand raised by the AO is beyond the scope of Section 154 proceedings.
Accordingly the authority relied on by the appellant the order passed by AO under Section 154 of the Income Tax Act is held to be unjustified and is quashed.
Aggrived by the order the Revenue filed an appeal before the Tribunal. The Departmental Representative (DR) relied on AO’s order and submitted that on facts the AO was justified in resorting to provisions of Section 154 of the Income Tax Act. There is mistake apparent from the record.
The Authorised Representative of the assessee relied on the observations of the CIT (A) on the issue of withholding tax on year end provisions and inapplicability of the provisions of Section 154 of the Income Tax Act.
The Bench comprising of G.S. Pannu, President and Ms. Astha Chandra, Judicial Member held that It is not in dispute that the AO proceeded to initiate action under Section 154 of the Income Tax Act on the basis of shortfall in TDS on year end provisions reported in Form 3CD of the assessee for FY 2012-13. If that be so, we are of the view that action of the AO to resort to the provisions of Section 154 of the Income Tax Act cannot be faulted.
It is further observed by the Tribunal that no finding on merits of the case has been recorded by the CIT (A). Thus restored the case to the file of the AO with direction to decide the issue under consideration afresh in accordance with law after allowing reasonable opportunity to the assessee to explain its case.
Hence the appeal of the Revenue is treated as allowed for statistical purposes.
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