News shortcuts: From the Courts | Top Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | Professional Updates | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
« From the Courts »
 For other GST and/ or Tax Audit Reports, whether separate UDIN is required for various annexures?
 Commissioner Of Income Tax Vs. Bhagwan Shree Laxmi Naraina
 Rolls-Royce Plc Vs. Deputy Director Of Income Tax
 Income Tax Officer Ward-17(2), New Delhi Vs. M/s MSS Cosmetics Pvt. Ltd., Shop No. 10, 32-C, BR Complex, Near Una Enclave, Mayur Vihar, Delhi-110091
 M/s Designarch Infrastructure Pvt. Ltd C/o Raj Kumar & Associates, CAs L – 7A[LGF], South Extension, Part –II New Delhi Vs. The I.T.O Ward – 7(1) New Delhi
 The ACIT, Circle – 59(1), Room No.101, F-Block, Vikas Bhawan, New Delhi Vs. M/s. Vasundhara Flavours (Presently known as Gopal Consumer World), 339, Functional Industrial Estate, Patparganj, New Delhi – 110 092.
 The ACIT, Central Circle 25, Room No.322, III Floor, ARA Centre, Jhandewalan Extn., New Delhi. Vs. M/s. Digicall Teleservices P. Ltd., D-7 Dhawandeep Apartments, 6 Jantar Mantar Road, New Delhi.
 DCIT, Circle – 10(1), New Delhi. Vs. M/s. Girdhar International Pvt. Ltd., F-16, Udyoug Nagar, Peeragari, New Delhi – 110 041.
 M/s. Cellnext Solutions Ltd., New Delhi. Vs. The Income Tax Officer, Ward – 5 (4), New Delhi. (
 The Income Tax Officer, Ward – 5 (4), New Delhi. vs. M/s. Direct Sales Pvt. Ltd., No.7, Village – Tigipur, P.O. Bakhtawarpur, Delhi – 36.
 Noida Power Co. Ltd.,Gr. Noida,Commercial Complex, H-Block, Alpha-Ii Sector Greater Noida Noida Vs. Dcit, Circle-2,Noida

The JCIT (TDS), 13-A, Subhash Road, Dehradun. vs. Uttaranchal Health & Family Welfare Society, SCOVA (NRHM), Sahastradhara Road, Near I.T. Park, Dehradun.
February, 07th 2019
       IN THE INCOME TAX APPELLATE TRIBUNAL
              DELHI BENCHES "A" : DELHI

 BEFORE SHRI BHAVNESH SAINI, J.M. AND SHRI L.P. SAHU, A.M.

                    ITA.No.1691/Del./2015
                  Assessment Year 2011-2012

The JCIT (TDS),                   Uttaranchal Health &
                                  Family Welfare Society,
13-A, Subhash Road,               SCOVA (NRHM),
                              vs. Sahastradhara Road,
Dehradun.                         Near I.T. Park, Dehradun.
                                  TAN MRTU00659B
        (Appellant)                      (Respondent)

               For Revenue : Shri Amit Katoch, Sr. D.R.
               For Assessee :           -None-

             Date of Hearing : 05.02.2019
     Date of Pronouncement : 06.02.2019

                           ORDER

PER BHAVNESH SAINI, J.M.

          This appeal by Revenue has been directed against

the Order of the Ld. CIT(A), Dehradun, Dated 30.12.2014,

for the A.Y. 2011-2012, challenging the cancellation of

penalty under section 271C of the I.T. Act, 1961.


2.        Briefly the facts of the case are that verification

proceedings were carried-out under section 133A of the

Income Tax Act, 1961 on 20th December, 2011. The
                                     2
                            ITA.No.1691/Del./2015 Uttarakhand Health & Family
                                     Welfare Society, SCOVA (NRHM), Dehradun.


assessee was found in default for not deducting tax at

source on various payments made by it. Show cause notice

under section 271C was issued as to why it should not be

penalized for failure to deduct TDS during the year under

appeal. The assessee filed written submissions in which it

was    explained     that     assessee-society        was    a    unit    of

Uttarakhand Government formed by the Health Department

of Uttarakhand for implementation of various schemes

under the National Rural Health Mission Programme

initiated by the Government of India in the States. All funds

were received from the Government of India on the specific

directions for expenditure oN health related object. During

the year under question, it made payment to various NGOs

for implementation of various objects of the schemes on

behalf of the State Government. All the organisation to

whom payments were made were registered under the

Societies Registration Act, 1860 and have exemption under

section 12A/80G of the Income Tax Act, 1961. Income of

these institutions were exempt from tax. It was submitted

that   the   funds    were       provided      by    the    Uttarakhand
                                  3
                         ITA.No.1691/Del./2015 Uttarakhand Health & Family
                                  Welfare Society, SCOVA (NRHM), Dehradun.







Government as Grant-in-Aid for reimbursement of capital

and actual operational expenditure on no profit no loss

basis as per the MOU entered. Expenses were claimed by

the NGOs on the basis of audit utilization certificates

submitted by the Department. The fixed assets and

infrastructure development from the Grant-in-Aid for capital

expenses    remained      property      of   the    Government         of

Uttarakhand. It was submitted that the services rendered by

the NGOs did not fall under the professional category and

did not come within the ambit of Section-194J. Even

Section 194C was not attracted as all the funds were given

against reimbursement of expenses on no profit no loss

basis. It was submitted that on the basis of professional

advise, the assessee was under strong bonafide belief that

all the NGOs to whom Grant-in-Aid was given were claiming

exemption under sections 12A and 80G of the Income Tax

Act and were filing their return of income tax return with

NIL   tax   and   also   since    Grant-in-Aid       was     given    for

reimbursement      of     capital     and      actual      operational

expenditure on no profit no loss basis, no TDS was required
                               4
                      ITA.No.1691/Del./2015 Uttarakhand Health & Family
                               Welfare Society, SCOVA (NRHM), Dehradun.


to be deducted. Thus, it was submitted that the assessee

had a reasonable cause for non-deducting tax and there

were no defiance of Law. The assessee relied upon several

decisions in support of the contention.


3.        The JCIT, however, did not accept the arguments

advanced by the assessee on account of the fact that EMRI

was providing technical and professional services and EMRI

was taxable. Further, it was held that the payer, the payee

and the payments are all covered within the scope of TDS

provision. It was submitted that with regard to the NGOs

even though they may not be taxable, there is no automatic

exemption from TDS in respect of the payments to entities

which may be registered under section 12A of the Income-

Tax Act. The A.O. accordingly levied the penalty under

section 271C of the Income Tax Act, 1961.


4.        The penalty Order was challenged before the Ld.

CIT(A) and same facts were reiterated. It was also submitted

that the Ld. CIT(A) had allowed substantial relief to the

assessee in appeal and this supported the plea of the

assessee that it was not required to deduct tax at source.
                               5
                      ITA.No.1691/Del./2015 Uttarakhand Health & Family
                               Welfare Society, SCOVA (NRHM), Dehradun.


The Ld. CIT(A) considered the explanation of assessee and

concluded that there is a reasonable ground to hold that

provisions of Sections 194J and 194C may not apply in the

case of the assessee. Therefore, assessee has a reasonable

cause and penalty was accordingly cancelled.


5.        We have heard the Ld. D.R. and perused the

findings of the authorities below. The Ld. D.R. filed the

service report on record, according to which, notice for the

date of hearing have been served by the Department on the

assessee. The Ld. D.R. contended that the Ld. CIT(A) on

quantum, decided the appeal of assessee under sections

201(1)/201(1A) of the Income Tax Act vide Order Dated

28.02.2013, copy of which is on record whereby the Order of

TDS under section 201 have been confirmed by the Ld.

CIT(A), however, on the alternate contention of assessee, the

matter has been restored to the A.O. with a direction to the

assessee to furnish documentary evidences in support of the

contention that the recipients have paid the taxes. It was

directed that A.O. will satisfy himself about the correctness

of the same and modify the tax payment as required. The
                                  6
                         ITA.No.1691/Del./2015 Uttarakhand Health & Family
                                  Welfare Society, SCOVA (NRHM), Dehradun.


interest would be charged accordingly for default on the part

of the assessee. The Ld. D.R. submitted that violation of

TDS provision is on account of non-deduction of TDS on a

sum i.e., "the payments" and not "on the income".

Therefore, the findings of the Ld. CIT(A) are incorrect.


6.         None appeared on behalf of the assessee, despite

service of the notice.







7.         We have heard the submissions of the Ld. D.R.

Vide Order Dated 22.11.2018, one of the Department

Appeal in ITA.No.1690/Del./2015 was heard and the

present appeal was adjourned to 05.02.2019. The record

reveals   that    the    appeal       of    the     Department         in

ITA.No.1690/Del./2015 for the A.Y. 2010-2011 have been

dismissed by the Tribunal because of the low tax effect. In

the present case, the A.O. passed the Order on account of

default on the part of the assessee for non-deduction of the

TDS vide order dated 9th January 2013 under section 201

vide Order Dated 09.11.2013 under sections 201(1)/201(1A)

of the Income Tax Act. Copies of the Orders are available on

record. The Ld. CIT(A) considered the issue of payment
                                    7
                           ITA.No.1691/Del./2015 Uttarakhand Health & Family
                                    Welfare Society, SCOVA (NRHM), Dehradun.


made to EMRI and held that assessee was required to

deduct tax at source on payments made to a EMRI. Similar

view have been taken by the Ld. CIT(A) with regard to the

payments made to other NGOs/Charitable Institutions and

business entities. The action of the A.O. was thus confirmed

in principle.


8.         The alternative argument of the assessee was that

the payees concerned had duly accounted for the impugned

receipts in their return of income and paid the taxes as per

Law. The alternative contention of assessee was accepted

and   assessee       was   directed      to   furnish      documentary

evidences in support of its contention before A.O. with a

direction to A.O. to satisfy himself about the correctness of

the   claim     of   assessee    and    modify      the   tax    demand

accordingly. Interest was however chargeable for the default

and it should be reviewed as per verification of the taxes

paid by the recipients. The appeal of assessee was thus

partly allowed. The Ld. D.R, therefore, rightly contended

that there were no justification for the Ld. CIT(A) in the

penalty matter to hold that assessee is not in default of
                                8
                       ITA.No.1691/Del./2015 Uttarakhand Health & Family
                                Welfare Society, SCOVA (NRHM), Dehradun.


deduction of tax. Since the assessee is ex-parte, therefore,

it is not clear whether any appeal has been filed by assessee

against the Order of Ld. CIT(A) Dated 28.02.2013. Since Ld.

CIT(A) vide Order Dated 28.02.2013, in principle, has

confirmed the Order of the A.O. that assessee is liable to

deduct TDS on the payments in question, therefore, Ld.

CIT(A) should not have taken a contrary view in the penalty

matter. Since the matter of quantum is restored to the A.O.

for verifying the above claim of assessee, therefore, it would

be reasonable and proper to restore the penalty matter also

to the file of A.O. to pass the fresh Order in accordance with

Law, after passing the Order under sections 201(1)/201(1A)

of the Income Tax Act, 1961, as per the directions of the Ld.

CIT(A). Whether assessee would have a reasonable cause

shall be re-determined by the A.O, after giving reasonable,

sufficient opportunity of being heard to the assessee. We,

accordingly, set-aside the impugned Orders and restore the

matter in issue to the file of A.O. with a direction to re-

decide the penalty matter, after passing the Order under

sections 201(1)/201(1A) of the Income Tax Act, 1961, as per
                                  9
                         ITA.No.1691/Del./2015 Uttarakhand Health & Family
                                  Welfare Society, SCOVA (NRHM), Dehradun.


the directions of the Ld. CIT(A), Dated 28.02.2013. The A.O.

shall give reasonable and sufficient opportunity of being

heard to the assessee.


9.         In the result, appeal of the Department is allowed

for statistical purposes.


           Order pronounced in the open Court.



     Sd/-                                   Sd/-
    (L.P. SAHU)                            (BHAVNESH SAINI)
ACCOUNTANT MEMBER                         JUDICIAL MEMBER

Delhi, Dated 06th February, 2019

VBP/-

Copy to
1.   The appellant
2.   The respondent
3.   CIT(A) concerned
4.   CIT concerned
5.   D.R. ITAT `A' Bench, Delhi
6.   Guard File.

                      // BY Order //



          Assistant Registrar : ITAT Delhi Benches :
                          Delhi

Home | About Us | Terms and Conditions | Contact Us
Copyright 2019 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting