,""
INCOME TAX APPELLATE TRIBUNAL, MUMBAI- `F' BENCH.
. , ,
Before S/Sh.D.Manmohan, Vice-President& Rajendra, Accountant Member
/.ITA Nos. 4878/& 4879 Mum/2013,/Assessment Year-2004-05
ITO (TDS)-2(4), National Health & Education Society
Mumbai. Vs. (P.D.Hinduja Hospital & Medical
Research Centre) Veer Savarkar
Marg, Mahim, Mumbai-400016
PAN: AAATN0093Q
/.ITA Nos.4971& 4972/Mum/2013,/Assessment Year-2005-06
ITO (TDS)-2(4), National Health & Education Society
Mumbai. Vs. (P.D.Hinduja Hospital & Medical
Research Centre) Veer Savarkar
Marg, Mahim, Mumbai-400016
./.C.O.No.191 & 192/Mum/2014
(Arising out of ITA No.4878 & 4971/M/13),../A.Y.2004-05
./.C.O.No. 211 &212/Mum/2014
(Arising out of ITA No.4879&4972/M/13),../A.Y.2005-06
National Health & Education Society ITO (TDS)-2(4),
(P.D.Hinduja Hospital & Medical Vs. Mumbai.
Research Centre) Veer Savarkar Marg,
Mahim, Mumbai-400016
( / Appellant) ( / Respondent)
/ Assessee by : Shri S.C.Tiwari
/Revenue by : Shri Mohammed Rizwan
/ Date of Hearing : 14/08/2015
/ Date of Pronouncement : 19/08/2015
, 1961 254(1)
Order u/s.254 (1) of the Income-tax Act 1961(Act)
Per Rajendra,AM :
Challenging the order dt.24th March 2011 for AY 2004-05 and AY 2005-06 of the CIT(A)-
14, the Assessing Officer (AO) has raised various grounds of appeal with regard to the orders
passed by the AO u/s. 201(1) and 201(1A) of the Act. The assessee has filed cross objection
for the year under consideration
ITA 4878/M/2013 for A Y 2004-05 u/s 201 (1) By Revenue
a) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in quashing the
order passed by the AO u/s. 201(1)/201(1A) by relying on the CBDT Circular No. 5 of 2010
dated 3rd June, 2010 stating that the TDS proceedings are not validly pending and thereby
treating the order u/s. 201(1)/201(1A) as time barred on the grounds that as per clause (i) of
section 201(3), the limitation for passing of the order u/s. 201(1) would be two years from the
end of the financial year 2004-05 i.e. 31.03.2007 and as per clause (ii) of section 201(3) , the
time period of six years from the end of the financial year 2003-04 shall expire on
31.3.2010. Since the order is passed on 24.03.2011, the order passed by the AO is held by the
CIT (A) to be beyond limitation period without appreciating the fact that as per the proviso to
section 201(3), the order u/s. 201(1)/201 (1A) for a financial year commencing on or before
the 151 day of April 2007 may be passed at any time on or before the 31st day of March
2011.The CBDT Circular NO.5 referred by the Ld. CIT (A) is only clarificatory and cannot
ITA-4878-79 & ors, Natl. Health Edu. Soc.
over ride this statute.
b) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) had erred in
holding that the order passed by the A.O. u/s. 201(1) dated 24.03.2011 is beyond limitation
period as per provision of section 201 (3) of the I.T. Act and proceeded to annul the impugned
order when the Ld. CIT(A) was aware of the fact that a survey action u/s. 133A of the I.T. Act
in the case of the assessee had been conducted on 04.10.2010 and order u/s 201 (1) was
passed on 24.03.2011 which is well within the time limit since section 201 (3) of the I.T. Act
clearly provides that such order for a financial year commencing on or before the 15th day of
April, 2007, may be passed at any time on or before the 3151 day of March. 2011 and hence,
order passed u/s. 201 (1) dated 24.03.2011 is valid one
c) On the facts and circumstances of the case and in law, the Ld. CIT(A) had erred in annulling
the order passed by the A.O. u/s. 201 (1 )/201 (1A) by observing that the impugned order is
statutorily beyond the period of limitation without appreciating the fact that the proceedings
under the said section pursuant to survey stand valid for the reason that the assessee had filed
incomplete TDS statements u/s. 200 as mandated under the Income-tax Act, 1961 which fact
was unearthed and came to light during the survey proceedings of the department.
d) On the facts and circumstances of the case and in law, the Ld. CIT (A) had erred in annulling
the order passed by the A.O. u/s.201(1)/201(1A) without appreciating the fact that as per
circular NO.5 of 2010 issued by CBDT wherein it was clarified that the A.O. can complete
TDS proceedings for a financial beginning from 01.04.2007 and earlier year's by 31.03.2011.
In other words by virtue of assessees filling incomplete TDS statements the survey and the
proceedings u/s. 201(1 )/201(1A) are validly pending before the Income-tax Authorities.
e) On the facts and circumstances of the case and in law , the Ld CIT (A) has erred in
annulling the order passed by the A.O. by treating the same as time barred and did not
adjudicate the other issues on which A.O.'s order I s based for the reason that very basis
of A.O. `s Order is without any validity, which calls for restoration.
f) On the facts and the circumstancesof the case and in law, the appellant prays that the order
of the Ld. CIT (A) on the above ground be set aside and that of Assessing officer
determining tax default of Rs 4,92,61,089/- be restored.
ITA No 4971/M/2013 for AY 2004-05 U/s 201(1A) by revenue
1. "The Ld. CIT (A) erred in quashing the order u/s 201(1A) whereby interest was charged on
the short deduction determined u/s 201(1), by observing that the order u/s 201(1) had been
annulled and also erred in not appreciating the facts that the order of the Ld. CIT (A)
(annulling the short deduction u/s 201(1) had not been accepted by the department and
appeal to ITAT had been filed".
2. The appellant craves leave to amend or alter any ground or add a new ground which may be
necessary at the time of the hearing of the case or thereafter"
3. The order of the Ld. CIT (A) being erroneous be set aside and the A.O.'s order be restored".
CO No 211/M/2014 in Appeal No 4878/M/2013 A Y 2004-05 By Assessee
1. The Learned CIT (A) has rightly held that the order u/s 201/201(1A) made by ITO (TDS )
in the case of respondent on 24th march 2011 in relation to assessment year 2004-05 is
barred by limitation.
2. The Learned CIT (A) has erred in not holding that on the facts and in the circumstances of
the case of the respondent and in law the respondent should not be deemed to be an
assessee in default as held by ITO (TDS) in respect of the payments made to hospital based
consultants.
3. The Learned CIT (A) has erred in not holding that on the facts and in the circumstances of
the case of the respondent and in law the Respondent should not be deemed to be an
assessee in default as held by ITO (TDS) in respect of the payments made to Hinduja
Foundation.
4. The Learned CIT (A) has erred in not holding that on the facts and in the circumstances of
the case of the respondent and in law the Respondent should not be deemed to be an
assessee in default as held by ITO (TDS) in respect of the payments of Drug handling
Charges.
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ITA-4878-79 & ors, Natl. Health Edu. Soc.
CO No 191/M/2014 in Appeal No 4971/M/2013 A Y 2004-05 By Assessee
1. The Learned CIT (A) has rightly held that the order u/s 201(1A) made by ITO in the case
of the respondent on 228th march 2011 in relation to A Y 2004-05 is barred by limitation.
2. The Learned CIT (A) has erred in not holding that on the facts and in the circumstances of the
case of the respondent and in law the Respondent is not liable to any interest u/s 201(1A) of
the act.
ITA 4879/Mum/2013for AY 2005-06 by Revenue u/s 201(1)
a) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in quashing the
order passed by the AO u/s. 201(1)/201(1A) by relying on the CBDT Circular No. 5 of 2010
dated 3rd June, 2010 stating that the TDS proceedings are not validly pending and thereby
treating the order u/s. 201(1)/201(1A) as time barred on the grounds that as per clause (i) of
section 201(3), the limitation for passing of the order u/s. 201(1) would be two years from the
end of the financial year 2005-06 i.e. 31.03.2008. Since the order is passed on 24.03.2011,
the order passed by the AO is held by the CIT (A) to be beyond limitation period without
appreciating the fact that as per the proviso to section 201(3), the order u/s. 201(1)/201 (1A)
for a financial year commencing on or before the 151 day of April 2007 may be passed at any
time on or before the 31st day of March 2011.The CBDT Circular NO.5 referred by the Ld.
CIT (A) is only clarificatory and cannot over ride this statute.
b) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) had erred in
holding that the order passed by the A.O. u/s. 201(1) dated 24.03.2011 is beyond limitation
period as per provision of section 201 (3) of the I.T. Act and proceeded to annul the impugned
order when the Ld. CIT(A) was aware of the fact that a survey action u/s. 133A of the I.T. Act
in the case of the assessee had been conducted on 04.10.2010 and order u/s 201 (1) was
passed on 24.03.2011 which is well within the time limit since section 201 (3) of the I.T. Act
clearly provides that such order for a financial year commencing on or before the 15t day of
April, 2007, may be passed at any time on or before the 3151 day of March. 2011 and hence,
order passed u/s. 201 (1) dated 24.03.2011 is valid one
c) On the facts and circumstances of the case and in law, the Ld. CIT(A) had erred in annulling
the order passed by the A.O. u/s. 201 (1 )/201 (1A) by observing that the impugned order is
statutorily beyond the period of limitation without appreciating the fact that the proceedings
under the said section pursuant to survey stand valid for the reason that the assessee had filed
incomplete TDS statements u/s. 200 as mandated under the Income-tax Act, 1961 which fact
was unearthed and came to light during the survey proceedings of the department.
d) On the facts and circumstances of the case and in law, the Ld. CIT (A) had erred in annulling
the order passed by the A.O. u/s.201(1 )/201(1A) without appreciating the fact that as per
circular NO.5 of 2010 issued by CBDT wherein it was clarified that the A.O. can complete
TDS proceedings for a financial beginning from 01.04.2007 and earlier year's by 31.03.2011.
In other words by virtue of assessees filling incomplete TDS statements the survey and the
proceedings u/s. 201(1 )/201(1A) are validly pending before the Income-tax Authorities.
e) On the facts and circumstances of the case and in law , the Ld. CIT (A) has erred in not
considering the true facts unearthed during survey proceedings u/s 133A dated 4. 10.2010
Withrespect to not to treat the hospital based consultants Dr Phulrenu H Chauhan as
employee of the hospital and remuneration paid to him is not in the nature of salary and
provision of section 192 of the I.T. Act is not applicable in that case and also in the direction
of the LD CIT (A) to the assessee too furnish copies of appointment letter in the case of the
said person for verification by Ao is unjustified since , the same has already been
ascertained during the course of survey proceedings and during the proceedings u/s 201(1)
of the I.T. Act 1961 from appointment letter field by the assessee, it can be easily inferred
that the remuneration paid to the said person is salary subjected to TDS u/s 192 as
against 194J of the acat.
f) On the facts and in the circumstances of the case and in law , the LD CIT (A has erred in
deleting the total tax demand of Rs 2,71,928/- raised on account of payments made to
Hinduja Foundation and non-deduction of tax on payment made on account of drug
handling charges without appreciating the fact of the case came to light during survey
3
ITA-4878-79 & ors, Natl. Health Edu. Soc.
proceedings on 4.10.2010 since taking in to account the same ,an order u/s 20191) is
passed and TDS default was worked out and determined in terms of order dated
23.04.2011
g) On the facts and in the circumstances of the case and in law , the LD. CIT (A) has erred in
holding that the assessee's contention as correct in respect of Drug handling charges by
applying the provision of section 194C instead of section 194H ,as concluded by the AO in
the course of proceedings u/s 20191)/201(1A) of the Income tax Act 1961, without
appreciating the facts of the case came to light during survey proceedings on 4.10.2010 by
taking in to account the same, an order u/s 201(1) was passed and TDS default was worked
out and determine din terms of order dated 24.3.2011
ITA No 4972/M/2013 for AY 2004-05 U/s 201(1A) by revenue
1. "The Ld. CIT (A) erred in quashing the order u/s 201(1A) whereby interest was charged on
the short deduction determined u/s 201(1), by observing that the order u/s 201(1) had been
annulled and also erred in not appreciating the facts that the order of the Ld. CIT (A)
(annulling the short deduction u/s 201(1) had not been accepted by the department and
appeal to ITAT had been filed".
2. The appellant craves leave to amend or alter any ground or add a new ground which may be
necessary at the time of the hearing of the case or thereafter"
3. The order of the Ld. CIT (A) being erroneous be set aside and the A.O.'s order be restored".
CO No 212/M/2014 in Appeal No 4879/M/2013 A Y 2005-06 By Assessee
1. The Learned CIT (A) has rightly held that the order u/s 201/201(1A) made by ITO (TDS )
in the case of respondent on 24th march 2011 in relation to assessment year 2005-06 is
barred by limitation.
2. The Learned CIT (A) has erred in not holding that on the facts and in the circumstances of
the case of the respondent and in law the respondent should not be deemed to be an
assessee in default as held by ITO (TDS) in respect of the payments made to hospital based
consultants.
3. The Learned CIT (A) has erred in not holding that on the facts and in the circumstances of
the case of the respondent and in law the Respondent should not be deemed to be an
assessee in default as held by ITO (TDS) in respect of the payments made to Hinduja
Foundation.
4. The Learned CIT (A) has erred in not holding that on the facts and in the circumstances of
the case of the respondent and in law the Respondent should not be deemed to be an
assessee in default as held by ITO (TDS) in respect of the payments of Drug handling
Charges.
CO No 192/M/2014 in Appeal No 4972/M/2013 A Y 2005-06 by Assessee
1. The Learned CIT (A) has rightly held that the order u/s 201(1A) made by ITO in
the case of the respondent on 228th march 2011 in relation to A Y 2005-06 is barred
by limitation.
2. The Learned CIT (A) has erred in not holding that on the facts and in the
circumstances of the case of the respondent and in law the Respondent is not liable
to any interest u/s 201(1A) of the act.
2.The assessee,a renowned hospital of Mumbai,is engaged in the activity of providing
healthcare services and doing medical research. It is managed by National Health &
Education Society popularly known as P.D.Hinduja Hospital & Medical Research Centre
(HH).A survey operation under section 133A of the Act was carried out at the hospital
premises of the assessee on 04/10/ 2010 for verification of the compliance of the provisions
of tax deduction at source (TDS).During the course of survey, statement of Deepak
Samant,Director(Finance)was also recorded. As a result, proceedings under section 201 (1) of
the Act were initiated and the assessee was required to show cause as to why it should not be
treated to be an Assessee-in-default(A-I-D)in respect of certain payments. The assessee
furnished its reply and various details as required by the AO. After considering the same, the
AO passed the orders u/s.201(1) in respect of these assessment years,holding it to be an A-I-
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ITA-4878-79 & ors, Natl. Health Edu. Soc.
D on certain counts and had accordingly raised demands of tax against the assessee u/s . 201
(1) of the Act.Total defaultu/s.201(1)was calculated at Rs. 4.92 Crores and Rs 5.46 crores for
assessment years under appeal. Subsequently order under section 201(1A)of the Act were
also passed on 28/09/2011 raising demand of Rs.4.43 Crores and Rs 4.26 crores under the
head `interest payable' for respective years under appeal.
3.Aggrieved by the order of the AO, the assessee filed an appeal before the First Appellate
Authority (FAA). Before him, it was submitted that the time limit for making assessment u/s
201(1) for the AY 2004-05 and onwards had expired. The assessee filed a chart in this regard
and itread as under:
Sr. Assessment Alleged Short Year of Action U/s U/s 201 * Law as on date of
No Year Deduction Rs. Alleged 201 default will apply: Benett
Default 4.10.10 Coleman & Co. Ltd. v. V.P.
Damle(1986) 157 ITR
812(Bom)
1 2004-05 04,92,61,089/- 31.03.04 *6years Time Limit for completion of
Assessment over
2 2005-06 05,46,47,787/- 31.03.04 *5 years Time Limit for completion of
Assessment over
3 2006-07 05,77,89,288/- 31.03.04 *4 years Time Limit for completion of
Assessment over
It was contended that subsequent to insertion of proviso to section 201(3) or prior to that
order passed u/s. 201/201(A) would not survive as same were ab-initio bad in law. After
considering the submission of the assessee and the orders passed by the AO u/s. 201(1) and
201(1A) of the Act,the FAA held that section 201(3) and 201(4) had been insertedin the
statute by Finance Act 2009 w.e.f. 01.04.2010.He referred to the provisions of section 201(1)
and section 153(3) (ii) and explanation 1.He held that time period of six years in clause-2 of
the above section 201(3) had been substituted for four years with retrospective effect from
01.04.2010 by Finance Act, 2012, that section 201(3) and 201(4) had become part of the
statute w.e.f. April 2010,that the survey action u/s. 133A was carried out on 04.10.2010, that
at that point of time above section were part of the statute,that for the financial year from
2004-05 to 2006-07, as per clause (i) of the section 201(3),the limitation period was two
years from the end of FY in which the statement was filed in a case where the statement
referred to in section 200 had been filed, that for the FY.under consideration quarterly/yearly
statements of TDS were required to be filed in such form and verified in such manner and
within such time as provided in the Act,that if the assessee had filed TDS yearly return/
statement of the 4th quarter same would have been filed in May or June 2004 and April or
May 2005 in the FY 2003-04 and 2004-05 respectively,that the limitation for passing of order
u/s. 201(1) would be two years from the end of the said FY i.e. 31.03.2006 and 31.03. 2007
respectively, that impugned order had been passed on 24.03.2011,that same was beyond
limitation period. He further mentioned that the assessee had not furnished any details about
the filing of the quarterly/yearly statements of TDS. He, therefore, directed the AO to verify
from his records as to whether it had filed the necessary quarterly statements for the FY
2003-04 and 2004-05. He held that if the quarterly statements as required u/s. 203 had been
filed within the due dates the orders passed by the AO were invalid and had to be annulled.
He further mentioned that if the assessee had not filed the TDS statement as per law then its
case would fall under clause (ii) of section 201(3) of the Act and the time period of 6 years
from the end of the FY.would be available with the AO and the orders passed by him would
be valid orders.As stated earlier, he directed the AO to verify the facts and follow his
instructions.
5
ITA-4878-79 & ors, Natl. Health Edu. Soc.
4.Before us,the Departmental Authority (DR) relied upon the order of the AO.Authorised
Representative (AR) stated that order passed by the AO was beyond the prescribe time
limit,that all the grounds of appeal in all the four appeals of the department as well as the two
cross objections filed by assessee are covered by the orders of ITAT for the AY.s.2006-07
to 2010-11.
5.We have heard the rival submissions and perused the material before us.We have also
perused the facts of the present case as well as the orders of ITAT in case of the appellant for
AY.s.2006-07 to 2010-11 and we are satisfied that issues covered in those appeals are
identical to the facts and issues of the present appeals.The issue time limit for passing the
orders u/s.201(1)has already been decided in case of the assessee in Appeal No 4935/M/
2013 and 4937/M/0213 for AY 2006-07 in para no 5 as under :-
"We find that the FAA has not given any direct finding. He had given direction to the AO to find out the
details of filing of quarterly statements for the year considerationand `to verify for his records as to
whether the assessee had filed the necessary quarterly statements (or yearly TDS return)'.He further
held that if the quarterly statement as required under section 201(3) had been filed with the due dates,
the order passed by the AO was invalid and had to be annulled. He also mentioned that the assessee
had not filed the TDS statements for the year under appeal as per law the case would be governed by
the provisions of section 201(ii) of the Act and the impugned order passed would be treated valid. In
our opinion, the order of the FAA does not suffer from any legal infirmity. Provisions of section 201(3)
were amended and word six years were substituted by words four years with retrospective effect from
1April 2010.Survey action carried out in October 2010 and the amendment had come on statute before
six months. So, the FAA,in our opinion has rightly interpreted the section and the time limit. Here, it
would be useful to refer to CBDT Circular dated 03.06. 2010 and same reads as under:
"It has been provided that an Order U/s 201(1) for failure to deduct the whole or any part of the tax as
required under this Act, if the deductee is a resident taxpayer, shall be passed within two years from
the end of the financial year in which the statement of tax deduction at source is filed by the
deductor.Where no such statement is filed, such Order can be passed up till four years from the end of
the financial year in which the payment is made or credit is given. To provide sufficient time for
pending cases, it is provided that such proceedings for the financial year beginning from 1st April,
2007 & earlier years can be completed by the 31.03.2011"
As the circular has clarified the position about the time limit,soin our opinion now there is no scope for
any ambiguity.Time limit depends upon the filing of quarterly/yearly statement. The FAA has
emphasized the same point and has directed the AO to make verification, as stated earlier. In these
circumstances, we are of the opinion that the order of the FAA does not suffer from any legal infirmity.
ConfirmingConfirming his order,we decide effective ground [GOA a) to d)], pertaining to time limit
against the AO."
Therefore,respectfully following the above decision,we decide effective ground no(a ) to (f)
of appeal no 4878 /m/2013 for Ay 2004-05 and Ground nos.(a) to (f) of appeal no. 4878/M/
2013 of AY 2004-05 and ground no (a) to (d) of appeal no.4879 of AY 2005-06 pertaining to
time limit against the AO.
In view of the above discussion,we hold that the orders of FAA for AY.2004-05 and 2005-06
do not suffer from any legal infirmity,therefore ground no (e) to(g) of appeal no 4879/ M/
2013 for AY 2005-06 by revenue do not survive and hence dismissed.
ITA/4971/Mum/2013.AY 2004-05 and ITA/4972/M/2013-AY.2005-06 :
6.These appeals are preferred against order of FAA where the orders passed u/s 201 (1A) of
the Act ,where order u/s 201(1) has been annulled. Therefore, the orders charging interest u/s
201(1A)charging interest on shortfall in deduction of tax at sources also do not survive.
Following our order passed u/s.201(1)of the Act,where we have decided the effective ground
of appeal against the AO,we hold that the order of the FAA does not suffer from any legal
infirmity and therefore the orders charging interest u/s 201(1A)also do not survive.
6
ITA-4878-79 & ors, Natl. Health Edu. Soc.
C.O/191 for AY 2004-05 and CO No 192/Mum/2014 for AY 2005-06
7.Both these COs are preferred by Assessee are in support of the order of the FAA.We have
already upheld the order of the FAA while deciding the issue of time limit.Therefore, GOA 1
is decided in favour of the assessee.
8.Ground No 2 of the CO is regarding non-chargeability of interest u/s 201(1A) of the act.As
we have already upheld that orders passed for both the years u/s 201(1) of the act by FAA
does not suffer from legal infirmity,so,the grounds regarding charging of interest become
infructuous.Therefore, same stands dismissed.
C.O/211 for AY 2004-05 and CO No 212/Mum/2014 for AY 2005-06
9.Both the Cos filed by assessee are supportingthe order of the FAA as well contesting the
issues on merit.We have already upheld the order of the FAA while deciding the issue of time
limit.Therefore,GOA 1 of CO.s stand decided in favour of the assessee
10.Grounds No.2 to 4 of both CO.s are against the merits of the individual issues of tax
deduction at sources contesting that assessee should not be "deemed to be in default" for
various payments.As we have cancelled the orders u/s 201(1) and 201(1A) of the Act,passed
by the TDS officer,so,these grounds are not required to be adjudicated on merits.
As a result,appeals filed by the AO stand dismissed and the CO.s of the assessee are allowed
for statistical purposes.
.
Order pronounced in open court on 19th August, 2015.
19th ,2015
Sd/- Sd/-
(. , / D.MANMOHAN ) ( / RAJENDRA)
/ VICE PRESIDENT / ACCOUNTANT MEMBER
/Mumbai, /Date: 19/08/2015
... Jv.Sr.PS.
/Copy of the Order forwarded to :
1.Appellant / 2. Respondent /
3.The concerned CIT(A)/ , 4.The concerned CIT /
5.DR " F" Bench, ITAT, Mumbai / , ,.. .
6.Guard File/
//True Copy//
/ BY ORDER,
/ Dy./Asst. Registrar
, /ITAT, Mumbai.
7
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