The Excutive Engineer,, Hyderabad v. THE ITO(TDS), WARD - 3(4),, Guntur

CO 94/VIZ/2013 | 2011-2012
Pronouncement Date: 21-10-2016 | Result: Dismissed

Appeal Details

RSA Number 9425323 RSA 2013
Assessee PAN HYDEO0827B
Bench Visakhapatnam
Appeal Number CO 94/VIZ/2013
Duration Of Justice 3 year(s) 3 day(s)
Appellant The Excutive Engineer,, Hyderabad
Respondent THE ITO(TDS), WARD - 3(4),, Guntur
Appeal Type Cross Objection
Pronouncement Date 21-10-2016
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 21-10-2016
Assessment Year 2011-2012
Appeal Filed On 18-10-2013
Judgment Text
ITA NO.201/VIZAG/2013 & CO 94/VIZAG/2013 THE EXECUTIVE ENGINEER PANCYHAYAT RAJ DIVISION GU DURU 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM . . $ BEFORE SHRI V. DURGA RAO JUDICIAL MEMBER & SHRI G. MANJUNATHA ACCOUNTANT MEMBER ./I.T.A.NO.201/VIZAG/2013 ( / ASSESSMENT YEAR: 2011-12) ITO(TDS) WARD - 3(4) GUNTUR VS. THE EXECUTIVE ENGINEER PANCHAYAT RAJ DIVISION GUDURU [PAN: HYDEO0827B ] ( % / APPELLANT) ( &'% / RESPONDENT) C.O. NO.94/VIZAG/2013 (ARISING OUT OF I.T.A.NO.201/VIZAG/2013) ( / ASSESSMENT YEAR: 2011-12) THE EXECUTIVE ENGINEER PANCHAYAT RAJ DIVISION GUDURU VS. ITO(TDS) WARD - 3(4) GUNTUR ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G. SUDHAKAR RAO ADVOCATE / RESPONDENT BY : SHRI R.S. ARAVINDAKSHAN DR / DATE OF HEARING : 18.10.2016 / DATE OF PRONOUNCEMENT : 21.10.2016 ITA NO.201/VIZAG/2013 & CO 94/VIZAG/2013 THE EXECUTIVE ENGINEER PANCYHAYAT RAJ DIVISION GU DURU 2 / O R D E R PER V. DURGA RAO JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A) VIJAYAWADA DATED 13.2.2013 FOR THE ASSESSME NT YEAR 2011-12. THE C.O. FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER PASSED BY THE LD. CIT(A). 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS THE EXEC UTIVE ENGINEER PANCHAYAT RAJ DIVISION GUDURU SPSR NELLORE DISTRI CT. A SURVEY OPERATION U/S 133A OF THE INCOME TAX ACT 1961 (HER EINAFTER CALLED AS 'THE ACT') WAS CONDUCTED IN THE PREMISES OF THE ASS ESSEE BY A.O. AND IT WAS NOTICED BY HIM THAT THE ASSESSEE HAS NOT FILED E-TDS RETURNS REGULARLY NOT OBTAINED PAN NUMBERS IN SOME OF THE CASES AND FAILED TO REMIT THE DEDUCTED AMOUNT INTO CENTRAL GOVERNMENT A CCOUNT WITHIN THE STIPULATED TIME. DURING THE ASSESSMENT PROCEEDINGS THE A.O. HAS OBSERVED THAT PARTICULARS OF DEDUCTEES WHO ARE NOT HAVING PAN NUMBERS WAS NOT UPLOADED IN THE E-TDS RETURNS. AS PER THE PROVISIONS OF SECTION 206AA(1) OF THE ACT W.E.F. 1.4.2010 IF ANY PERSON/CONCERN WHO RECEIVES ANY AMOUNT FROM THE ASSESSEE AND AT TH E TIME OF RECEIPT OF SAME FAILED TO FURNISH PAN THE DEDUCTOR IS UNDE R OBLIGATION TO DEDUCT TDS AT 20% OF GROSS AMOUNT OF PAYMENT. ON VERIFICA TION OF THE ITA NO.201/VIZAG/2013 & CO 94/VIZAG/2013 THE EXECUTIVE ENGINEER PANCYHAYAT RAJ DIVISION GU DURU 3 INFORMATION FILED WITH REGARD TO PAN THE A.O. NOTI CED THAT MOST OF THE PANS OBTAINED BY DEDUCTEES AFTER RECEIPT OF THE CON TRACT AMOUNT. THE ASSESSEE FAILED TO EFFECT THE TDS AT 20% AS PER THE PROVISIONS OF SECTION 206AA(1) OF THE ACT FROM THE DEDUCTEES WHO DO NOT F URNISH PAN AT THE TIME OF PAYMENT AND ALSO AS THE ASSESSEE FAILED TO REMIT DEDUCTED AMOUNT INTO THE GOVERNMENT ACCOUNT WITHIN THE STIPU LATED TIME THE A.O. HAS HELD THAT THE ASSESSEE IS DEEMED TO BE DEFAULT AND LIABLE TO SUCH A SHORT TDS DEMAND AND MANDATORY PENAL INTEREST U/S 2 01(1A) OF THE ACT. ACCORDINGLY A.O. HAS RAISED DEMAND OF ` 53 09 163/- U/S 201(1)/201(1A) OF THE ACT. 3. AGGRIEVED ASSESSEE CARRIED MATTER IN APPEAL BEF ORE THE CIT(A). THE LD. CIT(A) BY CONSIDERING THE CIRCULAR ISSUED B Y THE PRINCIPAL SECRETARY PR&RD DEPARTMENT AND ALSO THE PROCEEDING S OF THE CIT(TDS) VIDE F.NO.CIT(TDS)/12-13 DATED 14.12.2012 DELETED T HE ADDITION MADE BY THE A.O. THE RELEVANT PORTION OF THE ORDER IS E XTRACTED AS UNDER: I HAVE GONE THROUGH THE FACTS OF THE CASE SUBMISSI ONS MADE BY THE APPELLANT ORDER UNDER SECTION 201(1) AND 201(1 A) BESIDES CASE LAWS RELIED UPON. THE FACTS OF THE CASE ARE THAT THE AP PELLANT IS A STATE GOVERNMENT DEPARTMENT IN CHARGE OF EXECUTING THE GO VERNMENT SCHEMES MADE FROM TIME TO TIME KEEPING IN MIND THE SOCIAL O BLIGATIONS OF THE GOVERNMENT. AS A RULE THE4 WORKS ARE ALLOTTED NOT T O REGULAR CONTRACTORS OR ANY OTHER CORPORATE BODIES BII ONLY TO GROUPS FO RMED FROM FINANCIALLY WEAKER SECTIONS OF THE SOCIETY. THUS THE PAYMENTS GO TO A GROUP CONSISTING OF VULNERABLE MEMBERS OF THE SOCIETY WH O ARE ALWAYS OUTSIDE THE INCOME TAX NET. ANOTHER UNDERLYING FACTOR IS TH AT TO FULFILL THE SOCIAL OBLIGATIONS OF THE GOVERNMENT INVARIABLY SUCH WORK S ARE ENTRUSTED TO ITA NO.201/VIZAG/2013 & CO 94/VIZAG/2013 THE EXECUTIVE ENGINEER PANCYHAYAT RAJ DIVISION GU DURU 4 SUCH LOCAL USER GROUPS ONLY. THUS IT IS IMPORTANT TO NOTE HERE THAT THERE IS NO CONTRACT BETWEEN THE APPELLANT AND THE GROUPS TO WHOM SUCH WORKS HAVE BEEN ENTRUSTED TO. THIS IS THE BACKGROUND OF T HE CASE ON HAND. THE LEGAL POSITION REGARDING SUCH WORKS DONE ELSEWHERE IN THE COUNTRY AND THE CLARIFICATIONS MADE BY THE TDS AUTHORITIES ON S UCH ISSUES IS DISCUSSED IN THE FOLLOWING PARA. 6. AS IT IS IT IS THE CASE OF TDS ON PAYMENTS MADE TO LABORERS UNDER THE CENTRAL GOVERNMENT SCHEME MGNREGS (MAHATMA GAND HI NATIONAL RURAL EMPLOYMENT GUARANTEE SCHEME) AS PER MGNREG A CT 2005. ACCORDINGLY THE ANDHRA PRADESH GOVERNMENT UNDER RU RAL DEVELOPMENT UNDER THE CENTRAL GOVERNMENT SCHEME OF NREGS (NATIO NAL RURAL EMPLOYMENT GUARANTEE SCHEME) AP WORKS UNDER RURAL C ONNECTIVITY PROJECT CERTAIN GUIDELINES WERE ISSUED TO PANCHAYA T RAJ & RURAL DEVELOPMENT (RD-11) DEPARTMENT VIDE G.O.MS.NO.271 D ATED 08/09/2009 AND IN TURN THE SAME GUIDE LINES WERE COMMUNICATED TO FIELD FORMATIONS FOR IMPLEMENTATION. HERE IT IS IMPORTANT TO NOTE HE RE THAT THE CIT(TDS) VIDE F. NO. CIT(TDS)/TECH/1 2-1 3 DATED 14/12/2012 CLARIFIED TO THE PRINCIPAL SECRETARY PR &RD DEPARTMENT THAT THE CIR CULAR NO.502 CLEARLY COVERS WORKS EXECUTED UNDER NREP SCHEME & HENCE EXE MPT FROM TDS. IT IS IMPORTANT TO NOTE HERE THAT THE CBDT ALSO CLAR IFIED TO CHIEF COMMISSIONER OF INCOME TAX THIRUVANANTHAPURAM WHE RE WORKS EXECUTED UNDER KERALA DEVELOPMENT PLAN WHICH WERE AKIN TO AP'S NREGS-AP-WORKS UNDER RURAL CONNECTIVITY PROJECT AND IT WAS FURTHER COMMUNICATED THAT IN CASE THERE IS NO CONTRACT BETW EEN THE BENEFICIARY COMMITTEES AND THE STATE GOVERNMENT & THE KERALA DE VELOPMENT PLAN THE CLARIFICATION ISSUED BY BOARD VIDE CIRCULAR NO. 502 DATED 27/01/1988 WITH REGARD TO NREP & RURAL LANDLESS EMPLOYMENT GUA RANTEE PROJECT (RLEGP) WOULD ALSO APPLICABLE. IN SUCH A BACKGROUND I AM OF THE CONSIDERED OPINION THAT THE ABOVE GUIDELINES ARE AP PLICABLE TO THE GROUPS TO WHOM WORKS HAVE BEEN ENTRUSTED BY THE APPELLANT AND WITH REFERENCE TO THE STRUCTURE OF THE BODIES DISCUSSED SUPRA I AM ALSO OF THE FIRM VIEW THAT TDS PROVISIONS ARE NOT APPLICABLE ON PAYMENTS MADE BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION AND ACCORDINGLY THE IMPUGNED ORDERS MADE UNDER SECTION 201(1) AND 201(1A) ARE SET ASIDE . THE SUBMISSIONS MADE BY THE AR TODAY THAT ALL THE PAYMENTS MADE TO 162 RECIPIENTS WERE NOT TAXABLE AND THAT THE RETURNS FILED BY SUCH RECI PIENTS WERE EITHER NOT TAXABLE OR WHENEVER TDS WAS MADE THE SAME WAS REFUN DED IS A TESTIMONY THAT SUCH PAYMENTS WERE COVERED AS PER TH E BOARDS CIRCULAR NO.502 DATED 27.1.1988. 4. ON BEING AGGRIEVED REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. D.R. RELIED ON THE ORDER PASSED BY THE A.O. ITA NO.201/VIZAG/2013 & CO 94/VIZAG/2013 THE EXECUTIVE ENGINEER PANCYHAYAT RAJ DIVISION GU DURU 5 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSES SEE RELIED ON THE ORDER PASSED BY THE CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND THAT THE LD. CIT(A) BY CONSIDERING THE CIRCULAR ISS UED BY THE PRINCIPAL SECRETARY PR&RD NO.502 AND ALSO THE NOTE ISSUED BY THE CIT(TDS) VIDE F.NO.CIT TDS/12-13 DATED 14.12.2012 HE HAS HELD TH AT ASSESSEE HAS MADE A PAYMENT TO THE LABOURERS AND NO TDS IS REQUI RED TO BE DEDUCTED. WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THUS THIS GROUND OF APPEAL RAISED BY THE REVENUE I S DISMISSED. 7. SO FAR AS C.O. FILED BY THE ASSESSEE IS CONCERNE D IT IS ONLY SUPPORTING THE ORDER PASSED BY THE LD. CIT(A). IN VIEW OF OUR ABOVE ORDER IT BECOME INFRUCTUOUS AND ACCORDINGLY DISMIS SED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 21 ST OCT16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 21.10.2016 VG/SPS ITA NO.201/VIZAG/2013 & CO 94/VIZAG/2013 THE EXECUTIVE ENGINEER PANCYHAYAT RAJ DIVISION GU DURU 6 '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ITO(TDS) WARD-3(4) GUNTUR 2. / THE RESPONDENT THE EXECUTIVE ENGINEER PANCHAY AT RAJ DIVISION GUDURU NELLORE DIST. 3. ) / THE CIT(TDS) HYDERABAD 4. ) ( ) / THE CIT(A) VIJAYAWADA 5. ! ! / DR ITAT VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 (SR.PRIVATE SECRETARY) ! / ITAT VISAKHAPATNAM