TMI Blog2016 (1) TMI 990X X X X Extracts X X X X X X X X Extracts X X X X ..... c. 201(1) and 201(1A). The taxes cannot be recovered once again from the assessee in a situation where the recipient of income has already paid the due taxes on such income. Unless, the A.O. verified himself that the recipient of income has not paid the tax on such income and also demonstrate that the rate applied by him was in accordance with the provisions of sec. 206AA, the assessee cannot be hold as assessee in default under sec. 201(1) and 201(1A). Therefore, we are of the opinion that the A.O./TDS officer was not correct in computing the short deduction of tax and interest, by applying flat rate of 20% tax. The CIT(A), without appreciating the facts, simply upheld the action of A.O./TDS officer. Therefore, we deem it appropriate to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normal rate of tax for furnishing invalid PAN, non furnishing of PAN, wrong classification of category of employee s in respect of female and senior citizens and also for rounding off tax and interest to nearest ten rupees. 3. Being aggrieved by the intimation under sec. 200A, the assessee preferred an appeal before CIT(A). Before CIT(A), the assessee categorised the defaults into 7 categories and made his submission with regard to each of the seven categories. The assessee submitted that basically the short deduction was computed for the following defaults. (i)Invalid PAN then and not yet corrected.(ii) Invalid PAN then but valid PAN obtained later.(iii) Invalid PAN then but valid PAN was available then.(iv) PAN not available then and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A No. 448 to 454/Agra/2011. The CIT(A), after considering the explanation of assessee, set aside the issue to the file of AO/TDS officer, in respect of defaults referred in clause (ii), (iii) and (v) and directed the AO/TDS officer to verify the revised TDS returns and wherever correct PAN and status of employee is quoted by the assessee, then credit should be given against the short deduction determined. In respect of cases falling under category (i) and (iv), upheld the action of AO/TDS officer. With these observations, the CIT(A) allowed the appeal for statistical purpose. Aggrieved by the CIT(A) order, the assessee is in appeal before us. 4. The learned authorised representative of the assessee submitted that the CIT(A) was erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the CIT(A) has considered the assessee request and set aside the issue to the file of A.O., wherever, the assessee has obtained correct PAN and filed revised TDS return. In respect invalid PAN then and now and PAN not available then and now too, even now the assessee could not rectified the defaults. Therefore, the A.O./TDS officer was correct in computing the short deduction and his order should be upheld. 6. We have heard both the parties, perused the materials and gone through the orders of authorities below. The CPC-TDS has processed eTDS returns and issued intimation under sec. 200A of the Act. The AO/TDS officer has computed short deduction of tax and interest for defaults in furnishing invalid PAN, non furnishing of PA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by applying higher rate of TDS without even deducting basic exemption limit allowable under the Act, which has an adverse impact in the case of employees, whose income is subject to tax at progressive rate of taxation. 8. Section 206AA of the Act, provides for deduction of tax at higher rates, in case the deductee fails to furnish the correct PAN to the person responsible for deducting tax at source. In the event, the deductee fails to furnish PAN, then the deductor shall deduct tax at the rates which is higher of (i) at the rates specified in the relevant provisions of the Act, or (ii) at the rate or rates in force, or (iii) at the rate of twenty percent. A careful study of the provisions of section 206AA made it clear that it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax may be at 10% and in some cases it may be at 30%. Unless, this was done, the A.O. cannot apply flat rate of 20% and compute the short deduction of tax. Thus, it is clear that the onus is on the revenue to demonstrate that the correct tax has not been recovered from the person who had the primary liability to pay tax. Without doing so, the A.O. cannot simply compute the short deduction by applying flat rate of 20% tax on gross payment. 9. In the present case on hand, the assessee being a public sector undertaking has deducted TDS at the rates prescribed under the Act and filed the necessary eTDS returns. The CPC TDS, processed the return and computed the short deduction of tax by applying the 20% flat rate specified under sec. 206AA ..... X X X X Extracts X X X X X X X X Extracts X X X X
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