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2016 (1) TMI 990 - ITAT VISAKHAPATNAM

2016 (1) TMI 990 - ITAT VISAKHAPATNAM - TMI - Short deduction of tds - demand under sec. 201(1) and 201(1A) - Held that:- 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, merely based on the statements filed by the assessee, without being applying the higher of the three rate .....

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im 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 remit the issue back to the file of the A.O./TDS officer and direct the .....

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t the order of Commissioner of Income-tax (Appeals)-2, Visakhapatnam dated 28-1-2015 and pertains to the Asst. Years 2011-12, 2012-13 and 2013-14. Since, the issues involved in these appeals are common, they are heard together and disposed off by way of common order for the sake of convenience. 2. The brief facts of the case are that the assessee is a public sector undertaking which is engaged in the business of manufacture and sale of Iron and Steel products, has filed its eTDS returns in form .....

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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 .....

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re than 17000 employees. The assessee has taken all out efforts to collect PAN numbers from each employee. However, there were certain discrepancies in the PAN quoted in TDS returns which resulted in mismatch of PAN numbers while processing the TDS returns. The assessee has filed rectification request and corrected most of the defaults by obtaining correct PAN from the employees. Although, it has corrected most of the defaults, the defaults mentioned in category (i) and (iv) was not rectified, b .....

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ance on the following two decisions. (i) Jagran Prakashan Ltd vs. DCIT (2012) 345 ITR 288 (All)(ii) Allahabad Bank vs. ITO(TDS), Algarh in ITA 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 .....

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ot available then and now too. The A.R. submitted that assessee is a public sector undertaking having large work force of more than 17000 employees. The assessee has taken all out efforts to collect PAN numbers from each employee. In spite of repeated reminders, few employees did not furnished PAN for various reasons. However, the assessee has filed rectification statements and corrected most of the defaults by obtaining correct PAN from the employees. Although, it has corrected most of the defa .....

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he part of employees in the payment of tax. To this effect placed its reliance on the following two decisions. (i) Jagran Prakashan Ltd vs. DCIT (2012) 345 ITR 288 (All)(ii) Allahabad Bank vs. ITO(TDS), Algarh in ITA No. 448 to 454/Agra/2011. Therefore, requested to set aside the order of CIT(A). 5. On the other hand, the D.R. strongly supported the order of CIT(A). The ld. D.R. submitted that the CIT(A) has considered the assessee request and set aside the issue to the file of A.O., wherever, t .....

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ct. The AO/TDS officer has computed short deduction of tax and interest for defaults in furnishing invalid PAN, non furnishing of PAN and error in categorisation of employees. It was the contention of the assessee that it has filed revised return and corrected most of the defaults for which short deduction was determined by the CPC-TDS. The CIT(A) has allowed the claim of the assessee and set aside the issue to the file of the A.O. with a direction to allow credit for TDS wherever PAN is correct .....

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. In the rectification statements, most of the defaults referred to in TRACES have been rectified with correct PAN numbers. But, in few cases, it was unable to rectify the defaults with correct PAN, as there was mismatch in PAN furnished by the employees. The assessee has taken all out efforts to collect PAN numbers from each employee. In spite of repeated reminders, few employees did not furnished PAN for various reasons. However, the correct amount of TDS recoverable from the payments have bee .....

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sible 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 automatic that a flat rate of 20% shall be deducted wherever PAN is not furnished. The deductor shall compute the tax in the .....

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. The assessee contended that it has deducted tax at source as per the applicable rates in force in the manner specified under sec. 192 after allowing basic exemption limit. We find force in the arguments of the assessee, for the reason that the payment covered under dispute is salary to employees. TDS on salary shall be deducted in the manner specified under sec. 192 of the Act, after allowing basic exemption limit and deductions towards investments in savings scheme etc. Unlike other provision .....

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pute 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 .....

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