Learned Income Tax Appellate Tribunal By Orderdated 3.6.2010 Dismissed The Appeal By Relying Upon Thejudgment Of Hon'ble Bombay High Court In The Case Of Ramesh v. This Appeal As Per Provisions Of Section 260-A Ofthe Act Of 1961 Is Preferred To Challenge The Order Passedby The Income Tax Appellate Tribunal, Jodhpur Affirmi

-1- IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR. J U D G M E N T Accounts Officer, O&M, Paliv.The ITO, TDS-1, Jodhpur DB Income Tax Appeal No.102/2011 Date of Judgment :: 23[rd] September, 2014 P R E S E N T HON'BLE MR.JUSTICE GOVIND MATHURHON'BLE MR.JUSTICE VIJAY BISHNOI Mr. Anil Bhansali, for the appellant.Ms. K.K.Bissa, for the respondent(s). ..... BY THE COURT: The Superintending Engineer (SE) of JodhpurVidhyut Vitaran Nigam Limited awarded certain works tovarious contractors involving supply of material anderection by separate agreements with separate considerationfor the payment schedule, performance guarantee, bankguarantee, warranty in respect to material etc. The Income Tax Officer, TDS-I, Jodhpur conducteda survey for verification of the TDS at the office of theAccounts Officer, O & M, Jodhpur Vidhyut Vitaran NigamLtd., Pali (hereinafter referred to as 'the appellant') andthe appellant was called upon to show cause as to why shortdeduction of tax under Section 194-C of the Income Tax Act,1961 (hereinafter referred to as 'the Act of 1961') be not recovered as per provisions of Section 201(1) with interestas per provisions of Section 201(1A) of the Act aforesaid.The notice calling upon the appellant was in respect ofthree financial years those are 2005-06, 2006-07 and 2007-08. The Income Tax Officer, TDS-I by order dated 21.4.2008ordered for recovery of short deduction of tax and interestthereon by holding that the assessee has admitted thedefault. Being aggrieved by the order dated 21.4.2008passed by the Income Tax Officer, TDS-I, the appellantpreferred an appeal before the Commissioner of Income Tax(Appeals), Jodhpur, but that came to be dismissed on theground that no appeal can be maintained if the default isadmitted. Suffice to mention here that while rejecting theappeal the Commissioner of Income Tax (Appeals) also lookedinto the merits and arrived at the conclusion that thetransactions undertaken by the appellant termed assale/purchase, are nothing but composite contract for workon which tax is deductible as per provisions of Section194-C of the Act of 1961. The appellant assailed correctness of the orderpassed by the Commissioner of Income Tax (Appeals) by wayof approaching Income Tax Appellate Tribunal with followinggrounds :- “1. That the learned authority below has erred intreating the appellant as principal officer whilepassing the order u/s 201/201(1A) for the allegeddefault. 2. That without prejudice to the ground no.1 2.1 The authorities below have erred in holdingthat provisions of section 194C of the Income TaxAct was applicable to the contract for supply ofgoods and thereby creating a demand ofRs.32,37,985/- towards TDS and interest undersection 201(1A) amounting to Rs.11,65,644/-. 2.2 The authorities below have erred in assumingand holding that there is one indivisiblecontract i contrast to the fact that there twoseparate contracts, one for supply of goods andsecond for erection. 2.3 The authorities below have erred in notproperly appreciating the nature of contract andterms and conditions contained in the contractfor supply of goods. 3. That the authorities below have erred inholding that the appellant has admitted theliability for deduction of tax at source from thepayments made for contract for supply of goods. 4. That, without prejudice to the above grounds,the authorities below have erred in pressing theTDS provisions for recovery of tax whereas thetax has already been recovered from thecontractor under other provisions of the Incometax Act, rendering the recovery of TDS a doubletaxation of the same amount. 5. That the order of the authorities below is badin law and on facts. 6. That the appellant craves for leave to add,alter, delete, substitute any of the grounds ofappeal on or before the final hearing of theappeal.” 3. That the authorities below have erred inholding that the appellant has admitted theliability for deduction of tax at source from thepayments made for contract for supply of goods. 4. That, without prejudice to the above grounds,the authorities below have erred in pressing theTDS provisions for recovery of tax whereas thetax has already been recovered from thecontractor under other provisions of the Incometax Act, rendering the recovery of TDS a doubletaxation of the same amount. 5. That the order of the authorities below is badin law and on facts. 6. That the appellant craves for leave to add,alter, delete, substitute any of the grounds ofappeal on or before the final hearing of theappeal.” Learned Income Tax Appellate Tribunal by orderdated 3.6.2010 dismissed the appeal by relying upon thejudgment of Hon'ble Bombay High Court in the case of RameshChandra & Co. v. CIT, (1987) 168 ITR 375 (Bom.). In thecase aforesaid it was held that “where an assessee has madea statement of facts, he can have no grievance if thetaxing authority taxes him in accordance with thatstatement. If he can have no grievance, he can file noappeal. Therefore, it is imperative, if the assessee's caseis that his statement has been wrongly recorded or that hemade it under a mistaken belief of fact or law, that heshould make an application for rectification to theauthority which passed the order based upon that statement.Until rectification is made, an appeal is not competent.” This appeal as per provisions of Section 260-A ofthe Act of 1961 is preferred to challenge the order passedby the Income Tax Appellate Tribunal, Jodhpur affirming theorder passed by the Commissioner of Income Tax (Appeals). Having considered facts of the case, this Courtby order dated 5.5.2011 while admitting the appeal forhearing settled following substantial questions of law foradjudication :- “(i) Whether the Tribunal was justified inupholding the view taken by the CIT(A) wherein itwas held by placing reliance upon the decisionrendered by the Bombay High Court, Nagput Benchreported in (1987) 168 ITR 375, Ramesh Chandra &Co. Vs. CIT that no appeal lies in a matter where assessee has admitted the issues of fact beforethe Assessing Officer? (ii) Whether the Tribunal was justified inplacing reliance upon the law laid down by theHigh Court in the case of Ramesh Chandra & Co.(supra) and if so, whether it has any applicationto the facts of this case? (iii) In case if it is held that either law laiddown by the Bombay High Court in the case ofRamesh Chandra & Co. (supra) is not applicable tothe facts of this case or if it is held thatappeal lay before the CIT(A), then whether a casefor remand either to the Tribunal or to CIT(A) ismade out for deciding the appeal on merits by thefirst appellate authority?” In appeal, the submission of learned counsel for the appellant is that as a matter of fact no admission wasmade on behalf of the Jodhpur Vidhyut Vitaran Nigam Ltd.with regard to the liability to deduct tax at source.According to learned counsel the issue was contested andthe payment of tax was made only to avoid coercivemeasures. Such payment of tax, thus, cannot be termed andtreated as admission of default. Per contra, as per Shri K.K.Bissa, learned counsel for the revenue, the appellant on receiving thenotice to show cause deposited the short deduction of TDSin Government account, thus, admission of default isapparent. The fact about admittance of default before theIncome Tax Officer, TDS-I was accepted in unambiguousterms, as such, the Commissioner of Income Tax (Appeals)rightly arrived at the conclusion that no appeal in lightof the judgment of Hon'ble Bombay High Court is maintainable and the view taken was rightly affirmed by theIncome Tax Appellate Tribunal. Heard learned counsels and examined the ordersimpugned. Per contra, as per Shri K.K.Bissa, learned counsel for the revenue, the appellant on receiving thenotice to show cause deposited the short deduction of TDSin Government account, thus, admission of default isapparent. The fact about admittance of default before theIncome Tax Officer, TDS-I was accepted in unambiguousterms, as such, the Commissioner of Income Tax (Appeals)rightly arrived at the conclusion that no appeal in lightof the judgment of Hon'ble Bombay High Court is maintainable and the view taken was rightly affirmed by theIncome Tax Appellate Tribunal. Heard learned counsels and examined the ordersimpugned. True it is, the appellant on calling upon throughthe notice to show cause by the Income Tax Officer, TDS-I,Jodhpur satisfied the tax liability pertaining to shortdeduction of TDS, but that ipso facto cannot be treated asadmission of the default in view of the fact that adetailed reply in relation to the liability pointed out wasgiven with specific assertion that the TDS shown in theshow cause notice and the order under Sections 201(1)/201(1A) are materially different. It was specifically pointed out by the assesseethat the company entered into separate and distinctagreements with various payees viz. One for purchase ofmachinery/equipment (supply order) and other for erection/commissioning work (work order). The sample agreements toowere advanced with specific assertion that the transactionof erection/commissioning work attracts TDS under Section194-C and that requirement was complied with. The supplycontract as per the assessee was not attracting theprovisions of TDS. Pertinent to mention here that thisissue has been taken into consideration on merits also bythe Commissioner, Income Tax (Appeals). The fact that theassessee contested the application of the provisionspertaining to TDS before the Assessing Authority as well asbefore the Commissioner of Income Tax (Appeals) is sufficient enough to arrive at the conclusion that therewas no absolute admittance by the assessee. In the case of Ramesh Chandra & Co. (supra) thefactual position was quite different. In the case aforesaidthe assessee made a statement of facts with specificassertion that he agrees with a part of the value of 360quintals of 'Sarki' which was creating a tax liability.Looking to this factual background Hon'ble the Bombay HighCourt held that when an assessee has made a statement offacts and accepts his tax liability, then he cannot raiseany grievance by way of filing an appeal. It was alsoobserved that if the assessee makes a statement about wrongrecording of his version or he made a statement undermistaken belief of fact or law, then the appropriate courseis by way of making an application of rectification to theauthority that passed the order based upon the fact stated.No appeal is maintainable until rectification. In the case in hand the position is entirelydifferent as the assessee from inception contested the taxliability but deposited the tax just to avoid coerciveaction. Looking to this factual position we are of the viewthat in the instant matter the judgment given by Hon'bleBombay High Court in the case of Ramesh Chandra & Co.(supra) was having no application. The substantialquestions of law No.1, 2 and 3 stand disposed ofaccordingly. The appeal, thus, is allowed. The order passed bythe Income Tax Appellate Tribunal dated 3.6.2010, thus, is set aside. The matter is remanded to the Income TaxAppellate Tribunal, Jodhpur for adjudication of the appealpreferred by the appellant assessee afresh on merits. (VIJAY BISHNOI),J. (GOVIND MATHUR),J. kkm/ps.