INCOME TAX ACT, 1961

Section 154

Rectification under section 154 - Intimation under section 200A - Difference between tax deductible at source computed at 20% and actual amount of tax deducted at source -

Assessee was engaged in business process management service and paid salaries to certain employees and deducted tax at source (TDS) thereon at the rates in force as per section 192. Subsequently correction statements were filed to rectify the defaults existing in the statements. Thereafter, statements filed by assessee were processed by TRACES and intimation under section 154 read with section 200A was received by assessee. In intimation, short tax deduction at source with respect to Form 24Q was quantified and interest on such short deduction of tax at source was quantified. Assessee had downloaded and analysed the justification report of TRACES to ascertain the reasons for short TDS as mentioned under section 200A. In the intimation passed under section 200A, TDS was computed at flat rate of 20% as per section 206AA on entire salary on account of invalid PAN furnished by employees of the assessee. However, assessee had deducted tax at source at the rates in force on the total taxable income. According to assessee, difference between tax deductible at source computed at 20% and actual amount of tax deducted at source had resulted in short deduction of tax at source. Aggrieved by intimation passed under section 154 r.w.s. 200A of IT Act for assessment year 2011-12 & 2012-13, assessee preferred appeals before the 1st Appellate authority. The Commissioner (Appeals) however rejected the appeal of assessee without going into the merits. The Commissioner(Appeals) was of view that assessee ought to have filed appeals against intimation under section 200A of the IT Act. Held: CIT(A) had erred in dismissing the appeal solely for the reason that demand was raised vide intimation under section 200A and assessee ought to have filed appeals against the same. Once an order of rectification was passed under section 154, original order passed under section 200A itself was modified and what remain thereafter is, not the order of rectification, but the orders under section 200A as rectified. Though demand was raised in intimation passed under section 200A, the same demand continued in the intimation passed under section 154. Hence, assessee has a legal right in filing an appeal against the said intimation and there is no restriction/prohibition in challenging the intimation passed under section 154 without challenging the intimation passed under section 200A. Thus, matter was remanded back to CIT(A) to pass orders on merits/grounds raised before him.

Relied:Rashtriya Ispat Nigam Ltd. v. Addl. CIT 2016 TaxPub(DT) 0783 (Visakhapatnam-Trib)

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2011-12 & 2012-13

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