DMHO cannot be treated as Assessee-in-Default since DDOs are liable to Deduct TDS on Payment to Pharmacist, Ads etc: ITAT [Read Order]

Visakhapatnam bench of Income Tax Appellate Tribunal (ITAT) recently held that Drawing & Disbursing Officer (DDO) is liable to deduct Tax Deducted at Source (TDS) whereas District Medical & Health Officer (DMHO) is not liable in the case of a Government organization.

Assessee in the present case is a government organization and head of Medical & Health Depart for Khammam District and appointing contract employees for carrying out the activities relating to rural family welfare services. In the process of implementation of the said welfare services, funds were being granted by the Government of Andhra Pradesh to the assessee, who in turn allocated the budget amongst the Medical Officers of various Primary Health Centers working under his control.

During the course of assessment proceedings Assessing Officer (AO) has passed an order under section 201(1) & 201(1A) of the Income Tax Act 1961 by raising a demand of Rs. 24,58,254 on the ground that assessee failed to deduct tax under section 192, 194C, 194H & 194J of the Act on the payments made on Account of European Commission, Pharmacist, Civil Assistant Surgeons and Advertisement.

On appeal, the CIT (A) deleted the addition made by the AO after considering the given explanations and submitted details by the assessee. On being aggrieved, revenue carried the matter in appeal before the Tribunal.

While perusing the material facts and records the tribunal bench comprising of Judicial Member V.Durga Rao and Accountant Member D.S.Sunder Singh observed that the only issue for consideration in this case is who the competent authority to deduct TDS. The division bench further specified that while considering the proof documents it is clear that payments to the contract employees were being made by the respective Medical Officer of various Primary Health Centers and not the assessee therefore, the demand raised by the Assessing Officer is not correct on the ground that TDS is not deducted under section 201(1) & 201(1A) of the Act. Hence deduction of TDS on payments to pharmacist, advertisement etc is not liable in the hands of DMHO.