2016 (8) TMI 408 - AT - Income Tax

Violation of provisions of section 194A read with section 197A - short deduction of TDS - Held that - Revenue has disputed the deletion of liability of ₹ 30,01,627/- (correct figure ₹ 29,90,256) on account of TDS of interest paid in respect of depositors for whom Form 15G and 15H were not furnished at the time of survey but certainly made available during the appellate / assessment proceedings for which, no adverse observations made in the Remand Report of the AO. Moreover, there is no loss to the Revenue. Revenue has not challenged the admission of additional evidence before the Tribunal and therefore, once the admission of additional evidence has not been challenged, the solitary issue which remains for consideration is whether delay in furnishing of Form 15G to the Department can be a ground to impose liability under section 201(1) of the Act on account of alleged default for non-application of TDS under section 194A read with section 197 of the Act, which as submitted above in light of the judgment is absolutely not tenable. In view of the aforesaid discussions and precedent relied upon, as aforesaid, Ld. CIT(A) has passed a well reasoned and speaking order and rightly held that assessee did not wilfully or contumaciously act in disregard of its objection under the law and the mistake was bonafide and no loss to revenue occurred for failure in submission of the Form 15G/15H in time. Hence, the order of the Ld. CIT(A) does not require any interference on my part, therefore, uphold the order of the Ld. CIT(A) and dismiss the Appeal filed by the Revenue. - Decided against revenue

Summary

Issues:
1. Whether the deletion of demand raised on account of short deduction of TDS with respect to cases where Form No. 15G/15H were late submitted was justified.
2. Whether the assessee's conduct in not deducting TDS in cases where interest paid exceeded the maximum amount not chargeable to income tax was acceptable.
3. Permission to add, delete, or amend the grounds of appeal.

Analysis:
1. The appeal by the Revenue challenged the deletion of demand related to short deduction of TDS due to late submission of Form No. 15G/15H. The AO observed that the assessee did not deduct tax at source on interest payments exceeding ?10,000 as per section 194A. The CIT(A) partly allowed the appeal, stating that the assessee did not act wilfully or contumaciously in disregarding the law, and the mistake was bonafide. The CIT(A) restricted the addition to ?1,88,250 on account of short deduction of tax and interest. The Tribunal upheld the CIT(A)'s order, citing similar cases and the absence of loss to revenue due to the delay in submitting Form 15G/15H.

2. The second issue involved the assessee's failure to deduct TDS in cases where interest paid exceeded the maximum amount not chargeable to income tax. The AO treated the assessee as an assessee-in-default under sections 201(1) and 201(IA) of the Income Tax Act. The CIT(A) found that the issue was technical in nature, following the judgment in CIT vs. State Bank of Patiala. The Tribunal agreed that the delay in furnishing Form 15G to the Department could not be a ground for imposing liability under section 201(1) of the Act, as the default was technical and no loss to revenue occurred. The Tribunal upheld the CIT(A)'s decision, emphasizing that the mistake was bonafide and did not result in revenue loss.

3. The permission sought by the appellant to add, delete, or amend the grounds of appeal was not explicitly discussed in the detailed analysis of the judgment. However, it can be inferred that the Tribunal did not find it necessary to address this issue separately in the final decision.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order that the assessee did not act wilfully or contumaciously in disregarding the law regarding TDS deductions and that the delay in submitting Form 15G/15H was not a ground for imposing liability. The judgment emphasized the technical nature of the default and the absence of revenue loss, aligning with previous legal precedents and interpretations.