2017 (9) TMI 829 - AT - Income Tax

Default u/s. 201(1) & 201(1A) - assessee is a bank where TDS was not deducted on interest earned on FDRs to its customers - reason for non-deduction of tax at source was stated to be the submission of Form 15G/15H by the customers - Held that - Undisputedly assessee has submitted the Forms 15G/15H before the AO, but it was not considered on account of its non-submission in time before the jurisdictional CIT and the AO passed an order u/s. 201(1) & 201(1A) of the Act raising a demand therein. The assessee again filed the said Forms before the CIT(Appeals), but he did not take cognizance of the same and confirmed the order of AO. Since the assessee has filed the Forms 15G/15H on account of which TDS was not deducted, the lower authorities should have examined the same. Since the assessee has already filed the Forms 15G/15H before the lower authorities, we are of the view that the said Forms be examined by the AO and if the said Forms are found to be correct on verification, the assessee cannot be held to be in default and no demand should be raised u/s. 201(1) & 201(1A) of the Act. Otherwise, the AO may act in accordance with the law. Accordingly, the order of CIT(Appeals) is set aside and the matter is restored to the file of Assessing Officer to readjudicate the issue afresh in the terms indicated above, after affording opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes

Summary

Issues:
Non-deduction of TDS leading to default and subsequent orders under sections 201(1) & 201(1A) of the Income Tax Act.

Analysis:
The appellant, a bank, appealed against the order of the CIT(Appeals) regarding non-deduction of TDS on interest earned on FDRs due to submission of Form 15G/15H by customers. The AO held the appellant in default for non-deduction of tax at source as the forms were not submitted to the jurisdictional CIT. The CIT(Appeals upheld the AO's order under sections 201(1) & 201(1A) of the Act. The appellant contended that despite irregular submission of forms, when presented to the CIT(Appeals), relief should have been granted. The appellant cited judicial pronouncements emphasizing that irregularities in form submission can be rectified by verifying the forms' correctness. The Tribunal noted that the CIT(Appeals) did not examine the forms' veracity, rejecting the appellant's contention based on improper filing before the AO and CIT. Referring to the cited judgments, the Tribunal highlighted that irregularities in form submission do not constitute default, and the AO must verify form correctness. As the appellant had submitted the forms to the lower authorities, the Tribunal directed the AO to re-examine the forms. If found correct, the appellant should not be considered in default, and no demand should be raised under sections 201(1) & 201(1A) of the Act. The order of the CIT(Appeals) was set aside, and the matter was remanded to the AO for fresh adjudication after providing the appellant with a hearing opportunity. The appeal was allowed for statistical purposes.

This judgment addresses the issue of non-deduction of TDS leading to default and subsequent orders under sections 201(1) & 201(1A) of the Income Tax Act. The Tribunal emphasized the importance of verifying the correctness of Form 15G/15H submissions by the appellant, highlighting that irregularities in form submission do not automatically constitute default. The Tribunal directed the Assessing Officer to re-examine the forms submitted by the appellant. If found to be correct, the appellant should not be considered in default, and no demand should be raised under the relevant sections of the Act. The Tribunal's decision underscores the significance of proper verification of form submissions in cases of non-deduction of TDS to determine default status accurately.