2018 (1) TMI 1295 - AT - Income Tax

Revision u/s 263 - Correctness in passing the order under section 143(3)- assessee not deducted TDS u/s 194A on the payments made to the eight payees on account of filing of Forms No. 15G/15H before the ld. Pr. Commissioner on 07/04/2012 - Held that - Once, assessee has filed Forms No. 15H/15G from the payees before the Pr.Commissioner and the Assessing Officer by considering the same, assessment is completed, therefore, in our opinion, the order passed by AO is neither erroneous nor prejudicial to the interest of the revenue. It is not a fit case to exercise powers under section 263 of the Act. - Decided in favour of assessee.

Summary

Issues:
1. Whether the Assessing Officer's order under section 143(3) was correct despite the non-deduction of TDS under section 194A by the assessee.

Analysis:
The appeal was against the Principal Commissioner's order for the Assessment Year 2012-13. The assessee, a finance business firm, filed its return with a total income of ?3,23,580. The Assessing Officer accepted the returned income under section 143(3) of the Income Tax Act, 1961. Subsequently, the Principal Commissioner invoked section 263 due to the non-deduction of TDS under section 194A on interest payments to unsecured loan creditors. The Pr. Commissioner found the Assessing Officer's order erroneous and prejudicial to revenue, setting it aside for reassessment. The assessee contended that Forms 15G/15H were obtained from creditors, exempting TDS, and were submitted to the Commissioner. However, the Pr. Commissioner noted discrepancies in the submission dates of these forms, leading to the reassessment directive.

The main issue was whether the Assessing Officer erred in not deducting TDS under section 194A despite the submission of Forms 15G/15H by the payees. The assessee had made interest payments to eight parties, all of whom submitted the required forms. The forms were filed before the Pr. Commissioner and the Assessing Officer during assessment proceedings. The Pr. Commissioner's concern was the Assessing Officer's failure to assess the applicability of section 194A. The tribunal found the order not erroneous or prejudicial to revenue, citing a similar case precedent. The tribunal emphasized that once the forms were submitted, and assessment completed, the Assessing Officer's order was valid. Relying on a Chennai Bench decision, the tribunal held that no disallowance under section 40(a)(ia) was warranted, ultimately allowing the assessee's appeal against the Pr. Commissioner's order.

In conclusion, the tribunal ruled in favor of the assessee, setting aside the Pr. Commissioner's order and reinstating the Assessing Officer's decision. The tribunal found that the submission of Forms 15G/15H by the payees exempted the assessee from TDS obligations under section 194A, aligning with the Chennai Bench's interpretation. The appeal was allowed, and the original assessment order was upheld, emphasizing compliance with relevant tax provisions.