2019 (6) TMI 1124 - AT - Income Tax

TDS u/s 194A - Non-deduction/short deduction of TDS - TDS not deducted on the basis of Form No.15G/15H - interest u/s 201(1A) - HELD THAT - First such situation is where the beneficiaries(deductees)have filed the return of income AR argued that in such situation raising the demand u/s 201 is not permissible in view of the Hon ble Apex Court s decision in the case of Hindustan Coca Cola Beverages Pvt. Ltd. Vs. CIT 2007 (8) TMI 12 - SUPREME COURT . We remit the matter back to the file of the AO to verify the correctness of the returns filed by all the deductees and restrict the demand to the extent of 201(1A). Deductees not filed Form 15G/15H - There is no evidence to show that Form 15G/15H was collected before the due date. In the absence of any evidence to establish that the assessee had collected the forms before the due date and even failed to furnish Form 15G/15H before the concerned Pr.CIT before the due date, we do not find any reason to disagree with the CIT(A) that production of Form 15G/15H before the CIT(A) is nothing but an afterthought. Accordingly, we uphold the order of the Ld.CIT(A) relating to the deductees of Form 15G/15H cases and confirm the demand raised by the AO. Accordingly, the appeal of the assessee relating to deductees in whose case the Forms 15G/15H were not produced by the deductor is dismissed. Regard to Form15G/H with wrong PAN or without PAN - For the Financial year 2013-14 the deductor has furnished Form-15G in the case of TKD Prasad without having PAN. Though Form- 15G without PAN is invalid, in this case the amount involved was only ₹ 2098/- and the assessee has furnished the photo copy of the PAN card in page No.63 of the paper book. Therefore, we direct the AO to delete the demand raised u/s 201/201(1A) in the case of TKD Prasad. For the Financial year 2014-15 the deductor has furnished Form-15G in the case of M.Sambasiva Rao and the AO raised the demand for furnishing Form 15G/15H without PAN or wrong PAN. The assessee has furnished the copy of PAN card and the interest payment exceeds the taxable limit. Therefore, the deductee required to obtain no deduction certificate u/s 197 r.w.rule 29 and not Form 15G. Therefore, we hold that the AO has rightly treated the assessee as assessee in default and raised the demand. Accordingly we uphold the order of the CIT(A) and dismiss the appeal of the assessee on this issue. Financial year 2014-15 the AO has raised the demand in respect of Vasundhara Devi for not furnishing the PAN number. The assessee has furnished the photo copy of the PAN card. Since the assessee has furnished the Form 15G/15H and the amount of interest paid was only ₹ 11,088/-, we hold that the deductee has complied with the rules, accordingly, we direct the AO to delete the demand raised u/s 201/201(1A) in the case of Smt. Vasundhara Devi. Non deduction of TDS in case of amount of payment exceeded the basic limit of taxation - For the Financial year 2014-15 the AO has also raised the demand in respect Suman Pinnamaneni Veeragandham, the amount of interest paid to the deductee was ₹ 4,29,702/- which exceeds the taxable amount. For non deduction of tax at source, the deductee is required to obtain no tax deduction certificate from the AO u/s 197 r.w.rule 29. GPA holder of the deducteee has filed a letter addressed to Branch Manager, Lakshmi Vilas Bank on 26.09.17 which constitute additional evidence and not placed before the AO. The assessee has not filed any petition for admission of additional grounds. Even otherwise, since the amount exceeded the basic limit of taxation, in the absence of certificate u/s 197, the bank is obliged to deduct the tax at source. Having failed to deduct the tax at source and remit to the Government account, the AO has rightly treated the assessee as assessee in default. We do not see any reason to interfere with the order of the Ld.CIT(A). Accordingly, the appeal of the assessee on this issue is dismissed.

Summary

Issues Involved:

1. Non-deduction/short deduction of TDS by the assessee.
2. Treatment of the assessee as 'assessee in default' under Section 201(1A).
3. Validity and timing of Form 15G/15H submission.
4. Exemption claims for trusts and societies.
5. Cases involving wrong PAN or no PAN.

Detailed Analysis:

1. Non-deduction/short deduction of TDS by the assessee:
The case involves a commercial bank (the deductor) that failed to deduct TDS on certain payments where TDS was applicable and made short deductions in other cases. The Assessing Officer (AO) identified these issues during a survey conducted under Section 133A. The AO issued a show cause notice to the deductor, highlighting defaults amounting to ?13,96,381 for FY 2013-14 and ?18,71,389 for FY 2014-15, excluding interest under Section 201(1A).

2. Treatment of the assessee as 'assessee in default' under Section 201(1A):
The AO treated the deductor as 'assessee in default' for failing to deduct and remit TDS to the Government account within the stipulated time. The AO raised demands of ?17,95,874 for FY 2013-14 and ?18,71,389 for FY 2014-15. The CIT(A) confirmed the AO's order, rejecting the assessee's explanation regarding the exemption claims for trusts and the submission of Form 15G/15H.

3. Validity and timing of Form 15G/15H submission:
The CIT(A) observed that the bank failed to produce Form 15G/15H during the survey or in response to the show cause notice, considering their later submission as an afterthought. The Tribunal agreed, stating that the deductor must establish that Form 15G/15H was obtained before making the payment or before the due date. The Tribunal upheld the CIT(A)'s decision, confirming the demand raised by the AO for cases where Form 15G/15H was not timely produced.

4. Exemption claims for trusts and societies:
The assessee argued that TDS was not applicable to certain trusts as their income was exempt. However, the CIT(A) held that the bank is not the authority to decide income exemptions and that necessary exemption documents should be submitted by the deductee. The Tribunal agreed with the CIT(A), stating that the bank could not ascertain whether the trust clients would meet the conditions for exemption under Section 11.

5. Cases involving wrong PAN or no PAN:
For FY 2013-14, the Tribunal directed the AO to delete the demand in the case of TKD Prasad, where the deductor later furnished the PAN card. For FY 2014-15, the Tribunal upheld the AO's decision in the case of M. Sambasiva Rao, where Form 15G/15H was submitted without a proper PAN. The Tribunal also directed the deletion of the demand in the case of Vasundhara Devi, where the interest paid was only ?11,088, and the PAN card was later provided. In the case of Suman Pinnamaneni Veeragandham, the Tribunal upheld the AO's decision as the interest payment exceeded the taxable limit, requiring a no tax deduction certificate under Section 197.

Conclusion:
The Tribunal partly allowed the appeals, remitting the matter back to the AO to verify the returns filed by the deductees and restrict the demand to Section 201(1A) for those who filed returns. The Tribunal dismissed the appeals where Form 15G/15H was not timely submitted or where the PAN was incorrect or missing. The Tribunal directed the deletion of demands in specific cases where the PAN was later provided, and the interest paid was below the taxable limit.