2020 (11) TMI 221 - AT - Income Tax

Penalty u/s 272A(2)(c) - interest payment exceeding ₹ 10,000 - non deduction of TDS u/s 194A on interest paid to the depositors - ITO power to issue notice u/s 133(6) to determine through general enquiry for the purpose of identifying persons who are likely to have taxable income - claim of the assessee that they did not have to deduct TDS as they are exempt as appellant being a Primary Agricultural Credit Society - relevancy of information called for u/s 133(6) - HELD THAT - The assessee has not given any reply to the submissions of the learned D.R. The assessee has also not been able to substantiate any of the grounds which has been raised by it. In fact a perusal of the ground as raised by the assessee in Ground No. D shows that the assessee is well informed of the proceedings before the AO and their powers and office procedures. Admittedly the assessee has been absolutely non-cooperative in any of the proceedings. The assessee has not shown as to whether even after the present proceedings have been initiated the information has been submitted or whether TDS has been deducted subsequently. Other than filing appeals and not representing the same, nor giving explanation in respect of the grounds raised only delay tactics are being adopted. No reasonable cause has also been shown. By no stretch of imagination can it be even presumed that the assessee did not know of the decision of Kathiroor Service Co-Operative Bank Ltd. 2013 (11) TMI 728 - SUPREME COURT nor is it a plausible explanation that the assessee is exempt from deducting TDS in the absence of any order thereto - such contumacious conduct on the part of the assessee is liable to be dealt with harshly - orders of the learned CIT(A) and that of the AO are liable to be upheld and penalty levied under Section 272A(2)(c) of the Act is liable to be confirmed. - Decided in favour of revenue.

Issues Involved:
1. Validity of the notice issued under Section 133(6) of the Income Tax Act, 1961.
2. Authority of the Income Tax Officer (TDS) to call for information under Section 133(6).
3. Relevance and purpose of the information called under Section 133(6).
4. Penalty imposed under Section 272A(2)(c) for non-furnishing of information.
5. Timeliness and procedural aspects of the appeal.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 133(6):
The appellant argued that the notice issued by the Income Tax Officer (TDS), Kottayam was invalid as the information called for under Section 133(6) was irrelevant for any purpose under the Income Tax Act, 1961. The appellant, being a Primary Agricultural Credit Society, claimed exemption from deducting tax at source from interest paid to its depositors under Section 194A(3)(vii)(a). The Tribunal, however, noted that the Hon'ble Supreme Court in the case of Kathiroor Service Co-Operative Bank Ltd. had upheld the authority of the Income Tax Officer to issue notices under Section 133(6) for general inquiries to identify persons likely to have taxable income. The Tribunal found that the notice issued was valid and within the powers conferred under Section 133(6).

2. Authority of the Income Tax Officer (TDS) to Call for Information:
The appellant contended that the Income Tax Officer (TDS) does not have the authority to call for information under Section 133(6) as this power is vested only in the Assessing Officer, Deputy Commissioner (Appeals), Joint Commissioner, or Commissioner (Appeals). The Tribunal referred to the Supreme Court's decision in Kathiroor Service Co-Operative Bank Ltd., which confirmed that the ITO (TDS) had the authority to issue such notices, provided they had the necessary approval from the Director or Commissioner. The Tribunal found that the notice in question was issued after obtaining the required approval, thus validating the authority of the ITO (TDS).

3. Relevance and Purpose of the Information Called:
The appellant argued that the information requested under Section 133(6) was not relevant for any proceedings under the Income Tax Act. The Tribunal observed that the information sought was to determine whether the appellant was in compliance with the Act, particularly regarding TDS obligations. The Tribunal noted that the Supreme Court had held that Section 133(6) allows for the collection of information for general inquiries, which can be used to identify potential taxpayers and ensure compliance. Therefore, the information requested was deemed relevant and necessary.

4. Penalty Imposed Under Section 272A(2)(c):
The appellant sought the deletion of the penalty of ?21,500 imposed for non-furnishing of information called for under Section 133(6). The Tribunal found that the appellant had been non-cooperative and had not provided any valid reason for not furnishing the information. The Tribunal referred to previous decisions where similar penalties were upheld and found no reasonable cause for the appellant's non-compliance. Consequently, the penalty under Section 272A(2)(c) was confirmed.

5. Timeliness and Procedural Aspects of the Appeal:
The appeal filed by the appellant was time-barred by 21 days. The appellant provided an affidavit explaining the delay due to the COVID-19 pandemic and lockdown. The Tribunal accepted the reason for the delay, noting that the Supreme Court had suspended the Limitation Act due to the pandemic. Therefore, the delay was condoned, and the appeal was considered on its merits.

Conclusion:
The Tribunal dismissed the appeal, upholding the validity of the notice issued under Section 133(6), the authority of the ITO (TDS) to call for information, the relevance of the information requested, and the penalty imposed under Section 272A(2)(c). The Tribunal found that the appellant had not provided any substantial grounds to overturn the decisions of the lower authorities.

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