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2021 (12) TMI 1029 - AT - Income TaxDemand u/s 201 (I) - AO treated the assessee as an assessee in default for non-deduction of tax u/s 201 - Form Nos.15G/15H not filled in properly - Assessee submitted that once the appellant bank has obtained the declarations forms from the depositors. it has no option but not to deduct the tax at source. The appellant bank has no legal obligation to deduct tax at source on the payments made to depositors - HELD THAT - As decided in own case 2016 (5) TMI 1566 - ITAT HYDERABAD once the assessee obtained Form 15I from the sub-contractors whose contents are not disputed or whose genuineness is not doubted, then, the assessee is not liable to deduct tax from the payment made to sub-contractor. Once, assessee is not liable to deduct tax disallowance u/s 40(a)(ia) cannot be made. The assessee s breach of the requirement to furnish details to the income tax authority in the prescribed form within the prescribed time may attract other consequences but cannot result in a section 40(a)(ia) disallowances. Hence, addition made on this count is deleted. - Decided in favour of assessee. The facts and findings recorded therein, has substance over the order passed by the ITO(TDS) u/s 201(1) 201(1A) of the Act. Considering the observations of the Tribunal in the assessee s own case as quoted supra, we allow the grounds raised by the assessee on this issue.
Issues Involved:
1. Erroneous order of the Commissioner of Income Tax (Appeals). 2. Non-availability of documents due to a survey by the Income Tax Department. 3. Incomplete forms due to illiteracy of depositors. 4. Applicability of Section 201(1) and 201(1A) of the Income Tax Act, 1961. 5. Verification and relevance of Form 15G and 15H. Issue-Wise Detailed Analysis: 1. Erroneous Order of the Commissioner of Income Tax (Appeals): The assessee argued that the order of the Commissioner of Income Tax (Appeals) was erroneous, against the provisions of law, and contrary to the facts and circumstances of the case. The CIT(A) confirmed the Assessing Officer's (AO) order without adequately considering the context and evidence provided by the assessee. The Tribunal noted that the CIT(A) did not find the decisions relied upon by the appellant relevant to the issue at hand and upheld the AO's findings based on the improper filling of forms. 2. Non-availability of Documents Due to a Survey by the Income Tax Department: The assessee contended that the necessary documents, including Form 15G and 15H, were with the Income Tax Department due to a survey, hampering their ability to provide details to the CIT(A). The Tribunal acknowledged this issue but emphasized the need for proper documentation and verification as per the statutory requirements. 3. Incomplete Forms Due to Illiteracy of Depositors: The assessee, a rural bank, claimed that most depositors were illiterate farmers, resulting in incomplete forms. The CIT(A) and AO noted that the declarations in Form 15G and Form 15H were not duly filled in with mandatory fields such as the name of the depositor, amount of deposit, date of deposit, date of maturity, and interest rate. The Tribunal recognized the operational challenges faced by the rural bank but stressed the importance of compliance with statutory requirements. 4. Applicability of Section 201(1) and 201(1A) of the Income Tax Act, 1961: The AO invoked Sections 201(1) and 201(1A) of the Act, treating the assessee as an assessee in default for non-deduction of tax due to improper forms. The Tribunal reviewed the CIT(A)'s findings that filing declarations without fulfilling mandatory fields is as good as non-filing, thereby justifying the AO's demand and interest levied under these sections. 5. Verification and Relevance of Form 15G and 15H: The Tribunal evaluated the submissions and evidence, including a previous decision in the assessee's own case, where disallowance under Section 40(a)(ia) was allowed based on substantial compliance and operational challenges. The Tribunal noted that the assessee had a system in place for collecting Form 15G/15H and had demonstrated substantial compliance, with more than 75% of forms submitted. The Tribunal concluded that the assessee was not liable to be treated as an assessee in default for minor discrepancies and allowed the appeals based on the precedent and operational realities. Conclusion: The Tribunal allowed the appeals of the assessee for AYs 2011-12 to 2014-15, recognizing the operational challenges and substantial compliance demonstrated by the assessee. The Tribunal emphasized the importance of proper documentation but acknowledged the practical difficulties faced by a rural bank dealing with illiterate depositors. The decision underscored the need for a balanced approach in applying statutory requirements, considering the specific context and evidence provided.
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