2023 (3) TMI 1143 - AT - Income Tax

TDS u/s 194A - failure to upload Form 15G/15H of the depositors in roper format - assessee in default u/s 201(1)/201(1A) - HELD THAT - Assessee has acted within the four corners of law and did not deduct tax on such interest for which the depositors have filed Form 15G 15H. Though the assessee is required to uphold the same in a proper format, but it failed to do so due to some technical defect but since the physical copies are available, revenue authorities should not have treated the assessee in default. See ALLAHABAD BANK case 2021 (4) TMI 14 - ITAT DELHI and THE KARUR VYSYA BANK LTD. case 2017 (9) TMI 829 - ITAT BANGALORE Considering the fact that the assessee has not deducted tax at source u/s 194A of the Act after receiving the physical copies of Form 15G 15H, it should not be considered as an assessee in default. Therefore, we delete the demand raised by the ld. AO for non-deduction of tax at source u/s 194A of the Act as well as interest levied thereon for AY 2016-17 and 2017-18 for non-submission of Form 15G 15H, and allow the grounds raised by the assessee.

Summary

Issues involved:
The judgment involves the delay in filing the appeal, treatment of the assessee in default for non-deduction of tax at source, and the levying of interest under sections 201(1)/201(1A) of the Income Tax Act, 1961.

Delay in Filing Appeal:
The appellant filed a petition for condonation of delay of eighty-seven days in filing the appeal before the Tribunal, which was admitted after finding that there was a sufficient cause preventing timely filing.

Treatment of Assessee in Default:
The common issue was whether the ld. CIT(A) erred in sustaining the action of the ld. Assessing Officer in treating the assessee in default for non-deduction of tax at source u/s 194A of the Act and charging interest. The amounts in challenge were Rs.19,69,867/- and Rs.5,31,864/- for 2016-17, and Rs.35,61,523/- and Rs.5,69,843/- for 2017-18.

Factual Background:
The assessee, a bank, faced a survey under section 133A(2A) of the Act, revealing non-deduction of tax at source on interest payments, leading to demands for short deduction of tax and interest for both assessment years.

Assessee's Defense:
The assessee contended that Form 15G and 15H were received from depositors, uploaded on the Income-tax portal, but could not be opened due to technical issues. Physical copies were available, but the ld. CIT(A) held the assessee responsible for not uploading on the Core Banking Solution system.

Arguments and Decision:
The assessee argued that despite technical difficulties, physical copies of Form 15G & 15H were available, and the bank had acted within the law by not deducting tax on interest for which these forms were submitted. Citing precedents, the Tribunal held in favor of the assessee, stating that the bank should not be considered in default for non-deduction of tax and interest levied.

Conclusion:
The Tribunal allowed both appeals of the assessee, deleting the demands raised by the ld. AO for non-deduction of tax at source u/s 194A of the Act and interest levied thereon for the assessment years 2016-17 and 2017-18. The order was pronounced in Kolkata on 17th March 2023.