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2014 (3) TMI 539 - AT - Income TaxDemand u/s 201(1) and 201(1A) with interest for Non-deduction of TDS Though the assessee bank had obtained Form No. 15G and Form No. 15H but the same was not submitted to the jurisdictional Commissioner of Income Tax within due time. - Held that - Apart from sub-section (1A) of section 197A which merely requires a declaration to be filed by the payee of the interest and once it is filed, the payer of the interest has no choice except to desist from deducting tax at source from the interest paid the provision does not impose any obligation on the payer to find out the truth of the declaration filed by the payee the decision in Vipin P. Mehta Versus Income-tax Officer, Ward-24(3) (4), Mumbai 2011 (5) TMI 503 - ITAT MUMBAI followed - if the assessee has delayed the filing of declaration with the office of the jurisdictional C.I.T., within the time limit specified in sub-section (2) of Section 197A, that is a distinct omission or default for which a penalty is prescribed. The contention of the assessee is accepted that since the assessee Bank had the declaration of the payees in the prescribed form with it at the time when the interest was paid to the respective customers, the assessee cannot be held to be liable to deduct tax therefrom u/s 194A of the Act - if the assessee Bank was not liable to deduct tax at the time of payment of interest, then section 40(a)(ia) of the Act is not attracted and the assessee cannot be held liable to pay tax as assessee in default and interest - for non-filing of Form No. 15G and 15H within the prescribed time, there is a provision of penalty u/s 272A(2)(f) of the Act which is not a case of the department in the present appeal thus, the order set aside Decided in favour of Assessee.
Issues Involved:
1. Whether the Commissioner of Income Tax (Appeals) erred in upholding the order of the Assessing Officer under sections 201(1) and 201(1A) of the Income Tax Act for non/less deduction of tax at source. Issue-wise Detailed Analysis: 1. Upheld Order of Assessing Officer under Sections 201(1) and 201(1A): The primary issue in these appeals is whether the Commissioner of Income Tax (Appeals) erred in upholding the order of the Assessing Officer under sections 201(1) and 201(1A) of the Income Tax Act for non/less deduction of tax at source. The assessee, a nationalized bank, was found to have short deducted tax in some cases and failed to deduct tax in others without obtaining Form No. 15G and Form No. 15H during a survey conducted on 15th December 2009. Although the assessee had obtained these forms, they were not submitted to the jurisdictional Commissioner of Income Tax within the due time. The Assessing Officer determined the tax payable under section 201 at Rs. 3,59,950 and interest payable under section 201(1A) at Rs. 1,61,955. The Commissioner of Income Tax (Appeals) confirmed this order, leading to the present appeals. Arguments and Submissions: The assessee's Authorized Representative (AR) argued that the Commissioner of Income Tax (Appeals) failed to appreciate that the order passed by the Assessing Officer was time-barred and that there was no short deduction of tax. The AR contended that obtaining Form No. 15G and Form No. 15H and not submitting them was a technical breach, and the assessee should not be construed as an assessee in default. The AR also emphasized that the assessee cannot be held liable without proving that the recipient of the income had not paid the tax. The AR relied on various decisions of Coordinate benches of the Tribunal, including: - Vipin P. Mehta vs ITO (2011): The Tribunal held that if the assessee had declarations from payees in the prescribed form, it had no option but to make payments without tax deduction. The delay in filing declarations with the Commissioner of Income Tax was a procedural lapse, not affecting the obligation to deduct tax. - Gokuldas Virjibhai & Company vs ITO (2010): The Tribunal held that obtaining Form No. 15G exempts the payer from deducting tax, and non-submission to the Commissioner is a procedural lapse. - Karwat Steel Traders vs ITO (2013): The Tribunal held that once Form 15G/Form 15H is received, there is no liability to deduct tax, and non-filing of these forms invites penalty under section 272A(2)(f), not disallowance under section 40(a)(ia). The Departmental Representative (DR) supported the orders of the authorities, emphasizing the duty of the assessee to submit Form 15G and 15H to the jurisdictional Commissioner of Income Tax and attributing the omission to the assessee. Tribunal's Findings: The Tribunal observed that the assessee had obtained Form No. 15G and 15H from customers but failed to submit them to the jurisdictional Commissioner of Income Tax within the prescribed time. The Tribunal noted that under section 197A(1A), once the payee files a declaration, the payer must desist from deducting tax. The Tribunal emphasized that the payer is not obligated to verify the truth of the declarations filed by the payee. The Tribunal held that the failure to submit Form 15G and 15H within the prescribed time is a procedural lapse, attracting penalty under section 272A(2)(f), but not affecting the obligation to deduct tax. The Tribunal concluded that since the assessee had the declarations at the time of payment, it cannot be held liable to deduct tax under section 194A, and section 40(a)(ia) is not applicable. Conclusion: The Tribunal allowed the appeals, setting aside the orders of the Assessing Officer and the Commissioner of Income Tax (Appeals). The Tribunal held that the assessee cannot be held liable for non/less deduction of tax at source under sections 201(1) and 201(1A) due to the procedural lapse of not submitting Form 15G and 15H within the prescribed time. The Tribunal emphasized that the obligation to deduct tax does not arise if the payer has obtained the necessary declarations from the payees.
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