2016 (9) TMI 392 - AT - Income Tax

TDS u/s 192 - Interest u/s 201(1A) - non deduction of tax at source on payment of salary on monthly average basis - non mentioning of PAN No. of depositors on Form 15G /15H furnished by depositors with Bank - Held that - The contention of the assessee that at the end of financial year there was no short deduction of TDS on payment of salary to various employees has not been controverted by the authorities below. Further, we find that the TDS on salary was deducted on the monthly average basis by Circle Office of persons responsible and it was automatic and there is no interference by the Brach. We further find that deduction of amount of tax from salary depend upon the various saving schemes adopted by various employees and some time the employees make delay in submissions of their Saving certificates. Further we find from the reply of assessee to learned CIT(A) that the employees had declared the other income to the Bank only in the month of March and further that some times increment and pay perquisites of employees is paid in the last month and therefore, all these reasons could contribute to some short deduction of TDS in some earlier months of the financial year but the fact remains that at the end of financial year there was no short deduction of TDS. We find that the non deduction of TDS on monthly average basis was due to technical reasons and moreover, the issue for non deduction on monthly average basis is decided in favour of assessee in the decision of Hon ble Delhi High Court in the case of CIT vs. Marubeni India (Pvt.) Ltd. 2007 (8) TMI 40 - HIGH COURT, DELHI The finding of learned CIT(A) that AR of the appellant has failed to furnish any evidence in support of the contention that the PAN were available with the persons responsible at the time of accepting form 15G/15H, is only a technical breach in view of the fact that learned CIT(A) passed the order dated 26.06.2014 whereas as per the list of persons submitted to Assessing Officer indicating the PAN Nos., it is observed that PAN Nos. of assessees to whom interest was paid without deduction of tax was issued in the years 2008-2011. The list of such payments is placed at (PB page 1 to 2). Therefore, the PAN Nos. of such deductees was available at the time of deduction of TDS, and therefore, the mentioning of the same on the declarations was only a technical breach. - Decided in favour of assessee

Summary

Issues:
1. Non-deduction of tax at source on payment of salary on a monthly average basis
2. Charging of interest under sections 201(1) & 201(1A) for non-mentioning of PAN No. of depositors on Form 15G/15H

Analysis:
1. The appeal was against the order confirming the action of Assessing Officer for charging interest u/s 201(1A) for non-deduction of tax on salary payments. The Assessing Officer observed discrepancies during a survey and created a demand for not deducting TDS on a monthly average basis. The appellant argued that TDS was automatically deducted by the Circle Office and there was no short deduction at the end of the financial year. The Tribunal found the non-deduction was due to technical reasons and ruled in favor of the appellant, citing precedents supporting the appellant's case. The demand was deleted as it was a technical breach.

2. The second issue involved the creation of a demand for short deduction of interest due to non-mentioning of PAN No. on Form 15G/15H. The appellant provided a list of deductees with PAN numbers to the Assessing Officer, indicating a technical error. The Tribunal agreed with the appellant's submissions, noting that the PAN numbers were available at the time of deduction, and the mentioning of PAN on declarations was a technical breach. Citing relevant case laws, the demand was deleted as the deductors had furnished declarations in the prescribed manner. The Tribunal upheld the appellant's arguments and allowed the appeal, deleting the demand created by the authorities below.

In conclusion, the Tribunal allowed the appeal filed by the assessee, ruling in favor of the appellant on both issues. The order was pronounced in open court on 27.07.2016.