2019 (12) TMI 1028 - AT - Income Tax

Default U/s 201(1) and 201(1A) - non-deduction of tax on interest payment exceeding basic limit due to submission of form 15G/15H - HELD THAT - As found from the record that during the appellate proceedings, the assessee had filed the additional evidences which were sent by the CIT(A) to the AO for his remand report. The remand report so submitted by the AO has been reproduced by the CIT(A) at page 7 of his appellate order. Nothing was produced by the Department so as to persuade the Bench to deviate from the findings recorded by the CIT(A) wherein the CIT(A) after considering the remand report held that the assessee was not in default u/s 201(1) and 201(1A). Thus we do not find any reason to interfere in the findings of ld. CIT(A). - Decided against revenue

Summary

Issues:
1. Whether the assessee was in default under Section 201(1) and 201(1A) of the Income Tax Act for non-deduction of tax on interest payments exceeding the basic limit due to submission of form 15G/15H.

Analysis:
The appeal by the revenue was against the order of the ld. CIT(A) for the A.Y. 2012-13 concerning the non-deduction of tax on interest payments by the assessee. The revenue contended that the ld. CIT(A) erred in holding that the assessee was not in default under Section 201(1) and 201(1A) of the Act due to the submission of form 15G/15H by customers. The facts revealed that the assessee bank did not deduct TDS on interest payments exceeding the basic exemption limit, despite some customers submitting form 15G/15H. This raised concerns about proper tax reporting and compliance. The AO treated the assessee in default under Section 201(1) for non-deduction of TDS, resulting in a demand of ?52,34,703 under Section 201(1A).

During the proceedings before the ld. CIT(A), the assessee submitted additional evidence, which was sent for a remand report. The ld. CIT(A) considered the remand report and held that the assessee was not in default under Section 201(1) and 201(1A). The ACIT (TDS) in the remand report acknowledged the additional evidence provided by the appellant, leading to the conclusion that the assessee was not in default. Consequently, the ld. CIT(A) directed the deletion of the demand raised by the AO. The revenue appealed this decision before the ITAT.

Upon review, the ITAT noted that the ld. CIT(A) had carefully considered the observations, submissions, additional evidence, and the remand report. The ITAT found that the ld. CIT(A) had valid reasons for concluding that the assessee was not in default under Section 201(1) and 201(1A). The lack of new evidence from the revenue department led the ITAT to uphold the findings of the ld. CIT(A). Therefore, the appeal by the revenue was dismissed, affirming the decision that the assessee was not in default under the specified sections of the Income Tax Act.

In conclusion, the judgment clarified the issue of default under Section 201(1) and 201(1A) concerning the non-deduction of TDS on interest payments exceeding the basic limit due to form 15G/15H submissions. The decision emphasized the importance of proper tax compliance and reporting, ultimately ruling in favor of the assessee based on the evidence presented and the remand report's findings.