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TMI Blog2014 (5) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... ther and are being disposed of by this common order, for the sake of convenience. 3. The solitary issue urged in these appeals is whether the learned Commissioner of Income-tax (Appeals) was justified in confirming the demand raised under section 201(1) and interest under section 201(1A) of the Act by treating these assessees as "assessees-in-default" for non-deduction of tax at source on the interest paid to the depositors. 4. The facts relating to the said issue are stated in brief. Both these assessees are branches of Ernakulam District Co-op Bank Ltd. The first one is "Mattancherry" branch and the other one is "Kalamasery" branch. The Department carried out a survey operation under section 133A of the Act in the main branch of the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly rejected contentions of the assessee. In the hands of both assessees, the Income-tax Officer held that they have failed to deduct tax at source from the payment of interest as per the provisions of section 194A of the Act. In the case of Mattanchery branch, the Income-tax Officer also observed that the assessee has also failed to remit TDS amount. Hence, the Income-tax Officer treated both the assessees as assessees-in-default in terms of section 201(1) of the Act and accordingly, raised the demand under section 201(1) of the Act and also charged interest under section 201(1A) of the Act. 5. Aggrieved, these assessees filed the appeals before the learned Commissioner of Income-tax (Appeals). However, the first appellate authority confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said forms. Accordingly, he submitted that the assessee did not deduct tax at source as per the mandate of the provisions of section 197A(1A) of the Act in the case of persons who furnished the prescribed forms. In this regard, the learned authorised representative placed reliance on the decision of the hon'ble Gujarat High Court in the case of CIT v. Valibhai Khanbhai Mankad (Tax Appeal No. 1182 of 2011 dated October 1, 2012) [2013] 1 ITR-OL 405 (Guj) wherein the hon'ble Gujarat High Court had observed as under (page 409) : "7. The exclusion provided in sub-section (3) of section 194C from the liability to deduct tax at source under sub-section (2) would thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly he contended that the Income- tax Officer (TDS) was not right in law in considering the violation of rule 29C(3) for treating these assessees as "assessees-in-default" in terms of section 201(1) of the Act. 8. On the contrary, the learned Departmental representative submitted that the assessee has contravened the provisions of rule 29C(3) of the Income-tax Rules by not furnishing the Form 15G/15H within the due time prescribed in the Rule. In view of such violation, the Income-tax Officer did not recognise the claim of the receipt of Form 15G/15H of the Act. The learned Departmental representative also pointed out that most of the Forms submitted by the depositors were found to be defective by the Assessing Officer, since all the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax did make any comment about the deficiency, if any, found in the declarations filed in Form 15G/15H. Another question that arises at this stage is-whether the Income-tax Officer is authorised to scrutinize documents that were filed before the Commissioner of Income-tax and make comments thereon, that too without the authority obtained from the Commissioner of Income-tax ?. Further, as submitted by learned authorised representative the Income-tax Officer has made vague observations about the defects without pointing out the actual defects. According to the learned authorised representative, the Income-tax Officer should have given an opportunity to the assessee to rectify the defects, if any, in the interest of natural justice, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsible for paying any income of the nature referred to in section 193 or sec tion 194A or section 194K, as the case may be, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil." A plain reading of section 197A(1A) shows that the said provision overrides the provisions of section 194A if the modalities prescribed in section 197A(1A) are complied with. The section further states that the person responsible for paying any income of the nature referred to in section 194 or section 194A or section 194K shall not deduct tax under any of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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