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TMI Blog2017 (1) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... inform you that we have taken form 15G from party and the same has been deposited with the department, but the fact is that on form 15G the date was mention is "07/04/2010". Due to this reason the assessing office & CIT(A) is not considering my appeal. We have also shown the ITR of the said arties whom we have given interest and the said parties showing the interest as their income. I request you to kindly accept my appeal and allowed the said expenditure from my business income." 4. The Assessee is an individual. He derives income from business of trading in plastic in the name of M/S. Ocean International & Krishna Realtors. In the course of assessment proceedings, the AO noticed that the Assessee had paid a sum of Rs. 4,87,418/- as interest on unsecured loan. According to the AO, the Assessee did not deduct tax at source as required by the provisions of Sec.194A of the income Tax Act, 1961 (Act) and therefore the said sum which was claimed as a deduction while computing income from business of the Assessee had to be disallowed as required by the provisions of Sec.40(a)(ia) of the Act. The plea of the Assessee for non deduction of tax at source was that the persons to whom intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the claim of the Assessee only for the reason that the persons furnishing Form No.15G have given the same to the Assessee on 7.4.2010 after the close of the financial year ending as on 31.3.2010. According to the AO in the action point with reference to column No.4 of Form No.15G, it has been mentioned that the declaration must be made by the payee at the time of or before receiving the amount either directly or by credit to his account and not after the amount is received or credited. Since Form No.15G was obtained by the Assessee on or after 31.3.2010, the AO held that the Assessee cannot rely on form No.15G for non deduction of tax at source. Therefore the question before the CIT(A) was only limited as to whether Form No.15G can be given after the close of the relevant financial year. 8. The relevant provisions of Sec.197A reads thus "(1A) Notwithstanding anything contained in section 193 or section 194A or section 194K, no deduction of tax shall be made under any of the said sections in the case of a person (not being a company or a firm), if such person furnishes to the person responsible for paying any income of the nature referred to in section 193 or section 194A or sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel's vehement reliance is on Hon'ble Allahabad High Court's judgment in the case of Jagran Prakashan Ltd. v. Dy.CIT (TDS) [2012] 21 taxmann.com 489 wherein Their Lordships have, inter alia, observed as follows: .......... it is clear that deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly. In the present case, the Income tax authorities had not adverted to the Explanation to Section 191 nor had applied their mind as to whether the assessee has also failed to pay such tax directly. Thus, to declare a deductor, who failed to deduct the tax at source as an assessee in default, condition precedent is that assessee has also failed to pay tax directly. The fact that assessee has failed to pay tax directly is thus, foundational and jurisdictional fact and only after finding that assessee has failed to pay tax directly, deductor can be deemed to be an assessee in default in respect of such tax ..... 7. It is thus argued that the onus is on the revenue to demonstrate that the taxes have not been recovered from the person who had the primarily liability to pay tax, and it is only when the primar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means. The provisions regarding interest in delay in depositing the taxes are set out in Section 201 (1A). These provisions provide that for any delay in recovery of such taxes is to be compensated by the levy of interest. As far as recovery provisions are concerned, . these provisions are set out in Section 201 (1) which seeks to make good any loss to revenue on account of lapse by the assessee tax deductor. However, the question of making good the loss of revenue arises only when there is indeed a loss of revenue and the loss of revenue can be there only when recipient of income has not paid tax. Therefore, recovery provisions under section 201(1) can be invoked only when loss to revenue is established, and that can only be established when it is demonstrated that the recipient of income has not paid due taxes thereon. In the absence of the statutory powers to requisition any information from the recipient of income, the assessee is indeed not always able to obtain the same. The provisions to make good the shortfall in collection of taxes may thus end up being invoked even when there is no shortfall in fact. On the other hand, once assessee furnishes the requisite basic informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fairly conceded the position and urged the bench to set aside the matter to the file of the AO 5. We have heard rival submissions and gone through facts and circumstances of the case. We are inclined to set aside the issue to the file of the AO and accordingly, we direct the AO to verify whether the recipients have included the income in their respective returns and also paid taxes on the same. The assessee will provide the details of recipients i.e. their assessment particulars etc. to the AO so that the AO can verify. In case the recipient parties are not cooperating in providing details, the AO can call for the information u/s. 133(6) of the Act for verification of the same. Accordingly, this issue is remitted back to the file of AO to decide in terms of the above directions. This issue of assessee's appeal is allowed for statistical purposes." 12. Therefore the disallowance u/s.40(a)(ia) of the Act to the extent sustained by the CIT(A) should be set aside and remanded to the AO to verify whether the recipients have included the receipts paid by the assessee in their respective returns of income and also paid taxes on the same. To the extent the recipients from the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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