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TMI Blog2017 (4) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued on 13.08.2013. After examining the details filed by the assessee in response to the above notice, the assessment under section 143(3) of the Act was completed determining the total income of the assessee at Rs. .1,21,68,213/- after making disallowance under section 40(a)(ia) of the Act in respect of interest paid without deducting TDS. 2. The assessee carried the matter in appeal before the ld. CIT(A) against the disallowance under section 40(a)(ia) of the Act. After considering the submissions of assessee and by following the decision of the Tribunal in the case of Malineni Babulu (HUF) v. ITO vide order dated 07.08.2015, the ld. CIT(A) deleted the disallowance. 3. On being aggrieved, the Revenue is in appeal before the Tribunal. The ld. DR has submitted that the assessee has not complied with the statutory requirement by filing duplicate copy of the Form 15G/H filled up by the payee and delivered to the payer for verification in support of the client to whom the interest paid/payable before the ld. Commissioner. Therefore, the Assessing Officer has disallowed the entire interest amount under section 40(a)(ia) of the Act, which should be confirmed and the order of the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the Tribunal has observed and held as under: "11. We have heard the rival submissions and perused the material on record. A perusal of the page No. 76 as well as page Nos. 53 and 67 of the Paper Book, it clear that in the case of M/s. Coramandal Fertilizers Ltd., no cash payments were made and in the case of M/s. Ravindra Agro Service Centre, it is clear that no payments in cash exceeding Rs. 20,000/- were made. This evidence has not been rebutted by the Ld. CIT-DR. Hence, we had no option but to hold that the provisions of Section 40A(3) are not applicable to the present case. Hence, this ground of appeal filed by appellant is allowed. 12. The next ground of appeal relates to challenging the directions of Ld. CIT to make addition of Rs. 98,193/- under the provisions of Section 40(a)(ia) of the Act. During the year, the appellant had made interest payment of Rs. 42,498/- and Rs. 38,709/- to the coparcener of the appellant. It was claimed that the taxable income of the payees was below the taxable limit hence Form 15H was obtained from them and it was claimed to have been submitted to the CIT, Guntur by post, but no proof in support of the dispatch by post was furnished b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal including the decision of the Income-tax Appellate Tribunal, Mumbai Bench "F" in the case of Vipin P. Mehta v. ITO [2011] 46 SOT 71 (URO)/11 taxmann.com 342; decision of the Income-tax Appellate Tribunal, Pune Bench "A" in the case of Gokuldas Virjibhai & Co. v. ITO [2012]139 ITD 284/27 taxmann.com 26 and the decision of the Income-tax Appellate Tribunal, Mumbai Bench "A" in the case of Karwat Steel Traders v. ITO [2013] 145 ITD 370/37 taxmann.com 190 and submitted that it is an undisputed fact that the assessee had obtained Forms 15G and 15H as provided under section 197A(1A) of the Act but the assessee did not furnish the said form to the jurisdictional Commissioner of Income-tax which is merely a procedural lapse. It was also submitted on behalf of the assessee that once the assessee had obtained Form 15G from the payee assessee, then the payer appellant has no legal obligation to deduct the tax on the payment made to the payee. 6. Replying to the above, the learned Departmental representative fairly accepted that as per observations made by the Commissioner of Income-tax (Appeals) in the impugned order, the assessee obtained Forms 15G and 15H from the customers to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the declarations were not submitted by the payees of the interest to the assessee at the time when the payments were made. Without disproving the assessee's claim on the basis of other evidence, except by way of inference, it would not be fair or proper to discard the claim. The Assessing Officer has not recorded any statements from the payees of the interest to the effect that they did not file any declarations with the assessee at the appropriate time or to the effect that they filed the declarations only at the request of the assessee in September/October, 2008. In the absence of any such direct evidence, we are unable to reject the assessee's claim. The Assessing Officer has stated in paragraph 4.4 of the assessment order that he found that some of the loan creditors were having taxable income but still the assessee had submitted declarations from them in Form 15G. Unless it is proved that these forms were not in fact submitted by the loan creditors, the assessee cannot be blamed because at the time of paying the interest to the loan creditors, he has to perforce rely upon the declarations filed by the loan creditors and he was not expected to embark upon an enquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment within the time limit, it cannot be said that the assessee did not have the declarations with him at the time when he paid the interest to the payees. That would be a separate matter and separate proof and evidence is required to show that even when the assessee paid the interest, he did not have the declarations from the payees with him and therefore he ought to have deducted the tax from the payment. No such evidence or proof has been brought by the Department." [Emphasis supplied]. 8. The case of Gokuldas Virjibhai & Co. (supra) interpreted the relevant provisions of the Act and liability of the assessee in regard to Forms 15G and15H as under : "14. We have heard the parties and perused the record. In this case, there is no dispute about the fact that the assessee has obtained the Form 15G as provided under section 197A(1)(ia) of the Act, but the assessee did not furnish the said Form to the Commissioner of Income-tax, Kolhapur. In our opinion, it is only the procedural lapse. Once the assessee has obtained the Form No. 15G from the payee assessee, has no legal obligation to deduct the tax on the payment made to payee. We find no justification in order to sustaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en submitted with the office of the Income-tax Officer with a request to ignore the delay in submission of the same. In view of above, we hold that unless it is proved that Forms 15G and 15H were not in fact submitted by loan creditors, the assessee cannot be blamed because at the time of paying interest to loan creditors, the assessee payer has to per force rely upon the declarations filed by the loan creditors and the assessee was not expected to embark upon an inquiry as to whether the loan creditors really and in truth have no taxable income on which tax is payable. If such kind of duty is cast upon the assessee payer, that would be putting an impossible burden on the assessee. 11. In the present set of facts and circumstances of the case, we are of the view 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. In this sub-section, the word "shall" has been used by the Legislature which leaves no alternative to the payer in the matter but to accept declaration so filed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive customers, in this position, the assessee cannot be held to be liable to deduct tax therefrom under section 194A of the Act. We further hold that 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 the assessee in default and interest thereon. At this juncture, it is pertinent to mention that for non-filing of Forms 15G and 15H within the prescribed time, there is a provision of penalty under section 272A(2)(f) of the Act which is not a case of the Department in the present appeal. Accordingly, the order of the Assessing Officer as well as the impugned order is set aside and sole ground of the assessee in all three appeals is allowed". Applying the ratio laid down in the above case to the facts of the present case, we are of the opinion that the order passed by CIT is neither erroneous nor prejudicial to the interest of Revenue. Hence, we hereby quash the order passed by CIT, Guntur under the provisions of Section 263 of the Act. In the result, Grounds of Appeal filed by the appellant are allowed. Appeal is allowed." 4.3 The ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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