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TMI Blog2023 (9) TMI 745X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to deduct tax at source on furnishing the necessary declaration by customers where either the interest income does not exceed the basic exemption limit or the depositor is more than the prescribed age and he furnishes the declaration that tax on his total income including interest from the bank will be Nil. In order to treat a person as assessee in default, firstly, there should be an obligation to deduct tax at source and despite such obligation, the person fails to deduct tax at source or pay after such deduction and further the payee has also not paid tax directly. The question whether the assessee is in default in terms of section 201(1) needs to be determined in the light of Explanation to section 191. Howbeit, the cases covered u/s 197A(1A) [i.e. the eligible person furnishing declaration in form No. 15G that his tax liability on total income, including the interest, will be Nil] but not hit by section 197A(1B) [i.e. interest income other than interest on securities as referred to in section 194A does not exceed the basic exemption limit], will at the outset be excluded from consideration as not entailing any obligation to deduct tax at source. Similarly, the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n excess of the basic exemption limit, without deduction of tax at source on receiving Form Nos.15G/15H. On perusal of such information, the AO noted four cases, as tabulated on page 4 of his order, where interest paid was more than the basic exemption limit but no deduction of tax at source was made on receiving Form Nos.15G/15H. After considering the reply and getting partially satisfied, the AO held the assessee to be in default u/s. 201 to the tune of Rs. 1,90,801/-. 4. The assessee filed appeal before the ld. CIT(A) which was delayed by 633 days. After granting credit in respect of Corona period, the ld. CIT(A) observed that still there was delay of 324 days. The assessee tendered explanation in support of the delay, as has been recorded in the impugned order as well. Not satisfied, he did not condone the delay and dismissed the appeal on this score. Without prejudice, he also discussed the issue on merits rejecting the assessee s contention that the order passed by the AO u/s. 201(1)/201(1A) was time barred and also that the AO was not right in treating the assessee in default. Aggrieved thereby, the assessee is in appeal before the Tribunal. 5. We have heard the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the financial year in which the last statement was filed expires on 31.3.2015. By that time, the substituted sub-section (3) has already come into place. Hence the case gets covered under the substituted provision. 8. The substituted sub-section (3) of section 201 w.e.f. 01-10-2014 has done away with the two classifications in the earlier provision, viz., where the statement is filed by the person responsible and where no such statement is filed. The time limit under the substituted provision is seven years from the end of the financial year in which the payment is made or credit for the income is allowed. The order u/s 201(1)/(1A) came to be passed in this case on 27.3.2019, which is within a period of seven years from the end of the financial year in which the interest income was paid/credited to the customers accounts. Such an order is clearly within the limitation period. Thus, the ground of limitation raised by the assessee does not stand. The same is, ergo, dismissed. 9. Now we take up the issue on merits about the liability of the assessee to deduct tax at source. The ld. AR contended that the assessee received Form Nos.15G/15H from the customers and as such it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns as it is. Another thing which follows from this Explanation is that where the assessee (i.e. the payee) has paid tax directly, the person responsible gets discharged from the obligation in respect of such tax u/s 201(1) . It has no application qua the interest payable in terms of section 201(1A) of the Act. 12. Adverting to the facts of the instant case, it is found as an admitted position that the assessee did not deduct tax source on the interest payment made to its customers in respect of which it has been treated as an assessee in default u/s. 201(1). However, there is no material to show that the recipient also paid such tax directly. The contention of the ld. AR that on receipt of Form No.15G/15H, its obligation is discharged and the assessee cannot be treated as an assessee in default u/s. 201(1), in our view, does not pass the scrutiny of the mandate of Explanation to section 191, which clearly provides that the recipient has also failed to pay such tax directly . The requirement is to pay the tax directly and not simply furnish Form No.15G/15H. The bank will be discharged from the obligation of deducting tax at source when Form No. 15G/15H is filed only to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank needs to deduct tax at source notwithstanding the furnishing of declaration in Form No. 15G and the bank will be treated as assessee in default u/s 201(1), where not only it failed to deduct tax at source but the customer also failed to pay such tax directly. Reverting to the order u/s. 201(1)/201(1A), it is seen that the AO took up only those cases for treating the assessee in default where the customers furnished Form No. 15G and the amount of interest income exceeded the basic exemption limit. 14. Further, sub-section (1C) of section 197A provides that notwithstanding anything contained, inter alia, in section 194A, no deduction of tax shall be made in the case of any individual resident in India who is of the age of 60 years or more at any time during the previous year and he furnishes a declaration (in Form No. 15H) to the person responsible that tax on his estimated total income, will be Nil. The age of 60 years has been substituted for the age of 65 years by the Finance Act, 2012 w.e.f. 01-07-2012. 15. The net effect of the Explanation to section 191, section 194A read with section 197A and 201 is that there will be no obligation to deduct tax at source on furn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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