TMI Blog2011 (5) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... since he had the declarations of the payees in the prescribed form before him at the time when the interest was paid, he was not liable to deduct tax therefrom under section 194A - If he was not liable to deduct tax, section 40(a)(ia) is not attracted - There is no other ground taken by the Income-tax authorities to disallow the interest - Therefore accept the assessee's appeal and delete the disallowance of interest - IT APPEAL NO. 3317 (MUM.) OF 2010 - - - Dated:- 20-5-2011 - R.V. EASWAR, R.K. PANDA, JJ. Satish R. Mody for the Appellant. Vijay Shankar for the Respondent. ORDER R.V. Easwar, President. This is an appeal by the assessee and it relates to the assessment year 2006-07. The assessee is an individual c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed declarations in form No. 15H/15G, as the case may be, before the date on which tax ought to have been deducted and therefore the assessee was not liable to deduct the tax. It was therefore pleaded that section 40(a)(ia) was not applicable to the assessee's case since it would apply only if the assessee was required to deduct the tax, but had not deducted the same. The assessee also submitted that by oversight he did not submit the copies of the declarations in form No. 15G/15H to the office of the CIT(TDS) and that these forms were recently submitted to him. 3. The Assessing Officer did not accept the assessee's explanation. He noted that the declarations submitted by the payees were submitted with the CIT (TDS) only on 15-10-2008 afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed by section 272A(2)(f) of the Act in a sum of one hundred rupees for every day during which the default continues and no such penalty proceedings having been initiated by the income-tax authorities, the delay in filing the declarations with the office of the CIT(TDS) should be taken to have been condoned and in these circumstances the assessee was under no obligation to deduct tax under section 194A and therefore the provisions of section 40(a)(ia) were not applicable. The argument of the revenue however is that it cannot be verified as to whether the declarations in the prescribed form were actually furnished by the payees to the assessee at the appropriate time unless the assessee files them with the office of the CIT(TDS) within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seventh day of the month next following the month in which the declaration was furnished to him. If the person responsible for paying the interest (i.e., the assessee) does not comply with sub-section (2) of section 197A, he is liable to pay penalty of Rs. 100 for every day during which the failure continues. Such penalty can be imposed only by the Commissioner or Chief Commissioner of Income-tax as stated in clause (b) of sub-section (3) of section 272A and sub-section (4) requires that an opportunity shall be given to the assessee before any penalty order is passed. 7. In the present case the claim of the assessee is that at the time of paying the interest to the 34 persons mentioned in the assessment order, he had before him the appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppropriate 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 para 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 No. 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 as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limit specified in sub-section (2) of section 197A, that is a distinct omission or default for which a penalty is prescribed. Section 273B provides that no penalty shall be imposed under any of the clauses of sub-section (2) of section 272A for the delay, if the assessee proves that there was reasonable cause for the same. We have already seen that under sub-section (4) of section 272A, no penalty can be imposed unless the assessee is given an opportunity of being heard. All these provisions indicate that the failure on the part of the assessee, who is the payer of the interest, to file the declarations given to him by the payees of the interest, within the time-limit specified in sub-section (2) to section 197A is distinct and separate and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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