TMI Blog2014 (11) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... nue. Deletion of penalty u/s 271C – Demand already set aside, so penalty cannot be levied - Held that:- Before the AO u/s 201(1) & 201(1A) of the Act, the assessee had produced declaration in form 15G in respect of the payments/credits where tax has not been deducted at source – the AO has not accepted the declaration by observing that at the time of survey, only some of the declarations were found and others were obtained by the assessee only after the date of payment/credit of the interest - Even out of the declarations found at the time of survey, the AO refused to accept many by pointing out certain defects and deficiencies - the demands have been deleted, the penalty also cannot survive - once the depositors have furnished the declaration in prescribed manner requesting the deductor not to deduct tax at source, the deductor is under a statutory obligation not to deduct tax – thus, the order of the CIT(A) is upheld – Decided against revenue. - IT APPEAL NOS. 515 TO 517 (VIZAG.) OF 2013, CO NOS. 6 TO 8 (VIZAG.) OF 2014 - - - Dated:- 7-7-2014 - J. SUDHAKAR REDDY AND SAKTIJIT DEY, JJ. For The Appellant : D. Manoj Kumar For The Respondent : G.V.N. Hari ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that though they have already obtained the declarations in form 15G from the depositors but these forms could not be produced at the time of survey due to insufficient time. The assessing officer however was not convinced with the explanation of the assessee. Accordingly, he demanded tax u/s 201(1) and interest u/s 201(1A) of the Act amounting to ₹ 2,47,645/- and ₹ 49,197/- respectively towards non-deduction of tax and in absence of declaration in form 15G. Further, on verifying the declarations in form 15G found at the time of survey, the assessing officer noticed various defects and deficiencies as certain columns therein were not properly filled up. Accordingly, he rejected those declarations in form 15G and demanded tax and interest u/s 201(1) and 201(1A) of the Act to the tune of ₹ 14,751/- and ₹ 2,803/- respectively. Further, the assessing officer noticed that though in many cases the assessee has claimed payment of interest on term deposit to be below ₹ 10,000/-, however, on verification of details of interest paid, it was found that in respect of some of the depositors, the bank has not deducted tax even though the interest paid/credited excee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illed up having some blanks, which the appellant has filled up and produced before the AO, which the AO has refused to take cognizance and the third category is that where interest paid was more than ₹ 10,000 on which TDS provisions were applicable, but no Forms No.15G/15H were found during the course of action under section 133A, but subsequently produced before the AO, which the AO refused to take cognizance on the ground that relevant forms were subsequently obtained. The action of the AO appears to be not correct for the following reasons supported by case laws. It may be noted here, say for a while that the Forms No.15G/15H were taken belatedly, it cannot be said that the forms are invalid and demand u/s 201 and 201(1A) cannot be raised. In this context, it is relevant to note that the Hon'ble Income Tax Tribunal Jodhpur Bench in the case of Income Tax Officer v. Pearl Organic Coating, [2004] 84 TTJ (Jd) 802 held that provisions of section 201 and 201(1A) were not attracted where the declarations in form 15G/H are received after the date of credit of interest to the account of the payee. Similarly, if the AO finds any deficiencies in filling declarations, it is as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility u/s 201(1) 201(1A) of the Act. In support of such contention, he relied upon a decision of the ITAT Agra Bench in case of Allahabad Bank v. ITO in ITA No.448 to 454/Agra/2011 dated 20.6.2014. 7. We have heard the submissions of the parties, perused the orders of the revenue authorities as well as other materials on record. It is the claim of the department that the assessee has not been able to submit declarations in forms 15G in all the cases at the time of survey. Whereas, the assessee has asserted that during the proceeding before the assessing officer, declarations of the depositors in prescribed manner was filed in cases where tax has not been deducted. On a perusal of facts and materials on record, it is clear that even assuming that at the time of survey, all the declarations could not be brought to the notice of the department for whatever may be the reasons, but fact remains that during the proceeding before the assessing officer, the assessee has furnished declarations in the prescribed format in respect of interest payment/credit made to depositors wherein tax was not deducted at source. The assessing officer has rejected the declaration forms by assuming that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years 2009-10 2010-11 raising demands of ₹ 4,05,146/- and ₹ 1,45,897/-, the assessing officer initiated proceeding for imposition of penalty u/s 271C of the Act by issuing a show cause notice to the assessee. As noted by the assessing officer in the impugned order, since the assessee failed to appear and explain, though opportunity was granted to him, he proceeded to pass the order for both the assessment years by imposing penalty u/s 271C of the Act of an amount of ₹ 4,05,146/- and ₹ 1,45,897/- respectively. 13. Being aggrieved of the penalty order so passed, the assessee preferred appeal before the CIT(A). The CIT(A) after appreciating the submissions of the assessee and also considering the fact that while deciding assessee's appeal against the order passed u/s 201(1)/201(1A) of the Act for assessment year 2009-10, he has deleted the demand raised, allowed the appeals of the assessee by holding that penalty u/s 271C of the Act is not attracted to the case of the assessee. The finding of the Ld. CIT(A) in this regard is as under: I have seen the submissions made by the appellant gone through the penalty orders under section 271C be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain defects and deficiencies. However, while considering department's appeal in ITA No.515/Vizag/2013, we have upheld the order of the CIT(A) in deleting the demand and observed that the declarations obtained subsequent to the date of interest payment/credit cannot be rejected. Considering the fact that the demands have been deleted, the penalty also cannot survive. Therefore, we do not find any justification to interfere with the order of the CIT(A) in deleting the penalty imposed. It will be pertinent to mention here that once the depositors have furnished the declaration in prescribed manner requesting the deductor not to deduct tax at source, the deductor is under a statutory obligation not to deduct tax. Hence, in the aforesaid circumstances, the deductor cannot be penalized for not deducting tax at source. 15. In the result, both the appeals of the department are dismissed. CO Nos.7 8/Vizag/2014: 16. The COs are merely supporting the order of the CIT(A). Since we have upheld the order of the CIT(A) while disposing off department's appeals in ITA Nos.516/Vizag/2013 517/Vizag/2013, the COs have become infructuous. 17. In the result, appeals of the depart ..... X X X X Extracts X X X X X X X X Extracts X X X X
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