TMI Blog2015 (8) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... - Neither the AO nor the CIT disputed the fact of filing copy of Form 15H before the AO. No doubt, it is fact that the appellant failed to produce proof in support of dispatch of Form 15H to the CIT. In our considered opinion, this by itself does not entail any addition. It is only technical breach of law and the act provides for separate penal provisions for such default. Therefore, no disallowance can be made and to the provisions of Section 40(a)(ia) of the Act. See Vijaya Bank Vs. ITO [2014 (3) TMI 539 - ITAT DELHI] - Decided in favour of assessee. - I.T.A. No. 1326/HYD/2014, C.O. No. 57/HYD/2014 - - - Dated:- 7-8-2015 - SMT. P. MADHAVI DEVI AND SHRI INTURI RAMA RAO, JJ. For The Assessee : Shri S. Rama Rao, AR For The Revenue : Shri D. Srinivas, DR PER INTURI RAMA RAO, A.M. : These cross-appeals filed by assessee and Revenue against the orders of the Ld. Commissioner of Income Tax, Guntur dated 25-02-2014 passed U/s. 263 of the Income Tax Act [Act]. Revenue filed Cross Objections with the following Grounds of Appeal: 1. The appeal is barred by limitation in view of the fact that the date of communication of the order appealed against is 21.04.2014, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned CIT ought to have seen that there is no error in the assessment which is prejudicial to revenue and, therefore, the provisions U/s. 263 would not apply. 3. The learned CIT erred in holding that the provisions U/s. 40A(3) or 40(a)(ia) would apply to certain payments made by the appellant herein. 4. The learned CIT erred in holding that the provisions U/s. 40A(3) would apply to the payments made to Coromandal Fertilizers Ltd., and further erred in holding that an amount of ₹ 3,63,720/- is liable for such disallowance. 5. The learned CIT erred in holding that the provisions U/s. 40A(3) would apply to the payments made to Ravindra Agro Service Centre, Gudur and further erred in holding that an amount of ₹ 5,54,000/- is liable for such disallowance. 6. The learned CIT erred in observing that interest of ₹ 98,193/-paid to Sri M. Babulu and Smt. M. Padmajais to be disallowed U/s. 40a(ia) of the I.T.Act. 7. The learned CIT erred in directing the Assessing Officer to modify the assessment by making disallowance U/s. 40A(3) and 40a(ia) of the I.T.Act. 8. Any other grounds that may be urged at the time of hearing . 5. There is a delay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at appeal was not necessary and the appellant does not gain anything out of the delay and the Ld. CIT-DR had expressed no objection for condonation of delay. In the circumstances, keeping in view the interest of justice, we condone the delay of 24 days in filing this present appeal. 7. Now, coming to the issue of merits of the appeal, the brief facts leading the present appeal are as follows: 7.1 The appellant is a HUF. The return of income for the AY. 2009-10 was filed on 30-09-2009 declaring net income of ₹ 2,35,000/-. As against this return of income, assessment was completed U/s. 143(3) vide order dt. 21-12-2011 at a total income of ₹ 4,85,000/- after making addition of ₹ 2,50,000/- on estimate basis. While matter stood thus, the Ld.CIT, Guntur had issued a show cause notice dt. 20-01-2014 U/s. 263 of the Act requiring the appellant to show cause as to why the assessment order cannot be revised to make additions U/s. 40A(3) in respect of payment made to M/s. Coramandal Fertilizers Ltd., and M/s. Ravindra Agro Service Centre, Gudur and addition of interest expenditure of ₹ 98,193/- under the provisions of Section 40(a)(ia) for non-deduction of TDS. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. 29th November, 2008 - ₹ 25,000/- iii. 4th December, 2008 - ₹ 1,87,260/-. All these amounts were debited to the appellant s bank account, the banker collected the applicable service charges for issuing the Demand Drafts. 10. Now, coming to the payments made to M/s. Ravindra Agro Service Centre, he drew our attention to page No. 67 and as well as page No. 53 of the Paper Book, wherein the ledger account copy of M/s. Ravindra Agro Service Centre, in the appellant s books and as well as the ledger account copy of the appellant in the books of M/s. Ravindra Agro Service Centre, at page No. 53 are placed. From the above ledger account, it is clear that on any day no payment was made exceeding ₹ 20,000/- and therefore, he submitted that the provisions of Section 40A(3) cannot be applied. On the other hand, Ld.CIT-DR had relied on the order passed U/s. 263. 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 Fertil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income-tax (Appeals) grossly erred in upholding the order of the Assessing Officer because the Commissioner of Income-tax (Appeals) failed to appreciate the fact that the order passed by the Assessing Officer was time barred and there was no short deduction of tax. Learned counsel of the assessee further submitted that the Commissioner of Income-tax (Appeals) was not justified in not appreciating the important fact that the branch had obtained Forms 15H and 15G in all the cases and non-submission of the same was only a technical breach and as such, the assessee cannot be construed as an assessee in default. The learned authorised representative further pointed out that the assessee cannot be held as the assessee in default without proving that the recipient of the income has not paid the tax. 5. During the arguments, the authorised representative of the assessee placed reliance on various decisions of the co-ordinate Benches of the Tribunal 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir total income and therefore tax need not be deducted from interest under section 194A, and in the light of these declarations he had no option but to make the payment of interest without any tax deduction. If the claim is true then the contention must be accepted because under sub-section (1A) of section 197A, if such a declaration is filed by the payee of interest, no deduction of tax shall be made by the assessee. The Revenue authorities have doubted the assessee s version because according to them it is only when the Assessing Officer proposed the disallowance of the interest by invoking section40(a)(ia) in the course of the assessment proceedings that the assessee filed the declarations claimed to have been submitted to him by the payees of the interest, in the office of the Commissioner of Income-tax (TDS) as required by sub-section (2) of section 197A. Apart from this inference, there is no other evidence in their possession to hold that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e office of the Commissioner or the Chief Commissioner of Income-tax (TDS) within the time 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 merely because there is a failure on the part of the assessee to submit the declarations to the Income-tax Department 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax, there is no liability to deduct tax. Once there is no liability to deduct tax, it cannot be considered that tax is deductible at source under Chapter XVII-B as prescribed under section 40(a)(ia). The provisions of section 40(a)(ia) can only be invoked in a case where tax is deductible at source and such tax has not been deducted or after deduction has not been paid. No such default occurred in this case. Accordingly, we are of the opinion that the provisions of section 40(a)(ia) are not applicable to the facts of the case. Both the Assessing Officer and the Commissioner of Income-tax (Appeals) erred in considering that non-filing of form 15H invites disallowance under section 40(a)(ia). (Emphasis supplied) 10. During the argument, the learned authorised representative submitted a copy of the letter submitted before the Income-tax Officer (TDS) dated February 16, 2010, wherein it has been submitted that all related Form 15G/15H have already been 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 creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 197A of the Act which is distinct and separate and merely because there was a failure on the part of the assessee-bank to submit these declaration to the jurisdictional Commissioner of Income-tax within time, it cannot be held that the assessee did not have declaration with him at the time when the assessee-bank paid interest to the payees. In this situation, that would be a separate issue which would be a separate matter and would require separate proof and evidence to show that even when the assessee paid interest, the assessee did not have a declaration from the payees with him and, therefore, he ought to have deducted the tax from the payment of interest which is not a case of the Department in the present appeal. 12. From the discussion made hereinabove, we accept the contentions of the assessee that since the assessee-bank had the declaration of the payees in the prescribed form with it at the time when the interest was paid to the respective 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 assesseebank was not liable to deduct tax at the time of payment of int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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