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2015 (8) TMI 705 - ITAT HYDERABAD

2015 (8) TMI 705 - ITAT HYDERABAD - TMI - Revision u/s 263 - Revenue filled cross appeals against orders of revision - Held that:- The provisions of the Act does not provide for filing of Cross Objection against the order passed U/s. 263. It is trite law that no appeal is maintainable unless the statute expressly provides for the same. Keeping in view of this settled legal position, we hold that the Cross Objections filed by Revenue are not at all maintainable, hence dismissed as such. - Decided .....

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le to the present case. - Decided in favour of assessee.

Disallowance u/s 40(a)(ia) - Non deduction of TDS on interest payment - Held that:- 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 pro .....

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rders 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, whereas, the appeal was filed before the Honourable Tribunal on 14.07.2014. 2. The appellant has failed to pay the requisite fee as per subsection (6) of Section 253 of the Income Tax .....

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of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) or the Assessing Officer in pursuance of the directions of the Dispute Resolution Panel has been preferred under sub-section (1) or sub-section (2) or sub-section (2A) by the other party, may, notwithstanding that he may not have appealed against such order or any part thereof; within thirty days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, against a .....

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U/s. 263. It is trite law that no appeal is maintainable unless the statute expressly provides for the same. Keeping in view of this settled legal position, we hold that the Cross Objections filed by Revenue are not at all maintainable, hence dismissed as such. 4. Now, coming to the appeal filed by assessee, the assessee raised the following Grounds of Appeal challenging the order passed U/s. 263 of the Act: 1. The order of the learned CIT passed U/s. 263 of the I.T. Act is erroneous both on fac .....

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rned 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 t .....

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ged in the business of fertilizers & pesticides in the name and style of Sri Srinivasa Fertilizers . For the assessment year 2009-10, the HUF filed the return of income on 30.9.2009 admitting an income of ₹ 2,35,000/-. The Income-Tax Officer, Ward-I, Gudur originally completed the assessment U/s. 143(3) on 21.12.2011 determining the income at ₹ 4,85,000/-. Later, the Commissioner of Income-Tax, Gutur invoking the provisions of Sec.263 of the I.T.Act required the appellant to stat .....

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. There is a delay of 24 days in filing the appeal. In this regard the petitioner humbly submits that when the order of the CIT was received he was under the bonafide belief that no appeal need be filed against such order and the appeal lies against the order to be passed by the Assessing Officer in consequence to the order U/s. 263 of the I.T.Act. In the mean time, the Assessing Officer passed an order U/s. 143(3) r.w.s. 263 of the I.T.Act. At this stage the petitioner approached an Advocate fo .....

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nal. The petitioner, therefore, prays the Hon ble Income-Tax Appellate Tribunal to kindly condone the delay and pass appropriate orders in the matter . 6. From the above petition, it is clear that delay had occurred on account of bonafide belief that 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 .....

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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. In response to show cause notice, the appellant had submit .....

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U/s. 263 may be dropped. The Ld.CIT brushing aside the explanation offered by the appellant had passed an order dt. 25-02-2014 U/s. 263 holding that the assessment order was erroneous and prejudicial the interest of Revenue in as much as the above issues were not considered and added by the AO in the assessment order. Being aggrieved, the appellant had come up with the present appeal before us. 8. The appellant had raised 8 Grounds of Appeal. Ground No. 1 & 8 are general in nature, does not .....

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the very legality of the order passed by CIT U/s. 263 of the Act. We shall now take up the Grounds of Appeal Nos. 2 to 5. 9. It was submitted on behalf of the appellant that the provisions of Section 40A(3) cannot be made applicable to the present case in as much as no cash payments were made to M/s. Coramandal Fertilizers Ltd. All the payments made to M/s. Coramandal Fertilizers Ltd., were by way of crossed Demand Drafts and he drew our attention to Page No. 76 of the Paper Book wherein the co .....

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0. 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 ther .....

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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 ₹ 98,193/- under the provisions of Section 40(a)(ia) of the Act. During the year, the appellant had made interest payment of ₹ 42,498/- and .....

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support of dispatch of Form 15H by post. The Ld. Counsel submitted that though no proof in support of dispatch of Form 15H to the CIT could be filed, copy of Form 15H was filed before the AO. Hence, he submitted that the provisions of Section 40(a)(ia) cannot be made applicable to the present case. On the other hand, Ld. CIT-DR relied on the order of CIT. 13. We have heard the rival submissions and perused the material on record. Neither the AO nor the CIT disputed the fact of filing copy of Fo .....

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of Vijaya Bank Vs. ITO [2014] [49 Taxmann.com 533 (Delhi-Trib)], which is re-produced below: 4. We have heard rival arguments of both parties and carefully perused the record. The learned authorised representative submitted that the Commissioner 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 ded .....

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at 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 of Gokuldas Virjibhai& Co. v. ITO [2012] 139 ITD 284/27 taxmann. .....

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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 whom payment of interest was made and no tax was deducted at source, at the same time it was the duty of the as .....

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on by the assesseeappellant, at the outset, we observe that undisputedly, the assessee-bank obtainedForms 15G and 15H from the customers to whom the payment of interest was made and no tax was deducted at source. Further, we also observe that these forms were not submitted to the jurisdictional Commissioner of Income-tax, Faridabad, within the prescribed time as per provisions of the Act. In the case of Vipin P. Mehta (supra), the co-ordinate Bench of the Income-tax Appellate Tribunal, Mumbai, .....

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t 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 .....

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ce, 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 .....

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rs really and in truth have no taxable income on which tax is payable. That would be putting an impossible burden on the assessee. That apart subsection (1A) of section 197A 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 from the interest. The sub-section uses the word shall which leaves no choice to the assessee in the matter. In the case of payment of leave travel concession .....

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n 192, but which provides in sub-section (1A) that if the payee of the interest has filed the prescribed form to the effect that he is not liable to pay any tax in computing his total income, the payer shall not deduct any tax. The sub-section does not impose any obligation on the payer to find out the truth of the declarations filed by the payee. Even if the assessee has delayed the filing of the declarations with the office of the Commissioner or the Chief Commissioner of Income-tax (TDS) with .....

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ovisions 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 p .....

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n 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 .....

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er Chapter-XVIIB and such tax has not been deducted or, after deduction has not been paid. In this case, the assessee was to deduct tax under provisions of section 194A. Section 194A is further qualified by the provisions of section 197A(1A) wherein if a person furnishes a declaration in writing in prescribed Form and verified in the prescribed manner to the effect that tax on his estimated total income is to be included in computing his total income will be nil, there is no need to deduct tax. .....

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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 applicab .....

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ax 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 .....

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ection, 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 the payee. Under section 197A(1A) of the Act if the payee of the interest has filed the prescribed form to the effect that he is not liable to pay any tax in computing the total income, then the payee shall not deduct any tax at source from the interest. This provision does not impose any obligation on the payer to find out the truth of the declarat .....

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d under any of the clauses of sub-section (2) of section 272A for the delay, if the assessee proves that there was a reasonable cause for the delay. We further observe that as per the provisions of sub-section (4) of section 272A of the Act, no penalty can be imposed unless the assessee is given an opportunity of being heard. The total effect of all these provisions indicate that there is a failure on the part of the assessee who is the payer of the interest, to file a declaration given to him b .....

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