TMI Blog2017 (4) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... . [2013 (7) TMI 622 - ALLAHABAD HIGH COURT] - Decided in favour of assessee - I T.A. No. 2929/Mds/2016 - - - Dated:- 24-3-2017 - Shri Chandra Poojari, Accountant Member And Shri Duvvuru RL Reddy, Judicial Member Appellant by : Shri Shiva Srinivas, JCIT Respondent by : Shri R. Viswanathan, C.A. ORDER Per Duvvuru Rl Reddy, Judicial Member This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 3, Madurai dated 03.08.2016 relevant to the assessment year 2012-13. The only effective ground raised in the appeal of the Revenue is that the ld. CIT(A) has erred in deleting the disallowance made under section 40(a)(ia) of the Income Tax Act, 1961 [ Act in short]. 2. The assessee is a mutual fund company functioning in the line of Nidhi Company under section 620A of the Companies Act. It has filed the return of income on 30.09.2012 admitting total income of Rs. .50,88,974/-, which was accepted under section 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny and notice under section 143(2) of the Act was issued on 13.08.2013. After examining the details filed by the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer and the same was not disputed by the Assessing Officer. Thus, there was no dispute that the assessee has obtained Form 15G from the persons to whom interest was paid/credited. Further, the ld. CIT(A) has observed that the Assessing Officer did not doubted the fact that the assessee obtained Form 15G before crediting/paying interest to the depositors. Since the Assessing Officer made the disallowance only on the ground that Form 15G/15H were not submitted to the ld. Commissioner in time, the ld. CIT(A) was of the opinion that only penalty proceedings can be initiated under section 272A(2)(f) of the Act and no disallowance can be made under section 40(a)(ia) of the Act as has been held by the Hyderabad Benches of the Tribunal in the case of Malineni Babulu (HUF) v. ITO vide order dated 07.08.2015. By following the above decision, the ld. CIT(A) deleted the disallowance of Rs. .69,99,239/- made under section 40(a)(ia) of the Act. 4.2 We have perused the order in the case of Malineni Babulu (HUF) v. ITO in I.T.A. No.1326/Hyd/2014 CO No. 57/Hyd/2014 vide order dated 07.08.2015, wherein, the Hyderabad Benches of the Tribunal has observed and held as under: 11. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of paying the interest to 34 persons mentioned in the assessment order, he had before him the appropriate declarations in the prescribed form from the payees stating that no tax was payable by them in respect of their 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 section 40(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 wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) 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 subsection (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may result in invoking penalty provisions under section 272A(2)(f), for which separate provision/procedure was prescribed under the Act. However, once Form 15G/ Form 15H was received by the person responsible for deducting tax, 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 submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by the payee of the interest, within the time limit specified in sub-section (2) to 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 respectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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