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Allahabad Bank, Ghaziabad Versus ITO (TDS/Survey) , Ghaziabad

2017 (10) TMI 526 - ITAT DELHI

Non deduct tax at source u/s 194A on the interest on “Flexi Fixed Deposit Schemes” - Proceedings u/s 201(1) and 201(1A)- Held that:- On the perusal of the order of the Assessing Officer as well as the Learned CIT(Appeals), nowhere it is borne out, how the Assessing Officer had satisfied himself as to whether the deductee/payee has failed to pay taxes directly. It is only when a finding is arrived in the case of the deductee/payee that he has failed to pay tax directly, then only deductor, i.e., .....

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er u/s 201(1) read with section 201(1A) is bad in law and same is quashed. In the result the appeal of the assessee is allowed. - In ITA No. 6052/Del/2014, In ITA No. 6044/Del/2014, In ITA No. 6049/Del/2014, In ITA No. 6050/Del/2014, In ITA No. 6053/Del/2014, In ITA No. 6047/Del/2014, In ITA No. 6045/Del/2014, In ITA No. 6046/Del/2014, In ITA No. 6054/Del/2014 - Dated:- 13-9-2017 - SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA No. 6051/Del/2014 And In ITA No. 6048/D .....

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ts, therefore, same were heard together and are being disposed off by way of this consolidated order. 2. For the sake of proper appreciation of facts and issues, the appeal for the A.Y. 2002-03 in ITA No. 6052/Del/2014 are discussed and the findings given therein will apply mutatis-mutandis in all the appeals. The grounds raised by the assessee which are common in all the years read as under:- 1) That the CIT (Appeals) ought to have condoned the delay in filing the appeal as there was sufficient .....

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1(1)/201(1A) of the Act is bad in law and consequently the demand created as a result of order dated 8th March 2011 read with order dated 21st April 2005, thereby treating the assessee in default is arbitrary and bad in law. 4) That in the absence of any action taken against the payees or in the absence of any evidence that any demand legally recoverable from payees or is outstanding against the payees, the holding of the appellant as assessee in default and then recovery of the amount determine .....

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se case proceedings u/s 201(1) and 201(1A) was initiated and order was passed on 24.3.2005 levying short charge of tax u/201(1) and interest u/s 201(1A), wherein the Assessing Officer had held that the assessee has failed to deduct tax at source u/s 194A on the interest over ₹ 5,000/- on Flexi Fixed Deposit Schemes to various persons. The details of interest paid for the three financial years and credited above ₹ 5,000/- without TDS were as under:- Sl. No. Financial Year Interest Amo .....

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ime of deposits and the Flexi Fixed Deposit Scheme is a kind of time deposit and therefore, the assessee was liable for tax u/s 201(1) read with section 194(A). 3. This mater in the original proceedings had travelled up to the stage of the Tribunal, wherein, Tribunal vide order dated 2.2.2007, at the first instance dismissed the assessee s appeal for want of COD approval. However, later on, in the Miscellaneous Application filed by the assessee the said order was recalled and in the final order .....

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t was paid during the F.Ys. 2001-02, 2002-03 and 2003-04 were providing the details like name of the payee; amount of interest paid; amount of TDS deducted; amount and date of income tax paid by the payee on such interest with the evidence; date of filing of income tax and amount interest u/s 201(1A) due on late payment of tax. In response the assessee could only furnish the details of certain payees for which the Assessing Officer had given due credit and the balance interest payment on which T .....

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. The Learned CIT (Appeals) in his order observed that there was a delay in filing of the appeal by the assessee and the assessee could not prove the reasons for such a delay and accordingly all the appeals were held to be non-maintainable. However, he further proceeded to decide the appeals on merits and thereby confirming the order of the Assessing Officer. 5. On behalf of the assessee, Branch Manager appeared before us and submitted that in the case of Allahabad Bank for other branch, exactly .....

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posits and failure to do so definitely amounts to assessee being treated as assessee in default and therefore, tax u/s 201(1) and interest u/s 201(1A) has rightly been levied. 7. We have heard both the parties and also perused the relevant materials on record. First of all, from the perusal of the impugned order, it is seen that the Learned CIT (Appeals) has held that the appeal of the assessee is not maintainable as there is a delay in filing of the appeal but at the same time he has proceeded .....

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eals) on the merits. 8. Here in this case, on the perusal of the order of the Assessing Officer as well as the Learned CIT(Appeals), nowhere it is borne out, how the Assessing Officer had satisfied himself as to whether the deductee/payee has failed to pay taxes directly. It is only when a finding is arrived in the case of the deductee/payee that he has failed to pay tax directly, then only deductor, i.e., the present assessee can be deemed to be the assessee-in-default in respect of such tax an .....

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e is no occasion to treat the deductor as an assessee in default unless the assessee has not paid the tax directly. The fact that the assessee has failed to pay tax directly is thus, a foundational and jurisdictional fact and only after finding that the assessee has failed to pay tax directly, can the deductor be deemed to be such tax. The Explanation to section 191 of the Income-tax Act, 1961, is confined only to the amount of tax which was required to be deducted. While interpreting the provis .....

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n the tax has not been deducted by the deductor, the tax not deducted can be realised from the deductor. No such provision is made under section 201 obviously because the liability to pay Income-tax is on the assessee directly in whose case, the tax has not been deducted. 9. If we apply the aforesaid principle of the Hon'ble High Court on the facts of the present case, we find that the Assessing Officer has nowhere given any finding that the deductee/assessee has failed to pay taxes directly .....

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he issue before us in the case of M/s. Jagran Prakashan Ltd. vs. DCIT - 345 ITR 288 (All) held as under:- ……..it is dear that deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly. In the present case, the Income Tax Authorities had not adverted to the Explanation to section 191 nor had applied their mind as to whether the assessee has also failed to pay such tax directly. Thus, to declare a deductor, who failed to .....

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d pronouncement of the order in the year 2012 and the ITAT order in the first round to the Assessing Officer was assessment year back so no we are bound to follow the law laid by the Hon'ble Jurisdictional High Court in M/s. Jagran Prakashan Ltd. (surpa). In assessee s own case in a similar matter the Agra Bench of the Tribunal observed after taking note of the law laid in Jagran Prakashan Ltd. (supra) as under:- 6. It is thus clear that the onus is on the revenue to demonstrate that the tax .....

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unts from which taxes have not been withheld. As a result of the judgment of Hon ble Allahabad High Court in Jagran Prakashan s case (supra), there is a paradigm, shift in the manner in which recovery provisions under section 201(1) can be invoked. As observed by Their Lordships, the provisions of Section 201(1) cannot be invoked and the tax deductor cannot be treated an assessee in default till it is found that asses see has also failed to pay such tax directly . Once this finding about the non .....

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