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TMI Blog2023 (7) TMI 1446X X X X Extracts X X X X X X X X Extracts X X X X ..... for the facility of reference, we are taking up the facts from A.Y. 2016-17. 4. Brief facts of the case are that the assessee is a Cooperative Society engaged in the Banking business. A survey under section 133A(2A) of the Income Tax Act was carried out in the Office premises of the assessee on 12.10.2017 for verification of TDS that was required to be deducted as per the provisions of Chapter XVIIB of the Income Tax Act. According to the ld. Assessing Officer, the assessee was required to deduct TDS on the payment of interest by the assessee to its customers. The ld. Assessing Officer further observed that the deductor had paid an amount of interest in excess of Rs.10,000/- to the tune of Rs.16,13,44,802/- on deposits made by the customers on which TDS was applicable but the deductor-assessee has failed to deduct the TDS. Accordingly, he issued a show-cause notice and assessee gave its explanation. 5. In A.Y. 2017-18, the ld. Assessing Officer has observed that assessee-Bank has paid the interest of Rs.16,70,81,472/- on which it was required to deduct TDS while making payment of interest to the customers. 6. In A.Y. 2018-19, the assessee has made the payment of interest to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.1. It can be seen from the records that the survey operation u/s 133(A)(2A) was conducted in the business premise and found that the appellant had paid interest to different entities on which TDS was not done. The assessing officer considered and accept the reply of the appellant to determine the actual amount of interest paid to the depositors on which TDS was not made. The total amount of interest came to the tune of Rs. 16,13,44,802/-. Therefore, it is not disputed fact that the appellant has not deducted tax on source on interest payment to the tune of Rs. 16,13,44,802/-. 5.2. Now, there are two grounds on which the appellant seek relief from treating assessee in default u/s 201 of the I.T Act. The first one is related to obtain Form no. 15G from the deductees. Thus, the question arises that mere obtaining 15G form from the dedutees can absolve the deductor to be treated as "assessee in default". 5.3. The Income Tax Act provides no deduction to be made in certain cases u/s 197A which is as under: (1) Notwithstanding anything contained in section 194 or section 194EE, no deduction of tax shall be made under any of the said sections in the case of an individual, who is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal income of the previous year in which such income is to be included in computing his total income will be nil. (ID) Notwithstanding anything contained in this section, no deduction of tax shall be made by the Offshore Banking Unit from the interest paid- (a) on deposit made on or after the 1st day of April, 2005, by a non-resident or a person not ordinarily resident in India; or (b) on borrowing, on or after the 1st day of April, 2005, from a non-resident or a person not ordinarily resident in India. Explanation.-For the purposes of this sub-section "Offshore Banking Unit" shall have the same meaning as assigned to it in clause (u) of section 2 of the Special Economic Zones Act, 2005. (1E) Notwithstanding anything contained in this Chapter, no deduction of tax shall be made from any payment to any person for, or on behalf of, the New Pension System Trust referred to in clause (44) of section 10. (1F) Notwithstanding anything contained in this Chapter, no deduction of tax shall be made, or deduction of tax shall be made at such lower rate, from such payment to such person or class of persons, including institution, association or body or class of institutions, associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said quarter in accordance with the provisions of clause (vii) of sub-rule (4) of rule 31A " 5.5. It is clear from Rule 29C(3) that the person responsible for paying any income i.e the appellant in this case had to mandatorily allot a unique identification number to each declaration received during every quarter of the financial year. Further, the appellant had to furnished particulars of the declaration in quarterly statements to the Director General of Income Tax (systems) or the person authorized by the Director General of Income Tax (systems) under Rule 31 A. The application of provision must be applied wholly and in totality. The appellant is not entitled to get relief if he partly fulfilled the requirements under the provision by only collecting form no.15G. 5.6. The second is related to verification of return of the deductee by the AO as it was claimed by the appellant that all deductee had declared the interest income in their return and paid taxes. The claim of the assessee is based on a proviso mentioned u/s 201(1) of the I. T Act. The same proviso is reproduced as under: (1) Where any person, including the principal officer of a company,- (a) who is require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uential and mandatory. The ground no. 3 is also dismissed. 5.10. Ground no.4:- The ground no. 4 is relates calculating the interest for default period and credit of TDS already paid. Interest levy u/s 201(1 A) is mandatory and to be calculated in following manner:- (1) Interest for failure to deduct tax at source/delay in payment of TDS As per section 201, if any person who is liable to deduct tax at source does not deduct it or after so deducting fails to pay, the whole or any part of the tax to the credit of the Government, then, such person, shall be liable to pay simple interest as given below: Interest shall be levied at 1% for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax was deducted. Interest shall be levied at 1.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax was actually remitted to the credit of the Government. 1. Further, subject to the fulfillment of conditions mentioned in proviso of section 201(1) of the I. T Act, interest shall be payable from the date on which such tax was dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed deposits and other deposits on which interest is paid. The dispute before us pertains to assessment year 2016-17 and 2017-18 for which the demand for non-deduction of tax and interest has been levied. The crux of the arguments of the ld. Counsel for the assessee is that the assessee bank regularly deducts tax at source on the deposits which are above the permissible limits u/s 194A of the Act. But in those cases for which Form 15G & 15H are received form the depositors tax at source is not deducted. The assessee bank regularly receives Form 15G & 15H and submits the same to the jurisdictional officer in charge of TDS. For the year under appeal there was a change in systems and the assessee was required to upload all the Forms 15G & 15H on the Income Tax portal, copy of which are placed at page 64 of the paper book. But thereafter, due to technical problem, the attachments uploaded, could not be opened. The assesse bank was unable to upload it again even though it had physical copies of Form 15G & 15H, which contains details of the investors, the amount of sum given on deposit, the date of investment and period of such investments and most important in the declaration given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 4th March 2016, after following the judgment of the Jurisdictional Allahabad High Court in the case of the assessee itself, has quashed the proceedings u/s 201 of the Act on the similar lines. Further, for Assessment Year 2014-15 and 2015-16 also the issue is identical and no distinguishing feature was pointed out by Ld. DR at the time of hearing. Since, both the assessment years i.e. A.Y. 2014- 15 and 2015-16 are identical, therefore, we are allowing both the appeals. 10. Similar view was also taken by the Co-ordinate Bench of ITAT Bangalore in the case of The Karur Vysya Bank Ltd. Vs. ACIT in ITA No. 1854/Bang/2016; order dt. 09/08/2017. Therefore, respectfully following the decisions referred hereinabove and considering the fact that the assessee has not deducted tax at source u/s 194A of the Act after receiving the physical copies of Form 15G & 15H, it should not be considered as an assessee in default. Therefore, we delete the demand raised by the ld. AO for nondeduction of tax at source u/s 194A of the Act as well as interest levied thereon for AY 2016-17 and 2017-18 for non-submission of Form 15G & 15H, and allow the grounds raised by the assessee. 11. In the result, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee in default. If this logic of the Revenue is accepted, then if one Form is not submitted then the assessee could be considered as an assessee in default for the whole interest payment, which was paid after collecting these forms properly. In other words, if the assessee is able to submit the details with respect to part of the amount paid without deducting the tax, then those details are to be considered by the Revenue before treating the assesese in default. For example in A.Y. 2016-17, the stand of the assessee is that it has submitted forms to the extent of Rs.4,07,56,170/- out of the total payment. This aspect ought to have been specifically dealt and a finding should have been recorded as to why this amount should also be considered for levying the TDS @ 10% alongwith interest. The persons who have received the interest payment from the assessee might not be a taxable assessee. In view of the above, we allow all these appeals and set aside the impugned orders. We restore this issue to the file of ld. Assessing Officer for fresh adjudication after providing due opportunity of hearing to the assessee. 14. In the result, all the appeals of the assessee are allowed for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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