Vijaya Bank, Kothagudem, V. THE DCIT, CIRCLE - 3(1)(TDS), Visakhapatnam

CO 7/VIZ/2014

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9774 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 20-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D MANOJ KUMAR
• Keywords: Principle of natural justice
• Section: 133A; 201(1)

Judgement Text

ITA NOS.515 TO 517/VIZAG/2013 & CO 6 TO 8 OF 2014 M/S. VIJAYA BANK, KOTHAGUDEM IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO S . 515 TO 517 /VIZAG/ 2013 ASSESSMENT YEARS : 2009-10, 2009-10 & 2010-11 RESPE CTIVELY DCIT CIRCLE-3(1)(TDS) VIJAYAWADA VS. M/S. VIJAYA BANK KOTHAGUDEM (APPELLANT) (RESPONDENT) PAN NO.HYDVO2858C CO NOS.6 TO 8/VIZAG/2014 (ARISING OUT OF ITA NOS.515 TO 517/VIZAG/2013) ASSESSMENT YEARS : 2009-10, 2009-10 & 2010-11 RESPE CTIVELY M/S. VIJAYA BANK KOTHAGUDEM VS. DCIT CIRCLE-3(1)(TDS) VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.HYDVO2858C ASSESSEE BY: SHRI G.V.N. HARI, ADVOCATE REVENUE BY : SHRI D. MANOJ KUMAR, ADDL. CIT DATE OF HEARING : 07.07.2014 DATE OF PRONOUNCEMENT : 07.07.2014 ORDER PER BENCH:- THESE ARE APPEALS BY THE DEPARTMENT AGAINST TWO SE PARATE ORDERS OF CIT(A), VIJAYAWADA BOTH DATED 26.4.2013. THE ASSES SEE HAS ALSO FILED CROSS OBJECTIONS AGAINST THE SAME ORDERS OF THE CIT(A). ITA NO.515/VIZAG/2013: 2. THIS APPEAL OF THE DEPARTMENT IS AGAINST THE ORD ER OF THE CIT(A) DELETING THE DEMAND RAISED U/S 201(1) AND 201(1A) O F THE INCOME-TAX ACT PERTAINING TO THE ASSESSMENT YEAR 2009-10. DEPARTM ENT HAS RAISED THE FOLLOWING GROUNDS:- 1. THE CIT(A) OMITTED THE FACT THAT THE ASSESSEE FA ILED TO PRODUCE ANY EVIDENCE TO THE EFFECT THAT FORM NO.15G/H HAVE BEEN FORWARDED TO THE JURISDICTIONAL COMMISSIONER OF INCOME-TAX, WHICH IS A STATUTORY REQUIREMENT. ITA NOS.515 TO 517/VIZAG/2013 & CO 6 TO 8 OF 2014 M/S. VIJAYA BANK, KOTHAGUDEM 2 2. THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER AS THE SAME WAS PASSED AFTER AFFORDING SUFF ICIENT OPPORTUNITY TO THE ASSESSEE AND FURTHER THE ASSESSING OFFICER HAS REDUCED THE DEMAND CONSIDERING EVEN THE LATE REMITTANCE. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A PUBLIC SECTOR BANK. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN CASE OF THE AS SESSEE ON 9.2.2010 TO VERIFY ITS TDS COMPLIANCE. AS A CONSEQUENCE OF THE SURVEY OPERATION, PROCEEDING WAS INITIATED BY THE ASSESSING OFFICER U /S 201 OF THE ACT. IN COURSE OF THE PROCEEDING, HE CALLED FOR THE DETAILS OF INTEREST PAYMENT/CREDITS DURING THE FINANCIAL YEAR 2008-09. AFTER NOTICING THE PROFIT & LOSS ACCOUNT FOR FINANCIAL YEAR 2008-09, THE ASSESSING OFFICER FOUND THAT INTEREST PAYMENTS/CREDITS TO THE EXTENT OF RS.8,69,11,898/- WAS MADE DURING THE YEAR. ON VERIFYING PARTYWISE DETAILS OF INTEREST P AYMENT FURNISHED BY THE BANK, THE ASSESSING OFFICER NOTICED THAT IN THE FIN ANCIAL YEAR 2008-09, THE BANK HAS PAID INTEREST EXCEEDING RS.10,000/- IN 131 CASES BUT NO TAX WAS DEDUCTED AT SOURCE AS THE PAYEES FURNISHED DECLARAT IONS IN FORM 15G. HOWEVER, DURING THE SURVEY PROCEEDING, THE BRANCH M ANAGER COULD FURNISH 15G FORMS IN 40 CASES. HE FURTHER NOTICED THAT THE STATEMENT RECORDED DURING SURVEY, THE BRANCH MANAGER HAD STATED THAT I N FINANCIAL YEAR 2008-09, THE BANK RECEIVED 15G FORMS FROM 40 DEPOSITORS. TH E ASSESSING OFFICER THEREFORE WAS OF THE VIEW THAT THE BANK HAS NOT DED UCTED TAX IN CASE OF DEPOSITORS WHO HAVE NOT FURNISHED DECLARATIONS IN F ORM 15G. ACCORDINGLY, HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLA IN. IN REPLY TO THE SHOW CAUSE NOTICE, THE ASSESSEE FILED A WRITTEN REPLY DA TED 2.6.2010 STATING THAT THOUGH THEY HAVE ALREADY OBTAINED THE DECLARATIONS IN FORM 15G FROM THE DEPOSITORS BUT THESE FORMS COULD NOT BE PRODUCED AT THE TIME OF SURVEY DUE TO INSUFFICIENT TIME. THE ASSESSING OFFICER HOWEVE R WAS NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE. ACCORDINGLY, HE D EMANDED TAX U/S 201(1) AND INTEREST U/S 201(1A) OF THE ACT AMOUNTING TO RS .2,47,645/- AND RS.49,197/- RESPECTIVELY TOWARDS NON-DEDUCTION OF T AX AND IN ABSENCE OF DECLARATION IN FORM 15G. FURTHER, ON VERIFYING THE DECLARATIONS IN FORM 15G FOUND AT THE TIME OF SURVEY, THE ASSESSING OFFICER NOTICED VARIOUS DEFECTS AND DEFICIENCIES AS CERTAIN COLUMNS THEREIN WERE NOT PR OPERLY FILLED UP. ACCORDINGLY, HE REJECTED THOSE DECLARATIONS IN FORM 15G AND DEMANDED TAX ITA NOS.515 TO 517/VIZAG/2013 & CO 6 TO 8 OF 2014 M/S. VIJAYA BANK, KOTHAGUDEM 3 AND INTEREST U/S 201(1) AND 201(1A) OF THE ACT TO T HE TUNE OF RS.14,751/- AND RS.2,803/- RESPECTIVELY. FURTHER, THE ASSESSING OF FICER NOTICED THAT THOUGH IN MANY CASES THE ASSESSEE HAS CLAIMED PAYMENT OF INTE REST ON TERM DEPOSIT TO BE BELOW RS.10,000/-, HOWEVER, ON VERIFICATION OF D ETAILS OF INTEREST PAID, IT WAS FOUND THAT IN RESPECT OF SOME OF THE DEPOSITORS , THE BANK HAS NOT DEDUCTED TAX EVEN THOUGH THE INTEREST PAID/CREDITED EXCEEDED THE LIMIT OF RS.10,000/-. ACCORDINGLY, HE ASKED THE ASSESSEE TO SHOW CAUSE. IN RESPONSE THERE TO, THE ASSESSEE SUBMITTED DECLARATION IN FOR M 15G IN RESPECT OF THOSE DEPOSITORS BEFORE THE ASSESSING OFFICER. THE ASSES SING OFFICER AFTER VERIFYING THE DECLARATION IN FORM 15G AND OTHER DETAILS WAS O F THE VIEW THAT THESE DECLARATIONS WERE OBTAINED BY THE BRANCH MANAGER FR OM THE DEPOSITORS SUBSEQUENTLY ONLY AFTER HE CAME TO KNOW OF THE LIAB ILITY TO DEDUCT TAX. HE WAS OF THE OPINION THAT U/S 197A OF THE ACT, THE DE CLARATION IN FORM 15G/15H ARE TO BE OBTAINED ON OR BEFORE THE DATE OF PAYMENT /CREDIT OF INTEREST. SINCE THE DECLARATION SUBMITTED IN FORM 15G WERE NOT BEFO RE THE DATE OF PAYMENT/CREDIT OF INTEREST, HE REJECTED THE SAID DE CLARATION AND DEMANDED TAX AND INTEREST U/S 201(1) AND 201(1A) OF AN AMOUN T OF RS.1,30,436/- AND RS.27,177/- RESPECTIVELY. THUS, THE TOTAL DEMAND R AISED BY THE ASSESSING OFFICER FOR THE IMPUGNED ASSESSMENT YEAR U/S 201(1) AND 201(1A) OF THE ACT IS RS.4,72,009/-. 4. BEING AGGRIEVED OF THE ORDER U/S 201(1) AND 201( 1A) OF THE ACT, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE C IT(A) DELETED THE ADDITION BY HOLDING AS UNDER: I HAVE SEEN THE SUBMISSIONS MADE BY THE APPELLANT, GONE THROUGH THE ORDER UNDER SECTION 201(1)/201(1A) BESI DES PERUSING ALL OTHER MATERIAL AVAILABLE ON RECORD INCLUDING TH E CASE LAWS RELIED UPON. THE ISSUE IS DEFAULT IN TDS ON PAYMENT OF IN TEREST AMOUNTS. IT MAY BE NOTED HERE THAT THERE WAS A SURVEY UNDER SECTION 133A, IN COURSE OF WHICH FORM NO.15G/15H WERE THOROUGHLY VER IFIED. AFTER SURVEY OPERATIONS, AS CERTAIN DISCREPANCIES WERE NO TICED SHOW- CAUSE NOTICES WERE ISSUED CALLING FOR EXPLANATION. DISCREPANCIES FOUND WERE OF 3 TYPES, VIZ., INTEREST PAID WITHOUT MAKING TDS WITHOUT OBTAINING FORMS NO.15G/15H; SUBSEQUENTLY AN D FORMS NO.15G/15H WERE NOT THERE AT THE TIME OF SURVEY, BU T PRODUCED IN RESPONSE TO SHOW-CAUSE NOTICES. FOR SUCH ALLEGED D EFAULTS DEMAND UNDER SECTION 201(1)/201(1A) AMOUNTING TO RS.4,72,0 09/- WAS RAISED. IN AS MUCH AS THE FIRST DEFAULT WAS CONCER NED, IT IS THE SUBMISSION OF THE AR THAT FORMS NO.15G/15H WERE IN FACT AVAILABLE ITA NOS.515 TO 517/VIZAG/2013 & CO 6 TO 8 OF 2014 M/S. VIJAYA BANK, KOTHAGUDEM 4 IN THE BUSINESS PREMISES, WHICH WERE NOT TAKEN POSS ESSION BY THE SURVEY TEAM IS ACCEPTABLE. IN SO FAR AS THE SECOND DEFAULT IS CONCERNED, THE AO DURING SURVEY UNDER SECTION 133A ACTION FOUND CERTAIN FORMS NO.15G/15H, WHICH WERE NOT PROPERLY F ILLED UP HAVING SOME BLANKS, WHICH THE APPELLANT HAS FILLED UP AND PRODUCED BEFORE THE AO, WHICH THE AO HAS REFUSED TO TAKE COGNIZANCE AND THE THIRD CATEGORY IS THAT WHERE INTEREST PAID WAS MORE THAN RS.10,000 ON WHICH TDS PROVISIONS WERE APPLICABLE, BUT NO FORMS NO.15G/15H WERE FOUND DURING THE COURSE OF ACTION UNDER SECTIO N 133A, BUT SUBSEQUENTLY PRODUCED BEFORE THE AO, WHICH THE AO R EFUSED TO TAKE COGNIZANCE ON THE GROUND THAT RELEVANT FORMS WERE S UBSEQUENTLY OBTAINED. THE ACTION OF THE AO APPEARS TO BE NOT C ORRECT FOR THE FOLLOWING REASONS SUPPORTED BY CASE LAWS. IT MAY BE NOTED HERE, SAY FOR A WHILE THAT THE FOR MS NO.15G/15H WERE TAKEN BELATEDLY, IT CANNOT BE SAID THAT THE FORMS ARE INVALID AND DEMAND U/S 201 AND 201(1A) CANNOT B E RAISED. IN THIS CONTEXT, IT IS RELEVANT TO NOTE THAT THE HONB LE INCOME TAX TRIBUNAL JODHPUR BENCH IN THE CASE OF INCOME TAX OF FICER VS. PEARL ORGANIC COATING, REPORTED IN (2004) 84 TTJ (JD) 802 HELD THAT PROVISIONS OF SECTION 201 AND 201(1A) WERE NOT ATTR ACTED WHERE THE DECLARATIONS IN FORM 15G/H ARE RECEIVED AFTER THE D ATE OF CREDIT OF INTEREST TO THE ACCOUNT OF THE PAYEE. SIMILARLY, I F THE AO FINDS ANY DEFICIENCIES IN FILLING DECLARATIONS, IT IS AS A MA TTER OF NATURAL JUSTICE AND EQUITY, THE APPELLANT SHALL BE GIVEN AN OPPORTU NITY TO MAKE GOOD THE DEFICIENCIES. THE AO REJECTING THE DECLAR ATIONS ON THE GROUND THAT WHEN THE FORMS WERE SUBMITTED, THEY ARE WITH DEFICIENCIES AND HENCE THEY ARE NOT VALID FORMS IS UNJUST AND UNWARRANTED. IN THIS REGARD, IT MAY BE NOTED HERE THAT THE HONBLE MADRAS HIGH COURT IN THE CASE OF VIJAY HEMANTH FINA NCE AND ESTATE LIMITED VS. ITO AND ANOTHER, REPORTED IN (1999) 238 ITR 282 (MAD) HELD THAT AN OPPORTUNITY SHOULD BE GIVEN TO THE DED UCTOR TO GET THE DEFICIENCIES IN FORM 15G/H RECTIFIED BEFORE ANY ACT ION U/S 201 AND U/S 201(1A) IS CONTEMPLATED AGAINST THE DEDUCTOR. THUS, THE AO WAS NOT JUSTIFIED IN MAKING ORDER UNDER SECTION 201 (1)/201(1A) FOR THE REASONS STATED ABOVE AND ACCORDINGLY, HE IS DIR ECTED TO REDUCE THE DEMAND TO NIL. 5. THE LD. D.R. CONTESTING THE OBSERVATION MADE BY THE LD. CIT(A) SUBMITTED THAT AT THE TIME OF SURVEY, ONLY 40 NOS. OF DECLARATION IN FORM 15G COULD BE SUBMITTED BY THE BRANCH MANAGER. HENCE, T HE BALANCE DECLARATION SUBMITTED WERE NOT OBTAINED PRIOR TO THE PAYMENT/CR EDIT OF INTEREST, HENCE, CANNOT BE TAKEN COGNIZANCE OF. SO FAR AS DEFECTIVE DECLARATIONS ARE CONCERNED, THE LD. D.R. SUBMITTED THAT THEY CANNOT BE TREATED AS VALID DECLARATIONS. HE FURTHER CONTENDED THAT EVEN ASSUM ING THAT THE DECLARATIONS WERE OBTAINED BY THE BANK FROM THE DEPOSITORS TO WH OM INTEREST HAVE BEEN PAID BUT AS THE ASSESSEE HAS NOT SUBMITTED STATEMEN T BEFORE THE CIT IN ITA NOS.515 TO 517/VIZAG/2013 & CO 6 TO 8 OF 2014 M/S. VIJAYA BANK, KOTHAGUDEM 5 RESPECT OF THE DECLARATIONS OBTAINED, THERE IS VIOL ATION OF THE STATUTORY PROVISION. HENCE, THE ASSESSEE CANNOT GET BENEFIT OF THE DECLARATIONS OBTAINED ON 15G/15H. HE THEREFORE, SUBMITTED THAT THE CIT(A) HAVING NOT CONSIDERED THESE FACTS IN PROPER PERSPECTIVE, THE O RDER PASSED NEEDS TO BE SET ASIDE. 6. THE LD. A.R. ON THE OTHER HAND STRONGLY SUPPORTI NG THE ORDER OF THE CIT(A) SUBMITTED THAT THE ASSESSEE HAS FILED DECLAR ATION IN THE PRESCRIBED MANNER BEFORE THE ASSESSING OFFICER DURING THE PROC EEDING U/S 201 OF THE ACT. THEREFORE, BY POINTING OUT SOME TECHNICAL DEFECTS A ND ON PRESUMPTION AND SURMISES, THE ASSESSING OFFICER WAS NOT CORRECT IN REJECTING THE DECLARATIONS SUBMITTED BY THE ASSESSEE. FURTHER, IT WAS SUBMITT ED THAT THE REVENUE IS UNDER AN OBLIGATION TO DEMONSTRATE THAT THE PAYEES HAVE NOT MADE PAYMENT OF TAX DUE ON THE INTEREST RECEIVED FROM THE BANK A ND THEN ONLY THE BANK CAN BE WITH LIABILITY U/S 201(1) & 201(1A) OF THE ACT. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON A DECISION OF THE ITAT A GRA BENCH IN CASE OF ALLAHABAD BANK VS. ITO IN ITA NO.448 TO 454/AGRA/20 11 DATED 20.6.2014. 7. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES, PE RUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. IT IS THE CLAIM OF THE DEPARTMENT THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBMIT DECLARATIONS IN FORMS 15G IN ALL THE CASES AT THE TIME OF SURVEY. WHEREAS, THE ASSESSEE HAS ASSERTED THAT DURING THE PROCEEDING BEFORE THE ASSE SSING OFFICER, DECLARATIONS OF THE DEPOSITORS IN PRESCRIBED MANNER WAS FILED IN CASES WHERE TAX HAS NOT BEEN DEDUCTED. ON A PERUSAL OF FACTS AND MATERIALS ON RECORD, IT IS CLEAR THAT EVEN ASSUMING THAT AT THE TIME OF SURVEY, ALL THE D ECLARATIONS COULD NOT BE BROUGHT TO THE NOTICE OF THE DEPARTMENT FOR WHATEVE R MAY BE THE REASONS, BUT FACT REMAINS THAT DURING THE PROCEEDING BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS FURNISHED DECLARATIONS IN THE PRESCRIB ED FORMAT IN RESPECT OF INTEREST PAYMENT/CREDIT MADE TO DEPOSITORS WHEREIN TAX WAS NOT DEDUCTED AT SOURCE. THE ASSESSING OFFICER HAS REJECTED THE DEC LARATION FORMS BY ASSUMING THAT THE ASSESSEE HAS NOT OBTAINED THOSE FORMS PRIO R TO THE DATE OF PAYMENT/CREDIT OF INTEREST. IN OUR VIEW, THE REJEC TION OF THE DECLARATIONS ON MERE PRESUMPTION AND SURMISES BY THE ASSESSING OFFI CER IS NOT CORRECT. FACT ITA NOS.515 TO 517/VIZAG/2013 & CO 6 TO 8 OF 2014 M/S. VIJAYA BANK, KOTHAGUDEM 6 REMAINS THAT THE ASSESSEE HAS SUBMITTED THE DECLARA TION FORMS BEFORE THE ASSESSING OFFICER. THEREFORE, INSTEAD OF POINTING OUT CERTAIN DEFECTS, DEFICIENCIES/TECHNICAL OBJECTIONS, THE ASSESSING OF FICER SHOULD HAVE ACCEPTED THE DECLARATION. ONCE A DECLARATION IS RECEIVED FR OM THE DEPOSITOR IN THE PRESCRIBED MANNER, THE DEDUCTOR IS UNDER A STATUTOR Y OBLIGATION NOT TO DEDUCT TAX. THEREFORE, THE ASSESSEE CANNOT BE PENALIZED O R SADDLED WITH LIABILITY U/S 201(1) OR 201(1A) OF THE ACT WHEN THE DEPOSITORS TO WHOM INTEREST HAS BEEN PAID/CREDITED HAVE FURNISHED DECLARATIONS IN THE PR ESCRIBED MANNER REQUESTING NOT TO DEDUCT TAX. IN THESE CIRCUMSTANC ES, WE AGREE WITH THE CONCLUSION OF THE LD. CIT THAT MERELY BECAUSE THERE ARE SOME TECHNICAL DEFECTS IN THE DECLARATION OR THEY HAVE BEEN RECEIV ED AFTER THE DATE OF CREDIT OF INTEREST TO THE ACCOUNT OF THE PAYEE THEY CANNOT BE REJECTED. IT IS ALSO A FACT THAT THE VIEW TAKEN BY THE LD. CIT(A) IS IN CO NSONANCE WITH THE DECISION OF ITAT JODHPUR BENCH IN THE CASE OF INCOME TAX OFFI CER VS. PEARL ORGANIC COATING, REPORTED IN (2004) 84 TTJ (JD) 802 AND THA T OF THE HONBLE MADRAS HIGH COURT IN CASE OF VIJAY HEMANTH FINANCE AND EST ATE LIMITED VS. ITO AND ANOTHER, REPORTED IN (1999) 238 ITR 282 (MAD). THE LD. D.R. HAS NOT BROUGHT TO OUR NOTICE ANY CONTRARY DECISION. IN AFO RESAID VIEW OF THE MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD . CIT(A) IN DELETING THE DEMAND RAISED BY THE ASSESSING OFFICER. ACCORDINGL Y, WE UPHOLD THE ORDER OF THE CIT(A) BY DISMISSING THE GROUNDS RAISED. 8. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED. CO NO.6/VIZAG/2014: 9. THE CO IS MERELY SUPPORTING THE ORDER OF THE CIT (A). SINCE WE HAVE UPHOLD THE ORDER OF THE CIT(A) WHILE DISPOSING THE DEPARTMENTS APPEAL IN ITA NO.515/VIZAG/2013, THE CO HAS BECOME INFRUCTUOU S. 10. IN THE RESULT, BOTH THE APPEAL OF THE DEPARTMENT AND CO ARE DISMISSED. ITA NOS.515 TO 517/VIZAG/2013 & CO 6 TO 8 OF 2014 M/S. VIJAYA BANK, KOTHAGUDEM 7 ITA NOS.516 & 517/VIZAG/2013: 11. THESE TWO APPEALS OF THE DEPARTMENT ARE AGAINST THE ORDER OF THE CIT(A) IN DELETING THE PENALTY IMPOSED U/S 271C OF THE ACT FOR THE ASSESSMENT YEARS 2009-10 & 2010-11. 12. BRIEFLY THE FACTS ARE, ON THE BASIS OF THE ORDE R PASSED U/S 201(1) & 201(1A) OF THE ACT FOR THE ASSESSMENT YEARS 2009-10 & 2010-11 RAISING DEMANDS OF RS.4,05,146/- AND RS.1,45,897/-, THE AS SESSING OFFICER INITIATED PROCEEDING FOR IMPOSITION OF PENALTY U/S 271C OF TH E ACT BY ISSUING A SHOW CAUSE NOTICE TO THE ASSESSEE. AS NOTED BY THE ASSES SING OFFICER IN THE IMPUGNED ORDER, SINCE THE ASSESSEE FAILED TO APPEAR AND EXPLAIN, THOUGH OPPORTUNITY WAS GRANTED TO HIM, HE PROCEEDED TO PAS S THE ORDER FOR BOTH THE ASSESSMENT YEARS BY IMPOSING PENALTY U/S 271C OF TH E ACT OF AN AMOUNT OF RS.4,05,146/- AND RS.1,45,897/- RESPECTIVELY. 13. BEING AGGRIEVED OF THE PENALTY ORDER SO PASSED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER APPRECI ATING THE SUBMISSIONS OF THE ASSESSEE AND ALSO CONSIDERING THE FACT THAT WHI LE DECIDING ASSESSEES APPEAL AGAINST THE ORDER PASSED U/S 201(1)/201(1A) OF THE ACT FOR ASSESSMENT YEAR 2009-10, HE HAS DELETED THE DEMAND RAISED, ALLOWED THE APPEALS OF THE ASSESSEE BY HOLDING THAT PENALTY U/S 271C OF THE ACT IS NOT ATTRACTED TO THE CASE OF THE ASSESSEE. THE FINDING OF THE LD. CIT(A) IN THIS REGARD IS AS UNDER: I HAVE SEEN THE SUBMISSIONS MADE BY THE APPELLANT G ONE THROUGH THE PENALTY ORDERS UNDER SECTION 271C BESID ES PERUSING ALL OTHER MATERIAL AVAILABLE ON RECORD INCLUDING THE CA SE LAWS RELIED UPON. IT IS SEEN FROM RECORDS THAT FOR THE AY 2009 -10, THE FORMS NO.15G/15H WERE NOT THERE DURING THE SURVEY OPERATI ONS, BUT SUBSEQUENTLY PRODUCED BEFORE THE AO IN RESPONSE TO SHOW-CAUSE NOTICE ISSUED. AS PER THE DECISION OF THE JODHPUR BENCH OF THE ITAT, SUCH DEFAULT IS CURABLE, AS, AS PER ITS DECISION IN THE CASE OF INCOME TAX OFFICER VS. PEARL ORGANIC COATING, REPORTED IN (2004) 84 TTJ (JD) 802 HELD THAT PROVISIONS OF SECTION 201 AND 201(1A) WERE NOT ATTRACTED WHERE THE DECLARATIONS IN FORM 15G/H ARE RECEIVED AFTER THE DATE OF CREDIT OF INTEREST TO THE ACCOUNT OF TH E PAYEES. HENCE, PENALTY UNDER SECTION 271C IS NOT ATTRACTED. IN AS MUCH AS OTHER ASSESSMENT YEAR 2010-11 IS CONCERNED DURING THE COU RSE OF SURVEY FORMS NO.15G/15H COULD NOT BE PRODUCED DUE TO LACK OF SUFFICIENT ITA NOS.515 TO 517/VIZAG/2013 & CO 6 TO 8 OF 2014 M/S. VIJAYA BANK, KOTHAGUDEM 8 TIME, BUT PRODUCED THE SAME IN RESPONSE TO SHOW-CAU SE NOTICE ISSUED, WHICH THE AO HAS REFUSED TO CONSIDER. IN F ACT, IF A FORM WAS NOT PRODUCED DURING THE TIME OF SURVEY, THE AO IS D UTY BOUND TO GIVE AN OPPORTUNITY TO THE APPELLANT TO PRODUCE THE SAME . IN THIS REGARD, IT MAY BE NOTED HERE THAT THE HONBLE MADRAS HIGH C OURT IN THE CASE OF VIJAY HEMANTH FINANCE AND ESTATE LIMITED VS. ITO AND ANOTHER, REPORTED IN (1999) 238 ITR 282 (MAD) HELD THAT AN O PPORTUNITY SHOULD BE GIVEN TO THE DEDUCTOR TO GET THE DEFICIEN CIES IN FORM 15G/H RECTIFIED BEFORE ANY ACTION U/S 201 AND U/S 2 01(1A) IS CONTEMPLATED AGAINST THE DEDUCTOR. HERE, THE AO WI THOUT GIVING OPPORTUNITY TO PRODUCE THE RELEVANT FORMS WAS NOT J USTIFIED IN MAKING ORDER UNDER SECTION 201(1)/201(1A). THUS, F OR THE REASONS STATED ABOVE PENALTY UNDER SECTION 271C IS NOT ATTR ACTED. 14. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIALS ON RECORD. UNDISPUTEDLY IN COURSE OF PRO CEEDING BEFORE THE ASSESSING OFFICER U/S 201(1) & 201(1A) OF THE ACT, THE ASSESSEE HAD PRODUCED DECLARATION IN FORM 15G IN RESPECT OF THE PAYMENTS/ CREDITS WHERE TAX HAS NOT BEEN DEDUCTED AT SOURCE. HOWEVER, THE ASSESSING OF FICER HAS NOT ACCEPTED THE DECLARATION BY OBSERVING THAT AT THE TIME OF SU RVEY, ONLY SOME OF THE DECLARATIONS WERE FOUND AND OTHERS WERE OBTAINED BY THE ASSESSEE ONLY AFTER THE DATE OF PAYMENT/CREDIT OF THE INTEREST. EVEN O UT OF THE DECLARATIONS FOUND AT THE TIME OF SURVEY, THE ASSESSING OFFICER REFUSED TO ACCEPT MANY BY POINTING OUT CERTAIN DEFECTS AND DEFICIENCIES. HOW EVER, WHILE CONSIDERING DEPARTMENTS APPEAL IN ITA NO.515/VIZAG/2013, WE HA VE UPHELD THE ORDER OF THE CIT(A) IN DELETING THE DEMAND AND OBSERVED THAT THE DECLARATIONS OBTAINED SUBSEQUENT TO THE DATE OF INTEREST PAYMENT /CREDIT CANNOT BE REJECTED. CONSIDERING THE FACT THAT THE DEMANDS HA VE BEEN DELETED, THE PENALTY ALSO CANNOT SURVIVE. THEREFORE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE CIT(A) IN DELETING THE PENALTY IMPOSED. IT WILL BE PERTINENT TO MENTION HERE THAT ONCE THE DEPOSITO RS HAVE FURNISHED THE DECLARATION IN PRESCRIBED MANNER REQUESTING THE DED UCTOR NOT TO DEDUCT TAX AT SOURCE, THE DEDUCTOR IS UNDER A STATUTORY OBLIGATIO N NOT TO DEDUCT TAX. HENCE, IN THE AFORESAID CIRCUMSTANCES, THE DEDUCTOR CANNOT BE PENALIZED FOR NOT DEDUCTING TAX AT SOURCE. 15. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTMEN T ARE DISMISSED. ITA NOS.515 TO 517/VIZAG/2013 & CO 6 TO 8 OF 2014 M/S. VIJAYA BANK, KOTHAGUDEM 9 CO NOS.7 & 8/VIZAG/2014: 16. THE COS ARE MERELY SUPPORTING THE ORDER OF THE CIT(A). SINCE WE HAVE UPHELD THE ORDER OF THE CIT(A) WHILE DISPOSING OFF DEPARTMENTS APPEALS IN ITA NOS.516/VIZAG/2013 & 517/VIZAG/2013, THE COS HAVE BECOME INFRUCTUOUS. 17. IN THE RESULT, APPEALS OF THE DEPARTMENT AS WELL AS CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 7 TH JULY14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 7 TH JULY, 2014 COPY TO 1 THE DCIT CIRCLE-3(1) (TDS), VIJAYAWADA 2 M/S. VIJAYA BANK, KOTHAGUDEM 3 THE CIT, VIJAYAWADA 4 THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM