M/s Pragathi Krishna Gramina Bank , Bellary V. Assistant Commissioner of Income Tax , Hubli

ITA 02/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7563 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 02-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEERA MALHOTRA CITIIDR
• Keywords: Opportunity of being heard
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.2/BANG/2017 ASSESSMENT YEAR : 2014-15 M/S. PRAGATHI KRISHNA GRAMIN BANK, HEAD OFFICE, NO.32, SANGANAKAL ROAD, GANDHI NAGAR, BELLARY 583 103. TAN: BLRP06283E VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, TDS CIRCLE, HUBLI. APPELLANT RESPONDENT APPELLANT BY : SMT. SHEETAL BORKAR, ADVOCATE RESPONDENT BY : MS. NEERA MALHOTRA, CIT-II(DR), ITAT, BENGALURU DATE OF HEARING : 20.09.2017 DATE OF PRONOUNCEMENT : 27.09.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINS T THE ORDER OF THE CIT(APPEALS) INTER ALIA ON THE FOLLOWING GROUNDS:- 1. THE ORDER U/S.201/201(1A) OF THE LEARNED COMM ISSIONER OF INCOME-TAX (A) IN RESPECT OF THE ASSESSMENT YEAR 2014-15 DETERMINING THE TDS LIABILITY AT RS.2.35,99,380/- I S AGAINST LAW, WEIGHT OF EVIDENCE AND PROBABILITIES OF THE CASE. 2. THE LEARNED CIT(A) OUGHT TO HAVE GIVEN SUFFICIEN T OPPORTUNITY FOR FURNISHING THE PARTICULARS OF INTER EST PAYMENTS MADE BY THE BANK AND THAT AN OPPORTUNITY SHOULD BE GIVEN FOR THE BANK TO FURNISH THE ACKNOWLEDGEMENTS IN RESPECT OF THE REMAINING ITA NO.2/BANG/2017 PAGE 2 OF 7 BRANCHES FOR HAVING FURNISHED BEFORE THE JURISDICTI ONAL CIT COPIES OF FORM NO.15G/ 15H. 3. THE LEARNED CIT(A) HAS ERRED BY CONCLUDING THAT JUST BECAUSE THE COPIES OF FORM NO. 15G/ 15H WERE NOT FU RNISHED WITHIN THE PRESCRIBED TIME BEFORE THE JURISDICTIONA L CIT, THE ENTIRE INTEREST SUPPORTED BY FORM NO.15G/15H IS LIA BLE FOR TDS. IT IS THE APPELLANT'S CONTENTION THAT ONCE THE BRAN CH MANAGERS OBTAIN FORM-15G/H FROM THE DEPOSITORS, THE LIABILIT Y TO DEDUCT TDS CEASES. THIS VIEW IS SUPPORTED BY THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF KARWART STEEL TRADERS. 4. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRE CIATED THAT THERE WAS NO OBLIGATION ON THE PART OF THE APP ELLANT TO DEDUCT TAX AT SOURCE BY APPLYING THE PROVISIONS OF SEC.194 A OF THE ACT AND CONSEQUENTLY THE PROVISIONS OF SEC.40 (A)(IA) O F THE ACT WERE NOT APPLICABLE TO JUSTIFY THE DISALLOWANCE AS MADE BY HIM. 5. THE LEARNED COMMISSIONER (A) ERRED IN UPHOLDING THE DISALLOWANCE EVEN THOUGH WHEN THE EXPENDITURE CLAIM ED WAS SUPPORTED BY 15G AND 15H GIVEN BY THE RECIPIENTS, O NLY ON THE GROUND OF THAT THE SUBMISSION OF THE COPIES OF THE FORMS WITH THE JURISDICTIONAL COMMISSIONER WAS BELATED. 6. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRE CIATED THOUGH THERE WAS DELAY, THE FORMALITIES HAVE BEEN C OMPLIED WITH AND THE GENUINENESS OF THE CLAIM WAS NOT DOUBTFUL, THE LEARNED COMMISSIONER (A) OUGHT TO HAVE ALLOWED THE DEDUCTIO N IN FULL. 7. THE LEARNED COMMISSIONER (A) ALSO OUGHT TO HAVE APPRECIATED THAT SEVERAL PAYMENTS OF INTEREST WERE OUTSIDE THE PURVIEW OF SEC.194A OF THE ACT AND CONSEQUENTLY THE PROVISIONS OF SEC.40(A)(IA) WILL NOT BE APPLICABLE TO JUSTIFY THE DISALLOWANCE OF DEDUCTION AS CLAIMED BY THE APPELLANT. 8. WITHOUT PREJUDICE, THE DISALLOWANCES ARE EXCESS IVE, ARBITRARY AND UNREASONABLE AND OUGHT TO BE REDUCED SUBSTANTIALLY. 9. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT T HE APPEAL MAY BE ALLOWED. ITA NO.2/BANG/2017 PAGE 3 OF 7 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE HAS INVITED OUR ATTENTION THAT IDENTICAL ISSUES WERE EX AMINED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AYS 2011-12 & 2012- 13 IN WHICH THE TRIBUNAL HAS RESTORED THE MATTER TO THE FILE OF THE AO TO ADJUDICATE THE ISSUE AFRESH AFTER AFFORDING THE ASSESSEE OPPORTUNITY OF BEING HEARD AND ASSESSEE TO FILE DETAILS/SUBMISSIONS. COPY OF THE ORDER IS PLACED ON RECORD. 3. THE LD. DR DID NOT DISPUTE THESE FACTS. 4. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES AND THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR TH E AYS 2011-12 & 2012- 13, COPY OF WHICH IS PLACED ON RECORD, WE FIND THAT THE IMPUGNED ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN AS SESSEES OWN CASE. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 3.2 WE HAVE HEARD RIVAL CONTENTIONS OF THE LD AR F OR THE ASSESSEE IN SUPPORT OF THE GROUNDS RAISED AND THE I D DR IN SUPPORT OF THE IMPUGNED ORDERS OF THE LD CIT(A) FOR BOTH ASST. YEARS 2011-12 2012-13. 13. THE GROUNDS RAISED (SUPRA) ARE IN RESPECT OF TH E TREATMENT OF THE ASSESSEE BY THE AUTHORITIES BELOW AS AN ASSE SSEE IN DEFAULT U/S 201(1) OF THE ACT FOR FAILURE ON ITS PART TO DE DUCT TAX AT SOURCE ON INTEREST PAYMENTS AS REQUIRED U/S 194A OF THE AC T. WHILE DISPOSING THE ASSESSEE'S APPEAL FOR ASST. YEARS 201 1-12, THE LD CIT(A) CONSIDERED THE ISSUE AND HELD AS UNDER AT PA RAS 5 TO 6 THEREOF. 5.0. IT IS CLEAR FROM THE ABOVE THAT THE AO COMPL ETED THE TDS ASSESSMENT AND PASSED ORDER 4/S 201/201(1A) OF THE ACT WITHOUT ITA NO.2/BANG/2017 PAGE 4 OF 7 GIVING SUFFICIENT TIME AND OPPORTUNITY. IN THE CASE OF APPELLANT BANK HAVING 325 BRANCHES IT COULD NOT COLLECT THE I NFORMATION WITH REGARD TO TDS DEDUCTED, PAID AND OTHER RELEVAN T INFORMATION IN TIME AND SUBMITTED BEFORE THE AO DURING THE TDS PROCEEDINGS. THE AO HAS NOT CONSIDERED THE FORM NO. 15G/H SINCE THEY HAVE NOT FILED BEFORE JURISDICTIONAL CIT IN PRESCRIBED TIME. 5.1. THE CIT(A), HUBLI IN ASSESSEE'S OWN CASE ON THE SAME ISSUES FOR A.Y.2010-11 (AFTER CONSIDERING THE SUBMI SSIONS OF ASSESSEE AND THE ASSESSMENT ORDER HELD AS 'HENCE, T HE AO IS DIRECTED TO VERIFY THE BRANCH WISE AND DEDUCTEE WIS E DETAILS OF THE INTEREST PAYMENTS AND FILLING OF THE FORM 15G/H, BE FORE RESPECTIVE CITS, IN TIME AND AFTER GIVING A REASONA BLE OPPORTUNITY TO THE ASSESSEE, THE CLAIM OF THE ASSESSEE HAS TO B E CONSIDERED ACCORDINGLY. 6.0 IT CAN BE OBSERVED FROM THE ORDER OF CIT(A), H UBLI IN ASSESSEE'S OWN CASE FOR A.Y.2010-11 ON THE SAME ISS UE, THE ASSESSEE HAD NOT SUBMITTED THE REQUIRED INFORMATION IN TIME DURING THE TDS VERIFICATION BY THE JURISDICTIONAL A O. IN THE A.Y.2011-12 ALSO THE ASSESSEE HAS NOT SUBMITTED THE INFORMATION IN TIME FOR TDS VERIFICATION. SINCE THE TIME IS GET TING BARRED TO COMPLETE THE TDS VERIFICATION PROCESS AND TO PASS T HE ORDER U/S 201(1)/201(1A) OF THE ACT, THE AO CANNOT WAIT FOR I NFORMATION AND PASSED THE ORDER U/S 201(1)/201(1A) OF THE ACT. IT CAN BE SEEN THAT THIS HAS BECOME THE ASSESSEE'S REGULAR PRACTIC E FOR NOT PRODUCING INFORMATION IN TIME STATING THE PRACTICAL PROBLEMS OF THE ASSESSEE BANK FOR COLLECTING THE INFORMATION FR OM ALL ITS BRANCHES. IT IS ASSESSEE'S DUTY TO COMPLY WITH THE TDS PROVISIONS AND TO KEEP THE INFORMATION READY WHICH IS MANDATOR ILY TO BE MAINTAINED AS PER THE TDS PROVISIONS. WHENEVER JURI SDICTIONAL AO CALLS FOR INFORMATION FOR TDS VERIFICATION IT IS THE ASSESSEE'S DUTY TO CO-OPERATE AND PROVIDE THE INFORMATION VIZ COMPLETE PARTICULARS OF INTEREST PAYMENTS BRANCH WISE AND DE DUCTEE WISE AND FILING OF THE FORM 15G/15H WHICH HAS TO BE FILE D BEFORE JURISDICTIONAL CITS WITHIN PRESCRIBED TIME. IN THIS CASE THE ASSESSEE FAILED TO PROVIDE THE INFORMATION IN TIME TO COMPLETE THE TPS VERIFICATION PROCESS AND TO PASS T HE ORDER U/S 201(1)/201(1A) OF THE ACT. HENCE THE DISALLOWANCE M ADE BY THE AO IS IN ORDER AND IS UPHELD. THE GROUNDS OF APPEAL OF THE ASSESSEE ARE DISMISSED. ITA NO.2/BANG/2017 PAGE 5 OF 7 3.2.2 FROM A PERUSAL OF THE OBSERVATIONS AND FIND INGS RENDERED BY THE LD CIT(A) AT PARA 5 AND 6 OF THE IMPUGNED OR DER FOR ASST. YEAR 2011-12 (SUPRA), IT IS AMPLY CLEAR THAT THE AO COMPLETED THE TDS ASSESSMENT, AND PASSED THE ORDERS U/S 201(1)/20 1(1A) OF THE ACT FOR THIS YEAR, ADMITTEDLY WITHOUT AFFORDING THE ASSESSEE SUFFICIENT TIME AND OPPORTUNITY TO COLLECT THE INFO RMATION FROM ITS 325 BRANCHES IN RESPECT OF TDS DEDUCTED ON INTEREST PAYMENTS AND OTHER RELEVANT INFORMATION FOR HIS CONSIDERATIO N. IT IS FURTHER OBSERVED BY THE LD CIT(A) THAT IN SIMILAR CIRCUMSTA NCES, THE LD CIT(A) WHILE DISPOSING OFF THE ASSESSEE'S APPEAL FO R ASST. YEAR 2010-11 ON IDENTICAL ISSUES HAD, AFTER CONSIDERING THE ASSESSEE'S SUBMISSIONS, DIRECTED THE AO TO VERIFY THE BRANCH W ISE AND DEDUCTEE WISE DETAILS OF THE INTEREST PAYMENTS AND FILING OF FORM 15G/15H BEFORE THE RESPECTIVE C'SIT IN TIME AND TO CONSIDER THE ASSESSEE'S CLAIMS AFTER AFFORDING REASONABLE OPPORT UNITY TO THE ASSESSEE. AFTER ADMITTEDLY OBSERVING AS ABOVE, THE LD CIT(A) HAS STRANGELY PROCEEDED TO UPHOLD ORDERS OF THE AO STAT ING THAT THE ASSESSEE IS IN THE REGULAR PRACTICE OF NOT PROVIDIN G INFORMATION REQUIRED FOR TDS VERIFICATION BEFORE THE AO AND SIN CE THE MATTER WAS GETTING BARRED BY LIMITATION, THE AO'S ACTION I N PASSING THE ORDERS U/S 201(1)/201(1A) OF THE ACT WAS UPHELD. IN OUR CONSIDERED VIEW ON AN APPRAISAL OF THE MATERIAL ON RECORD, WE FIND THAT THE FACTUAL SITUATION ON THE IDENTICAL IS SUE PREVAILING IN THE ASST. YEAR 2010-11, IS SIMILAR TO THAT PREVAILI NG IN THE ASST. YEARS 2011-12 AND 2012-13, I.E THE YEARS UNDER CONS IDERATION BEFORE US; WHERE THE AO WAS DIRECTED BY CIT(A) TO V ERIFY AND EXAMINE THE ISSUE AFRESH AND CONSIDER THE ASSESSEE' S CLAIM AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEIN G HEARD. IN THE CASE OF HAND IT IS NOT CLEAR FROM THE RECORD AS TO HOW MANY CASES OF PAYMENT OF INTEREST THE ASSESSEE WAS HAVING FORM NO.15G/15H AND WHETHER THESE FORMS WERE AT ALL SUBM ITTED WITH THE JURISDICTIONAL CIT. IN THIS FACTUAL MATRIX OF THE CASE, AS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE IMP UGNED ORDERS OF THE LD CIT(A) FOR BOTH ASST. YEARS 2011-1 2 AND 2012- 13 REJECTING THE ASSESSE'S CLAIMS WHICH ARE PRESENT LY BEFORE US FOR CONSIDERATION, CANNOT BE SUSTAINED IN VIEW OF T HE OBSERVATIONS BY THE LD CIT(A) OF THE LACUNA AND SHO RTCOMINGS OF THE AO IN CARRYING OUT PROPER VERIFICATION IN TH E TDS MADE ON INTEREST PAYMENTS. IN THIS VIEW OF THE MATTER, W E, THEREFORE, IN THE INTEREST OF EQUITY AND JUSTICE, SET ASIDE TH E IMPUGNED ORDERS OF THE LD CIT(A) FOR ASST. YEARS 2011-12 AND 2012-13 AND RESTORE THE MATTER TO THE FILE OF THE AO FOR DE NOVO ITA NO.2/BANG/2017 PAGE 6 OF 7 ADJUDICATION OF THIS MATTER, WITH THE DIRECTIONS TO VERIFY THE ASSESSEE'S TDS LIABILITY BRANCH WISE AND DEDUCTEE W ISE DETAILS OF INTEREST PAYMENTS ON THE POINT OF AVAILABILITY O F FORM NO.15G/15H ONLY IN RESPECT OF CASES WHEN SUCH FORMS WERE BEFORE THE RESPECTIVE CIT EVEN THOUGH BELATEDLY. TH E ASSESSEE WILL GET THE BENEFIT OF AVAILABILITY OF FORM NO.15G /15H ONLY IN RESPECT OF CASES WHERE SUCH FORMS ARE AVAILABLE WIT H THE ASSESSEE AND SUBMITTED WITH THE JURISDICTIONAL CIT CONCERNED. NEEDLESS TO ADD THAT THE AO WILL ADJUDICATE THE MAT TER DENOVO ONLY AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUN ITY OF BEING HEARD IN THE MATTER AND TO FILE DETAILS/SUBMISSIONS REQUIRED IN THIS REGARD. CONSEQUENTLY, THE ASSESSEE'S GROUNDS ARE TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. 5. SINCE THE TRIBUNAL HAS TAKEN A PARTICULAR VIEW I N A SIMILAR SET OF FACTS, WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THIS APPEAL. ACCORDINGLY, FOLLOWING THE ORDER OF THE TRIBUNAL, WE SET ASIDE T HE ORDER OF CIT(APPEALS) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO READJUDICATE THE MATTER DE NOVO AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. THE ASSESSEE IS ALSO D IRECTED TO EXTEND ALL SORTS OF COOPERATION TO THE DEPARTMENT. ACCORDINGL Y, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF SEPTEMBER, 2017. SD/- SD/- ( A.K. GARODIA ) ( SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 27 TH SEPTEMBER, 2017. / D ESAI S MURTHY / ITA NO.2/BANG/2017 PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.