Oxford Paper & Boards, Kolkata V. I.T.O Wd - 35(1),kolkata, Kolkata

ITA 1277/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99653 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 15-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAD J
• Assessee Lawyers: P K SANGHAI
• Keywords: Opportunity of being heard; Reasonable cause
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1277/KOL/2013 ASSESSMENT YEAR:2008-09 OXFORD PAPER & BOARDS 23A, N.S. ROAD, 7 TH FLOOR, ROOM NO. 10, KOLKATA 700 001 [ PAN NO. AAAFO 5430 G ] / V/S . ITO, WARD-35(1), 18, RABINDRA SARANI, KOLKATA-1 /APPELLANT .. /RESPONDENT /BY APPELLANT SRI P.K. SANGHAI, ADVOCATE /BY RESPONDENT SRI RAJENDRA PRASAD, JCIT-DR /DATE OF HEARING 14-07-2015 /DATE OF PRONOUNCEMENT 07-08-2015 /O R D E R THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF COM MISSIONER OF INCOME TAX (APPEALS)-XX, KOLKATA IN APPEAL NO. 198.CIT(A)-XX/W ARD35(1)/2010-11/KOL DATED 12-02-2013. ASSESSMENT WAS FRAMED BY ITO WARD-35(1) KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 20-12- 2010 FOR ASSESSMENT YEAR 2008-09. 2. ONLY ISSUE INVOLVED IN THIS APPEAL OF ASSESSEE I S AGAINST THE ORDER OR LD. CIT(A) FOR CONFIRMING THE ACTION OF AO FOR DISALLOW ING INTEREST EXPENSE AMOUNTING TO RS.4,48,861/- U/S 40(A)(IA) OF THE ACT FOR FAILURE TO DEDUCT INCOME TAX AT SOURCE AND NON PROCUREMENT OF FORM 15G FROM THE PARTIES WITHIN THE STIPULATED TIME. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND:- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS WRONG IN CONFIRMING THE ACTION OF LD. AO WHO DISALLOWED INTE REST EXPENSES AMOUNTING TO RS.4,48,861/- U/S 40(A)(IA) OF THE INCOME TAX ACT 1 961 DESPITE RECEIPT OF FORM NO 15G. ITA NO. 1277/KOL/2013 A.Y. 2008-09 OXFORD PAPER & BOARDS V. ITO WD-23(1) KOL. PAGE 2 3. BRIEFLY STATED FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO IN ORDER TO VERIFY THE COMPLIANCES OF TDS PROVISION, A SKED, THE ASSESSEE TO FURNISH THE REQUISITES DETAILS INCLUDING THE FORM 15G RECEIVED BY THE ASSESSEE WITH REFERENCE TO SECTION 197A(IC) OF THE ACT. ON GOING THROUGH THE C OPIES OF FORM 15G SUBMITTED BY ASSESSEE. AO NOTICED THAT NEITHER FORM 15G WERE PRO PERLY FILLED IN NOR SUBMITTED TO THE DEDUCTEES WITHIN THE STIPULATED TIME I.E, WITHI N THE LAST DATE OF THE FINANCIAL YEAR I.E. 31 ST MARCH 2008. THE FORMS WERE SUBMITTED TO THE DEDUCT EES ON 04.04.2008 I.E., AFTER THE EXPIRY OF RELEVANT FINANCIAL YEAR 2007-08 I.E. AFTER THE CLOSING OF ACCOUNTS ON 31STD MARCH, 2008. THE ASSESSEE WAS ASKED TO SHOW C AUSE AS TO WHY THESE FORMS S15G SIGNED BY THE DEDUCTEES IN THE MONTH OF APRIL, 2008 SHOULD NOT BE TREATED AS INVALID AND PAYMENT OF INTEREST CORRESPONDING TO TH IS FORM 15G SHOULD BE DISALLOWED TO U/S. 40(A)(IA) OF THE ACT. 4. IN REPLY TO THE SHOW CAUSE NOTICE OF AO, THE AR OF THE ASSESSEE SUBMITTED THAT ALL THE FORMS 15G WERE DULY RECEIVED BY THE ASSESSE E DURING THE FIRST WEEK OF MARCH, 2008 BUT WERE MISPLACED FOR SOME REASONS AND COULD NOT BE FOUND TILL THE END OF YEAR I.E. 31-03-2008 AND THEREFORE ASSESSEE REQUESTED AL L THOSE PARTIES TO SUBMIT FORM 15G AFRESH. THE UNSECURED LOAN PROVIDERS ACCEPTED THE R EQUEST OF THE ASSESSEE AND RE- SUBMITTED THE FORM 15G AFTER 31 ST MARCH, 2008, HOWEVER, AO DID NOT ACCEPT THE PLEA OF THE ASSESSEE AND DISALLOWED THE INTEREST PAID TO THOSE PARTIES FOR NON SUBMISSION OF FORM 15G TOTALING TO RS.4,48,861/- U/S 40(A)(IA) OF THE ACT FOR FAILURE TO DEDUCT TDS AS WELL AS FAILURE TO PROCURE FROM 15G FROM THE PAR TIES WITHIN THE STIPULATED TIME. AGGRIEVED, ASSESSEE WENT FOR APPEAL BEFORE LD. CIT( A) AND LD. CIT(A) ALSO CONFIRMED THE VIEW TAKEN BY AO AND SAID IN HIS ORDE R VIDE PARA-5.2 WHICH REPRODUCED AS UNDER:- 5-2 I HAVE PERUSED THE ASSESSMENT ORDER AND CONSI DERED THE SUBMISSION OF THE APPELLANT. THE FACT OF THE CASE IS THAT THE APPELLANT PAID INTEREST ON LOANS TO VARIOUS PERSONS BUT NO TAX WAS DEDUCTED. T HE APPELLANT CLAIMED THAT THEY HAD RECEIVED FORM NO. 15G FROM THE PERSON S CONCERNED, HENCE, NO TAX WAS REQUIRED TO BE DEDUCTED. HOWEVER, THE A FOUND THAT THE DATE ON FORM NO. 15G WAS 04.04.2008 AND SIGNED BY THE DE DUCTEES ON 04.04.2008 ITSELF. THE APPELLANT ARGUED THAT ORIGIN AL FORM SUBMITTED BY THE DEDUCTEES WERE MISPLACED, THEREFORE, THEY RESUB MITTED THE FORM 15G ITA NO. 1277/KOL/2013 A.Y. 2008-09 OXFORD PAPER & BOARDS V. ITO WD-23(1) KOL. PAGE 3 AFTER 31.03.2008 BUT INADVERTENTLY PUTTING THE SAME DATE ON WHICH THE FORMS WERE RESUBMITTED. I DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE APPELLANT, AS PER PROVISION OF SECTION 194A, THE AP PELLANT WAS REQUIRED TO DEDUCT TAX ON PAYMENT OF INTEREST BUT THEY FAILED T O DO SO. THE CLAIM OF THE APPELLANT FOR SUBMISSION OF FORM NO 15G DOES NOT AP PEAR TO BE CORRECT AS THE FACTS AND CIRCUMSTANCES ITSELF SHOW THAT THE SAME WERE SUBMITTED AFTER THE CLOSING OF THE YEAR. UNDER THESE CIRCUMST ANCES, THE ACTION OF THE AO TO INVOKE PROVISION OF SECTION 40(A)(IA) IS CORR ECT. AGGRIEVED, NOW ASSESSEE CAME IN SECOND APPEAL BEFOR E THE TRIBUNAL. 5. LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAPER B OOK IN REGARD TO THE COPIES OF FORM 15G RECEIVED FROM THE PARTIES AND SUBMITTE D TO I.T. AUTHORITIES ON 07- 04-2008 WHICH IS WELL WITHIN THE STATUTORY TIME-LIM IT GIVEN IN THE ACT FOR SUBMITTING FORM 15G BEFORE THE TAX AUTHORITY. HE FU RTHER PRAYED THAT ALL THE FORM 15G HAD ALL THE REQUISITES DETAILS FILLED IN I NCLUDING THE ASSESSMENT YEAR I.E. 2008-09 FOR WHICH THE FORM 15G HAVE BEEN SUBMI TTED. FURTHER, LD. COUNSEL FOR THE ASSESSEE ALSO BROUGHT MY ATTENTION TO THE A SSESSEES PAPER BOOK HAVING THE COPIES OF MISPLACED FORM-15G WHICH WERE DATED 0 1-03-2008 AND WHICH HE AGAIN GOT RE-SIGNED FROM THOSE PARTIES ON 04-04-200 8. LD. COUNSEL URGED FOR RELIEF ON THIS GROUND THAT AS FORM 15G WERE DULY RE CEIVED BY IT DURING THE RELEVANT FINANCIAL YEAR IT WAS NOT REQUIRED ON ITS PART TO DEDUCT THE TAX TDS ON THE INTEREST PAYMENTS MADE TO THE PARTIES FROM WHOM ASSESSEE HAD RECEIVED FORM 15G HENCE, THE INTEREST PAYMENT SHOULD NOT BE DISALLOWED U/S. 40(A)(IA) OF THE ACT. ON THE CONTRARY, LD. DR SUPPORTED THE ORDE RS OF AUTHORITIES BELOW AND DID NOT PUT ANY FRESH SUBMISSION BEFORE ME. 6. I HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. SECTION 194A PROVIDES FO R DEDUCTION OF TDS INTEREST PAID BY THE ASSESSEE AT THE APPROPRIATE RATE AND SE C. 197A PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN SEC. 194A NO DEDUCTION SHALL BE MADE ITA NO. 1277/KOL/2013 A.Y. 2008-09 OXFORD PAPER & BOARDS V. ITO WD-23(1) KOL. PAGE 4 UNDER THIS SECTION IF THE PAYEE OF THE INTEREST FUR NISH TO THE PERSON RESPONSIBLE FOR PAYING THE INTEREST, A DECLARATION IN WRITING I N DUPLICATE IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER TO THE E FFECT THAT THE TAX ON HIS ESTIMATED TOTAL INCOME OF THE PREVIOUS YEAR IN WHIC H THE INTEREST IS TO BE INCLUDED WILL BE NIL. SUB-SECTION (2) PROVIDES THAT THE PERSON RESPONSIBLE FOR PAYING INTEREST SHALL DELIVER OR CAUSE TO BE DELIVE RED TO THE CCIT OR CIT ONE COPY OF THE DECLARATION SUBMITTED BY THE PAYEE OF T HE INTEREST TO THE ASSESSEE ON OR BEFORE THE SEVENTH DAY OF THE MONTH NEXT FOLLOWI NG THE MONTH IN WHICH THE DECLARATION WAS FURNISHED TO HIM. IF THE PERSON RES PONSIBLE FOR PAYING THE INTEREST (I.E. THE ASSESSEE) DOES NOT COMPLY WITH S UB-SECTION 2 OF SEC. 197A OF THE ACT, HE IS LIABLE TO PAY PENALTY OF RS.100/- FO R EVERY DAY DURING WHICH THE FAILURE CONTINUES. SUCH PENALTY CAN BE IMPOSED ONLY BY THE COMMISSIONER OR CHIEF COMMISSIONER OF INC TAX AS STATED IN CLAUSE ( B) OF SUB-SECTION 3 OF SEC. 272A IN SUB-SECTION 3 OF SEC. 272A OF THE ACT AND I N SUB-SECTION 4 REQUIRES THAT AN OPPORTUNITY SHALL BE GIVEN TO THE ASSESSEE BEFOR E ANY PENALTY ORDER IS PASSED. 7. IN THE PRESENT CASE, THE CLAIM OF THE ASSESSEE I S THAT AT THE TIME OF PAYING THE INTEREST TO THE PARTIES AS MENTIONED IN THE ASS ESSMENT ORDER HE HAD BEFORE HIM THE APPROPRIATE DECLARATION FORM 15G RECEIVED F ROM THE PAYEES STATING THAT NO TAX WAS PAYABLE IN RESPECT OF THEIR TOTAL INCOME AND THEREFORE TAX NEED NOT BE DEDUCTED FROM INTEREST U/S 194A AND IN THE LIGHT OF THIS DECLARATION, HE HAD NO OPTION BUT TO MAKE PAYMENT FOR INTEREST WITHOUT ANY TAX DEDUCTION. FURTHER IN CASE BEFORE ME, THE AO HAS NEVER OBJECTED TO ANY DE TAILS AS WERE PROVIDED IN THE FORM 15G AND ONLY POINT ON WHICH BASIS THE AO H AS DISALLOWED THE INTEREST PAID IS THE DATE OF SIGNING OF THE DECLARATION OF F ORM 15G WHICH HAS BEEN 4 TH APRIL, 2008 IN A FEW CASES. HOWEVER, THE COPIES OF THOSE MISPLACED FORM 15G WHICH WERE LATER ON LOCATED BY THE ASSESSEE ARE ALS O ON RECORD AND WHICH HAS THE DECLARATION DATE MENTIONED AS ON 01-03-2008. THERE WAS A REASONABLE CAUSE ON THE PART OF THE ASSESSEE IN REGARD TO FORM 15G WHIC H WERE MISPLACED AND AGAIN ITA NO. 1277/KOL/2013 A.Y. 2008-09 OXFORD PAPER & BOARDS V. ITO WD-23(1) KOL. PAGE 5 LOCATED AFTER SOMETIME AND ASSESSEE MADE DUE EFFORT S TO AGAIN GET FRESH FORM 15G SO AS TO COMPLY WITH THE PROVISION OF SEC. 197A (1A) TO FURNISH FORM 15G BEFORE 7 TH APRIL OF EACH YEAR. THERE IS NO DISPUTE IN REGARD TO SUBMISSION OF THE FORMS ON 07-04-2008. UNLESS IT HAS BEEN PROVED THAT FORM 15G WERE NOT IN FACT SUBMITTED BY THE LOAN CREDITORS TO THE ASSESSEE, TH E ASSESSEE CANNOT BE BLAMED BECAUSE AT THE TIME OF PAYING INTEREST TO THE LOAN CREDITORS, HE HAS TO PERFORCE RELY UPON THE DECLARATIONS FILED BY THE LOAN CREDIT ORS AND HE WAS NOT EXPECTED TO EMBARK UPON AN ENQUIRY AS TO WHETHER THE LOAN CREDI TORS REALLY AND IN TRUTH HAD NO TAXABLE INCOME ON WHICH TAX IS PAYABLE. THAT WOU LD BE PUTTING AN IMPOSSIBLE BURDEN ON THE ASSESSEE. ALSO IN ALL THE FORMS 15G S UBMITTED WERE DULY INCORPORATING NAME, ADDRESS, OCCUPATION, ASSESSMENT YEAR I.E. 2008-09, AMOUNT OF SUM PAID AND DULY SIGNED. 8. THE SUB-SECTION 1A OF SEC. 197A OF THE ACT MEREL Y REQUIRES A DECLARATION TO BE FILED BY THE PAYEE OF THE INTEREST AND ONCE I T IS FILED THE PAYER OF THE INTEREST HAS NO CHOICE EXCEPT TO DESIST FROM DEDUCT ING INCOME TAX AT SOURCE FROM INTEREST. THE SUB-SECTION USES THE WORD SHALL WHICH LEAVES NO CHOICE TO THE ASSESSEE IN THE MATTER. THIS ISSUE IS SQUARELY COVE RED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF MUMBAI BENCH F BENCH IN THE CASE OF VIPIN P. MEHTA V. ITO IN ITA NO.3317/MUM/2010 DATED 20-05-2011 AND WHICH HAS GIVEN FOLLOWING FINDING AS UNDER:- 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 IN DICATE THAT THE FAILURE ON THE PART OF THE ASSESSEE, WHO IS THE PAY ER 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 LIMIT, IT CANNOT BE SAID THAT THE ASSESSEE DID NOT HAVE DECLARATIONS WITH HIM AT THE TIME WHEN HE PAID THE INTEREST TO THE PAYEES. THAT WOULD BE A SEPARATE MA TTER AND ITA NO. 1277/KOL/2013 A.Y. 2008-09 OXFORD PAPER & BOARDS V. ITO WD-23(1) KOL. PAGE 6 SEPARATE PROOF AND EVIDENCE IS REQUIRED TO SHOW THA T EVEN WHEN THE ASSESSEE PAID THE INTEREST, HE DID NOT HAVE THE DECLARATIONS FROM THE PAYEES WITH HIM AND THEREFORE HE OUGHT TO HAVE DEDUCTED THE TAX FROM THE PAYMENT. NO SUCH EVIDENCE OR PROOF HAS BEEN BROUGHT BY THE DEPARTMENT. 8. FOR THE AFORESAID REASONS, WE ACCEPT THE ASSESS E CLAIM THAT SINCE HE HAD THE DECLARATIONS OF THE PAYEES IN THE PRESCRIBED FORM BEFORE HIM AT THE TIME WHEN THE INTEREST WAS PAID, HE WAS NOT LIABLE TO DEDUCT TAX THEREFROM UNDER SECTION 194A. IF HE W AS NOT LIABLE TO DEDUCT TAX, SECTION 40(A)(IA) IS NOT ATTRACTED. THE RE IS NO OTHER GROUND TAKEN BY THE INCOME TAX AUTHORITIES TO DISAL LOW THE INTEREST. WE THEREFORE ACCEPT THE ASSESSEES APPEAL AND DELET E THE DISALLOWANCE OF INTEREST OF RS.7,87,291/-. IN VIEW OF THE ABOVE, I AM OF THE VIEW THAT ASSESSE E HAS SUBMITTED FORM 15G WELL IN THE STIPULATED TIME-LIMIT ALONG WITH ALL TH E RELEVANT DETAILS AND DISALLOWANCE U/S 40(A)(IA) OF THE ACT CANNOT BE MAD E ONLY FOR TOPOGRAPHICAL ERROR IN FILLING THE VERIFICATION DATE IN DUPLICATE FORM 15G FILLED UP BY PAYEES. ALL THE ORIGINAL FORM 15G WERE RECEIVED BY THE ASSE SSEE BEFORE THE END OF FY 2007-08 AND THOSE HAVE BEEN SUBMITTED TO THE DEPART MENT BEFORE 07-04-2008 AND ASSESSEE WAS CORRECT IN NOT MAKING DEDUCTION OF TDS AS PER THE PROVISION OF SEC. 197A (1A) OF THE ACT AND AS SUCH, I REVERSE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE DISALLOWANCE OF INTEREST CLAIM ED BY THE ASSESSEE. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. 9. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 07/08/2015 SD/- (MAHAVIR SINGH) JUDICIAL MEMBE R KOLKATA, *DKP - 07/08/2015 ITA NO. 1277/KOL/2013 A.Y. 2008-09 OXFORD PAPER & BOARDS V. ITO WD-23(1) KOL. PAGE 7 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT-OXFORD PAPER & BOARDS, 23A, N.S.ROAD, 7 TH FLOOR ROOM NO-1 0, KOLKATA-01 2. / RESPONDENT- ITO WARD-35(1), 18 RABINDRA SARANI, KOL-1 3. ' % / CONCERNED CIT KOLKATA 4. % - / CIT (A) KOLKATA 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORD ER/ , / ',