M/s Vijaya Bank, Gurgaon V. ITO, Gurgaon

ITA 2674/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74300 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 12-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAGAN SOOD
• Keywords: Opportunity of being heard; Reasonable cause; Procedural lapse
• Section: 273B; 201(1)

Judgement Text

ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.2672/DEL/2013 ASSESSMENT YEAR : 2007-08 I.T.A.NO.2673/DEL/2013 ASSESSMENT YEAR : 2008-09 I.T.A.NO.2674/DEL/2013 ASSESSMENT YEAR : 2009-10 VIJAYA BANK, VS INCOME TAX OFFICER, GURGAON BRANCH, T DS WARD, PAYAL CINEMA COMPLEX, GURGAO N. SECTOR-14, GURGAON. (PAN: AAACV4791J) (APPELLANT) (RESPONDENT ) APPELLANT BY: SHRI S. ANANTHAN , MRS. LALITHA RAMESWARAN RESPONDENT BY : SHRI GAGAN SOOD, SR.DR O R D E R PER CHANDRAMOHAN GARG, J.M. THESE APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX(A-2), FARIDAB AD DATED 20.02.2013 IN APPEAL NO. 6/GGN/2010-11 FOR AY 2007-08; APPEAL NO. 17/GGN/2010- 11 FOR AY FOR AY 2008-09; AND APPEAL NO. 18/GGN/201 0-11 FOR AY 2009- 10. ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 2 2. ALTHOUGH THE ASSESSEE HAS TAKEN AS MANY AS SEVEN SIMILAR GROUNDS IN ALL THESE APPEALS BUT EXCEPT GROUND NO.2, OTHER GRO UNDS OF THE ASSESSEE ARE SUPPORTIVE AND ARGUMENTATIVE TO THE MAIN GROUND I.E . GROUND NO. 2 WHICH READS AS UNDER:- 2. THE LD.CIT(A) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER PASSED U/S 201(1) AND 201(A) OF T HE INCOME TAX ACT FOR NON/LESS DEDUCTION OF TAX AT SOU RCE. 3. BRIEFLY STATED THE FACTS GIVING RISE TO THESE AP PEALS ARE THAT THE ASSESSEE IS A NATIONALIZED BANK IN WHICH MAJORITY O F SHARES ARE HELD BY CENTRAL GOVERNMENT HAVING A BRANCH IN GURGAON. THE BRANCH OF THE ASSESSEE BANK HAD DEDUCTED THE TAX AND ALSO FILED T HE RELEVANT RETURNS TO THE DEPARTMENT. A SURVEY WAS CONDUCTED ON 15 TH DECEMBER, 2009 ON THE ASSESSEE BRANCH. DURING THE COURSE OF INSPECTION O F THE BRANCH, THE ASSESSEE HAD PROVIDED NECESSARY DOCUMENTS CALLED FOR BY THE TAX AUTHORITIES. DURING THE SURVEY, THE INSPECTING OFFICIALS OBSERVED THAT THERE WAS SHORT DEDUCTION OF TAX IN SOME CASES AND THE BRANCH HAS FAILED TO D EDUCT TAX AT SOURCE IN SOME OF THE CASES WITHOUT OBTAINING FORM NO. 15G AN D FORM NO. 15H. THOUGH THE ASSESSEE BANK HAD OBTAINED FORM NO. 15G AND FORM NO. 15H BUT THE SAME WAS NOT SUBMITTED TO THE JURISDICTIONA L COMMISSIONER OF INCOME TAX WITHIN DUE TIME. SUBSEQUENTLY, FORM NO. 15G AND FORM 15H WERE PRODUCED TO THE ASSESSING OFFICER. REJECTING THE CONTENTIONS AND ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 3 SUBMISSIONS OF THE ASSESSEE, THE LD. ASSESSING OFFI CER DETERMINED THE TAX PAYABLE U/S 201 OF THE INCOME TAX ACT, 1961 (FOR SH ORT THE ACT) AT RS.3,59,950 AND INTEREST PAYABLE THEREON U/S 201(1A ) AT RS.1,61,955/-. BEING AGGRIEVED BY THE ABOVE ORDER U/S 201 AND 201( 1A), THE ASSESSEE PREFERRED AN APPEAL TO THE COMMISSIONER OF INCOME T AX(APPEALS-2), FARIDABAD BUT REMAINED EMPTY HANDED BECAUSE THE ORD ER OF THE AO WAS CONFIRMED BY THE FIRST APPELLATE AUTHORITY. FURTHE R, BEING AGGRIEVED BY THE SAID IMPUGNED ORDER OF THE COMMISSIONER OF INCOME T AX(APPEALS-2), FARIDABAD, THE ASSESSEE HAS PREFERRED THE PRESENT A PPEALS ON THE MAIN GROUND AS REPRODUCED HEREINABOVE. 4. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY PERUSED THE RECORD. LD. AR SUBMITTED THAT THE COMM ISSIONER OF INCOME TAX(A) GROSSLY ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER BECAUSE THE COMMISSIONER OF INCOME TAX(A) FAILED TO APPRECIATE THE FACT THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS TIME BARRED AND THERE WAS NO SHORT DEDUCTION OF TAX. LD. COUNSEL OF THE ASSE SSEE FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME TAX(A) WAS NOT JUSTIFIED IN NOT APPRECIATING THE IMPORTANT FACT THAT THE BRANCH HAD OBTAINED FOR M NO. 15 H AND 15G IN ALL THE CASES AND NON-SUBMISSION OF THE SAME WAS ON LY A TECHNICAL BREACH AND AS SUCH, ASSESSEE CANNOT BE CONSTRUED AS AN ASS ESSEE IN DEFAULT. LD. AR ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 4 FURTHER POINTED OUT THAT THE ASSESSEE CANNOT BE HEL D AS ASSESSEE IN DEFAULT WITHOUT PROVING THAT THE RECIPIENT OF THE INCOME HA S NOT PAID THE TAX. 5. DURING THE ARGUMENTS, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PLACED RELIANCE ON VARIOUS DECISIONS OF COORDINATE BENCHES OF TRIBUNAL INCLUDING DECISION OF ITAT, MUMBAI BENCH F IN THE CASE OF VIPIN P. MEHTA VS ITO (2011) 11 TAXMANN.COM 342 (MUM); DECIS ION OF ITAT PUNE BENCH A IN THE CASE OF GOKULDAS VIRJIBHAI & COMPANY VS ITO (2010) 27 TAXMANN.COM 26 (PUNE) AND DECISION OF ITA T MUMBAI BENCH A IN THE CASE OF KARWAT STEEL TRADERS VS ITO (201 3) 37 TAXMANN.COM 190 (MUMBAI) AND SUBMITTED THAT IT IS AN UNDISPUTED FACT THAT TH E ASSESSEE HAD OBTAINED FORM NO. 15G AND 15H AS PROVIDED U/S 1 97A(1A) OF THE ACT BUT THE ASSESSEE DID NOT FURNISH THE SAID FORM TO T HE JURISDICTIONAL COMMISSIONER OF INCOME TAX WHICH IS MERELY A PROCED URAL LAPSE. IT WAS ALSO SUBMITTED ON BEHALF OF THE ASSESSEE THAT ONCE THE ASSESSEE HAD OBTAINED FORM NO. 15G FROM THE PAYEE ASSESSEE, THEN THE PAYE R APPELLANT HAS NO LEGAL OBLIGATION TO DEDUCT THE TAX ON THE PAYMENT MADE TO THE PAYEE. 6. REPLYING TO THE ABOVE, LD. DR FAIRLY ACCEPTED TH AT AS PER OBSERVATIONS MADE BY THE COMMISSIONER OF INCOME TAX(A) IN THE IM PUGNED ORDER, THE ASSESSEE OBTAINED FROM NO. 15G AND 15H FROM THE CUS TOMERS TO WHOM PAYMENT OF INTEREST WAS MADE AND NO TAX WAS DEDUCTE D AT SOURCE, AT THE SAME ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 5 TIME IT WAS THE DUTY OF THE ASSESSEE TO DELIVER THE SE FORMS BEFORE 7 TH DAY OF THE MONTH NEXT FOLLOWING THE MONTH IN WHICH FORM WA S FURNISHED TO IT. THE DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AN D SUBMITTED THAT THE ASSESSEE BANK IS DUTY BOUND TO DELIVER AND SUBMIT F ORM 15G AND 15H TO THE JURISDICTIONAL COMMISSIONER OF INCOME TAX AND OMISS ION IN THIS REGARD IS ATTRIBUTABLE TO THE ASSESSEE FOR WHICH ASSESSEE HAS NO BONAFIDE REASON. 7. ON CAREFUL PERUSAL OF RECORD AND DECISIONS RELIE D BY THE ASSESSEE APPELLANT, AT THE OUTSET, WE OBSERVE THAT UNDISPUTE DLY, THE ASSESSEE BANK OBTAINED FORM NO. 15G AND 15H FROM THE CUSTOMERS TO WHOM THE PAYMENT OF INTEREST WAS MADE AND NO TAX WAS DEDUCTED AT SOU RCE. FURTHER, WE ALSO OBSERVE THAT THESE FORMS WERE NOT SUBMITTED TO THE JURISDICTIONAL COMMISSIONER OF INCOME TAX, FARIDABAD WITHIN THE PR ESCRIBED TIME AS PER PROVISIONS OF THE ACT. IN THE CASE OF VIPIN P. MEH TA (SUPRA), THE COORDINATE BENCH OF ITAT, MUMBAI OBSERVED AND HELD AS UNDER:- 7. IN THE PRESENT CASE THE CLAIM OF THE ASSESSEE I S THAT AT THE TIME OF PAYING THE INTEREST TO THE 34 PERSONS MENTIONED IN THE ASSESSMENT ORDER, HE HAD BEFORE HI M THE APPROPRIATE DECLARATIONS IN THE PRESCRIBED FORM FRO M THE PAYEES STATING THAT NO TAX WAS PAYABLE BY THEM IN R ESPECT OF THEIR TOTAL INCOME AND THEREFORE TAX NEED NOT BE DEDUCTED FROM INTEREST UNDER SECTION 194A, AND IN THE LIGHT OF THESE DECLARATIONS HE HAD NO OPTION BUT TO MAKE THE PAYMENT OF INTEREST WITHOUT ANY TAX DEDUCTION. IF THE CLAIM IS TRUE THEN THE CONTENTION MUST BE ACCEPTED ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 6 BECAUSE UNDER SUB-SECTION (1A) OF SECTION 197A, IF SUCH A DECLARATION IS FILED BY THE PAYEE OF INTEREST, NO DEDUCTION OF TAX SHALL BE MADE BY THE ASSESSEE. THE REVENUE AUTHORITIES HAVE DOUBTED THE ASSESSEE'S VER SION BECAUSE ACCORDING TO THEM IT IS ONLY WHEN THE ASSES SING OFFICER PROPOSED THE DISALLOWANCE OF THE INTEREST B Y INVOKING THE SECTION 40(A)(IA) IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THAT THE ASSESSEE FILED THE DECLARATIONS CLAIMED TO HAVE BEEN SUBMITTED TO HIM BY THE PAYEES OF THE INTEREST, IN THE OFFICE OF THE CI T(TDS) AS REQUIRED BY SUB-SECTION 2 OF SECTION 197A. APART FR OM THIS INFERENCE, THERE IS NO OTHER EVIDENCE IN THEIR POSSESSION TO HOLD THAT THE DECLARATIONS WERE NOT SUBMITTED BY THE PAYEES OF THE INTEREST TO THE ASSE SSEE AT THE TIME WHEN THE PAYMENTS WERE MADE. WITHOUT DISPROVING THE ASSESSEE'S CLAIM ON THE BASIS OF OTH ER EVIDENCE, EXCEPT BY WAY OF INFERENCE, IT WOULD NOT BE FAIR OR PROPER TO DISCARD THE CLAIM. THE ASSESSING OFFIC ER HAS NOT RECORDED ANY STATEMENTS FROM THE PAYEES OF THE INTEREST TO THE EFFECT THAT THEY DID NOT FILE ANY DECLARATIONS WITH THE ASSESSEE AT THE APPROPRIATE T IME OR TO THE EFFECT THAT THEY FILED THE DECLARATIONS ONLY AT THE REQUEST OF THE ASSESSEE IN SEPTEMBER/OCTOBER, 2008. IN THE ABSENCE OF ANY SUCH DIRECT EVIDENCE, WE ARE UNA BLE TO REJECT THE ASSESSEE'S CLAIM. THE ASSESSING OFFICER HAS STATED IN PARA 4.4 OF THE ASSESSMENT ORDER THAT HE FOUND THAT SOME OF THE LOAN CREDITORS WERE HAVING TAXABLE INCOME BUT STILL THE ASSESSEE HAD SUBMITTED DECLARA TIONS FROM THEM IN FORM NO.15G. UNLESS IT IS PROVED THAT THESE FORMS WERE NOT IN FACT SUBMITTED BY THE LOAN CREDIT ORS, THE ASSESSEE CANNOT BE BLAMED BECAUSE AT THE TIME O F PAYING THE INTEREST TO THE LOAN CREDITORS, HE HAS T O PERFORCE RELY UPON THE DECLARATIONS FILED BY THE LO AN CREDITORS AND HE WAS NOT EXPECTED TO EMBARK UPON AN ENQUIRY AS TO WHETHER THE LOAN CREDITORS REALLY AND IN ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 7 TRUTH HAVE NO TAXABLE INCOME ON WHICH TAX IS PAYABL E. THAT WOULD BE PUTTING AN IMPOSSIBLE BURDEN ON THE ASSESSEE. THAT APART SUB-SECTION 1A OF SECTION 197A MERELY REQUIRES A DECLARATION TO BE FILED BY THE PA YEE OF THE INTEREST AND ONCE IT IS FILED THE PAYER OF THE INTEREST HAS NO CHOICE EXCEPT TO DESIST FROM DEDUCTING TAX F ROM THE INTEREST. THE SUB-SECTION USES THE WORD 'SHALL' WHICH LEAVES NO CHOICE TO THE ASSESSEE IN THE MATTE R. IN THE CASE OF PAYMENT OF LEAVE TRAVEL CONCESSION AND CONVEYANCE ALLOWANCE TO EMPLOYEES WHO ARE LIABLE TO DEDUCT TAX FROM THE SALARY PAID TO THE EMPLOYEES UN DER SECTION 192, THE SUPREME COURT HAS HELD IN CIT VS. LARSEN & TOUBRO LTD. (2009) 313 ITR 1, THAT THE ASSESSEE WAS UNDER NO STATUTORY OBLIGATION UNDER TH E ACT OR RULES TO COLLECT EVIDENCE TO SHOW THAT THE EMPLOYEE HAD ACTUALLY UTILIZED THE MONEY PAID TOWAR DS LEAVE TRAVEL CONCESSION/CONVEYANCE ALLOWANCE. THE POSITION IS STRONGER UNDER SECTION 197A WHICH DOES NOT APPLY TO SECTION 192, BUT WHICH PROVIDES IN SUB-SEC TION (1A) THAT IF THE PAYEE OF THE INTEREST HAS FILED TH E PRESCRIBED FORM TO THE EFFECT THAT HE IS NOT LIABLE TO PAY ANY TAX IN COMPUTING HIS TOTAL INCOME, THE PAYER SH ALL NOT DEDUCT ANY TAX. THE SUB-SECTION DOES NOT IMPOSE ANY OBLIGATION ON THE PAYER TO FIND OUT THE TRUTH O F THE DECLARATIONS FILED BY THE PAYEE. EVEN IF THE ASSESS EE HAS DELAYED THE FILING OF THE DECLARATIONS WITH THE OFF ICE OF THE CIT/CCIT (TDS) WITHIN THE TIME LIMIT SPECIFIED IN SUB-SECTION (2) OF SECTION 197A, THAT IS A DISTINCT OMISSION OR DEFAULT FOR WHICH A PENALTY IS PRESCRIB ED. SECTION 273B PROVIDES THAT NO PENALTY SHALL BE IMPO SED UNDER ANY OF THE CLAUSES OF SUB-SECTION (2) OF SECT ION 272A FOR THE DELAY, IF THE ASSESSEE PROVES THAT THE RE WAS REASONABLE CAUSE FOR THE SAME. WE HAVE ALREADY SEEN THAT UNDER SUB-SECTION (4) OF SECTION 272A, NO PENA LTY CAN BE IMPOSED UNLESS THE ASSESSEE IS GIVEN AN ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 8 OPPORTUNITY OF BEING HEARD. ALL THESE PROVISIONS IN DICATE THAT THE FAILURE ON THE PART OF THE ASSESSEE, WHO I S THE PAYER OF THE INTEREST, TO FILE THE DECLARATIONS GIV EN TO HIM BY THE PAYEES OF THE INTEREST, WITHIN THE TIME LIMI T SPECIFIED IN SUB-SECTION (2) TO SECTION 197A IS DIS TINCT AND SEPARATE AND MERELY BECAUSE THERE IS A FAILURE ON T HE PART OF THE ASSESSEE TO SUBMIT THE DECLARATIONS TO THE INCOME-TAX DEPARTMENT WITHIN THE TIME LIMIT, IT CAN NOT BE SAID THAT THE ASSESSEE DID NOT HAVE DECLARATIONS WI TH HIM AT THE TIME WHEN HE PAID THE INTEREST TO THE PAYEES . THAT WOULD BE A SEPARATE MATTER AND SEPARATE PROOF AND EVIDENCE IS REQUIRED TO SHOW THAT EVEN WHEN THE ASS ESSEE 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. (EMPHASIS SUPPLIED BY US) 8. IN THE CASE OF GOKULDAS VIRJIBHAI & COMPANY, ITA T, PUNE BENCH INTERPRETED THE RELEVANT PROVISIONS OF THE ACT AND LIABILITY OF THE ASSESSEE IN REGARD TO FORM NO.15G AND 15H AS UNDER:- 14. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. IN THIS CASE, THERE IS NO DISPUTE ABOUT TH E FACT THAT THE ASSESSEE HAS OBTAINED THE FORM NO. 15G AS PROVIDED U/S 197A(1)(IA) OF THE ACT, BUT THE ASSESS EE DID NOT FURNISH THE SAID FORM TO THE C.I.T., KOLHAPUR. IN OUR OPINION, IT IS ONLY THE PROCEDURAL LAPSE. ONCE THE ASSESSEE HAS OBTAINED THE FORM NO.15G FROM THE PAYE E ASSESSEE, HAS NO LEGAL OBLIGATION TO DEDUCT THE TAX ON THE PAYMENT MADE TO PAYEE. WE FIND NO JUSTIFICATION IN ORDER TO SUSTAINING THE SAID ADDITION. ACCORDINGLY, THE SAME IS DELETED. ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 9 9. ON PERUSAL OF DECISION OF ITAT MUMBAI BENCH IN T HE CASE OF KARWAT STEEL TRADERS (SUPRA), WE OBSERVE THAT THE SAME ISS UE HAS BEEN DEALT IN PARA 4.1 IN FAVOUR OF THE ASSESSEE WHICH READS AS UNDER: - 4.1 AS CAN BE SEEN FROM ABOVE PROVISION, THE AMOUNT CAN NOT BE ALLOWED AS DEDUCTION ONLY IN THE EVENT WHEN TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER-XVII -B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCT ION HAS NOT BEEN PAID. IN THIS CASE, THE ASSESSEE WAS TO DE DUCT TAX UNDER PROVISIONS OF SECTION 194A. SECTION 194A IS FURTHER QUALIFIED BY THE PROVISIONS OF SECTION 197A(1A) WHE REIN IF A PERSON FURNISHES A DECLARATION IN WRITING IN PRES CRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER TO THE E FFECT THAT TAX ON HIS ESTIMATED TOTAL INCOME IS TO BE INC LUDED IN COMPUTING HIS TOTAL INCOME WILL BE NIL, THERE IS NO NEED TO DEDUCT TAX THE ASSESSEE HAS RECEIVED SUCH FORMS AS PRESCRIBED FROM THOSE PERSONS TO WHOM INTEREST WAS PAID/BEING PAID AND ACCORDINGLY NO DEDUCTION OF TAX WAS TO BE MADE IN SUCH CASES. THE DEFAULT FOR NON- FURN ISHING OF THE DECLARATIONS TO THE CIT AS PRESCRIBED MAY RE SULT IN INVOKING PENALTY PROVISIONS U/S. 272A(2)(F), FOR WH ICH SEPARATE PROVISION/ PROCEDURE WAS PRESCRIBED UNDER THE ACT. HOWEVER, ONCE FORM 15G/FORM 15H WAS RECEIVED B Y THE PERSON RESPONSIBLE FOR DEDUCTING TAX, THERE IS NO LIABILITY TO DEDUCT TAX. ONCE THERE IS NO LIABILITY TO DEDUCT TAX, IT CAN NOT BE CONSIDERED THAT TAX IS DEDUCTIBL E AT SOURCE UNDER CHAPTER XVII-B AS PRESCRIBED U/S. 40(A )(IA). THE PROVISIONS OF SECTION 40(A)(IA) CAN ONLY BE INV OKED IN A CASE WHERE TAX IS DEDUCTIBLE AT SOURCE AND SUCH T AX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN P AID. NO SUCH DEFAULT OCCURRED IN THIS CASE. ACCORDINGLY, WE ARE OF THE OPINION THAT THE PROVISIONS OF SECTION 40(A)(IA ) ARE NOT APPLICABLE TO THE FACTS OF THE CASE. BOTH THE ASSES SING ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 10 OFFICER AND CIT(A) ERRED IN CONSIDERING THAT NON-FI LING OF FORM 15H INVITES DISALLOWANCE U/S. 40(A)(IA). (EMPHASIS SUPPLIED BY US) 10. DURING THE ARGUMENT, LD. AR SUBMITTED A COPY OF THE LETTER SUBMITTED BEFORE ITO(TDS) DATED 16.02.2010 WHEREIN IT HAS BEE N SUBMITTED THAT ALL RELATED FORM NOS. 15G/15H HAVE ALREADY BEEN SUBMITT ED WITH THE OFFICE OF THE ITO WITH A REQUEST TO IGNORE THE DELAY IN SUBMI SSION OF THE SAME. IN VIEW OF ABOVE, WE HOLD THAT UNLESS IT IS PROVED THA T FORM NO. 15G AND 15H WERE NOT IN FACT SUBMITTED BY LOAN CREDITORS, THE A SSESSEE CANNOT BE BLAMED BECAUSE AT THE TIME OF PAYING INTEREST TO LOAN CRED ITORS, THE ASSESSEE PAYER HAS TO PER FORCE RELY UPON THE DECLARATIONS FILED B Y THE LOAN CREDITORS AND THE ASSESSEE WAS NOT EXPECTED TO EMBARK UPON AN INQUIRY AS TO WHETHER THE LOAN CREDITORS REALLY AND IN TRUTH HAVE NO TAXABLE INCOM E ON WHICH TAX IS PAYABLE. IF SUCH KIND OF DUTY IS CAST UPON THE ASSESSEE PAYE R, THAT WOULD BE PUTTING AN IMPOSSIBLE BURDEN ON THE ASSESSEE. 11. IN THE PRESENT SET OF FACTS AND CIRCUMSTANCES O F THE CASE, WE ARE OF THE VIEW THAT APART FROM SUB-SECTION (1A) OF SECTION 19 7A WHICH MERELY REQUIRES A DECLARATION TO BE FILED BY THE PAYEE OF THE INTEREST AND ONCE IT IS FILED, THE PAYER OF THE INTEREST HAS NO CHOICE EXCE PT TO DESIST FROM DEDUCTING TAX AT SOURCE FROM THE INTEREST PAID. IN THIS SUB- SECTION, THE WORD SHALL HAS ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 11 BEEN USED BY THE LEGISLATURE WHICH LEAVES NO ALTERN ATIVE TO THE PAYER IN THE MATTER BUT TO ACCEPT DECLARATION SO FILED BY THE PA YEE. UNDER SECTION 197A(1A) OF THE ACT IF THE PAYEE OF THE INTEREST HA S FILED THE PRESCRIBED FORM TO THE EFFECT THAT HE IS NOT LIABLE TO PAY ANY TAX IN COMPUTING THE TOTAL INCOME, THEN THE PAYEE SHALL NOT DEDUCT ANY TAX AT SOURCE FROM THE INTEREST. THIS PROVISION DOES NOT IMPOSE ANY OBLIGATION ON TH E PAYER TO FIND OUT THE TRUTH OF THE DECLARATION FILED BY THE PAYEE. RESPE CTFULLY FOLLOWING THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF VIPIN P. MEHTA (SUPRA), WE ARE INCLINED TO HOLD THAT IF THE ASSESSEE HAS DELAY ED THE FILING OF DECLARATION WITH THE OFFICE OF THE JURISDICTIONAL C.I.T., WITHI N THE TIME LIMIT SPECIFIED IN SUB-SECTION (2) OF SECTION 197A, THAT IS A DISTINCT OMISSION OR DEFAULT FOR WHICH A PENALTY IS PRESCRIBED. AS PER SECTION 273B OF THE ACT, NO PENALTY SHALL BE IMPOSED UNDER ANY OF THE CLAUSES OF SUB SE CTION (2) OF SECTION 272A FOR THE DELAY, IF THE ASSESSEE PROVES THAT THERE WA S A REASONABLE CAUSE FOR THE DELAY. WE FURTHER OBSERVE THAT AS PER PROVISIONS O F SUB SECTION (4) OF SECTION 272A OF THE ACT, NO PENALTY CAN BE IMPOSED UNLESS T HE ASSESSEE IS GIVEN AN OPPORTUNITY OF BEING HEARD. THE TOTAL EFFECT OF AL L THESE PROVISIONS INDICATE THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE WHO IS THE PAYER OF THE INTEREST, TO FILE A DECLARATION GIVEN TO HIM BY THE PAYEE OF THE INTEREST, WITHIN THE TIME LIMIT SPECIFIED IN SUB-SECTION (2) TO SECT ION 197A OF THE ACT WHICH ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 12 IS DISTINCT AND SEPARATE AND MERELY BECAUSE THERE W AS A FAILURE ON THE PART OF THE ASSESSEE BANK TO SUBMIT THESE DECLARATION TO TH E JURISDICTIONAL COMMISSIONER OF INCOME TAX WITHIN TIME, IT CANNOT B E HELD THAT THE ASSESSEE DID NOT HAVE DECLARATION WITH HIM AT THE TIME WHEN THE ASSESSEE BANK PAID INTEREST TO THE PAYEES. IN THIS SITUATION, THAT WO ULD BE A SEPARATE ISSUE WHICH WOULD BE A SEPARATE MATTER AND WOULD REQUIRE SEPARA TE PROOF AND EVIDENCE TO SHOW THAT EVEN WHEN THE ASSESSEE PAID INTEREST, THE ASSESSEE DID NOT HAVE A DECLARATION FROM THE PAYEES WITH HIM AND, THEREFORE , HE OUGHT TO HAVE DEDUCTED THE TAX FROM THE PAYMENT OF INTEREST WHICH IS NOT A CASE OF THE DEPARTMENT IN THE PRESENT APPEAL. 12. FROM THE DISCUSSION MADE HEREINABOVE, WE ACCEPT THE CONTENTIONS OF THE ASSESSEE THAT SINCE THE ASSESSEE BANK HAD THE D ECLARATION OF THE PAYEES IN THE PRESCRIBED FORM WITH IT AT THE TIME WHEN THE IN TEREST WAS PAID TO THE RESPECTIVE CUSTOMERS, IN THIS POSITION, THE ASSESSE E CANNOT BE HELD TO BE LIABLE TO DEDUCT TAX THEREFROM U/S 194A OF THE ACT. WE FURTHER HOLD THAT IF THE ASSESSEE BANK WAS NOT LIABLE TO DEDUCT TAX AT T HE TIME OF PAYMENT OF INTEREST, THEN SECTION 40(A)(IA) OF THE ACT IS NOT ATTRACTED AND THE ASSESSEE CANNOT BE HELD LIABLE TO PAY TAX AS ASSESSEE IN DEF AULT AND INTEREST THEREON. AT THIS JUNCTURE, IT IS PERTINENT TO MENTION THAT F OR NON-FILING OF FORM NO. 15G AND 15H WITHIN THE PRESCRIBED TIME, THERE IS A PROVISION OF PENALTY U/S ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 13 272A(2)(F) OF THE ACT WHICH IS NOT A CASE OF THE DE PARTMENT IN THE PRESENT APPEAL. ACCORDINGLY, THE ORDER OF THE ASSESSING OF FICER AS WELL AS IMPUGNED ORDER IS SET ASIDE AND SOLE GROUND OF THE ASSESSEE IN ALL THREE APPEALS IS ALLOWED. 13. IN THE RESULT, ALL THREE APPEALS OF THE ASSESSE E ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.3.2014. SD/- SD/- (G.D. AGRAWAL) (CHANDRA MOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 14TH MARCH 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR ITA NOS. 2672,2673, 2674/D/2013 ASSTT.YEARS: 2007-08, 2008-09, 2009-10 14 S