Appeal details
Counselvise Citation
[2017] 130 COUNSELVISE.COM (IT) 7441 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 10 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-03-2017
Appeal Filed By
Department
Bench Allotted
A
Assessment Year
2012-2013
Appeal Filed On
14-10-2016
Judgement Text
, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO. 2 929 /MDS/201 6 / ASSESSMENT YEAR :20 1 2 - 1 3 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1 , NAGERCOIL . VS. M/S. XAVIER BENEFIT FUND LTD., 1 ST FLOOR, POPULAR BUILDING, MEAD STREET, W.C.C. ROAD, N AGERCOIL 629 001, KANYAKUMARI DISTRICT. [PAN: AA A C X0259R ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI SHIVA SRINIVAS , J CIT / RESPONDENT BY : SHRI R. VISWANATHAN , C.A. / DATE OF HEARING : 0 2 . 0 1 .201 7 / DATE OF P RONOUNCEMENT : 24 . 0 3 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 3 , MADURAI DATED 03 . 0 8 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 1 2 - 1 3 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE L D. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE INCOME TAX AC T , 1961 [ ACT IN SHORT] . I.T.A. NO . 2 929 /M/ 16 2 2. THE ASSESSEE IS A MUTUAL FUND COMPANY FUNCTIONING IN THE LINE OF NIDHI COMPANY UNDER SECTION 620A OF THE COMPANIES ACT. IT HAS FILED THE RETURN OF INCOME ON 30.09.2012 ADMITTING TOTAL INCOME OF .50,88,974/ - , WHICH WAS ACCEPTED UNDER SECTION 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 13.08.2013. AFTER EXAMINING THE DETAILS FILED BY THE ASSESSEE IN RE SPONSE TO THE ABOVE NOTICE, THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT .1,21,68,213/ - AFTER MAKING DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IN RESPECT OF INTEREST PAID WITHOUT DEDUCT ING TDS . 2. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AGAINST THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND B Y FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF MALINENI BABULU (HUF) V. ITO VIDE ORDER DATED 07.08.2015 , THE LD. CIT(A) DELETED THE DISALLOWANCE. 3. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. T HE LD. DR HAS SUBMITTED THAT THE ASSESSEE HAS NOT COMPLIED WITH THE STATUTORY REQUIREMENT BY F ILING DUPLICATE COPY OF THE FORM 15G/H FILLED UP BY THE PAYEE AND DELIVERED TO THE PAYER FOR VERIFICATION IN SUPPORT OF THE CLIENT TO WHOM THE INTEREST PAID/PAYABLE BEFORE THE LD. COMMISSIONER. THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE INT EREST AMOUNT UNDER SECTION I.T.A. NO . 2 929 /M/ 16 3 40(A)(IA) OF THE ACT, WHICH SHOULD BE CONFIRMED AND THE ORDER OF THE LD. CIT(A) SHOULD BE REVERSED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDERS OF THE LD. CIT(A) AND PRAYED FOR ITS CONFIRMATI ON. 4. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSING OFFICER NOTICED THAT T HE ASSESSEE HAS PAID INTEREST ON FIXED DEPOSITS EXCEEDING .5,000/ - DURING THE YEAR AT .69, 99,239/ - AND AS PER THE PROVISIONS OF SECTION 194A OF THE ACT, WHEN THE INTEREST PAID EXCEEDED .5,000/ - , THE ASSESSEE SHOULD HAVE DEDUCTED TAX AT SOURCE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BY FILING COPIES OF FROM 15G/15H, THE AR OF THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE HAS OBTAINED FORM NO. 15G/15H FOR INTEREST EXPENDITURE ON FIXED DEPOSITS. HOWEVER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE DID NOT SUBMIT COPIES OF FORM NO. 15G/15H TO THE LD. COMMI SSIONER WITHIN THE SPECIFIED PERIOD AND THEREFORE, HE DISALLOWED THE ENTIRE INTEREST CLAIM OF .69,99,239/ - . 4.1 ON PERUSAL OF THE COPIES OF FORM 15G/15H AS WAS FILED BEFORE THE ASSESSING OFFICER, THE LD. CIT(A) WAS OF THE OPINION THAT SINCE THE ASSESSEE HAS FILED COPIES OF FORM 15G IN RESPECT OF INTEREST PAYMENT BEFORE THE ASSESSING OFFICER AND THE SAME WAS NOT DISPUTED BY THE ASSESSING OFFICER. I.T.A. NO . 2 929 /M/ 16 4 THUS, THERE WAS NO DISPUTE THAT THE ASSESSEE HAS OBTAINED FORM 15G FROM THE PERSONS TO WHOM INTEREST WAS PAID/CREDITED. FURTHER, THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSING OFFICER DID NOT DOUBTED THE FACT THAT THE ASSESSEE OBTAINED FORM 15G BEFORE CREDITING/PAYING INTEREST TO THE DEPOSITORS. SINCE THE ASSESSING OFFICER MADE THE DISALLOWANCE ONLY ON THE GROUND THAT FORM 15G/15H WERE NOT SUBMITTED TO THE LD. COMMISSIONER IN TIME, THE LD. CIT(A) WAS OF T HE OPINION THAT ONLY PENALTY PROCEEDINGS CAN BE INITIATED UNDER SECTION 272A(2)(F) OF THE ACT AND NO DISALLOWANCE CAN BE MADE UNDER SECTION 40(A)(IA) OF THE ACT AS HAS BEEN HELD BY THE HYDERABAD BENCHES OF THE TRIBUNAL IN THE CASE OF MALINENI BABULU (HUF) V. ITO VIDE ORDER DATED 07.08.2015. BY FOLLOWING THE ABOVE DECISION, THE LD. CIT(A) DELETED THE DISALLOWANCE OF .69,99,239/ - MADE UNDER SECTION 40(A)(IA) OF THE ACT. 4.2 WE HAVE PERUSED THE ORDER IN THE CASE OF MALINENI BABULU (HUF) V. ITO IN I.T.A. NO.1326/HYD/2014 & CO NO. 57/HYD/2014 VIDE ORDER DATED 07.08.2015, WHEREIN, THE HYDERABAD BENCHES OF THE TRIBUNAL H AS OBSERVED AND HELD AS UNDER: 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. A PERUSAL OF THE PAGE NO. 76 AS WELL AS PAGE NOS. 53 AND 67 OF THE PAPER BOOK, IT CLEAR THAT IN THE CASE OF M/S. CORAMANDAL FERTILIZERS LTD., NO CA SH PAYMENTS WERE MADE AND IN THE CASE OF M/S. RAVINDRA AGRO SERVICE CENTRE, IT IS CLEAR THAT NO PAYMENTS IN CASH EXCEEDING RS. 20,000/ - WERE MADE. THIS EVIDENCE HAS NOT BEEN REBUTTED BY THE LD. CIT - DR. HENCE, WE HAD NO OPTION BUT TO HOLD THAT THE PROVISION S OF SECTION 40A(3) I.T.A. NO . 2 929 /M/ 16 5 ARE NOT APPLICABLE TO THE PRESENT CASE. HENCE, THIS GROUND OF APPEAL FILED BY APPELLANT IS ALLOWED. 12. THE NEXT GROUND OF APPEAL RELATES TO CHALLENGING THE DIRECTIONS OF LD. CIT TO MAKE ADDITION OF RS. 98,193/ - UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. DURING THE YEAR, THE APPELLANT HAD MADE INTEREST PAYMENT OF RS. 42,498/ - AND RS. 38,709/ - TO THE COPARCENER OF THE APPELLANT. IT WAS CLAIMED THAT THE TAXABLE INCOME OF THE PAYEES WAS BELOW THE TAXABLE LIMIT HENCE FORM 15H W AS OBTAINED FROM THEM AND IT WAS CLAIMED TO HAVE BEEN SUBMITTED TO THE CIT, GUNTUR BY POST, BUT NO PROOF IN SUPPORT OF THE DISPATCH BY POST WAS FURNISHED BEFORE THE CIT. HOWEVER, A COPY OF FORM 15H WAS FILED BEFORE THE AO. THIS FACT HAS NOT BEEN DISPUTED B Y THE REVENUE. THE CIT DIRECTED THE AO TO DISALLOW THE SAME FOR FAILURE TO ADDUCE EVIDENCE IN SUPPORT OF DISPATCH OF FORM 15H BY POST. THE LD. COUNSEL SUBMITTED THAT THOUGH NO PROOF IN SUPPORT OF DISPATCH OF FORM 15H TO THE CIT COULD BE FILED, COPY OF FORM 15H WAS FILED BEFORE THE AO. HENCE, HE SUBMITTED THAT THE PROVISIONS OF SECTION 40(A)(IA) CANNOT BE MADE APPLICABLE TO THE PRESENT CASE. ON THE OTHER HAND, LD. CIT - DR RELIED ON THE ORDER OF CIT. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. NEITHER THE AO NOR THE CIT DISPUTED THE FACT OF FILING COPY OF FORM 15H BEFORE THE AO. NO DOUBT, IT IS FACT THAT THE APPELLANT FAILED TO PRODUCE PROOF IN SUPPORT OF DISPATCH OF FORM 15H TO THE CIT. IN OUR CONSIDERED OPINION, THIS BY ITSE LF DOES NOT ENTAIL ANY ADDITION. IT IS ONLY TECHNICAL BREACH OF LAW AND THE ACT PROVIDES FOR SEPARATE PENAL PROVISIONS FOR SUCH DEFAULT. THEREFORE, NO DISALLOWANCE CAN BE MADE AND TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IN THIS REGARD, WE PLACE OUR RELIANCE ON THE DECISION OF HON BLE DELHI BENCH OF ITAT IN THE CASE OF VIJAYA BANK VS. ITO [2014] [49 TAXMANN.COM 533 (DELHI - TRIB)], WHICH IS RE - PRODUCED BELOW: 4. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH PARTIES AND CAREFULLY PERUSED THE RECORD. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE COMMISSIONER OF INCOME - TAX (APPEALS) GROSSLY ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER BECAUSE THE COMMISSIONER OF INCOME - TAX (APPEALS) FAILED TO APPRECIATE THE FACT THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS TIME BARRED AND THERE WAS NO SHORT DEDUCTION OF TAX. LEARNED COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE COMMISSIONER OF INCOME - TAX (APPEALS) WAS NOT JUSTIFIED IN NOT APPRECIATING THE IMPORTANT FACT THAT THE BRANCH HAD OBTA INED FORMS 15H AND 15G IN ALL THE CASES AND NON - SUBMISSION OF THE SAME WAS ONLY A TECHNICAL BREACH AND AS SUCH, THE ASSESSEE CANNOT BE CONSTRUED AS AN ASSESSEE IN DEFAULT. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER POINTED OUT THAT THE I.T.A. NO . 2 929 /M/ 16 6 ASSESSEE CANNOT B E HELD AS THE ASSESSEE IN DEFAULT WITHOUT PROVING THAT THE RECIPIENT OF THE INCOME HAS NOT PAID THE TAX. 5. DURING THE ARGUMENTS, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE PLACED RELIANCE ON VARIOUS DECISIONS OF THE CO - ORDINATE BENCHES OF THE TRIBUN AL INCLUDING THE DECISION OF THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI BENCH 'F' IN THE CASE OF VIPIN P. MEHTA V. ITO [2011] 46 SOT 71 (URO)/11 TAXMANN.COM 342; DECISION OF THE INCOME - TAX APPELLATE TRIBUNAL, PUNE BENCH 'A' IN THE CASE OF GOKULDAS VIRJIBHAI & CO. V. ITO [2012]139 ITD 284/27 TAXMANN.COM 26 AND THE DECISION OF THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI BENCH 'A' IN THE CASE OF KARWAT STEEL TRADERS V. ITO [2013] 145 ITD 370/37 TAXMANN.COM 190 AND SUBMITTED THAT IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD OBTAINED FORMS 15G AND 15H AS PROVIDED UNDER SECTION 197A(1A) OF THE ACT BUT THE ASSESSEE DID NOT FURNISH THE SAID FORM TO THE JURISDICTIONAL COMMISSIONER OF INCOME - TAX WHICH IS MERELY A PROCEDURAL LAPSE. IT WAS ALSO SUBMITTED ON BEHALF OF THE ASSESSEE THAT ONCE THE ASSESSEE HAD OBTAINED FORM 15G FROM THE PAYEE ASSESSEE, THEN THE PAYER APPELLANT HAS NO LEGAL OBLIGATION TO DEDUCT THE TAX ON THE PAYMENT MADE TO THE PAYEE. 6. REPLYING TO THE ABOVE, THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY ACCEPTED THAT AS PER OBSERVATIONS MADE BY THE COMMISSIONER OF INCOME - TAX (APPEALS) IN THE IMPUGNED ORDER, THE ASSESSEE OBTAINED FORMS 15G AND 15H FROM THE CUSTOMERS TO WHOM PAYMENT OF INTEREST WAS MADE AND NO TAX WAS DEDUCTED AT SOURCE, AT THE SAME TIME I T WAS THE DUTY OF THE ASSESSEE TO DELIVER THESE FORMS BEFORE THE 7TH DAY OF THE MONTH NEXT FOLLOWING THE MONTH IN WHICH FORM WAS FURNISHED TO IT. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE - BANK IS DUTY BOUND TO DELIVER AND SUBMIT FORMS 15G AND 15H TO THE JURISDICTIONAL COMMISSIONER OF INCOME - TAX AND OMISSION IN THIS REGARD IS ATTRIBUTABLE TO THE ASSESSEE FOR WHICH THE ASSESSEE HAS NO BONA FIDE REASON. 7. ON CAREFUL PERUSAL OF RECORD AND D ECISIONS RELIED ON BY THE ASSESSEE APPELLANT, AT THE OUTSET, WE OBSERVE THAT UNDISPUTEDLY, THE ASSESSEE - BANK OBTAINED FORMS 15G AND 15H FROM THE CUSTOMERS TO WHOM THE PAYMENT OF INTEREST WAS MADE AND NO TAX WAS DEDUCTED AT SOURCE. FURTHER, WE ALSO OBSERVE THAT THESE FORMS WERE NOT SUBMITTED TO THE JURISDICTIONAL COMMISSIONER OF INCOME - TAX, FARIDABAD, WITHIN THE PRESCRIBED TIME AS PER PROVISIONS OF THE ACT. IN THE CASE OF VIPIN P. MEHTA (SUPRA), THE CO - ORDINATE BENCH OF THE I.T.A. NO . 2 929 /M/ 16 7 INCOME - TAX APPELLATE TRIBUNAL, MUM BAI, OBSERVED AND HELD AS UNDER (PAGE 366) : 'IN THE PRESENT CASE THE CLAIM OF THE ASSESSEE IS THAT AT THE TIME OF PAYING THE INTEREST TO 34 PERSONS MENTIONED IN THE ASSESSMENT ORDER, HE HAD BEFORE HIM THE APPROPRIATE DECLARATIONS IN THE PRESCRIBED FORM FROM THE PAYEES STATING THAT NO TAX WAS PAYABLE BY THEM IN RESPECT 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 WI THOUT ANY TAX DEDUCTION. IF THE CLAIM IS TRUE THEN THE CONTENTION MUST BE ACCEPTED 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 AUTHO RITIES HAVE DOUBTED THE ASSESSEE'S VERSION BECAUSE ACCORDING TO THEM IT IS ONLY WHEN THE ASSESSING OFFICER PROPOSED THE DISALLOWANCE OF THE INTEREST BY INVOKING SECTION 40(A)(IA) IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THAT THE ASSESSEE FILED THE DECLA RATIONS CLAIMED TO HAVE BEEN SUBMITTED TO HIM BY THE PAYEES OF THE INTEREST, IN THE OFFICE OF THE COMMISSIONER OF INCOME - TAX (TDS) AS REQUIRED BY SUB - SECTION (2) OF SECTION 197A. APART FROM 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 ASSESSEE AT THE TIME WHEN THE PAYMENTS WERE MADE. WITHOUT DISPROVING THE ASSESSEE'S CLAIM ON THE BASIS OF OTHER EVIDENCE, EXCEPT BY WAY OF INFERENCE, IT WOULD NOT BE FAIR OR PROPER TO DISCARD THE CLAIM. THE ASSESSING OFFICER 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 TIME OR TO THE EFFECT THAT THEY FILED THE DECLARA TIONS ONLY AT THE REQUEST OF THE ASSESSEE IN SEPTEMBER/OCTOBER, 2008. IN THE ABSENCE OF ANY SUCH DIRECT EVIDENCE, WE ARE UNABLE TO REJECT THE ASSESSEE'S CLAIM. THE ASSESSING OFFICER HAS STATED IN PARAGRAPH 4.4 OF THE ASSESSMENT ORDER THAT HE FOUND THAT SOM E OF THE LOAN CREDITORS WERE HAVING TAXABLE INCOME BUT STILL THE ASSESSEE HAD SUBMITTED DECLARATIONS FROM THEM IN FORM 15G. UNLESS IT IS PROVED THAT THESE FORMS WERE NOT IN FACT SUBMITTED BY THE LOAN CREDITORS, THE ASSESSEE CANNOT BE BLAMED BECAUSE AT THE TIME OF PAYING THE INTEREST TO THE LOAN CREDITORS, HE HAS TO PERFORCE RELY UPON THE DECLARATIONS FILED BY THE LOAN CREDITORS AND HE WAS NOT EXPECTED TO EMBARK UPON AN ENQUIRY AS TO WHETHER THE LOAN CREDITORS REALLY AND IN TRUTH HAVE NO TAXABLE INCOME ON WH ICH TAX IS PAYABLE. THAT WOULD BE PUTTING AN IMPOSSIBLE BURDEN ON THE ASSESSEE. THAT APART SUBSECTION (1A) OF SECTION 197A 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 I.T.A. NO . 2 929 /M/ 16 8 CHOICE E XCEPT TO DESIST FROM DEDUCTING TAX FROM THE INTEREST. THE SUB - SECTION USES THE WORD 'SHALL' WHICH LEAVES NO CHOICE TO THE ASSESSEE IN THE MATTER. IN THE CASE OF PAYMENT OF LEAVE TRAVEL CONCESSION AND CONVEYANCE ALLOWANCE TO EMPLOYEES WHO ARE LIABLE TO DEDU CT TAX FROM THE SALARY PAID TO THE EMPLOYEES UNDER SECTION 192, THE SUPREME COURT HAS HELD IN CIT V. LARSEN & TOUBRO LTD. [2009] 313 ITR 1 (SC), THAT THE ASSESSEE WAS UNDER NO STATUTORY OBLIGATION UNDER THE ACT OR THE RULES TO COLLECT EVIDENCE TO SHOW THAT THE EMPLOYEE HAD ACTUALLY UTILISED THE MONEY PAID TOWARDS LEAVE TRAVEL CONCESSION/CONVEYANCE ALLOWANCE. THE POSITION IS STRONGER UNDER SECTION 197A WHICH DOES NOT APPLY TO SECTION 192, BUT WHICH PROVIDES IN SUB - SECTION (1A) THAT IF THE PAYEE OF THE INTERE ST HAS FILED THE PRESCRIBED FORM TO THE EFFECT THAT HE IS NOT LIABLE TO PAY ANY TAX IN COMPUTING HIS TOTAL INCOME, THE PAYER SHALL NOT DEDUCT ANY TAX. THE SUB - SECTION DOES NOT IMPOSE ANY OBLIGATION ON THE PAYER TO FIND OUT THE TRUTH OF THE DECLARATIONS FIL ED BY THE PAYEE. EVEN IF THE ASSESSEE HAS DELAYED THE FILING OF THE DECLARATIONS WITH THE OFFICE OF THE COMMISSIONER OR THE CHIEF COMMISSIONER OF INCOME - TAX (TDS) WITHIN THE TIME LIMIT SPECIFIED IN SUB - SECTION (2) OF SECTION 197A, THAT IS A DISTINCT OMISSI ON OR DEFAULT FOR WHICH A PENALTY IS PRESCRIBED. SECTION 273B PROVIDES THAT NO PENALTY SHALL BE IMPOSED UNDER ANY OF THE CLAUSES OF SUB - SECTION (2) OF SECTION 272A FOR THE DELAY, IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAME. 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 INDICATE THAT THE FAILURE ON THE PART OF THE ASSESSEE, WHO IS THE PAYER 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 TH E INCOME - TAX DEPARTMENT WITHIN THE TIME LIMIT, IT CANNOT BE SAID THAT THE ASSESSEE DID NOT HAVE THE DECLARATIONS WITH 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 SH OW THAT 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.' [EMPHASIS SUPPLIED] . 8. THE CASE OF GOKULDAS VIRJIBHAI & CO. (SUPRA) INTERPRETED THE RELEVANT PROVISIONS OF THE ACT AND LIABILITY OF THE ASSESSEE IN REGARD TO FORMS 15G AND15H AS UNDER : I.T.A. NO . 2 929 /M/ 16 9 '14. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. IN THIS CASE, THERE IS NO DI SPUTE ABOUT THE FACT THAT THE ASSESSEE HAS OBTAINED THE FORM 15G AS PROVIDED UNDER SECTION 197A(1)(IA) OF THE ACT, BUT THE ASSESSEE DID NOT FURNISH THE SAID FORM TO THE COMMISSIONER OF INCOME - TAX, KOLHAPUR. IN OUR OPINION, IT IS ONLY THE PROCEDURAL LAPSE. ONCE THE ASSESSEE HAS OBTAINED THE FORM NO. 15G FROM THE PAYEE 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.' 9. ON P ERUSAL OF THE DECISION OF THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI BENCH, IN THE CASE OF KARWAT STEEL TRADERS (SUPRA), WE OBSERVE THAT THE SAME ISSUE HAS BEEN DEALT IN PARAGRAPH 4.1 IN FAVOUR OF THE ASSESSEE WHICH READS AS UNDER : '4.1 AS CAN BE SEEN F ROM ABOVE PROVISION, THE AMOUNT CANNOT BE ALLOWED AS DEDUCTION ONLY IN THE EVENT WHEN TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER - XVIIB AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION HAS NOT BEEN PAID. IN THIS CASE, THE ASSESSEE WAS TO DEDUCT TAX UND ER PROVISIONS OF SECTION 194A. SECTION 194A IS FURTHER QUALIFIED BY THE PROVISIONS OF SECTION 197A(1A) WHEREIN IF A PERSON FURNISHES A DECLARATION IN WRITING IN PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER TO THE EFFECT THAT TAX ON HIS ESTIMATED T OTAL INCOME IS TO BE INCLUDED 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 B E MADE IN SUCH CASES. THE DEFAULT FOR NON - FURNISHING OF THE DECLARATIONS TO THE COMMISSIONER OF INCOME - TAX AS PRESCRIBED MAY RESULT IN INVOKING PENALTY PROVISIONS UNDER SECTION 272A(2)(F), FOR WHICH SEPARATE PROVISION/PROCEDURE WAS PRESCRIBED UNDER THE ACT . HOWEVER, ONCE FORM 15G/ FORM 15H WAS RECEIVED BY THE PERSON RESPONSIBLE FOR DEDUCTING TAX, THERE IS NO LIABILITY TO DEDUCT TAX. ONCE THERE IS NO LIABILITY TO DEDUCT TAX, IT CANNOT BE CONSIDERED THAT TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AS PRE SCRIBED UNDER SECTION 40(A)(IA). THE PROVISIONS OF SECTION 40(A)(IA) CAN ONLY BE INVOKED IN A CASE WHERE TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED OR AFTER DEDUCTION HAS NOT BEEN PAID. NO SUCH DEFAULT OCCURRED IN THIS CASE. ACCORDINGLY , WE ARE OF THE OPINION THAT THE PROVISIONS OF SECTION 40(A)(IA) I.T.A. NO . 2 929 /M/ 16 10 ARE NOT APPLICABLE TO THE FACTS OF THE CASE. BOTH THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONSIDERING THAT NON - FILING OF FORM 15H INVITES DISALLOWANCE UNDE R SECTION 40(A)(IA).' (EMPHASIS SUPPLIED) 10. DURING THE ARGUMENT, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED A COPY OF THE LETTER SUBMITTED BEFORE THE INCOME - TAX OFFICER (TDS) DATED FEBRUARY 16, 2010, WHEREIN IT HAS BEEN SUBMITTED THAT ALL RELATED FORM 15G/15H HAVE ALREADY BEEN SUBMITTED WITH THE OFFICE OF THE INCOME - TAX OFFICER WITH A REQUEST TO IGNORE THE DELAY IN SUBMISSION OF THE SAME. IN VIEW OF ABOVE, WE HOLD THAT UNLESS IT IS PROVED THAT FORMS 15G AND 15H WERE NOT IN FACT SUBMITTED BY LOAN C REDITORS, THE ASSESSEE CANNOT BE BLAMED BECAUSE AT THE TIME OF PAYING INTEREST TO LOAN CREDITORS, THE ASSESSEE PAYER HAS TO PER FORCE RELY UPON THE DECLARATIONS FILED BY THE LOAN CREDITORS AND THE ASSESSEE WAS NOT EXPECTED TO EMBARK UPON AN INQUIRY AS TO W HETHER THE LOAN CREDITORS REALLY AND IN TRUTH HAVE NO TAXABLE INCOME ON WHICH TAX IS PAYABLE. IF SUCH KIND OF DUTY IS CAST UPON THE ASSESSEE PAYER, THAT WOULD BE PUTTING AN IMPOSSIBLE BURDEN ON THE ASSESSEE. 11. IN THE PRESENT SET OF FACTS AND CIRCUMSTA NCES OF THE CASE, WE ARE OF THE VIEW THAT APART FROM SUB - SECTION (1A) OF SECTION 197A 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 EXCEPT TO DESIST FROM DEDUCTING TAX AT SOURCE FROM THE INTEREST PAID. IN THIS SUB - SECTION, THE WORD 'SHALL' HAS BEEN USED BY THE LEGISLATURE WHICH LEAVES NO ALTERNATIVE TO THE PAYER IN THE MATTER BUT TO ACCEPT DECLARATION SO FILED BY THE PAYEE. UNDER SECTION 197A(1A) OF THE ACT IF THE P AYEE OF THE INTEREST HAS 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 THE P AYER TO FIND OUT THE TRUTH OF THE DECLARATION FILED BY THE PAYEE. RESPECTFULLY FOLLOWING THE DECISION OF THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI BENCH, IN THE CASE OF VIPIN P. MEHTA (SUPRA), WE ARE INCLINED TO HOLD THAT IF THE ASSESSEE HAS DELAYED THE FI LING OF DECLARATION WITH THE OFFICE OF THE JURISDICTIONAL COMMISSIONER OF INCOME - TAX, WITHIN 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 A CT, NO PENALTY SHALL BE IMPOSED UNDER ANY OF THE CLAUSES OF SUB - SECTION (2) OF SECTION 272A FOR THE DELAY, IF THE ASSESSEE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE DELAY. WE FURTHER OBSERVE THAT AS I.T.A. NO . 2 929 /M/ 16 11 PER THE PROVISIONS OF SUB - SECTION (4) OF SECTION 2 72A OF THE ACT, NO PENALTY CAN BE IMPOSED UNLESS THE ASSESSEE IS GIVEN AN OPPORTUNITY OF BEING HEARD. THE TOTAL EFFECT OF ALL THESE PROVISIONS INDICATE THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE WHO IS THE PAYER OF THE INTEREST, TO FILE A DECLARAT ION GIVEN TO HIM BY THE PAYEE OF THE INTEREST, WITHIN THE TIME LIMIT SPECIFIED IN SUB - SECTION (2) TO SECTION 197A OF THE ACT WHICH IS DISTINCT AND SEPARATE AND MERELY BECAUSE THERE WAS A FAILURE ON THE PART OF THE ASSESSEE - BANK TO SUBMIT THESE DECLARATION TO THE JURISDICTIONAL COMMISSIONER OF INCOME - TAX WITHIN TIME, IT CANNOT BE HELD THAT THE AS SESSEE DID NOT HAVE DECLARATION WITH HIM AT THE TIME WHEN THE ASSESSEE - BANK PAID INTEREST TO THE PAYEES. IN THIS SITUATION, THAT WOULD BE A SEPARATE ISSUE WHICH WOULD BE A SEPARATE MATTER AND WOULD REQUIRE SEPARATE 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 DISCUS SION MADE HEREINABOVE, WE ACCEPT THE CONTENTIONS OF THE ASSESSEE THAT SINCE THE ASSESSEE - BANK HAD THE DECLARATION OF THE PAYEES IN THE PRESCRIBED FORM WITH IT AT THE TIME WHEN THE INTEREST WAS PAID TO THE RESPECTIVE CUSTOMERS, IN THIS POSITION, THE ASSESSE E CANNOT BE HELD TO BE LIABLE TO DEDUCT TAX THEREFROM UNDER SECTION 194A OF THE ACT. WE FURTHER HOLD THAT IF THE ASSESSEE BANK WAS NOT LIABLE TO DEDUCT TAX AT THE TIME OF PAYMENT OF INTEREST, THEN SECTION 40(A)(IA) OF THE ACT IS NOT ATTRACTED AND THE ASSES SEE CANNOT BE HELD LIABLE TO PAY TAX AS THE ASSESSEE IN DEFAULT AND INTEREST THEREON. AT THIS JUNCTURE, IT IS PERTINENT TO MENTION THAT FOR NON - FILING OF FORMS 15G AND 15H WITHIN THE PRESCRIBED TIME, THERE IS A PROVISION OF PENALTY UNDER SECTION 272A(2)(F) OF THE ACT WHICH IS NOT A CASE OF THE DEPARTMENT IN THE PRESENT APPEAL. ACCORDINGLY, THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE IMPUGNED ORDER IS SET ASIDE AND SOLE GROUND OF THE ASSESSEE IN ALL THREE APPEALS IS ALLOWED . APPLYING THE RATIO LAID DOWN IN THE ABOVE CASE TO THE FACTS OF THE PRESENT CASE, WE ARE OF THE OPINION THAT THE ORDER PASSED BY CIT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE, WE HEREBY QUASH THE ORDER PASSED BY CIT, GUNTUR UNDER THE PROVISIONS OF SECT ION 263 OF THE ACT. IN THE RESULT, GROUNDS OF APPEAL FILED BY THE APPELLANT ARE ALLOWED. APPEAL IS ALLOWED. I.T.A. NO . 2 929 /M/ 16 12 4.3 THE LD. CIT(A) HAS RIGHTLY FOLLOWED THE ABOVE DECISIONS OF THE TRIBUNAL AND DELETED THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT. OTHERWISE ALSO, THE DECISION IN THE CASE OF CIT V. VECTOR SHIPPING SERVICES (P) LTD. 357 ITR 642 IS SQUARELY APPLIES TO THE CASE OF THE ASSESSEE, SINCE THE ASSESSEE HAS MADE THE ENTIRE PAYMENT DURING THE YEAR ITSELF AND NOTHING IS OUTSTANDING OR YET TO PAY . UNDER THE ABOVE FACTS AND CIRCUMSTANCES, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 5 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSE D. ORDER PRONOUNCED ON THE 24 TH MARCH, 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 24 . 0 3 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.
