M/s The H.P. State Co-operative Bank, Chamba V. ITO (TDS), Palampur

ITA 330/CHANDI/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5186 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Assessee Lawyers: P N ARORA
• Section: 133A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHES A, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R.KUMAR, ACCOUNTANT MEMBER ITA NOS. 326 TO 329/CHD/2017 ASSESSMENT YEARS: 2010-11 TO 2013-14 THE H.P. STATE CO-OPERATIVE BANK VS. THE ITO(TDS) DALHOUSIE BRANCH PALAMPUR CHAMBA PAN : AABFH7694E ITA NOS. 330 TO 333/CHD/2017 ASSESSMENT YEARS: 2010-11 TO 2013-14 THE H.P. STATE CO-OPERATIVE BANK VS. THE ITO(TDS) NEAR POST OFFICE PALAMPUR CHAMBA & ITA NOS. 334 TO 337/CHD/2017 ASSESSMENT YEARS: 2010-11 TO 2013-14 THE H.P. STATE CO-OPERATIVE BANK VS. THE ITO(TDS) BANIKHET BRANCH PALAMPUR CHAMBA (A PPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.N. ARORA (ADVOCATE) RESPONDENT BY : SMT. CHANDRAKANTA DATE OF HEARING : 05/03/2018 DATE OF PRONOUNCEMENT : 05/03/2018 ORDER PER BENCH: THESE APPEALS ARE AGAINST ORDERS U/S 201(1 )/201 (1 A) OF THE INCOME TAX ACT, 1961, DATED 27/12/2016 FOR F.Y. 2009-10, 2010- 11, 2011-12 AND 2012-13, PASSED BY THE CIT(A), PALAMPUR (HP) IN THE CASE OF THE ASSESSEE FOR CHAMBA BRANCH, DALHOUSIE BRANCH AND BANIKHET BRANCH. SINCE ALL THE TWELVE APPEAL PERTAINING TO THREE BRANCHES FOR FOUR YEARS EACH DE AL WITH THE SAME ISSUE THE SAME HAVE BEEN DEALT BY A CONSOLIDATED ORDER FOR TH E SAKE OF CONVENIENCE. H.P. STATE CO-OPERATIVE BANK ITA NO. 326 TO 337 ASST. YEAR: 2010-11 TO 2013-14 2 OF 7 2. WE SHALL TAKE ITA NO. 333/CHANDI/2017 FOR A.Y. 2 013-14 AS THE LEAD CASE IN WHICH ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE G ROUNDS OF APPEAL: 2. THAT THE WORTHY C1T(A) HAS NOT APPRECIATED THE FAC TS OF THE CASE AND MERELY RELIED ON ORDER OF THE AO AND WITHOUT ANY RHYME & R EASON, THE LD. CIT(A) HAS CONFIRMED THE ORDER OF THE ITO (TDS), PALAMPUR. AS SUCH ORDER OF THE CIT(A) IS LIABLE TO CANCELLED. 3. THAT THE CIT(A) DID NOT APPRECIATE THAT THERE WAS N O LIABILITY ON ACCOUNT OF DEMAND CREATED U/S 201(1) AT RS. 4,77,605/- AND INT EREST CHARGED U/S 201(1A) AT RS. 85,970/-. THUS, THE CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ORDER OF THE AO THEREBY CONFIRMING THE DEMAND AS WELL AS THE INTERE ST AT RS. 5,63,575/- 4. THAT THE WORTHY CIT(A) DID NOT APPRECIATE THAT THE AMOUNT REFLECTED IN THE BALANCE-SHEET SHOWN AS 'INCOME TAX PAYABLE' RELATES TO TDS ON PAYMENT OF INTEREST BUT NOT DEPOSITED IN CENTRAL GOVT. A/C. TH IS TAX WAS WRONGLY DEDUCTED AT SOURCE ON ACCOUNT OF DEFECT IN SOFTWARE OF THE BANK , FURTHERMORE, THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THERE WAS DEFECT IN T HE WORKING OF SOFTWARE AS ON THE PAYMENT OF INTEREST TO SMALL DEPOSITORS TDS WAS WRONGLY DEDUCTED AT SOURCE WHERE THE DEDUCTEE HAVE FILED FORM 15G/15H. IT WAS FURTHER EXPLAINED BEFORE THE AUTHORITIES BELOW THAT TDS WAS WRONGLY DEDUCTED ON THE PAYMENT OF INTEREST IN THE CASE OF GOVT. AGENCIES. THE AUTHORITIES BELOW F URTHER FAILED TO APPRECIATE THAT ON A/C OF DEFECTS IN THE SOFTWARE THE TDS WAS TO BE REVERSED AND THEREFORE DIE SAME WAS NOT DEPOSITED IN THE GOVT. TREASURY AS THERE WAS NO APPLICABILITY OF TDS AND ACCORDINGLY THE ACCOUNTS OF THE PARTIES FRO M WHOM TDS HAS SHOWN WERE REVERSED. 5. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE T HAT WHEN THERE WAS NO LIABILITY TO DEDUCT TDS AND CONSEQUENTLY THERE WAS NO QUESTIO N OF RAISING ANY DEMAND AGAINST TDS U/S 201(1) AND INTEREST U/S 201(1 A) OF THE IT ACT. 1961 AGAINST THE ASSESSEE. 6. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE TH AT FOR THE TECHNICAL DEFAULT OF THE SOFTWARE THE ASSESSEE CANNOT BE PENALIZED FOR T HE SAME. 7. THAT THE AUTHORITIES BELOW SHOULD HAVE APPRECIAT ED THOSE MERE WRONG ENTRIES IN THE BOOKS OF ACCOUNTS DUE TO TECHNICAL E RROR IN THE SOFTWARE WOULD NOT MAKE THE ASSESSEE LIABLE TO PAY AMOUNT AS TDS UNLES S THE SAME WAS ACTUALLY PAYABLE. THE DEMAND CAN BE CREATED ONLY IF THERE IS ACTUAL LIABILITY AND NOT MERELY ON THE BASIS OF WORKING ON WRONG CALCULATION BY THE SOFTWARE. 8. THAT THE ORDER THEREBY CREATING A DEMAND ON ACCOUNT OF TDS AND INTEREST AT RS. 5,63,575/- BY THE AO AND THE ORDER OF LD. CIT(A ) THEREBY CONFIRMING THE SAME ARE BOTH BAD IN LAW AND AGAINST THE FACTS OF THE CA SE AND ARE LIABLE TO BE CANCELLED. 9. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE THAT WHATEVER THE TDS LIABILITY WAS THERE WAS DULY PAID AND THE CREDIT OF THE SAME WAS ALLOWED SUBSEQUENTLY BY THE ITO (TDS). 10. THAT EVEN THE SOFTWARE HAS WRONGLY DEDUCTED THE TAX ON INTEREST OF SAVING ACCOUNTS AND TERM DEPOSIT ACCOUNTS HAVING INTEREST PAID LESS THAN RS. 10000/- IN THE FINANCIAL YEAR. 11. THAT THE AO HAS MERELY RELIED UPON THE AUDITED BALA NCE-SHEET AND ALSO THE OBSERVATION OF THE AUDITOR AND HAS MISERABLY FAILED TO COLLECT THE FACTUAL POSITION OF THE CASE WHILE GIVING HIS OWN OBSERVATION. THUS, THE AO HAS FAILED TO APPLY HIS MIND IN ORDER TO ASCERTAIN THE CORRECT AND REAL FAC T. THUS, THE LD CIT(A) WAS NOT H.P. STATE CO-OPERATIVE BANK ITA NO. 326 TO 337 ASST. YEAR: 2010-11 TO 2013-14 3 OF 7 JUSTIFIED IN CONFIRMING THE ORDER OF THE AO. AS SUC H THE ADDITION MADE IS UNJUSTIFIED AND UNLAWFUL AND THE SAME MAY BE DELETED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING O FFICER PASSED THE ORDERS UNDER SECTION 201(1)/201(1A). A SPOT INSPECTION/SUR VEY U/S 133A OF THE INCOME TAX ACT, 1961 WAS CONDUCTED AT THE PREMISES OF THE BANK ON 07.01.2014 . DURING THE COURSE OF SURVEY/INSPECTION, COPY OF AUDIT REPO RT ALONG WITH PROFIT & LOSS ACCOUNT AND BALANCE SHEET WAS OBTAINED. A PERUSAL O F THE BALANCE SHEET FOR THE F.Y. 2009-10, 2010-11, 2011-12 AND 2012-13 SHOW ED THAT THERE WERE BALANCES OF RS.2,71,190/- RS.3,43,481/-, RS.9,03,325/- AND R S.4,77,605/- (AS THE CASE MAY BE) RESPECTIVELY SHOWN AS 'INCOME TAX PAYABLE'. IT WAS STATED BY THE ASSESSEE THAT THIS AMOUNT RELATES TO THE TAX DEDUCTED ON THE PAYM ENT OF INTEREST BUT NOT DEPOSITED INTO CENTRAL GOVT. ACCOUNT. IT WAS STATED THAT DUE TO DEFECT IN THE SOFTWARE OF THE BANK, THE TAX WAS WRONGLY DEDUCTED AT SOURCE ON THE PAYMENT OF INTEREST TO THE SMALL DEPOSITORS OR WHERE THE DE DUCTEES HAVE FILED FORM NO. 15G/15H, OR ON THE PAYMENT OF INTEREST IN THE CASES OF THE GOVT. AGENCIES SUCH AS GOVT. SCHOOLS ETC. 3.1 IT WAS CONVEYED THAT DUE TO ABOVE DEFECT OF THE SOFTWARE, THE TAX DEDUCTED WAS TO BE REVERSED AND THEREFORE, WAS NOT DEPOSITED INTO THE CENTRAL GOVT. ACCOUNT AND WAS LYING AS INCOME TAX PAYABLE I N THE BALANCE SHEET OF THE BANK. THE ASSESSEE ALSO FILED A RECONCILIATION STATEMENT IN THIS REGARD. 3.2 THE AO, HOWEVER, HELD THAT AS PER PROVISIONS OF CHAPTER XVII OF THE INCOME TAX ACT, 1961, THE PERSON RESPONSIBLE TO DED UCT TAX U/S 194A OF THE ACT WAS REQUIRED TO DEPOSIT THE SAME TO THE CREDIT OF T HE CENTRAL GOVT. ACCOUNT WITHIN A PERIOD OF SEVEN DAYS FROM THE END OF THE M ONTH. HOWEVER, TILL THE DATE OF PASSING OF THE ORDER, THE PR HAD NEITHER REVERSE D THE TAX WRONGLY DEDUCTED AS CLAIMED NOR HAD THE SAME BEEN DEPOSITED INTO THE CENTRAL GOVT. ACCOUNT. IN VIEW OF THE ABOVE, THE AO HELD THE PR IN DEFAULT FOR NOT DEPOSITING THE TAX INTO CENTRAL GOVT. ACCOUNT AND FURTHER DETERMINED I NTEREST U/S 201(1 A) AS UNDER:- F.Y. DEMAND U/S 201(1) INTEREST U/S 201(1 A) TOTAL PAYABLE 2009-10 2,71,190/- 1,95,257/- 4,66,477/ - H.P. STATE CO-OPERATIVE BANK ITA NO. 326 TO 337 ASST. YEAR: 2010-11 TO 2013-14 4 OF 7 2010-11 3,43,481/- 1,85,480/- 5,28,961/- 2011-12 9,03,325/- 3,25,197/- 12,28.522/- 2012-13 4,77,605/- 85,970/- 5,63,575/- 4. THE ACTION OF THE ITO(TDS) HAS BEEN CONFIRMED BY THE LD. CIT(A) ON THE GROUNDS THAT ONCE THE PR HAD DEDUCTED TAX AT SOURCE , EVEN IF WRONGLY OR SO IN EXCESS OF THE PRESCRIBED RATE, THE ONLY OPTION FOR THE PR WAS TO HAVE ADJUSTED THE EXCESS TDS DURING THE FINANCIAL YEAR AS PER SEC TION 194A(4), OR TO HAVE ISSUED A CERTIFICATE FOR TAX DEDUCTED U/S 203(1) TO THE PAYEES SO THAT THEY COULD CLAIM CREDIT FOR THE SAME IN THEIR INDIVIDUAL RETURNS. 5. DURING THE HEARING BEFORE US THE LD. AR RELIED O N THE WRITTEN SUBMISSIONS FILED BEFORE THE LOWER AUTHORITIES WHICH ARE AS UND ER:- THE AMOUNT REFLECTED IN THE INCOME TAX PAYABLE ACCO UNT WAS MERELY BOOK ENTRY REFLECTING THE AMOUNT OF DEDUCTION BUT WAS NOT THE ACTUAL AMOUNT OF TDS PAYABLE BY THE BRANCH; IT WAS ONLY THE AMOUNT DEDUC TED BY THE SOFTWARE AND DID NOT REFLECT THE ACTUAL AMOUNT PAYABLE FOR TAX D EDUCTION AT SOURCE ON ACCOUNT OF INTEREST PAYMENTS BY THE BRANCH. THE LAR GE ACCUMULATION IN THE INCOME TAX PAYABLE ACCOUNT WAS DUE TO THE REASONS M ENTIONED HERE UNDER :- -THE BANK WAS WORKING IN BANK MADE SOFTWARE AND IT SHIFTED TO CORE BANKING SOFTWARE, IN THE YEAR 20019-2010, THE MODULE FOR AU TO DEDUCTION FOR TDS WAS ACTIVATED, RESULTING THE TAX WAS DEDUCTED IN ALL AC COUNTS IRRESPECTIVE OF THE AMOUNT OF INTEREST PAID AND THE CATEGORY OF ACCOUNT HOLDER. -FORM 15G/15H WERE NOT CONSIDERED BY THE SOFTWARE A S A RESULT THE TAX WAS DEDUCTED FROM THE VARIOUS ACCOUNTS WHICH WERE ACTUA LLY NOT SUPPOSED FOR DEDUCTION AND THE AMOUNT SO DEDUCTED WAS PARKED IN THE INCOME TAX PAYABLE ACCOUNT OF BRANCH. -TAX WAS EVEN DEDUCTED IN SAVING ACCOUNTS/TERM DEPO SIT ACCOUNTS MAINTAINED BY THE GOVERNMENT AGENCIES LIKE SCHOOLS, COLLEGES E TC TO WHOM THE PROVISIONS OF TDS WERE NOT APPLICABLE. -TAX WAS EVEN DEDUCTED ON THE AMOUNTS OF INTEREST W HERE THE AMOUNT CREDITED WAS LESS THAN RS. 10,000.00 IN ANY FINANCIAL YEAR. -TAX HAS BEEN DEDUCTED ON MACT ACCOUNTS IN WHICH THE INTEREST PAID IS EVEN LE SS THAN 50,000.00 AS THE SOFTWARE HAS CONSIDERED THE NAME MACT AS ONE UNIT, WHEREAS THE AMOUNT PERTAINS TO DIFFERENT ENTITIES. MOREOVER CONSIDERIN G THE JUDGMENT OF HON'BLE HIGH COURT OF HP THE (CWPIL NO.9 OF 2014) BANK WAS NOT R EQUIRED TO DEDUCT THE TAX ON MACT DEPOSITS BUT THE SYSTEM HAS DEDUCTED THE SA ME AND PARKED INTO THE INCOME TAX PAYABLE ACCOUNT. SIR, THE LD. AO HAS SIMPLY RELIED ON THE REPORT OF THE STATUTORY AUDITORS IN WHICH THEY HAVE ADVISED THE BRANCH TO TAKE APPROPRIATE AC TION IN RESPECT OF THE AMOUNT STANDING IN THE INCOME TAX PAYABLE ACCOUNT. THE RELEVANT PARAGRAPH FORM THE AUDIT REPORT IS BEING REPRODUCED BELOW FOR YOUR KIND PERUSAL. 'THE BRANCH IS DEDUCTING TAX ON INTEREST PAID/CREDI TED TO ITS DEPOSITORS AND THE AMOUNT SO DEDUCTED IS TRANSFERRED TO INCOME TAX PAY ABLE ACCOUNT WHICH IS H.P. STATE CO-OPERATIVE BANK ITA NO. 326 TO 337 ASST. YEAR: 2010-11 TO 2013-14 5 OF 7 NEVER REMITTED TO THE CREDIT OF CENTRAL GOVERNMENT. SUCH VIOLATION WILL LEAD TO IMPOSITION OF HEAVY PENALTY BY THE INCOME TAX DEPAR TMENT AND WILL ALSO CREATE DIFFERENCE IN THE MATURITY VALUE OF THE INSTRUMENTS . ALTHOUGH IN FEW INSTANCES IT WAS ALSO OBSERVED THAT THE SOFTWARE IS DEDUCTING TD S ON INTEREST PAYMENTS WHICH OTHERWISE WAS NOT REQUIRED, SUCH DEDUCTIONS TO THE EXTENT ARE ALSO RESPONSIBLE FOR ACCUMULATING HUGE AMOUNT OF TAX PAYABLE. WE RECOMME ND ON APPROPRIATE ACTION AT HO LEVEL AT AN EARLIEST POSSIBLE TIME FRA ME SO THAT THE PENAL PROVISIONS COULD BE AVOIDED FURTHER. ' THE AUDITOR HAVE VERY C ATEGORICALLY RECOMMENDED THAT APPROPRIATE ACTION SHOULD BE TAKEN WHICH IMPLI ES THAT HE WAS ALSO SATISFIED WITH OUR CONTENTION THAT AMOUNT NEEDS TO BE REVERSE D. HOWEVER DUE TO NON AVAILABILITY OF STAFF IN THE BRANCH THE REVERSAL OF AMOUNT DEDUCTED COULD NOT BE DONE. FURTHER CONSIDERING THE FACT THAT MOST OF THE AMOUNT DEDUCTED WAS SUPPOSED TO BE REVERSED, THE AMOUNT WAS NOT REMITTE D TO THE CREDIT OF CENTRAL GOVERNMENT AS IT COULD HAVE CREATED UNDUE HARDSHIP TO THE SMALL AND PETTY DEPOSITORS AND GOVERNMENT AGENCIES WHO DOES NOT TO FILE THEIR INCOME TAX RETURNS. MOREOVER WRONG DEDUCTION OF TAX COULD HAVE ADVERSELY AFFECTED THE BUSINESS OF BANK AND THE BANK MIGHT HAVE LOST ALL T HE GOVERNMENT DEPOSITS. SIR, EVEN AFTER THE INSPECTION OF THE LD. AO ASKED FOR T HE LIST OF DEPOSITORS HAVING DEPOSITS MORE THAN RS.1.00 LACS AS TECHNICALLY THE LIABILITY OF TDS WOULD ONLY ARISE IF THE AMOUNT OF DEPOSIT IS MORE THAN RS.1.00 LACS. FURTHER RECONCILIATION IN RESPECT TO VARIOUS REVERSAL VIS A VIS AMOUNT SUPPOSED TO BE DEPOSITED WAS BEING ASKED FOR WHICH WAS DULY PROVIDED TO THE LD. AO ALONG WIT H THE BANK STATEMENTS FOR GOVERNMENT ACCOUNTS EXEMPT FROM TDS DEDUCTION, COPI ES OF HARM 15G/15LI, COPIES OF MACT ACCOUNTS AND CERTAIN OTHER STATEMENT S, BUT THE LD. AO WITH A PREDETERMINED MINDSET AND WITH A HURRY TO PASS THE ORDERS DELIBERATELY IGNORED THE DOCUMENTS AND ISSUED ORDERS ON THE BASIS OF REP ORT OF THE STATUTORY AUDITORS. LIE EVEN DIDN'T BOTHERED TO GIVE THE CREDIT FOR THE AMOUNT OF TDS DEPOSITED BY THE APPELLANT FOR WHICH AGAIN THE RECTIFICATION REQUEST WAS MADE AND THE SAME WAS THEN ALLOWED BY THE AO, BUT REQUEST FOR CONSIDERATI ON OF OTHER MATTERS WHICH COULD MINIMIZE THE TAX INCIDENCE WERE TURNED DOWN O N GROUND THAT SINCE THE MATTER IS UNDER APPEAL THE SAME COULD NOT BE DECIDE D AT THE MOMENT. THE ORDERS PASSED BY THE LD. AO ARE EVEN NON SPEAKING A S THERE IS NOT EVEN A SINGLE WORD WRITTEN IN HIS ORDERS AS TO WHY THESE ALL DOCU MENTS/EVIDENCES HAVING EFFECT OF MINIMIZING THE AMOUNT OL TDS PAYABLE WERE IGNORE D BY HIM. SIR, AS A MATTER OF FACT MERE ENTRY IN THE BOOKS OF ACCOUNTS WOULD NOT MAKE THE ASSESSEE LIABLE TO PAY THE AMOUNT AS TDS UNLESS THE SAME WAS ACTUALLY PAYABLE. IN CASE THE SYSTEM HAVE DEDUCTED THE TAX ASSUMING A T THE RATE OF 1% AGAINST THE APPLICABLE RATE OF 10%, WHETHER THE SAME WOULD HAVE ACCEPTED BY THE DEPARTMENT. THE DEPARTMENT IN THAT CASE-WOULD HAVE ASKED FOR THE DIFFERENCE AMOUNT ALTHOUGH THE SYSTEM WOULD HAVE CALCULATED TH E TAX BY APPLYING THE WRONG RATE. WHAT I AM TRYING TO ELABORATE IS THAT T HE TAX IS REQUIRED TO BE PAID ON ACTUAL BASIS AND NOT MERELY BASED ON CALCULATION BY THE SOFTWARE. THE DETAILED EXERCISE AFTER THE INSPECTION WAS CARRIES OUT BY TH E STAFF OF THE BRANCH AND WHOLE OF THE AMOUNT PAYABLE AS TDS WAS DEPOSITED. LATER O N IN RESPONSE TO THE NOTICE U/S 221 OF THE INCOME TAX ACT, THE APPELLANT WAS AS KED TO PAY THE INTEREST AMOUNT ON THE AMOUNT SO DEPOSITED WHICH WAS ALSO DE POSITED. THE NECESSARY RECONCILIATION STATEMENT OF TDS DEDUCTED, TDS PAID BEFORE THE SURVEY, TDS PAID AFTER THE SURVEY, AND AMOUNT REVERSED DUE TO VARIOU S REASONS CI WAS EARLIER SUBMITTED TO THE LD. AO : I II III IV V VI VII VIII IX FINANCIAL YEAR BALANCE OF TDS DEDUCTED BY SYSTEM (A)(RS.) AMOUNT ALREADY DEPOSITED TO CENTRAL GOIT. A/C (B) (RS.) AMOUNT RECENTLY DEPOSITED @ (RS.) TOTAL AMOUNT DEPOSITED (B+C) (RS.) AMOUNT TO BE REVERSED A-(B+C) (RS.) 15G/H/GOVT. A/C (RS.) SMALL DEPOSIT (RS.) TOTAL REVERSD (RS.) 2009-10 271190 65940 51106 117046 154144 116294 378 50 154144 2010-11 343481 137285 NIL 137285 206196 160190 4600 6 206196 H.P. STATE CO-OPERATIVE BANK ITA NO. 326 TO 337 ASST. YEAR: 2010-11 TO 2013-14 6 OF 7 2011-12 903325 63519 248703 312222 591103 400100 19 1003 591103 2012-13 477605 98113 193522 291635 185970 155070 30 900 185979 TOTAL 1995601 364857 493331 858188 1137413 831654 305759 1137413 THE LD. AR FURTHER SUBMITTED THAT ACCORDING TO CIRC ULAR NO. 014(XL-35) DATED 11 TH APRIL, 1955, ONLY TAX DUE SHOULD BE CHARGED. WHATEV ER THE LEGITIMATE TAX, IT MUST BE ASSESSED AND MUST BE COLLECTED. THE PURPOSE OF T HIS CIRCULAR IS THAT THE DEPARTMENT SHOULD NOT TAKE ADVANTAGE OF ASSESSEE'S IGNORANCE TO COLLECT MORE TAX OUT OF HIM THAN IS LEGITIMATELY DUE FROM HIM. THE LD. AR FURTHER RELIED ON THE DECISION OF ITAT, KOLKATA BENCH 'A' IN THE CASE OF ALLAHABAD BANK VS. DCIT, CIRCLE-6, KOLKATA, REPORTE D IN (2018) 90 TAXMANN.COM 328 (KOLKATA - TRIB.) IN WHICH IT WAS HELD AS UNDER :- 'IT IS NOW WELL SETTLED THAT THERE IS NO ESTOPPELS AGAINST THE STATUTE. THE ASSESSEE IS ONLY PLEADING FOR CLAIM OF DEDUCTION WHICH HAD BEEN ERRONEOUSLY DISALLOWED BY IT IN THE RETURN OF INCOME AND CONSIDERED AS SUCH B Y THE ASSESSING OFFICER IN THE ASSESSMENT. THOUGH THERE WAS NO OCCASION FOR THE RE VENUE TO ADJUDICATE THIS ISSUE ON MERITS, THE REVENUE COULD NOT TAKE ADVANTA GE OF THE MISTAKE COMMITTED BY THE ASSESSEE. THE SCHEME OF TAXATION IS PRIMARILY GOVERNED BY THE PRINCIPLES LAID DOWN IN THE CONSTITUTION OF INDIA AND AS PER ARTICLE 265 OF THE CONSTITUTION OF INDIA, NO TAX SHALL BE LEVIED OR COLLECTED UNLESS BY AN AUTHORITY OF LA W. WHEN A PARTICULAR ITEM IS NOT TO BE TAXED AS PER THE STATUTE, THEN TAXING THE SAM E WOULD AMOUNT TO VIOLATION OF CONSTITUTIONAL PRINCIPLE AND REVENUE WOULD BE UNJUS TLY ENRICHED BY THE SAME. HENCE, IN THE PROCESS OF VERIFICATION BY THE ASSESS ING OFFICER, IF THE STAND OF THE ASSESSEE IS FOUND TO BE CORRECT AND IF IT RESULTS I N INCOME BEING ASSESSED LOWER THAN THE RETURNED INCOME, THAT WOULD BE THE TRUE AN D CORRECT INCOME OF THE ASSESSEE AND IT WOULD BE THE DUTY OF THE REVENUE TO ASSESS THE CORRECT TAX LIABILITY OF THE ASSESSEE. IN VIEW OF THESE FINDINGS IN THE F ACTS AND CIRCUMSTANCES OF THE CASE, IT IS DEEMED FIT AND APPROPRIATE, IN THE INTE REST OF JUSTICE AND FAIR PLAY, TO REMAND THIS ISSUE TO THE FILE OF THE ASSESSING OFFI CER FOR ADJUDICATION ON MERITS. ACCORDINGLY, THE ADDITIONAL GROUND RAISED BY THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSES.' THE LD. AR FURTHER SUBMITTED THAT IT IS RELEVANT TO POINT OUT THAT INTEREST WAS INCREASED U/S 201(1 A) FROM 1% TO 1.5% PER MONTH FR OM 1 ST JULY 2010. ACCORDINGLY THE NECESSARY DIRECTIONS MAY BE GIVEN FOR CHARGING THE INTEREST. ACCORDINGLY, IT IS PRAYED THAT THE APPEAL MAY KINDLY BE SET-ASIDE AND MAY BE RESTORED TO THE FILE OF THE ITO (TDS CIRCLE), PALAMPUR. 6. WE HAVE GONE THROUGH THE CONTENTIONS PUT FORTH B Y THE LD. AR. WE FIND THAT THOUGH THE TDS WAS DEDUCTED IN SPITE OF THE SU BMISSION OF FORM 15G/15H, THE SAID TAX DEDUCTED WAS NEITHER PAID TO THE TREAS URY NOR REFUNDED TO THE CUSTOMERS. THE ITO(TDS) HAS GIVEN A CATEGORICAL FIN DING THAT TILL THE TIME THE ORDER UNDER SECTION 201(1)/201(1A) HAS BEEN PASSED, NO REFUND OF THE TDS OR REVERSAL OF THE TDS DEDUCTED HAS BEEN UNDERTAKEN BY THE ASSESSEE. THE ASSESSEE HAS GOT NO RIGHT TO KEEP THE MONIES WITH T HEM WITHOUT REVERSING THE ENTRIES FOR A LONGER PERIOD. IT IS ALSO TO BE SEEN WHETHER THE BALANCE OF THE TDS DEDUCTED IN ADDITION TO THE NON ELIGIBLE DEDUCTEES HAS BEEN PAID TO TREASURY IN TIME OR NOT. H.P. STATE CO-OPERATIVE BANK ITA NO. 326 TO 337 ASST. YEAR: 2010-11 TO 2013-14 7 OF 7 HENCE THE CASE IS BEING REMANDED BACK TO THE FILE O F THE ITO(TDS) TO EXAMINE, WHETHER TDS HAS BEEN DEDUCTED CORRECTLY A ND PAID TO THE EXCHEQUER ON TIME AS STIPULATED, WHETHER THE EXCESS TDS DEDUCTED HAS BEEN CREDITED INTO THE ACCOUNTS OF THE CUSTOMERS, IF SO WHAT IS INTERVAL OF RE-CREDITING OF THE TDS, TO LOOK INTO THE REMEDIAL MEASURES TAKE N BY THE PR POST SURVEY TO BRING ABOUT THE CORRECT CHANGES IN THE SOFTWARE AND TO RE-DETERMINE THE DEFAULT OF THE TDS AND SUBSEQUENT DEPOSIT INTO THE GOVERNMENT ACCOUNT. THE ITO(TDS) WOULD BE AT LIBERTY TO LEVY THE PENALTY / INTEREST FOR NON DEDUCTION AND DELAYED DEPOSIT IF ANY AS PER THE PROVISIONS OF THE INCOME TAX ACT 1961. 7. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE AR E ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR.B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:05/03/2018 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR