Shree Basaveshwar Co-op. Bank Ltd., Belgaum V. Income Tax Officer, TDS Ward, Belgaum

ITA 343/PAN/2014

• Counselvise Citation: 34324114 RSA 2014
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 10-10-2014
• Court: TRIBUNAL
• Department Lawyers: VINAY SINGH RAWAT LD
• Assessee Lawyers: ASHOK G M UDHUR CA LD
• Section: 143(3); 133A; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ,PANAJI BENCH, PANAJI [BEFORE SHRI P. K. BANSAL, AM & SHRI D.T GARASIA, JM ] I.T . A NO . 343 /PNJ/2014 A.Y 200 10 - 11 SHR EE BASAVESHWAR CO - OP. VS. I.T.O, TDS W ARD, BELGAUM B ANK LTD PAN: AA A AB3041M ( APPELLANT) ( RESPONDENT ) FOR THE APPELLANT: SHRI ASHOK G M UDHUR, CA , LD.AR FOR THE RESPONDENT : SHRI VINAY SINGH RAWAT, LD.DR DATE OF HEARING: 0 5 - 01 - 2015 DATE OF PRONOUNCEMENT: 0 5 - 01 - 2015 / ORDER PER SHRI D.T GARASIA, J M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) , B ELGAUM DATED 01/08/ 2014 FOR THE ASSESSMENT YEAR 20 10 - 11 . 2. THE ASSESSEE HAS RAISED THE FOLLOWI NG GROUNDS OF APPEAL: - 1. THE LEARNED CIT(A), BELGAUM ERRED IN LAW AND FACTS UPHOLDING THE ASSESSING OFFICER ORDER WHICH IS TIME BARRED BY LIMITATION U/S 201(13)(I) IN VIEW OF THE STATEMENT BEING FILED BY THE APPELLANT DURING A.Y 2010 - 11 U /S 20 0 OF THE INCOME TAX ACT, 1961. 2. THE LEARNED CIT(A), BELGAUM AND ASSESSING OFFICER ERRED IN FACTS AND LAW IN TREATING APPELLANT IN DEFAULT U/S 201(1) EVEN WHEN THE I.T.A.T. PANJIM IN ITA NO.233/PNJ/2004 HAS HELD IN ASSESSEE OWN CASE FOR THE ASS T YEAR 2002 - 03 THAT TAX IS NOT DEDUCTIBLE ON INTEREST PAID TO MEMBERS AND COOPERATIVE SOCIETIES IN VIEW OF EXEMPTION U/S 194A(3)(V) OF THE INCOME TAX ACT 1961. 3. THE LEARNED CIT(A), BELGAUM AND ASSESSING OFFICER ERRED IN FACTS AND LAW IN TR EATING ASSESSEE IN DEFAULT UNDER SECTION.201(1) EVEN WHEN THE LAW IS SETTLED THAT INTEREST PAID TO MEMBERS OF COOPERATIVE SOCIETIES IS EXEMPT UNDER SECTION. 194A (3) AS HELD BY HIGH COURTS AND I.T.A.T. BENCHES: (I) THE JALGAON DCC BANK LTD VS. UNION OF INDIA (2004) (II) GUJARAT URBAN CO O PERATIVE BANK FEDERATION VS. UNION OF INDIA (2012) 209 TAXMAN 340(GUJ) (III) ASST COMMISSIONER OF INCOME TAX CIRCLE I, NASIK VS. OZER MERCHANT COOPERATIVE BANK LTD ITA 1588/PNJ/2012 DATED 30.1 0.2013 (IV) ASST. COMMISSIONER OF INCOME TAX CIRCLE 1(1) VS. VISAKHAPATNAM COOP BANK LTD ITA 5/VIZAG/2011 DT. 29.08.2011 2 ITA NO . 343/PNJ/2014 - JM SHREE BASAVESHWAR CO - OP BANK LTD (V) THE BAGALKOT DISTRICT CENTRAL COOP BANK LTD VS. JOINT COMMISSIONER OF INCOME TAX, BIJAPUR RANGE BIJAPUR ITA 1572/BANG/2013 DT. 30.05.2014. 4. THE LEARNED CIT(A), BELGAUM AND ASSESSING OFFICER ERRED IN TREATING THAT APPELLANT WAS LIABLE TO DEDUCT TAX U/S. 194A(3)(I)(B) CONTRADICTING THE VIEW TAKEN BY EARLIER ASSESSING OFFICER WHO HAS PASSED ASSESSMENT U/S 143(3) FOR THE ASST YEAR 2009 - 10 AND SOME EARLIER YEARS HOLDING THE VIEW THAT INTEREST PAID TO MEMBERS IS EXEMPT UNDER SECTION. 194A(3)(V) OF THE ACT. 5. THE LEARNED ASSESSING OFFICER ERRED IN FACTS AND LAW IN TREATING THE ASSESSEE IN DEFAULT WITHOU T OPPORTUNITY NOR VERIFYING THAT THE RECIPIENT OF INCOME HAVE NO CAUSED ANY LOSS OF REVENUE TO GOVERNMENT UNDER PROVISO U/S 201(1) OF THE INCOME TAX ACT 1961 HINDUSTAN COLA BEVERAGES (P) LTD VS. CIT (2007) 163 TAXMAN 255(SC) JAGRAN PRAKASHAN LTD VS. DCIT (TDS) (2012) 345 ITR 288(ALL) HC 3. THE GROUND NOS.2 TO 4 & 5 ARE NOT PRESSED. HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 4. THE GROUND NO. 6 IS GENERAL IN NATURE AND REQUIRES NOT ADJUDICATION. 5. THE ONLY EFFECTIVE IS THAT THE AOS ORDE R IS TIME BARRED BY LIMITATION U/S 201(3)(I) OF THE ACT . 6. SHORT FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A CO - OPERATIVE BANK AND ENGAGED IN THE BUSINESS OF BANKING. IT HAS OBTAINED NECESSARY LICENSE FROM RESERVE BANK OF INDIA FOR CARRYING ON ITS BANK ING OPERATIONS AS A CO - OPERATIVE BANK. ITS RBI LICENSE NO. IS UBD/KA/552P. A SURVEY U /S 133A OF THE I.T ACT 1961 WAS CONDUCTED BY THE INCOME TAX OFFICER, TDS WARD, BELGAUM AT THE BANKS PREMISE ON 12 - 12 - 2013 TO VERIFY COMPLIANCE WITH TDS/TCS (TAX DEDUCTI ON/TAX COLLECTION AT SOURCE) PROVISIONS. ON VERIFICATION, IT WAS NOTICED THAT NO TDS HAD BEEN MADE FOR THE INTEREST PAYMENTS ON TERM DEPOSITS TO MEMBERS DURING THE F.YS 2009 - 10 TO 2012 - 2013 , WHICH WERE LIABLE FOR TDS @ 10% AS PER PROVISIONS OF SECTION 19 4A(3)(I)(B) OF THE I.T ACT 1961. 6.1 THE INCOME TAX OFFICER CONCLUDED THAT THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE FROM INTEREST ON TERM DEPOSITS EXCEEDING RS.10,000/ - THEREFORE, THE PROVISIONS OF SECTION 201(1) & 201(1A) OF THE I.T ACT 1961 ARE AP PLICABLE IN THE CASE OF THE ASSESSEE. SINCE THE ASSESSEE HAS FAILED TO DEDUCT THE TDS, THE ASSESSEE/DEDUCTOR IS DEFAULT U/S 201(1) , INTEREST U/S 201(1A) WAS REQUIRED TO BE LEVIED. THUS, THE INCOME TAX OFFICER CALCULATED THE AMOUNT PAYABLE FOR A.Y 2010 - 11 AT RS.15,52,119, RS.11,49,724/ - U/S 201(1) AND RS.4,02,395/ - U/S 201(1A). 3 ITA NO . 343/PNJ/2014 - JM SHREE BASAVESHWAR CO - OP BANK LTD 7 . MATTER CARRIED TO LD. CIT(A) AND CIT(A) HAS CONFIRMED THE ACTION OF THE AO. 8 . THE ASSESSEE IS IN APPEAL AGAINST THE DECISION OF THE LD.CIT(A). 9 . DURING THE COURSE OF H EARING BEFORE US THE LD.AR OF THE ASSESSEE HAS SUBMITTED THAT AS PER SECTION 200 (1) OF THE ACT ANY PERSON DEDUCTING ANY SUM IN ACCORDANCE WITH THE PROVISION S OF THIS CHAPTER SHALL PAY WITHIN THE PRESCRIBED TIME, T HE SUM SO DEDUCTED TO THE CREDIT OF THE C ENTRAL GOVERNMENT OR AS THE BOARD DIRECT S . SECTION 200A (1) ALSO PROVIDES THAT WHERE A STATEMENT OF TAX DEDUCTION AT SOURCE HAS BEEN MADE BY A PERSON/DEDUCTOR U/S 200 , S UCH STATEMENT SHALL BE PROCESSED IN THE FOLLOWING MANNER, WHEREIN IT IS PROVIDED THAT NO INTIMATION UNDER THIS SUB - SECTION SHALL BE SENT AFTER EXPIRY OF ONE YEAR FROM THE END OF THE FINANCIAL Y E AR IN WHICH THE STATEMENT IS FILED. MOREOVER, SECTION 201(3) PROVIDES NO ORDER SHALL BE MADE UNDER SUB - SECTION(1) DEEMING A PERSON TO BE AN ASSE SSEE IN DEFAULT FOR FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX FROM A PERSON RESIDENT IN INDIA, AT ANY TIME AFTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE STATEMENT IS FILED IN A CASE WHERE THE STATEMENT REFERRED TO I N SECTION 200 HAS BEEN FILED. IT ALSO PROVIDES THAT IF ANY PERSON INCLUDING THE PRINCIPAL OF THE COMPANY , WHO IS REQUIRED TO DEDUCT A TAX SUM IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT DOES NOT DEDUCT A TAX OR DOES NOT PAY WHOLE OR ANY PART OF TAX WIL L BE DEEMED TO BE A DEFAULT. THEREFORE, IN THIS CASE THE ASSESSEE HAS FILED THE STATEMENT OF TDS IN FORM NO.15G/15H BEFORE THE CONCERNED AUTHORITY . THE ASSESSEE HAS NOT DEDUCTED THE TDS ON INTEREST PAID TO NON MEMBERS AND MEMBERS OF CO - OPERATIVE SOCIETY I N EXCESS OF RS.10,000/ - . AS PER SECTION 201(3) THE AO CANNOT TAKE ACTION AFTER EXPIRY OF 2 YEARS FROM THE END OF THE FINANCIAL YEAR, IN WHICH THE STATEMENT WAS FILED. IN THE INSTANT CASE, THE ASSESSEE HAS FILED THE STATEMENT IN A.Y 2010 - 11 ON OCT,2010, B U T THE SURVEY WAS CONDUCTED ON 12 - 12 - 2013. THEREFORE, ACTION OF THE CONCERNED TDS OFFICER IS BARRED BY LIMITATION. 10 . ON THE OTHER HAND, THE LD.DR HAS RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 11 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES . L OOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE , WE FIND THAT AS PER SECTION 194A OF THE ACT WHEN ANY PERSON , NOT BEING THE INDIVIDUAL, WHO IS RESPONSIBLE FOR PAY ING TO A RESIDENT ANY INCOME BY WAY OF INTEREST OTHER THAN INCOME SHALL , AT THE T IME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF PAYEE OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MADE , WHICHEVER IS EARLIER , DEDUCT INCOME - TAX THEREON AT THE RATE S IN FORCE. IN THIS INSTANT CASE THE 4 ITA NO . 343/PNJ/2014 - JM SHREE BASAVESHWAR CO - OP BANK LTD ASSESSEE HAS PAID THE INTEREST TO NON MEMBERS AND CO - OPERATIVE SOCIETY IN EXCESS OF RS.10,000/ - IN FINANCIAL YEAR 2009 - 10 AND NO DEDUCTION OF TAX HAS BEEN MADE. THE ASSESSEE, THEREFORE, TREATED AS DEFAULT IN RESPECT OF SU C H TAX. IF THE ASSESSEE IS IN DEFAULT A CTION HAS TO BE TAKEN U/S201 OF THE I.T ACT 1961 THE SECTION 201(3) READS AS UNDER: - NO ORDER SHALL BE MADE UNDER SUB - SECTION (1) DEEMING A PERSON TO BE AN ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX FROM A PERSON RESID ENT IN INDIA, AT ANY TIME AT THE EXPIRY OF - (I) TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE STATEMENT IS FILED IN A CASE WHERE THE STATEMENT REFERRED TO IN SECTION 200 HAS BEEN FILED; (II) [SIX] YEARS FROM THE END OF THE FINANCIAL YEA R IN WHICH PAYMENT IS MADE OR CREDIT IS GIVEN, IN ANY OTHER CASE; PROVIDED THAT SUCH ORDER FOR A FINANCIAL YEAR COMMENCING ON OR BEFORE THE 1 ST DAY OF APRIL, 2007 MAY BE PASSED AT ANY TIME ON OR BEFORE THE 31 ST DAY OF MARCH, 2011. 11.1 FROM THE AB OVE SECTION, IT IS CLARIFIED THAT NO ORDER SHALL BE MADE UNDER THIS SECTION SUB - SECTION(1) DEEMING A PERSON TO BE AN ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT THE WHOLE OR ANY PART OF TAX FROM A PERSON RESIDENT INDIA AT ANY TIME AFTER EXPIRY OF 2 YE ARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE STATEMENT IS FILED IN A CASE WHERE THE STATEMENT REFERRED TO IN SECTION 200 HAS BEEN FILED. IN THIS CASE THE ASSESSEE HAS FILED QUARTERLY STATEMENT OF TDS BEFORE THE CONCERNED AUTHORITY ON 15 - 06 - 2010 . ASS ESSMENT YEAR FOR THE YEAR UNDER CONSIDERATION IS 2010 - 11 [F.Y 2009 - 10]. THUS, THE ACTION HAS TO BE TAKEN WITHIN 2 YEARS FROM THE END OF FINANCIAL YEAR IN WHICH THE STATEMENT IS FILED . IN THE INSTANT CASE THE ASSESSMENT ORDER HAS BEEN MADE IN MARCH 2013. THEREFORE, AFTER MARCH 2013 NO ACTION CAN BE TAKEN. IN THIS CASE THE ASSESSMENT ORDER HAS BEEN PASSED ON 11 - 02 - 2014. THEREFORE, IT IS EVIDENT FROM RECORD THAT THE ACTION OF THE AO FOR TREATING THE ASSESSEE IN DEFAULT IS BARRED BY LIMITATION. IN THIS VIEW O F THE MATTER, WE ALLOW THIS GROUND OF ASSESSEES APPEAL. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 0 5 - 01 - 2015 SD/ - SD/ - ( P. K. BANSAL ) ( D.T GARASIA) ACCOUNTANT MEM BER JUDICIAL MEMBER DATED : 0 5 - 01 - 2015 5 ITA NO . 343/PNJ/2014 - JM SHREE BASAVESHWAR CO - OP BANK LTD **PRADIP (SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. A PPELLANT 2 RESPONDENT 3. THE CIT(A) CONCERNED 4. 5. THE CIT CONCERNED THE D . R 6. GUARD FILE TRUE COPY, BY ORDER, ASSTT. REGISTRAR .