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

ITA 345/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88708 (ITAT-PANAJI)
• 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: 2012-2013
• Appeal Filed On: 10-10-2014
• Court: TRIBUNAL
• Department Lawyers: VINAY SINGH RAWAT LD
• Assessee Lawyers: ASHOK G M UDHUR CA LD
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 133A; 201(1); 139

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 S . 34 5 & 346 /PNJ/2014 A.Y 200 1 2 - 13 & 2013 - 14 SHR EE BASAVESHWAR CO - OP. VS. I.T.O, TDS W ARD, BELGAUM B ANK LTD PAN: AA AAB3041M ( 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: TH ESE APPEAL S HAVE BEEN FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDER OF THE LD. CIT (A) , B ELGAUM DATED 01/08/ 2014 FOR THE ASSESSMENT YEAR S 20 1 2 - 13 AND 1013 - 14 RESPECTIVELY. 2. THE ASSESSEE HAS RAISED THE FOLLOWING COMMON GROUNDS OF APPEAL IN BOTH THE APPEALS FOR THE ASSESSMENT YEARS UNDER CONSIDERATION : - 1. THE LEARNED CIT(A), BELGAUM AND ASSESSING OFFICER ERRED IN FACTS AND LAW IN TREATING APPELLANT IN D EFAULT UNDER SECTION. 201(1) EVEN WHEN THE I.T.A.T. PANJIM IN ITA NO.233/PANJ/2004 HAS HELD IN ASSESSEE OWN CASE FOR THE ASST YEAR 2002 - 03 THAT TAX IS NOT DEDUCTABLE ON INTEREST PAID TO MEMBERS AND CO O PERATIVE SOCIETIES IN VIEW OF EXEMPTION U/S 1 94A(3) (V) OF THE INCOME TAX ACT 1961. 2. THE LEARNED CIT(A), BELGAUM AN D ASSESSING OFFICER ERRED IN FACTS AND LAW IN TREATING A SSESSEE IN DEFAULT U/S 201(1) EVEN WHEN THE LAW IS SETTLED THAT INTEREST PAID TO MEMBERS OF COOPERATIVE SOCIETIES IS EXEMPT U /S 194A (3) (V) 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 30.10.2013 (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 S . 34 5,346/ PNJ/2014 - JM SHREE BASAVESHWAR CO - OP BANK LTD (V) THE BAGAL KOT DISTRICT CENTRAL COOP BANK LTD VS. JOINT COMMISSIONER OF INCOME TAX, BIJAPUR RANGE BIJAPUR ITA 1572/BANG/2013 DT. 30.05.2014. 3 . 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 U /S 194A(3)(V) OF THE ACT. 4 . T HE LEARNED ASSESSING OFFICER ERRED IN FACTS AND LAW IN TREATING THE ASSESSEE IN DEFAULT WITHOUT GIVING 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 COMMON S HORT 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 BANKING 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 OF FICER, TDS WARD, BELGAUM AT THE BANKS PREMISE ON 12 - 12 - 2013 TO VERIFY COMPLIANCE WITH TDS/TCS (TAX DEDUCTION/TAX COLLECTION AT SOURCE) PROVISIONS. ON VERIFICATION, IT WAS NOTICED THAT NO TDS HAD BEEN MADE FOR THE INTEREST PAYMENTS ON TERM DEPOSITS TO MEMB ERS DURING THE F.YS 2009 - 10 TO 2012 - 2013 , WHICH WERE LIABLE FOR TDS @ 10% AS PER PROVISIONS OF SECTION 194A(3)(I)(B) OF THE I.T ACT 1961. 4 .1 THE INCOME TAX OFFICER CONCLUDED THAT THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE FROM INTEREST ON TERM DEPO SITS EXCEEDING RS.10,000/ - THEREFORE, THE PROVISIONS OF SECTION 201(1) & 201(1A) OF THE I.T ACT 1961 ARE APPLICABLE 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 201 2 - 13 AT RS. 22,85,643/ - , RS.1 8,58,257 / - U/S 201(1) AND RS.4, 27,386 / - U/S 201(1A). SIMILARLY, HE CALCULATED THE AMOUNT PAYABLE FOR A.Y 201 3 - 14 AT RS.2 1,69 ,403 / - , RS.1 9,54,430 / - U/S 201(1) AND RS. 2,14,973 / - U/S 201(1A). 5 . MATTER CARRIED TO LD. CIT(A) AND CIT(A) HAS CONFIRMED THE ACTION OF THE AO. 6 . THE ASSESSEE IS IN APPEAL AGAINST THE DECISION OF THE LD.CIT(A). 3 ITA NO S . 34 5,346/ PNJ/2014 - JM SHREE BASAVESHWAR CO - OP BANK LTD 7 . WE HAVE HEARD THE RIVAL CONTENTION S OF BOTH THE PARTIES. DURING THE COURSE OF HEARING BEFORE US THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS PAID INTEREST ON THE DEPOSIT TO MEMBERS AND CO - OPERATIVE SOCIETIES IN EXCESS OF RS.10,000/ - , BUT THE ASSESSEE HAS NOT DEDUCTED TAX ON T HE INTEREST PAID ON TERM DEPOSITS IN EXCESS OF RS.10,000/ - TO ITS MEMBERS. HE ALSO SUBMITTED THAT THE ASSESSEE IS NOT REQUIRED TO PAY/DEDUCT TAX AT SOURCE ON THE INTEREST PAYMENT TO ITS MEMBERS AND CO - OPERATIVE SOCIETIES AS PER PROVISIONS OF SECTION 194A( 3)(V) OF THE I.T ACT 1961. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS ALREADY DEDUCTED TAX FROM THE DEPOSITORS . T HE ASSESSEE HAS ALREADY PAID THE TAX TO THE GOVERNMENT. THE DEPOSITORS HAVE ALREADY SHOWN THE SAME IN THEIR RESPECTIVE RETURNS OF INCOME . T HEREFORE, AS PER DECISION IN THE CASE OF HINDUSTAN COLA BEVERAGES (P) LTD VS. CIT REPORTED IN (2007) 163 TAXMAN 255(S.C) THERE IS NO LOSS TO THE REVENUE BECAUSE THE RECIPIENT HAS ALREADY PAID THE TAX ON INTEREST PAYMENT. THEREFORE, THE MATTER MAY BE RESTOR ED TO THE AO TO VERIFY WHETHER THE COOPERATIVE BANK HAS ALREADY PAID THE TAX OR NOT ON PAYMENT OF INTEREST TO ITS MEMBERS. IF THE DEPOSITORS OR CO - OPERATIVE BANK HAS ALREADY PAID THE TAX, THEN ASSESSEE IS NOT DEEMED TO BE DEFAULT U/S 20 1 (1) OF THE ACT . TH EREFORE, THE MATTER MAY BE RESTORED TO THE FILE OF THE AO TO VERIFY THE SAME. 8 . ON THE OTHER HAND, THE LD.DR HAS NOT OBJECTED TO THE ABOVE SUBMISSIONS OF THE LD.AR OF THE ASSESSEE. 9 . HAVING HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND LOOKIN G TO THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE VIEW THAT THE ISSUE IS NOW CONTROVERSY BY THE DECISION IN ITA NO.34 4 /PNJ/2014 IN ASSESSEES OWN CASE, WHEREIN WE HAVE HELD THAT THE ASSESSEE BANK IS REQUIRED TO DEDUCT THE TAX ON INTEREST PAID TO ITS MEMBERS AND CO - OPERATIVE SOCIETY IN EXCESS OF R S.10,000/ - . WE FIND THAT IN BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION THERE IS AN AMENDMENT IN SECTION 201 OF THE I.T ACT, 1961 . AS PER THE AMENDMENT FROM 1 - 7 - 2013, IT WAS PROVIDED THAT ANY PERSON, WH O FAILS TO DEDUCT WHOLE OR ANY PART OF TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER OR SUM PAID TO A RESIDENT OR SUM CREDIT TO THE ACCOUNT OF RESIDENT SHALL NOT DEEM ED TO BE THE ASSESSEE IS DEFAULT IN RESPECT OF SUCH TAX. IF SUCH RESIDENT HAS FURN ISHED ITS RETURN OF INCOME U /S 139 OR HE HAS PAID THE TAX ON INCOME DECLARED BY HIM ON SUCH RETURN OF INCOME AND PERSON FURNISHED A CERTIFICATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS PRESCRIBED. WE FIND THAT AS PER THIS SECTION THE LD.AR HAS SUB MITTED BEFORE US THAT THE ASSESSEE IS READY TO FURNISH SUCH CERTIFICATE AS REQUIRED U/S 201 (1) OF THE ACT. THIS IS REQUIRED VERIFICATION BY THE AO. THEREFORE, IN THE INTEREST OF NATURAL JUSTICE AND FAIR PLAY, WE ARE OF THE 4 ITA NO S . 34 5,346/ PNJ/2014 - JM SHREE BASAVESHWAR CO - OP BANK LTD VIEW THAT THIS ISSUE IS RESTORED TO THE FILE OF THE AO TO VERIFY WHETHER THE RECIPIENT HAS ACCOUNTED FOR THIS INTEREST UNDER THE PROVISIONS OF SECTION 201(1) OF THE ACT OR NOT. THE AO SHALL VERIFY THIS ASPECT AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. THE AO IS DIRECT ED TO VERIFY THIS FACT WITHIN 30 DAYS OF RECEIPT OF THIS ORDER. IF THE ASSESSEE FAIL S TO PRODUCE THE REQUISITE CERTIFICATE AS PER PROVISIONS OF SECTION 201(1) OF THE ACT WITHIN 30 DAYS, THEN THE AO HAS LIBERTY TO CONFIRM THE ADDITION AS PER LAW. THEREFOR E, THIS ISSUE OF BOTH THE APPEALS IS ALLOWED FOR STATISTICAL PURPOSE. 1 0 . IN THE RESULT, APPEAL S OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE . ORDER IS PRONOUNCED IN THE OPEN COURT ON 0 5 - 01 - 2015 SD/ - SD/ - ( P. K. BANSAL ) ( D.T GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 5 - 01 - 2015 **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