Punjab National Bank, Muktsar (Punjab) V. The Income-tax Officer, Bathinda

ITA 562/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0540 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-06-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 11-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Section: 206AA; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.562(ASR)/2014 ASSESSMENT YEAR: 2012-13 PUNJAB NATIONAL BANK, MAIN BRANCH, MUKTSAR PAN: VS. INCOME TAX OFFICER (TDS) BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.N. ARORA (ADV.) RESPONDENT BY: SH. UMESH TAKYAR (DR.) DATE OF HEARING: 01.06.2016 DATE OF PRONO UNCEMENT: 27.07.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE OR DER OF LEARNED CIT(A), BATHINDA, DATED 26.06.2014 FOR ASST. YEAR: 2012-13. 2. IN THIS APPEAL THE ASSESSEE IS AGGRIEVED WITH TH E ACTION OF LEARNED CIT(A), BY WHICH HE HAD CONFIRMED THE ACTION OF ASS ESSING OFFICER WHEREBY THE ASSESSING OFFICER CHARGED INTEREST U/S 201(1A) OF THE ACT FOR NON DEDUCTION OF TAX AT SOURCE ON PAYMENT OF SALARY ON MONTHLY AVERAGE BASIS. THE ASSESSEE IS FURTHER AGGRIEVED WITH THE ACTION OF LEARNED CIT(A) BY WHICH HE HAD CONFIRMED THE CHARGING OF INTEREST U/S 201(1) & 201(1A) FOR NON MENTIONING OF PAN NO. OF DEPOSITORS ON FORM 15G /15H FURNISHED BY DEPOSITORS WITH BANK. ITA NO.562 (ASR)/2014 ASST. YEA R: 2012-13 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS THE BRANCH OF PUNJAB NATIONAL BANK AT MUKTSAR. DURING THE COURSE OF SURVEY U/S 133 A OF THE ACT, THE ASSESSING OFFICER OBSERVED THAT P ERSON RESPONSIBLE WAS NOT DEDUCTING TAX AT SOURCE ON PAYMENT OF SALARY ON MONTHLY AVERAGE BASIS. THEREFORE, THE ASSESSING OFFICER CREATED THE DEMAND U/S 201(1A) AMOUNTING TO RS.12,460/- FOR NOT DEDUCTING TDS ON M ONTHLY AVERAGE BASIS. THE REPLY OF THE PERSON RESPONSIBLE THAT THE TDS WAS AUTOMATICALLY DEDUCTED ON MONTHLY BASIS BY CIRCLE O FFICE WAS NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OFFICE R FURTHER OBSERVED THAT ASSESSEE IN A NUMBER OF CASES HAD PAID INTERES T EXCEEDING RS.10,000/- AND DEDUCTEES HAD NOT FURNISHED HIS PAN NOS. ON THE DECLARATIONS AND THEREFORE, THE ASSESSEE SHOULD HAV E DEDUCTED TDS @ 20%. THE PERSON RESPONSIBLE SUBMITTED THAT PAN NO. OF DEDUCTEES WERE AVAILABLE WITH THE BANK AND NON MENTIONING OF PAN N O. ON 15G/15H WAS A TECHNICAL ERROR AND THEREFORE, IT WAS SUBMITTED T HAT SINCE IT WAS AN INADVERTENTLY BONAFIDE ERROR AND THEREFORE, THE DEM AND SHOULD BE DELETED. HOWEVER, ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF ASSESSEE AND CREATED A DEMAND OF RS.2,88,068/- U/S 201(1) AND ALSO CREATED DEMAND ON ACCOUNT OF INTEREST U/S 201(1A) O F THE ACT. 4. AGGRIEVED WITH THE ORDER THE ASSESSEE FILED APPE AL BEFORE THE LEARNED CIT(A), HOWEVER, THE LEARNED CIT(A) ALSO DI D NOT ACCEPT THE ARGUMENTS OF ASSESSEE AND UPHELD THE ACTION OF ASSE SSING OFFICER. ITA NO.562 (ASR)/2014 ASST. YEA R: 2012-13 3 5. AGGRIEVED WITH THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, LEARNED AR SUBMITTED THAT PROVISI ONS OF SECTION 192(3) ALLOWS THE ADJUSTMENT FOR ANY EXCESS OR DEFI CIENCY ARISING OUT OF ANY PREVIOUS DEDUCTION OR FAILURE TO DEDUCT DURING THE SAME FINANCIAL YEAR. IT WAS FURTHER SUBMITTED THAT AT THE END OF T HE FINANCIAL YEAR THERE WAS NO SHORT DEDUCTION OF TAX AND THEREFORE, IT WAS PRAYED THAT INTEREST CHARGED U/S 201(1) DESERVES TO BE DELETED. 7. AS REGARDS THE OTHER ISSUE OF CREATION OF DEMAND FOR SHORT DEDUCTION ON INTEREST FOR NON MENTIONING OF PAN NO. ON THE DECLARATION U/S 15G/15H, THE LEARNED AR SUBMITTED THAT THE COMP LETE LIST OF PERSONS TO WHOM INTEREST EXCEEDING RS.10,000/- ALON G WITH THEIR PAN NOS. WERE FURNISHED TO THE ASSESSEE DURING THE PROC EEDINGS AND THE NON MENTIONING OF PAN NOS. ON THE DECLARATION WAS ONLY A TECHNICAL DEFAULT AND THEREFORE, THE LEARNED CIT(A) SHOULD HAVE DELET ED THE DEMAND. RELIANCE IN THIS RESPECT WAS PLACED ON THE CASE LAW OF ITAT, VISAKHAPATNAM BENCH, IN THE CASE OF DCIT CIRCEL-3(1 ) TDS VIJAYAWADA VS. M/S. VIJAYA BANK, KOTHAGUDEM, 238 ITR 282 . SIM ILARLY, RELIANCE WAS PLACED ON THE ORDER OF ITAT, JODHPUR BENCH IN THE C ASE OF ITO VS. PEARL ORGANIC COATINGS, REPORTED IN 84 TTJ 0802. 8. THE LEARNED DR, ON THE OTHER HAND, HEAVILY PLACE D HIS RELIANCE ON THE ORDER OF AUTHORITIES BELOW. ITA NO.562 (ASR)/2014 ASST. YEA R: 2012-13 4 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GON E THROUGH THE MATERIAL PLACED ON RECORD. AS REGARDS THE FIRST ISSUE OF NON DEDUCTION OF TDS ON MONTHLY AVERAGE BASIS, WE FIND THAT THE CONTENTION OF THE ASSESSEE THAT AT THE END OF FINANCIAL YEAR THERE WAS NO SHORT DED UCTION OF TDS ON PAYMENT OF SALARY TO VARIOUS EMPLOYEES HAS NOT BEEN CONTROVERTED BY THE AUTHORITIES BELOW. FURTHER, WE FIND THAT THE TDS ON SALARY WAS DEDUCTED ON THE MONTHLY AVERAGE BASIS BY CIRCLE OFFICE OF PE RSONS RESPONSIBLE AND IT WAS AUTOMATIC AND THERE IS NO INTERFERENCE BY TH E BRACH. WE FURTHER FIND THAT DEDUCTION OF AMOUNT OF TAX FROM SALARY DE PEND UPON THE VARIOUS SAVING SCHEMES ADOPTED BY VARIOUS EMPLOYEES AND SOME TIME THE EMPLOYEES MAKE DELAY IN SUBMISSIONS OF THEIR SAVING CERTIFICATES. FURTHER WE FIND FROM THE REPLY OF ASSESSEE TO LEARN ED CIT(A) THAT THE EMPLOYEES HAD DECLARED THE OTHER INCOME TO THE BANK ONLY IN THE MONTH OF MARCH AND FURTHER THAT SOME TIMES INCREMENT AND PAY PERQUISITES OF EMPLOYEES IS PAID IN THE LAST MONTH AND THEREFORE, ALL THESE REASONS COULD CONTRIBUTE TO SOME SHORT DEDUCTION OF TDS IN SOME EARLIER MONTHS OF THE FINANCIAL YEAR BUT THE FACT REMAINS THAT AT THE END OF FINANCIAL YEAR THERE WAS NO SHORT DEDUCTION OF TDS. BEFORE LE ARNED CIT(A) THE ASSESSEE HAD RELIED UPON THE CASE LAW DECIDED BY HO NBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MARUBENI INDIA (PVT.) LTD., IN WHICH IT WAS HELD THAT WHEN UNDER CERTAIN CIRCUMSTANCES THERE IS SHORT DEDUCTION OF TAX THE ASSESSEE CANNOT BE HELD TO BE IN DEFAULT U/ S 201(1) OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAD ALSO FILED THE COPY OF THE JUDGMENT, ITA NO.562 (ASR)/2014 ASST. YEA R: 2012-13 5 HOWEVER, THE LEARNED CIT(A) THOUGH OBSERVED THAT IS SUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE IN A NUMBER OF CASES, BUT HE DID NOT ADJUDICATE ON THE ISSUE HOLDING THAT ASSESSEE HAD NOT RAISED THE ISSUE BEFORE HIM. HOWEVER, WE FIND THAT THE NON DEDUCTION OF TDS ON M ONTHLY AVERAGE BASIS WAS DUE TO TECHNICAL REASONS AND MOREOVER, TH E ISSUE FOR NON DEDUCTION ON MONTHLY AVERAGE BASIS IS DECIDED IN FA VOUR OF ASSESSEE IN THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. MARUBENI INDIA (PVT.) LTD.. WE FIND THAT THOUGH ASSESSEE BEF ORE LEARNED CIT(A) HAD NOT RAISED SPECIFICALLY THIS GROUND OF APPEAL, BUT GROUND NO.3 RAISED BEFORE LEARNED CIT(A) CLEARLY INDICATES THAT ASSESS EE WAS AGGRIEVED WITH THE TOTAL DEMAND RAISED WHICH INCLUDED AMOUNT ON AC COUNT OF NON DEDUCTION OF TDS ON MONTHLY AVERAGE BASIS AND ASSES SEE DURING APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) HAD ALSO MADE ARGUMENTS FOR THE SAME, THEREFORE, LEARNED CIT(A) S HOULD NOT HAVE DISMISSED THE SAME AS NOT RAISED BY ASSESSEE, THERE FORE, WE DELETE THE DEMAND ON THIS ACCOUNT HOLDING THAT THE BREACH WAS MERELY TECHNICAL IN NATURE AND MOREOVER, THE ISSUE IS COVERED IN FAVOUR OF ASSESSEE AS NOTED BY LEARNED CIT(A). IN VIEW OF THE ABOVE, THE GROUN D NO.1 IS ALLOWED. 10. AS REGARDS GROUND NO.2, WE FIND THAT ASSESSEE I N PROCEEDING U/S 201(1) AND 201(1A) HAD PROVIDED A LIST OF PERSONS T O WHOM THE INTEREST OF 10,000/- OR MORE WAS PAID AND TDS WAS NOT DEDUCTED ALONG WITH PAN NO. OF ALL DEDUCTEES. THIS IS MENTIONED BY ASSESSIN G OFFICER AT PAGE 4 OF ITA NO.562 (ASR)/2014 ASST. YEA R: 2012-13 6 HIS ORDER AND THEREFORE, THE NON MENTIONING OF TDS WAS ONLY A TECHNICAL ERROR. WE FURTHER FIND THAT THE SAME SUBMISSIONS WE RE MADE BEFORE LEARNED CIT(A) AND IT WAS SUBMITTED AS UNDER: THERE IS NO PERSONS WHOSE PAN NO. IS NOT AVAILABLE OR IN VALID WITH THE BANK ON THE DATE OF PAYMENT OF INTEREST THERE WILL BE NO REQUIREMENT OF DEDUCTION OF TDS U/S 194A OF THE ACT. THE REQUIREME NTS OF SECTION 206AA IS ALSO FULFILLED ON THE DATE OF SUBMISSION AS THE PAN NO. OF ALL DEDUCTEES ARE AVAILABLE WITH THE BANK ON THE DATE OF SUBMISSI ONS OF DECLARATION IN FORM NO.15G/15H, ON THE DATE WHEN PAYMENT IS MADE. IT WAS ALSO SUBMITTED TO LEARNED CIT(A) THAT THE LI ST OF PERSONS TO WHOM INTEREST OF 10,000/- OR MORE WAS PAID AND TDS WAS N OT DEDUCTED ALONG WITH PAN OF ALL DEDUCTEES WAS SUBMITTED TO ASSESSIN G OFFICER AND THIS FACT IS NOTED BY LEARNED CIT AT PAGE-4 OF HIS ORDER . THE FINDING OF LEARNED CIT(A) THAT AR OF THE APPELLANT HAS FAILED TO FURNI SH ANY EVIDENCE IN SUPPORT OF THE CONTENTION THAT THE PAN WERE AVAILAB LE WITH THE PERSONS RESPONSIBLE AT THE TIME OF ACCEPTING FORM 15G/15H, IS ONLY A TECHNICAL BREACH IN VIEW OF THE FACT THAT LEARNED CIT(A) PAS SED THE ORDER DATED 26.06.2014 WHEREAS AS PER THE LIST OF PERSONS SUBMI TTED TO ASSESSING OFFICER INDICATING THE PAN NOS., IT IS OBSERVED THA T PAN NOS. OF ASSESSEES TO WHOM INTEREST WAS PAID WITHOUT DEDUCTION OF TAX WAS ISSUED IN THE YEARS 2008-2011. THE LIST OF SUCH PAYMENTS IS PLACE D AT (PB PAGE 1 TO 2). THEREFORE, THE PAN NOS. OF SUCH DEDUCTEES WAS AVAIL ABLE AT THE TIME OF DEDUCTION OF TDS, AND THEREFORE, THE MENTIONING OF THE SAME ON THE DECLARATIONS WAS ONLY A TECHNICAL BREACH. THE HONB LE ITAT, ITA NO.562 (ASR)/2014 ASST. YEA R: 2012-13 7 VISHAKHAPATNAM BENCH IN THE CASE OF DCIT CIRCLE-3(1 ), (TDS) VIJAYAWADA VS. M/S VIJAYA BANK, KOTHAGUDEM UNDER SI MILAR FACTS AND CIRCUMSTANCES HAS DECIDED THE ISSUE VIDE PARA-7 WHI CH IS REPRODUCED BELOW. 7. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES, P ERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIA LS ON RECORD. IT IS THE CLAIM OF THE DEPARTMENT THAT THE ASSESSEE HAS NOT B EEN ABLE TO SUBMIT DECLARATIONS IN FORM 15G IN ALL THE CASES AT THE TI ME OF SURVEY. WHEREAS, THE ASSESSEE HAS ASSERTED THAT DURING THE PROCEEDIN G BEFORE THE ASSESSING OFFICER, DECLARATIONS OF THE DEPOSITORS IN PRESCRIB ED MANNER WAS FILED IN CASES WHERE TAX HAS NOT BEEN DEDUCTED. ON A PERUSAL OF FACTS AND MATERIALS ON RECORD, IT IS CLEAR THAT EVEN ASSUMING THAT AT THE TIME OF SURVEY, ALL THE DECLARATIONS COULD NOT BE BROUGHT T O THE NOTICE OF THE DEPARTMENT FOR WHATEVER MAY BE THE REASONS, BUT FAC T REMAINS THAT DURING THE PROCEEDING BEFORE THE ASSESSING OFFICER, THE AS SESSEE HAS FURNISHED DECLARATIONS IN THE PRESCRIBED FORMAT IN RESPECT OF INTEREST PAYMENT/CREDIT MADE TO DEPOSITORS WHEREIN TAX WAS NOT DEDUCTED AT SOURCE. THE ASSESSING OFFICER HAS REJECTED THE DECLARATION FORM S BY ASSUMING THAT THE ASSESSEE HAS NOT OBTAINED THOSE FORM PRIOR TO THE D ATE OF PAYMENT/CREDIT OF INTEREST. IN OUR VIEW, THE REJECTION OF THE DECL ARATIONS ON MERE PRESUMPTION AND SURMISES BY HE ASSESSING OFFICER IS NOT CORRECT. FACT REMAINS THAT THE ASSESSEE HAS SUBMITTED THE DECLARA TION FORMS BEFORE THE ASSESSING OFFICER. THEREFORE, INSTEAD OF POINTING O UT CERTAIN DEFECTS, DEFICIENCIES/TECHNICAL OBJECTIONS, THE ASSESSING OF FICER SHOULD HAVE ACCEPTED THE DECLARATION. ONCE A DECLARATION IS REC EIVED FROM THE DEPOSITOR IN THE PRESCRIBED MANNER, THE DEDUCTOR IS UNDER A S TATUTORY OBLIGATION NOT TO DEDUCT TAX. THEREFORE, THE ASSESSEE CANNOT BE PE NALIZED OR SADDLED WITH LIABILITY U/S 201(1) OR 201(1A) OF THE ACT WHEN THE DEPOSITORS TO WHOM INTEREST HAS BEEN PAID/CREDITED HAVE FURNISHED DECL ARATIONS IN THE PRESCRIBED MANNER REQUESTING NOT TO DEDUCT TAX. IN THESE CIRCUMSTANCES, WE AGREE WITH THE CONCLUSION OF THE LD. CIT THAT ME RELY BECAUSE THERE ARE SOME TECHNICAL DEFECTS IN THE DECLARATION OR THEY H AVE BEEN RECEIVED AFTER THE DATE OF CREDIT OF INTEREST TO THE ACCOUNT OF TH E PAYEE THEY CANNOT BE REJECTED. IT IS ALSO A FACT THAT THE VIEW TAKEN BY THE LD. CIT(A) IS IN CONSONANCE WITH THE DECISION OF ITAT JODHPUR BENCH IN THE CASE OF INCOME TAX OFFICER VS. PEARL ORGANIC COATING, REPORTED IN (2004) 84 TTJ (JD) 802 AND THAT OF THE HON'BLE MADRAS HIGH COURT IN CASE O F VIJAY HEMANTH FINANCE AND ESTATE LIMITED VS. ITO AND ANOTHER, REP ORTED IN (1999) 238 ITR 282 (MAD). THE LD. D.R. HAS NOT BROUGHT TO OUR NOTICE ANY CONTRARY DECISION. IN AFORESAID VIEW OF THE MATTER, WE DO NO T FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE DEMAND RAISED BY THE ASSESSING OFFICER. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CI T(A) BY DISMISSING THE GROUNDS RAISED. ITA NO.562 (ASR)/2014 ASST. YEA R: 2012-13 8 RESPECTFULLY FOLLOWING THE ABOVE WE DELETE THE DEMA ND CREATED BY AUTHORITIES BELOW. IN VIEW OF THE ABOVE, GROUND NO. 3 IS ALSO ALLOWED. 11. IN NUTSHELL, THE APPEAL FILED BY ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 .07.2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: 27.07.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER