2021 (7) TMI 1096 - AT - Income Tax

ITAT grants relief to Assessee, directs AO to review Form 15G/H, delete demand

The ITAT Delhi allowed the Assessee's appeal, directing the AO to examine Form No. 15G and 15H submissions and delete the demand. The tribunal stressed ... Rectification of mistake u/s 154 - “assessee in default’ u/s 201(1) for not making TDS on interest payment - Assessee contested that all the form in Form No. 15G and 15H received by the deductor were also submitted to the department and therefore, tax was not deductible thereon - CIT (A) noted that the redrafting of ground of appeal after passing of the order u/s 154 of the Act by the ld AO is not acceptable because it amounts to substitution of appeal which was filed against the order demanding tax and that an appeal against the order of ld AO u/s 154 of the Act is not permissible - HELD THAT:- The fact clearly shows that original order passed u/s 201(1) and 201(1A) of the Act on 24.03.2014 where the Assessee was found to be an assessee in default and also charged interest thereon comprising all the above sum. The appeal before the ld CIT(A) was filed on 23.04.2013, subsequently, on 18.09.2015 the ld AO has rectified the mistake apparent in the order and thereafter reduced the demand. Only issue before him was that the claim of the Assessee that the Assessee obtained Form No. 15G and 15H same were filed before the revenue but the AO did not believe this during the course of passing of the order u/s 201(1A). The ld AO rejected the claim of the Assessee for the reason that though photocopies of all the form produced during the course of inspection as mentioned by ld AO at para No. 11 were available but claim was rejected only for the reason that no proper documentary evidence in support of having delivered this forms to CIT (A) was produced. So the only dispute was whether those forms were submitted before the ld CIT or not. The ld AO noted that Assessee has obtained form No. 15G and 15H from the depositors and filed though the interest paid to them was higher than the maximum chargeable to tax. But it is not the case that Assessee did not have form available with it. The ld CIT(A) at the time of disposal of the appeal did not appreciate that the first proviso inserted w.e.f. 01.07.2012 u/s 201 (1) of the act is applicable in the case of the Assessee and if the Assessee satisfy certain conditions, then it should not held to be an ‘Assessee in default’. In fact this proviso is held to be applicable retrospectively by the Hon'ble Delhi High Court. Therefore, the benefit of this proviso should have been granted by the ld CIT(A) to the Assessee. From the orders of the ld AO it is not discernable that how the tax demand of ₹ 3.74 crores was reduced to ₹ 21,28,983/-. In fact that is the error in the order of the ld AO. He should have computed the tax liability of the Assessee with utmost clarity. If the LD AO has not done his duty, the LD CIT (A) ought to have asked the LD AO for the remand report which he did not. Further, the ld CIT(A) in the order was also not correct in holding that the Assessee is not eligible to argue about the reduced demand after passing of the order u/s 154 of the Act and the Assessee should have filed a fresh appeal against the order passed u/s 154 of the Act. We are of the view that approach of the ld CIT(A) is pedantic not correct because it will put additional burden on the Assessee to cross the threshold of the provision of section 154 of the Act of being ‘mistake apparent from the record’. By passing an order u/s 154 of the act, in fact ld AO has made the task of ld CIT (A) much simpler. In fact, the mistake is committed by the LD AO who should have charged the right demand of tax from the Assessee. Therefore, it is mistake of the LD AO for which the Assessee cannot be penalized. Looking to the facts and circumstances of the case, as the issue is with respect to non deduction of tax at source on interest provision where Form No 15G and 15H are available with the Assessee or not available with the Assessee which can be verified by the ld DCIT TDS and correct demand could be raised - Appeal filed by the Assessee is allowed for statistical purposes. Issues:Appeal against order of CIT(A)-I, Gurgaon for Assessment Year 2012-13 - Condonation of delay - TDS inspection - Assessee as tax deductor - Default u/s 201(1) - Interest payment - Rectification order u/s 154 reducing demand - Non-deduction of tax at source on interest - Submission of Form No. 15G and 15H - Appeal dismissed in absence of Assessee - Maintainability of appeal against order u/s 154 - Applicability of proviso to section 201(1) - Reduction of tax demand - Duty of AO and CIT(A) - Verification of Form No. 15G and 15H - Direction to examine and delete demand.Analysis:The case involves an appeal filed by the Assessee against the order of the CIT(A)-I, Gurgaon for Assessment Year 2012-13. The Assessee, a tax deductor, was found in default under section 201(1) for not making TDS on interest payment, leading to a demand of Rs. 3,74,10,430. Subsequently, a rectification order u/s 154 reduced the demand to Rs. 21,28,983. The primary issue revolved around non-deduction of tax at source on interest payments and the submission of Form No. 15G and 15H. The Assessee claimed to have submitted these forms, but the AO did not accept the claim, resulting in a reduced demand based on non-submission of these forms.During the appeal before the CIT(A), the Assessee argued that all necessary forms were submitted to the department. However, the CIT(A) dismissed the appeal on the grounds of non-sustainability, emphasizing that the Assessee could not redraft grounds of appeal post the rectification order. The CIT(A) also questioned the clarity in the reduction of tax demand from Rs. 3.74 crores to Rs. 21,28,983 post the rectification order.In the absence of the Assessee during the hearings, the appeal was decided based on available facts. The Senior DR contended that the appeal was not maintainable as the Assessee should have appealed against the order u/s 154. However, the ITAT Delhi, in its judgment, found that the reduction in the demand during the pendency of the appeal was significant. The tribunal highlighted the duty of the AO and CIT(A) to ensure clarity in tax calculations and to consider the Assessee's submissions regarding Form No. 15G and 15H.Ultimately, the ITAT Delhi allowed the Assessee's appeal for statistical purposes, directing the AO to examine the Form No. 15G and 15H submissions and delete the demand accordingly. The judgment emphasized the importance of verifying compliance with tax deduction provisions and providing relief to the Assessee based on the facts and circumstances of the case.