Disallowance u/s 40(a)(ia) for late filing of Forms 15G and 15H...

Disallowance u/s 40(a)(ia) for late filing of Forms 15G and 15H is not justified. Even if the assessee fails to furnish the declaration forms before the concerned authority, they cannot be penalized for non-deduction of tax. Addition u/s 40(a)(ia) cannot be made when there was no requirement of deducting tax at source, once the declaration forms are submitted before the Assessing Officer u/s 197A(2). The department did not verify whether the payees declared the interest in their income tax returns. The direction of the Commissioner of Income Tax (Appeals) lacks legal foundation. The assessee's appeal is allowed.

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