TaxTMI 
TaxTMI 
2016 (4) TMI 1080
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....iod of delay attributable to assessee. 1.2. The learned CIT failed to appreciate that the order of AO was not erroneous and prejudicial to revenue, since the TDS was refunded based on "Indemnity Bond" in respect of "defective TDS" certificates, and in any case the appellant could not be held responsible for defects in TDS Certificates issued by Payee on whom duty is cast to issue valid certificate. Hence time taken to cure defects cannot be construed as delay in proceedings attributable to the appellant and interest withheld. 1.3. The learned CIT failed to appreciate that since money deposited on TDS made was with the government from the beginning and that there is no loss of revenue in the case of clerical mistakes on the certificates, setting aside an order of rectification of AO, based on the strength of Indemnity Bond is unwarranted and unreasonable''. 3. We consider the facts narrated in ITA No.1320/Mds/2015 for assessment year 2001-02 for adjudication. The assessee bank made a petition u/s.154 of the Act to the Assessing Officer to grant credit of TDS not allowed in the original assessment though TDS certificate are filed alongwith return of income. The assessee bank ....
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....elay attributable to the assessee, the assessee relied on the decisions of various High Court and the Commissioner of Income Tax referred in the order at page 3 as under:- ''As has been held in ClT v. Hindustan Lever Ltd ( 2012) 343 ITR 161, merely because the assessment order does not give any reasons for allowing the claim is not by itself indicative of the fact that the Assessing- Officer has not applied his mind on the issue. All the circumstances have to be seen. The credit for TDS claimed by the assessee is based on the strength of certificates produced before the AO. If there were any defects, the same is curable and not incurable. Once the defects were cured, the refund is made along with interest. This is an accepted position in law as to grant of credit. Withholding TDS credit on technical grounds causes harassment to the assessee. We invite your kind attention the order of Delhi High Court, decided on its own motion, All India Federation of Tax practitioners, (Writ Petition 2659 of 2012 dated 14.03.2013) directed CBDT to comply with various Mandamus issued by it. The court clearly held that, Denying the benefit of TDS because of the fault of the deductor, which is not ....
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....t page 4 of order as under:- '' There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is also when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind'' and following the principles, the ld. Assessing Officer erroneously gave TDS credit based on indemnity bond and interest u/s.244A without excluding the period of delay attributable to the assessee. As no interest u/sec.244A of the Act is payable for delay and also if there is dispute on the time period exclusion, the matter has to be referred to the Chief Commissioner of Income Tax who shall adjudicate on granting of refund. In the present case, the Assessing Officer has not referred to the higher authorities and granted refunded. The ld. CIT for non application of mind by Assessing Officer and not excluding any period of delay due to the lapse on the part of the assessee, relied on t....
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....ng Officer relied on the indemnity bond and overlooked the provisions of Sec. 244A(2) of the Act and relied on the Commissioner of Income Tax order and substantiated his arguments with the judicial decisions. 7. We heard the rival submissions and perused the material on record, judicial decisions and circulars. The ld. Authorised Representative of the bank submitted that the issue in dispute is on the time lag of submitting rectified defective TDS certificates is not attributable to the assessee as the deductee bank has to rectify with correct PAN number, TDS Challan details and signature and rubber stamp of the concerned authorities. For the above assessment year there was a manual system of issuing form 16A by the deductor and TDS credit is given on the basis of form 16A provided it is a defect free and the Income Tax Department obtain indemnity bond from the assessee for granting TDS credit in defective TDS certificate cases and such practice is prevailing over a time and there is no dispute on the issue of refund and interest on TDS based on indemnity bond but, the Assessing Officer has to consider the provisions of Sec. 244A(2) of the Act before granting the interest as under....