TaxTMI 
TaxTMI 
2020 (5) TMI 456
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....mand was created due to non-deduction of TDS on submission of Form No. 15G/15H in cases where interest paid exceeds basic exemption limit. Subsequently, the assessee's bank had applied for rectification of the order and order u/s 154 was passed by the DCIT(TDS) dated 23.11.2016 wherein the demand was reduced as per particulars below: Assessment Year Original demand (Rs) Revised demand (Rs) 2010-11 31,486/- 23,688/- 2011-12 43,051/- 23,886/- 2012-13 30,855/- 30,885/- 2013-14 73,344/- 37,750/- 4. It was submitted that the Addl.CIT(TDS) while levying the penalty u/s 271C has not taken into consideration the rectification order so passed by the AO and the penalty u/s 271C has been levied basis the original order. It was submitted that the rectification order u/s 154 where passed, replaces the original order and imposition of penalty in ignorance of fact of rectification was against the law and therefore, liable to be quashed. 5. In Ground No. 2, the assessee has challenged the action of the ld. CIT(A) in not considering the plea of the assessee that under similar facts and circumstances of the case, in the case of another branch of the same bank, penalty u/s 271C thoug....
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....he show cause notice u/s 271C of the Act. It was further submitted that Form No. 15G/15H is a declaration submitted by the customer for non deduction of TDS and the bank has deducted TDS in all cases accept where these declarations were submitted by the customers. It was accordingly submitted that the bank has acted in good faith under bona fide belief and without any mala fide intention by relying on the declaration submitted by the customers. It was submitted that the receipt of declaration in Form No. 15G/15H is itself a genuine cause for non deduction of TDS because it is self declaration form provided by the Income tax rules and the person signing the same is expected to provide correct information. In support, reliance was placed on the Co-ordinate Bench decision in case of L& T John Deere (P) Ltd vs. ACIT reported in 120 ITD 497 for the proposition that where the assessee has given bona fide explanation for failure of deduction of TDS, the assessee should not be made liable for penalty u/s 271C for failure to deduct TDS. 9. Further, our reference was drawn to the provisions of subsection (1C) of section 197A and it was submitted that where the said provision read along with....
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....73B of the Act provides that notwithstanding the provisions contained under Section 271C of the Act, no penalty shall be imposable upon the person or the assessee for any failure referred to in the aforesaid provision if the person or the assessee concerned proves there was reasonable cause for the said failure. Here, it would be appropriate to refer to the decision of the Hon'ble Supreme Court in the case of CIT v. Eli Lilly & Co. (India) (P.) Ltd. [2009] 178 Taxman 505 wherein it was held as under: "Section 271C inter alia states that if any person fails to deduct the whole or any part of the tax as required by the provisions of Chapter XVII-B then such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct. In these cases we are concerned with Section 271C(1)(a). Thus Section 271C(1)(a) makes it clear that the penalty leviable shall be equal to the amount of tax which such person failed to deduct. We cannot hold this provision to be mandatory or compensatory or automatic because under Section 273B Parliament has enacted that penalty shall not be imposed in cases falling there under. Section 271C falls in the ca....
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.... of interest to Smt Prem Lata Bhateja who is over sixty years of age during the financial year 2012-13 and 2013-14, in terms of provisions of section 197A(1C), there is a reasonable cause for non-deducting the TDS and the assessee bank cannot be fastened with the penalty u/s 271C of the Act. 15. In respect of Shri Vimal Mehta for financial year 2010-11 and 2011-12, given that the interest paid/credited exceeded the maximum amount not chargeable to tax, the assessee bank was required to deduct TDS in terms of section 194A of the Act r/w provisions of section 197A(1B) of the Act. The explanation of the assessee bank is that it has again relied on the declaration so furnished by the customer which is not disputed by the Revenue. It was submitted that it has acted in good faith under bona fide belief and without any mala fide intention by relying on the declaration so submitted by the customer. It was submitted that the receipt of declaration is itself a genuine cause for non deduction of TDS because it is self declaration form provided by the Income tax rules and the person signing the same is expected to provide correct information. To our mind, there is no dispute that the informat....