AI Drafter 
TaxTMI 
TaxTMI 
2023 (7) TMI 1446
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....cts on all vital points are common therefore, for the facility of reference, we are taking up the facts from A.Y. 2016-17. 4. Brief facts of the case are that the assessee is a Cooperative Society engaged in the Banking business. A survey under section 133A(2A) of the Income Tax Act was carried out in the Office premises of the assessee on 12.10.2017 for verification of TDS that was required to be deducted as per the provisions of Chapter XVIIB of the Income Tax Act. According to the ld. Assessing Officer, the assessee was required to deduct TDS on the payment of interest by the assessee to its customers. The ld. Assessing Officer further observed that the deductor had paid an amount of interest in excess of Rs.10,000/- to the tune of Rs.16,13,44,802/- on deposits made by the customers on which TDS was applicable but the deductor-assessee has failed to deduct the TDS. Accordingly, he issued a show-cause notice and assessee gave its explanation. 5. In A.Y. 2017-18, the ld. Assessing Officer has observed that assessee-Bank has paid the interest of Rs.16,70,81,472/- on which it was required to deduct TDS while making payment of interest to the customers. 6. In A.Y. 2018-19, t....
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....ch could have been verified by the AO from the assessment records of the deductees. 5.1. It can be seen from the records that the survey operation u/s 133(A)(2A) was conducted in the business premise and found that the appellant had paid interest to different entities on which TDS was not done. The assessing officer considered and accept the reply of the appellant to determine the actual amount of interest paid to the depositors on which TDS was not made. The total amount of interest came to the tune of Rs. 16,13,44,802/-. Therefore, it is not disputed fact that the appellant has not deducted tax on source on interest payment to the tune of Rs. 16,13,44,802/-. 5.2. Now, there are two grounds on which the appellant seek relief from treating assessee in default u/s 201 of the I.T Act. The first one is related to obtain Form no. 15G from the deductees. Thus, the question arises that mere obtaining 15G form from the dedutees can absolve the deductor to be treated as "assessee in default". 5.3. The Income Tax Act provides no deduction to be made in certain cases u/s 197A which is as under: (1) Notwithstanding anything contained in section 194 or secti....
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....ion in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil. (ID) Notwithstanding anything contained in this section, no deduction of tax shall be made by the Offshore Banking Unit from the interest paid- (a) on deposit made on or after the 1st day of April, 2005, by a non-resident or a person not ordinarily resident in India; or (b) on borrowing, on or after the 1st day of April, 2005, from a non-resident or a person not ordinarily resident in India. Explanation.-For the purposes of this sub-section "Offshore Banking Unit" shall have the same meaning as assigned to it in clause (u) of section 2 of the Special Economic Zones Act, 2005. (1E) Notwithstanding anything contained in this Chapter, no deduction of tax shall be made from any payment to any person for, or on behalf of, the New Pension System Trust referred to in clause (44) of section 10. (1F) Notwithstanding anything contained in this Chapter, no deduction of tax shall be made, or dedu....
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....sub-rule (3) shall furnish the particulars of declaration received by him during any quarter of the financial year along with the unique identification number allotted by him under sub-rule (3) in the statement of deduction of tax of the said quarter in accordance with the provisions of clause (vii) of sub-rule (4) of rule 31A " 5.5. It is clear from Rule 29C(3) that the person responsible for paying any income i.e the appellant in this case had to mandatorily allot a unique identification number to each declaration received during every quarter of the financial year. Further, the appellant had to furnished particulars of the declaration in quarterly statements to the Director General of Income Tax (systems) or the person authorized by the Director General of Income Tax (systems) under Rule 31 A. The application of provision must be applied wholly and in totality. The appellant is not entitled to get relief if he partly fulfilled the requirements under the provision by only collecting form no.15G. 5.6. The second is related to verification of return of the deductee by the AO as it was claimed by the appellant that all deductee had declared the interest income in t....
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....ed. The second ground is dismissed in view of the dismissal of the ground no.1. 5.9. Ground no.3:- The ground no.3 is related to raise demand and interest u/s 201(1 A) of the Income Tax Act. As the assessee is treated "assessee in default" u/s 201 of the I.T. Act the demand and the interest u/s 201(1 A) is consequential and mandatory. The ground no. 3 is also dismissed. 5.10. Ground no.4:- The ground no. 4 is relates calculating the interest for default period and credit of TDS already paid. Interest levy u/s 201(1 A) is mandatory and to be calculated in following manner:- (1) Interest for failure to deduct tax at source/delay in payment of TDS As per section 201, if any person who is liable to deduct tax at source does not deduct it or after so deducting fails to pay, the whole or any part of the tax to the credit of the Government, then, such person, shall be liable to pay simple interest as given below: Interest shall be levied at 1% for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax was deducted. Interest shall be levied at 1.5% for every ....
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....ommon issue in dispute before us raised by the assessee is that the ld. CIT(A) erred in confirming the action of the ld. AO in treating the assessee in default for non-deduction of tax at source on interest paid on deposit to persons other than co- operative societies and also levying interest thereon. The assessee is a co-operative bank and received deposits from various persons in the form of fixed deposits and other deposits on which interest is paid. The dispute before us pertains to assessment year 2016-17 and 2017-18 for which the demand for non-deduction of tax and interest has been levied. The crux of the arguments of the ld. Counsel for the assessee is that the assessee bank regularly deducts tax at source on the deposits which are above the permissible limits u/s 194A of the Act. But in those cases for which Form 15G & 15H are received form the depositors tax at source is not deducted. The assessee bank regularly receives Form 15G & 15H and submits the same to the jurisdictional officer in charge of TDS. For the year under appeal there was a change in systems and the assessee was required to upload all the Forms 15G & 15H on the Income Tax portal, copy of which are placed....
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....15H and any tax liability will be held as pending in recipient assessee's cases and hence Section 201 of the Act cannot be invoked as it is a recovery provision as submitted by the Ld. AR. The decisions given by the Ld. AR also reiterates similar facts. Besides this, in Assessment Years 2002-03 to 2004-05, in the case of the assessee itself in the same branch, the Delhi ITAT in ITA Nos. 5992 to 5994/Del/2012 dated 4th March 2016, after following the judgment of the Jurisdictional Allahabad High Court in the case of the assessee itself, has quashed the proceedings u/s 201 of the Act on the similar lines. Further, for Assessment Year 2014-15 and 2015-16 also the issue is identical and no distinguishing feature was pointed out by Ld. DR at the time of hearing. Since, both the assessment years i.e. A.Y. 2014- 15 and 2015-16 are identical, therefore, we are allowing both the appeals. 10. Similar view was also taken by the Co-ordinate Bench of ITAT Bangalore in the case of The Karur Vysya Bank Ltd. Vs. ACIT in ITA No. 1854/Bang/2016; order dt. 09/08/2017. Therefore, respectfully following the decisions referred hereinabove and considering the fact that the assessee has not d....