TDS on interest payment u/s 201(1A) of the Income Tax Act, 1961

INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “B”: NEW DELHI
BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
(Through Video Conferencing)
ITA No. 5870/Del/2016
(Assessment Year: 2012-13)

Canara Bank,
Main Branch, Railway Road,
Gurgaon
PAN: RTKC01324B

(Appellant)

Vs.

DCIT
TDS
Gurgaon

(Respondent)

Assessee by : None
Revenue by: Shri Mahesh Thakur, Sr. DR
Date of Hearing 17/06/2021
Date of pronouncement 26/07/2021
O R D E R

This appeal is filed by the Assessee against the order of the ld CIT(A)-I, Gurgaon dated 08.12.2015 for Assessment Year 2012-13.

2. TDS inspection was conducted on 28.01.2014. During inspection statement of Chief Manager and Manager were recorded wherein, they have accepted that TDS on interest of term deposit is being made on annual basis
and not on quarterly basis though such interest is being provided quarterly basis in the balance sheet.

3. Further, the Assessee also submitted that it has not deducted tax at source when Form No. 15G and 15H were submitted by the depositor. The ld AO did not accept this issue and therefore, he noted that an interest of Rs. 1,70,17,701/- was paid where the Assessee claimed that it has received Form No. 15G and 15H. The ld AO held that the assessee should have deducted tax @10% of Rs. 17,01,770/- thereon so the Assessee is an “assessee in default u/s
201(1) to that extent and further interest u/s 201(1A) was computed at Rs. 4,27,213/-

4. This appeal has been fixed for hearing on 23.05.2019, 21.08.2019, 29.08.2019, 21.10.2019, 27.11.2019, 10.02.2020, 17.02.2020 and 04.03.2020 as well as on 09.02.2021; none appeared on behalf of the Assessee. Same is the fate on 17.06.2021. In view of this the appeal is decided in absence of the Assessee on the merits of the case as per the facts
available on record.

5. 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, if there is any default after applying proviso to section 201(1A) of the Act. Therefore, in the interest of justice we set aside the appeal to the file of the LD AO with a direction to examine the Form No. 15G and 15H of the depositor to whom interest is paid and after the requisite conditions are satisfied, to delete the demand accordingly.

6. In the result appeal filed by the Assessee is allowed for statistical purposes.
Order pronounced in the open court on 26/07/2021.

Please find attached the enclosed file for the full judgement