Delay in submission of form 15G 15H to CIT do not make bank as assessee in default

Delay in submission of form 15G 15H not make bank assessee in default for non deduction of tax at source. Demand can not be raised without verification of Forms – ITAT

ABCAUS Case Law Citation:
ABCAUS 2039 (2017) (08) ITAT

The Grievance:
This appeal was preferred by the assessee bank against the order of CIT(Appeals) by which CIIT(A) upheld order of the Assessing Officer (AO) passed u/s 201(1) & 201(A) of the Income Tax Act for non/less deduction of tax at source.

Assessment Year :  2013-14

Brief Facts of the Case:

The assessee was a private sector bank. The Assessing Officer (AO) TDS noticed that it had not deducted TDS on interest paid to its customers on their fixed deposits.  The bank submitted that the reason attributable to non-deduction of tax at source was the submission of Form 15G/15H by the customers.

However, the AO noted that the aforesaid Form15G/15H were not submitted to the jurisdictional CIT as required. Accordingly, the AO has held the assessee to be in default for non-deduction of tax at source and raised demand.

Contention of the Appellant Assessee:

It was submitted that the Commissioner of Income Tax (Appeals) had not appreciated that the Branch had obtained Form 15H/15G in all the cases and non submission of Form 15G/15H to the jurisdictional CIT was only a technical breach and as such the appellant could not be construed as an assessee in default.

Without prejudice to the above, it was also contended that the appellant bank could not be held as an assessee in default without proving that the recipient of the income had not paid the tax.

Also, the bank relied on various judicial pronouncements in which it had been repeatedly held that if there is any irregularity in submission of Form 15G/15H, the same may be regularised by re-examining the veracity of the Forms and if the Forms are proper and TDS was not deducted on account receipt of the said Forms, no order u/s. 201(1) & 201(1A) can be passed.

Observations made by the Tribunal:

It was found that though assessee bank had furnished Form 15G/15H before the CIT(Appeals), but the CIT(Appeals) did not examined the veracity of the same. He outrightly rejected the contention of the assessee and confirmed the order of AO, having observed that the Forms 15G/15H were not properly filed before the AO and the jurisdictional CIT.

The Tribunal also examined the judgments referred to by the assessee and found that it had been repeatedly held that wherever there is any irregularity in the submission of Forms for non-deduction of tax at source, the assessee cannot be held to be in default. Rather the AO should verify the correctness of the Forms and if the Forms are found to be correct, the assessee cannot be held to be in default and no demand can be raised u/s. 201(1) & 201(1A) of the Act.

It was noted that undisputedly the assessee had submitted the Forms 15G/15H before the AO, but it was not considered on account of its non-submission in time before the jurisdictional CIT and the AO passed an order u/s. 201(1) & 201(1A) of the Act raising a demand therein. The assessee again filed the said Forms before the CIT(Appeals), but he did not take cognizance of the same and confirmed the order of AO. Since the assessee has filed the Forms 15G/15H on account of which TDS was not deducted, the lower authorities should have examined the same.

The ITAT opined that since the assessee had already filed the Forms 15G/15H before the lower authorities, the said Forms be examined by the AO and if the said Forms were found to be correct on verification, the assessee could not be held to be in default and no demand should be raised u/s 201(1) & 201(1A) of the Act. Otherwise, the AO may act in accordance with the law.

Held:

The order of CIT(Appeals) was set aside and the matter was restored to the file of Assessing Officer to readjudicate the issue afresh.