Case Law Details
Karnataka Grameena Bank Vs ITO (ITAT Bangalore)
In Karnataka Grameena Bank vs ITO, the Income Tax Appellate Tribunal, Bangalore Bench, dealt with appeals filed by the assessee for multiple assessment years (2016–17, 2017–18, 2018–19, and 2019–20) against orders of the Commissioner of Income Tax (Appeals), which upheld TDS liability under Sections 201(1) and 201(1A) of the Income-tax Act, 1961.
The assessee, a banking company, was subjected to a TDS survey to verify compliance. During assessment, the Assessing Officer found that Forms 15G/15H submitted by the assessee for non-deduction of tax on interest payments were defective. It was also alleged that there was no evidence to show that these forms had been submitted to the prescribed authority. Consequently, the Assessing Officer treated the case as one of short deduction of tax and levied differential TDS along with interest.
The assessee challenged this before the CIT(A), contending that additional time should have been granted to produce or rectify the forms. However, the CIT(A) dismissed the appeals, holding that no valid and complete declarations were filed and that the law does not permit retrospective correction through post-facto submission of Forms 15G/15H.
Before the Tribunal, the assessee argued that sufficient opportunity had not been provided to rectify defects in the forms. It further submitted that it had filed TDS statements in Form 26Q electronically under Rule 31A and produced acknowledgment copies and related documents as evidence of compliance. These documents, however, had not been placed before the Assessing Officer or the CIT(A), and therefore were not considered at earlier stages.
The Department contended that the forms were defective and that no evidence of filing Form 26Q had been produced before the lower authorities, supporting the orders passed.
After examining the records, the Tribunal observed that the assessee had in fact obtained Forms 15G/15H from depositors, though they contained defects. The Assessing Officer had presumed absence of such forms due to these defects and imposed differential TDS liability. The Tribunal also noted that the assessee had now produced acknowledgments evidencing filing of Form 26Q and submission of Forms 15G/15H, which had not been previously verified.
In view of these circumstances, the Tribunal held that the assessee should be given another opportunity to present the documents and establish compliance with statutory requirements. Accordingly, the Tribunal set aside the orders of the lower authorities and remitted the matter back to the Assessing Officer for fresh consideration. The Assessing Officer was directed to examine the Forms 15G/15H and Form 26Q submissions and decide the issue afresh on merits after providing an opportunity of hearing to the assessee.
The appeals were thus partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
These are the appeals filed by the assessee challenging the separate orders of the Ld.CIT(A)-2, Panaji dated 30/08/2025 in respect of A.Y. 2017-18 and dated 23/10/2025 in respect of the A.Ys. 2016-17, 2018-19 85 2019-20 and raised the following grounds:
Assessment Year 2016-17:
| Grounds of Appeal | Tax effect relating to each ground of appeal (see note below) |
| 1. The learned CIT(A) erred in passing the order in the manner he did. | Gen |
| 2. The learned CIT(A) erred in determining the TDS liability of Rs. 4,58,003 which is against the principle of Interest and Justice. | 4,58,003 |
| 3. The learned CIT(A) failed to appreciate that ITO, TDS has failed to give proper opportunity to produce 15G/ H before completing the assessment. | 4,58,003 |
| 4. The learned CIT(A) upheld the TDS liability without appreciating the submission of the appellant at the time of survey. | 4,58,003 |
| 5. Without prejudice the disallowance is excessive, arbitrary and unreasonable and ought to be deleted. | Gen |
| 6. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed. | Gen |
| Total tax effect (see note below) |
Assessment Year 2017-18:
| Grounds of Appeal | Tax effect relating to each ground of appeal (see note below) |
| 1. The learned CIT(A) erred in passing the order in the manner he did. | Gen |
| 2. The learned CIT(A) erred in determining the TDS liability of Rs. 1,07,285which is against the principle of Interest and Justice. | 1,07,285 |
| 3. The learned CIT(A) failed to appreciate that ITO, TDS has failed to give proper opportunity to produce 15G/ H before completing the assessment. | 1,07,285 |
| 4. The learned CIT(A) upheld the TDS
liability without appreciating the |
1,07,285 |
| 5. Without prejudice the disallowance is excessive, arbitrary and unreasonable and ought to be deleted. | Gen |
| 6. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed. | Gen |
| Total tax effect (see note below) |
Assessment Year 2018-19:
| Grounds of Appeal | Tax effect relating to each ground of appeal (see note below) |
| 1. The learned CIT(A) erred in passing the order in the manner he did. | Gen |
| 2. The learned CIT(A) erred in determining the TDS liability of Rs. 1,07,285which is against the principle of Interest and Justice. | 2,86,931 |
| 3. The learned CIT(A) failed to appreciate that ITO, TDS has failed to give proper opportunity to produce 15G/ H before completing the assessment. | 2,86,931 |
| 4. The learned CIT(A) upheld the TDS liability without appreciating the submission of the appellant at the time of survey. | 2,86,931 |
| 5. Without prejudice the disallowance is excessive, arbitrary and unreasonable and ought to be deleted. | Gen |
| 6. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed. | Gen |
| Total tax effect (see note below) |
Assessment Year 2019-20:
| Grounds of Appeal | Tax effect relating to each ground of appeal (see note below) |
| 1. The learned CIT(A) erred in passing the order in the manner he did. | Gen |
| 2. The learned CIT(A) erred in determining the TDS liability of Rs. 1,07,285which is against the principle of Interest and Justice. | 4,30,841 |
| 3. The learned CIT(A) failed to appreciate that ITO, TDS has failed to give proper opportunity to produce 15G/ H before completing the assessment. | 4,30,841 |
| 4. The learned CIT(A) upheld the TDS liability appellant at the time of survey. | 4,30,841 |
| 5. Without prejudice the disallowance is excessive, arbitrary and unreasonable and ought to be deleted. | Gen |
| 6. For these and such other grounds that may be urged at the time of hearing the appellant prays that the appeal may be allowed. | Gen |
| Total tax effect (see note below) |
2. The brief facts of the case are that the assessee is a banking company and TDS survey was conducted in the business premises of the assessee to verify the TDS compliance of the deductor. Some details were called for and the assessee also submitted the details and on verification, the AO had alleged that the form 15G / 15H produced by the assessee were defective and also alleged that there was no evidence to prove that the said forms were submitted to the competent authority and therefore passed an order u/s. 201(1) / 201(1A) of the Act in which the short deduction and the interest were determined.
3. As against the said order, the assessee filed an appeal before the Ld.CIT(A) and contended that if one more opportunity has been granted, they will file the forms before the AO. The Ld.CIT(A) had dismissed the appeals on the ground that no valid and complete declarations were filed and also the law does not permit retrospective correction on post-facto submission of form 15G / 15H to regularise a default already committed.
4. As against the said order, the assessee is in appeals before this Tribunal.
5. At the time of hearing, the Ld.AR submitted that the authorities had not granted sufficient time to produce / rectify the defects in the forms 15G /15H. The Ld.AR further submitted that the assessee had furnished the statement of deduction of tax in form no. 26Q as per Rule 31A of the Act electronically to the department and therefore without considering the said submission, the order passed u/s. 201(1) / 201(1A) is not in accordance with the provisions. The Ld.AR also filed a small paper book enclosing the copy of the letter indicating that the statement in form 26Q were filed and also enclosed the acknowledgment copies of filing the form 26Q to show that the assessee had complied with the provisions.
6. The Ld.DR submitted that the form 15G / 15H filed by the assessee were defective in nature and also no evidence were produced before the AO to indicate that the statement in form 26Q were electronically filed to the department and therefore submitted that the order of the lower authorities are in order.
7. We have heard the arguments of both sides and perused the materials available on record.
8. The dispute involved in this appeal is about the defective filing of form 15G / 15H by the assessee while paying the interest to the depositors and also on the allegation that the assessee had not proved that the forms were duly e-filed to the department and therefore the authorities had not accepted the claim of the assessee and levied the differential rate of TDS along with the interest. As seen from the assessment order as well as the appellate order, the fact remains that the assessee had produced the form 15G / 15H declarations from the depositors for not deducting the tax at source. It is also admitted that the said forms contains some defects and therefore the AO had presumed that there are no forms available and levied the differential rate of TDS. The AO had also stated that there was no evidence to prove that the said forms were submitted to the competent authority of the department as prescribed.
9. Before this Tribunal, the assessee had submitted a paper book enclosing the copy of the letter, acknowledgements for filing the statements in form 26Q as well as the acknowledgment for filing the form 15G / 15H. The form 26Q is a statement prescribed under the Rule 31A and it has been filed through online to the department which was evidenced from the acknowledgment furnished by the assessee. These documents were not placed before the AO or before the Ld.CIT(A) and therefore they have no opportunity to verify the said forms and statements.
10. In such circumstances, we are of the view that an another opportunity may be granted to the assessee to appear before the AO and show that the forms were properly filed before the department as well as to produce the statement in form 26Q which was filed electronically in order to prove that the assessee had complied with the provisions and therefore the order passed u/s. 201(1) and 201(1A) of the Act is not required to be made. We, therefore set aside the orders of the lower authorities and remit this issue to the file of the AO for denovo consideration and the assessee also directed to produce the statement in form 26Q as well as forms in 15G / 15H and thereafter the AO may decide the issue afresh on merits after hearing the assessee.
11. In the result, all the appeals filed by the assessee are partly allowed for statistical purposes.
Order pronounced in the open court on 25th March, 2026.
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