Allahabad Bank Vs ITO (ITAT Delhi)
Conclusion: Asessee-bank had not deducted TDS under section 194A in respect of customers who had provided Form No. 15G and 15H as the prime responsibility relating to TDS deduction u/s 201 was of the recipient assessee to pay the tax directly once they filed From No. 15G/15H and any tax liability would be held as pending in recipient assessee’s cases and hence Section 201 of the Act could not be invoked as it was a recovery provision.
Held: During the course of its financial business, assessee having deposits on which the interest was paid. As per the provisions of Section 194A, interest on TDS had been deducted from time to time and deposited with the Government account. During the course of enquiry made u/s 133(6), AO came to know that out of the persons, who have filed Form No. 15G/ 15H, were enjoying interest more than the taxable limit prescribed under the IT Act and accordingly the Bank authorities should not accept Form No. 15G/15H and then thereafter, without issuing a proper notice u/s 201 of the Act, passed the order u/s 201 and held the bank as assessee in default in terms of Section 201(1) in relation to the persons who were enjoying interest on their deposits more than the taxable limit, the list whereof had been given itself in the combined order passed u/s 201/201(1A) for the Financial Years 2013-14 and 2014-15., thereby ordering to recover the following demand from assessee. It was held that assessee bank has not deducted TDS in respect of customers who have provided Form No. 15G and 15H of the Act under the statute as provided by the Income Tax Act. The customers who have provided Form No. 15G/15H has specifically requests through these forms that TDS should not be deducted on their FDs/respective withdrawals. The prime responsibility relating to TDS deduction u/s 201 is of the recipient assessee to pay the tax directly once they filed From No. 15G/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. Therefore, the proceedings u/s 201 had been quashed.
FULL TEXT OF THE ORDER OF ITAT DELHI
These two appeals are filed by the assessee against order dated 20/09/2016 passed by CIT (A)-Ghaziabad for assessment years 2014-15 & 2015-16 respectively.
2. The grounds of appeal are as under:-
I.T.A. No. 6095/DEL/2016 (A.Y 2014-15)
“1. That in the absence of any income-tax demand outstanding against the payee or any action taken against the payee by the Department, the Assessing Officer has no valid jurisdiction u/s 201(1) and u/s 201(1A) of the Income-tax Act, 1961 (the Act), to hold the appellant as assessee in default and consequently the recovery of amount determined by the Assessing Officer holding the assessee in default on account of non- deduction of TDS, is invalid, unjust and bad in law.
2. That in the absence of a notice u/s 201 or 201(1A) of the Act, the income-tax demand created as a result of order dated 29th February 2016, thereby treating the assessee in default is arbitrary, against the natural justice and bad in
3. That the authorities below ought not to have treated the assessee in default u/s 201 read with section 201(1A) of the Act in respect of such payees who had furnished Form 15G/15H of the Act and consequently the TDS demand u/s 201 and 201(1A) of the Act is arbitrary, unjust and bad in law.
4. That the Assessing Officer ought not to have included such items of interest on which TDS has been deducted and paid by the assessee and explained before the CIT (Appeals) and consequently the TDS demand, as created by the Assessing Officer, is arbitrary, unjust and at any rate very
5. That the Assessing Officer and CIT (Appeals) both ought not to have created the TDS demand u/s 201 and 201(1A) of the Act against the assessee in respect of such items of interest, which have been included by the payees in their respective income-tax returns and have paid the income- tax thereon and accordingly the TDS demand as created by the Assessing Officer is arbitrary, unjust and at any rate very
5) Theabove grounds of appeal are independent and without prejudice to one another.
I.T.A. No. 6096/DEL/2016 (A.Y 2015-16)
1. That in the absence of any income-tax demand outstanding against the payee or any action taken against the payee by the Department, the Assessing Officer has no valid jurisdiction u/s 201(1) and u/s 201(1A) of the Income-tax Act, 1961 (the Act), to hold the appellant as assessee in default and consequently the recovery of amount determined by the Assessing Officer holding the assessee in default on account of non- deduction of TDS, is invalid, unjust and bad in
2. That in the absence of a notice u/s 201 or 201(1 A) of the Act, the income-tax demand created as a result of order dated 29th February 2016, thereby treating the assessee in default is arbitrary, against the natural justice and bad in
3. That the authorities below ought not to have treated the assessee in default u/s 201 read with section 201(1A) of the Act in respect of such payees who had furnished Form 15G/15H of the Act and consequently the TDS demand u/s 201 and 201(1A) of the Act is arbitrary, unjust and bad in law.
4. That the Assessing Officer ought not to have included such items of interest on which TDS has been deducted and paid by the assessee and explained before the CIT (Appeals) and consequently the TDS demand, as created by the Assessing Officer, is arbitraiy, unjust and at any rate very excessive That the Assessing Officer and CIT (Appeals) both ought not to have created the TDS demand u/s 201 and 201(1A) of the Act against the assessee in respect of such items of interest, which have been included by the payees in their respective income-tax returns and have paid the income-tax thereon and accordingly the TDS demand as created by the Assessing Officer is arbitrary, unjust and at any rate very excessive.
5) The above grounds of appeal are independent and without prejudice to one another.
3. Both the appeals are identical, hence we are taking up ITA 6095/Del/2016 Assessment Year 2014-15 as the lead case. The assessee is a bank, which has now been merged with Indian Bank, having a branch at Wright Ganj, Ghaziabad. During the course of its financial business, the assessee having deposits on which the interest is paid. As per the provisions of Section 194A of the Income-tax Act, 1961 (the Act), interest on TDS has been deducted from time to time and deposited with the Government account. However, in some of the cases, various persons have filed Form No. 15G/ 15H in accordance with the provisions of Section 197A of the Act which makes them eligible to receive interest without deduction of TDS prescribed u/s 194A of the Act. During the course of enquiry made u/s 133(6) of the Act, the AO came to know that out of the persons, who have filed Form No. 15G/ 15H, are enjoying interest more than the taxable limit prescribed under the IT Act and accordingly the Bank authorities should not accept Form No. 15G/15H and then thereafter, without issuing a proper notice u/s 201 of the Act, passed the order u/s 201 and held the bank as assessee in default in terms of Section 201(1) of the Act in relation to the persons who were enjoying interest on their deposits more than the taxable limit, the list whereof has been given itself in the combined order passed u/s 201/201(1A) of the Act for the Financial Years 2013-14 and 2014-15., thereby ordering to recover the following demand from the assessee vide order dated 29th February 2016:
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