Case Law Details

Case Name : State Bank of India Vs Income Tax Officer (ITAT Bangalore)
Appeal Number : I.T.A No. 51/Bang/2016
Date of Judgement/Order : 17/03/2017
Related Assessment Year : 2012- 13
Courts : All ITAT (5168) ITAT Bangalore (250)

We have heard the rival submissions. This Tribunal, in the case cited, supra, has set aside the matter to the AO as under :

“7. As per the above Para reproduced from the order of the Tribunal, it is seen that in that case, the tribunal has given a finding that as is evident from the record, the entry was reversed on the next working day and therefore, the amount so credited has never accrued to the payee. In the present case, no such evidence has been brought on record hat interest credited as per this software was only a notional provision and the same was reversed afterwards. But this is also an undisputed fact that the bank is using CBS software as in that case. Hence, we feel it proper that the matter should be restored back to the file of the AO for a fresh decision in the light of this Tribunal order rendered in the case of Bank of Maharashtra (Supra) and if the assessee is able to establish that it was only a notional provision which was reversed afterwards then no TDS liability can be imposed on the
assessee. We order accordingly .”

Following it, this issue is remitted back to the file of the AO for a fresh decision. If the assessee is able to establish that it was only a notional provision which was reversed afterwards, then no TDS liability can be imposed on the assessee. We order accordingly. For statistical purposes, the appeal is treated as allowed.

FULL TEXT OF THE ITAT JUDGMENT

This is an appeal filed by the assessee, against the order of the CIT (A), Gulbarga, date 09.11.2015, for the assessment year 2012- 13.

02. In the assessee’s case, during TDS verification, it was found that the assessee bank deducted TDS at Rs. 29,77,536/- on the interest payments to the term depositors. But, it remitted Rs. 2,54,995/- only to the Central Government account. Hence, there was a short remittance of TDS deducted at Rs. 27,22,541/-. A show cause notice was sent to the assessee on 11.03.2013 for non remittance of TDS and it was asked why it should not be treated as an assessee in default u/s 201(1) . In response, the assessee bank could not explain reasons for non remittance of TDS deducted into government account and it is stated in the order that Sri. L. S. Desai, Branch Manager appeared and produced copies of challans for Rs. 2,54,995/- only. Thus, the ACIT, TDS Circle, Bellary passed an order u/s.201(1) / 201(1A) date 27.03.2014 for the assessment year 2012-13 determining Rs. 37,02,641/-, as the TDS liability along with Rs. 9,80,100/-, the interest payable u/s. 201(1A). The assessee filed an appeal before the CIT (A), Gulbarga, and the CIT (A ) dismissed the appeal in his order date 09.11.2015. Aggrieved , the assessee filed this appeal with following grounds:

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03. We heard the rival submissions on the con donation prayer and condone the delay. The AR submitted that in the case of banks using CBS software, interest payable on time deposits is calculated generally on daily basis or monthly basis and is swept & parked accordingly in the provisioning account for the purpose of macro monitoring only but constructive credit is given to the depositors/ payee’s account either at the end of the financial year or at periodic intervals as per practice of the bank or as per the depositor’s/ payee’s requirement or on maturity or on encashment of time depositors whichever is earlier. He further submitted that the assessee was not given adequate opportunity to produce Form 15H/G etc and relied on this Tribunal decision in the case of State Bank of India, Hosepet City Branch, Hosepet Vs CIT(A) Gulburga in ITA No. 2 to 5 (Bang) 2016 date 16.9.206. Per contra, the DR relied on the CIT (A) and pointed out the CIT (A) has found that the assessee did not have valid Form 15H/Gs and at best they were defective and quoted the C’s IT(A) finding that “the contention of the appellant bank in the ground no.7 is that the payer cannot be blamed because at the time of paying the amount, payer has to rely upon the declaration filed by the payee even though it is incomplete and even though the payer has failed to submit the copy of same to the CIT. This contention is not acceptable. The due weight should be given to the provisions of the Act and the bank should follow the provisions. If any depositors filed incomplete/ defective form 15G/H, the bank should treat it as defective and rejected exemption claimed by the depositor & deduct TDS. Even the depositor can be asked to rectify the defect before it is collected or accepted. For e.g., if anyone opening the account does not fill the form correctly or does not follow RBI guidelines for opening account, banks refuse to open and operate that account. Similarly caution and adherence should be observed in relation to provisions of Income Tax Act. As contested by the appellant bank in ground no.8 to consider the delayed submission of Form 15G/H, there is no evidence produced that the copies of Form 15G/H were produced before jurisdictional CCIT / CIT.”

04. We have heard the rival submissions. This Tribunal, in the case cited, supra, has set aside the matter to the AO as under :

“7. As per the above Para reproduced from the order of the Tribunal, it is seen that in that case, the tribunal has given a finding that as is evident from the record, the entry was reversed on the next working day and therefore, the amount so credited has never accrued to the payee. In the present case, no such evidence has been brought on record hat interest credited as per this software was only a notional provision and the same was reversed afterwards. But this is also an undisputed fact that the bank is using CBS software as in that case. Hence, we feel it proper that the matter should be restored back to the file of the AO for a fresh decision in the light of this Tribunal order rendered in the case of Bank of Maharashtra (Supra) and if the assessee is able to establish that it was only a notional provision which was reversed afterwards then no TDS liability can be imposed on the
assessee. We order accordingly .”

Following it, this issue is remitted back to the file of the AO for a fresh decision. If the assessee is able to establish that it was only a notional provision which was reversed afterwards, then no TDS liability can be imposed on the assessee. We order accordingly. For statistical purposes, the appeal is treated as allowed.

05. In the result, assessee’s appeal is treated as allowed for statistical purpose.

Order pronounced in the open court on 17th day of March, 2017.

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