THE MURSHIDABAD DISTRICT CENTRAL CO. OP. BANK LTD.,MURSHIDABAD vs. ACIT (TDS), CIRCLE - 1, KOLKATA, KOLKATA

On perusal of the grounds, we find that the common issue for our consideration is that whether the ld. CIT(A) has erred in sustaining the action of the ld. Assessing Officer of treating the assessee in default u/s 201(1)/201(1A) of the Act for non-deduction of tax at source u/s 194A of the I.T.A. No. 459 & 460/Kol/2022 Assessment Years: 2016-17 & 2017-18 The Murshidabad District Central Co. Op. Bank Ltd. 2 Act on account of non-furnishing of Form 15G/15H of the depositors and further charging interest u/s 201(1)/201(1A) of the Act. Addition for Assessment Year 2016-17 and 2017-18 which are in challenge before us are as follows:-

Brief facts are that the assessee bank was subject to survey u/s 133A(2A) of the Act carried out on 08/11/2017 followed by serving of statutory notice. From perusal of the books it was noticed that on the payments of interest to persons other than societies amounting to Rs.1,96,98,676/-, tax at source @ 10% was not deducted u/s 14A of the Act and thus was treated as assessee in default and was held liable to pay short deduction of tax at Rs.19,69,867/- coupled with interest at Rs.5,31,864/. Similar action was taken for Assessment Year 2017-18 thereby raising demand for non-deduction of tax u/s 194A of the Act, at Rs.35,61,523/- and interest of Rs.5,69,843/-.

When the assessee carried the matter in appeal before the ld. CIT(A), it was submitted that Form No. 15G and 15H were duly received form the depositors and the same were uploaded on the Income-tax portal but due to some technical difficulty, the uploaded filed could not be opened. Before ld. CIT(A), copies of Form 15G & 15H were filed but ld. CIT(A) was of the view that since the assessee failed to upload the Form No. 15G & 15H on the Core Banking Solution (CBS) system, it is default on part of the assessee for which the ld. AO has rightly held the assessee responsible.

Aggrieved, now the assessee is in appeal before the Tribunal.

The ld. Counsel for the assessee, took us through the relevant pages of the paper book which contains details of the 15G & 15H forms submitted by various depositors. Our attention was also drawn to the complete list of the said details of the interest paid to such depositors who have filed Form 15G & 15H. Reference was also made to page 64 of the paper book in support of the arguments that Form 15G & 15H were uploaded on the website and, there was further communication between the Income-tax Department and the assessee. Further reliance was placed on certain decisions in support of the contention that even if such Forms 15G & 15H are submitted by the assessee during the course of assessment proceedings, then the same should be entertained and assessee should not be treated as an assessee in default.

We have heard rival contentions and perused the material placed on record before us. Common issue in dispute before us raised by the assessee is that the ld. CIT(A) erred in confirming the action of the ld. AO in treating the assessee in default for non-deduction of tax at source on interest paid on deposit to persons other than co-operative societies and also levying interest thereon. The assessee is a co-operative bank and received deposits from various persons in the form of fixed deposits and other deposits on which interest is paid. The dispute before us pertains to assessment year 2016-17 and 2017-18 for which the demand for non-deduction of tax and interest has been levied. The crux of the arguments of the ld. Counsel for the assessee is that the assessee bank regularly deducts tax at source on the deposits which are above the permissible limits u/s 194A of the Act. But in those cases for which Form 15G & 15H are received form the depositors tax at source is not deducted. The assessee bank regularly receives Form 15G & 15H and submits the same to the juri ictional officer in charge of TDS. For the year under appeal there was a change in systems and the assessee was required

It is an admitted fact that the assessee has procured the Form 15G & 15H, from all those depositors who have stated on the Form that tax should not be deducted on the interest paid/credited to them as their income is below taxable limit. Such forms are filed as per provisions of Income Tax Act and Income Tax Rules. Once such declaration is received by the bank, then, it is not required to deduct tax at source and in case any inconsistency is found in the declaration given by such depositors, then the remedy is available under the Act with the concerned officer to take action against such declarants. So far as the assessee is concerned, he has acted within the four corners of law and did not deduct tax on such interest for which the depositors have filed Form 15G & 15H. Though the assessee is required to uphold the same in a proper format, but it failed to do so due to some technical defect but since the physical copies are available, revenue authorities should not have treated the assessee in default. Under similar set of facts, the Co-ordinate Bench of ITAT Delhi in the case of Allahabad Bank vs ITO in ITA Nos. 6095 & 6096/Del/2016; order dt. 30/03/2021, decided in favour of the assessee as follows:-

Similar view was also taken by the Co-ordinate Bench of ITAT 1854/Bang/2016; order dt. 09/08/2017. Therefore, respectfully following the decisions referred hereinabove and considering the fact that the assessee has not deducted tax at source u/s 194A of the Act after receiving the physical copies of Form 15G & 15H, it should not be considered as an assessee in default. Therefore, we delete the demand raised by the ld. AO for non- deduction of tax at source u/s 194A of the Act as well as interest levied thereon for AY 2016-17 and 2017-18 for non-submission of Form 15G & 15H, and allow the grounds raised by the assessee.

In the result, both the appeals of the assessee are allowed. Order pronounced in the Court on 17th March, 2023 at Kolkata. (RAJPAL YADAV) ACCOUNTANT MEMBER Kolkata, Dated 17/03/2023 *SC SrPs

""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील ( ) / The CIT(A)- 5. िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाड" फाईल /Guard file.