Loading judgment…
Facts
The assessee bank failed to deduct TDS on interest payments exceeding Rs. 2 lakhs to 22 parties. Additionally, TDS credit was reversed for Rs. 7,67,720/- on the grounds of interest paid to senior citizens who subsequently filed Form 15H. The Assessing Officer raised demands for non-deduction and reversal of TDS, which were upheld by the First Appellate Authority.
Held
The Tribunal held that the assessee failed to provide proof of disclosure and tax payment by the deductees for the interest income. The Tribunal also noted that the assessee had multiple opportunities to furnish correct forms and evidence but failed to do so, hence, no further opportunity was granted.
Key Issues
Whether the assessee was liable for non-deduction of TDS on interest payments and for reversal of TDS credit without proper evidence and documentation.
Sections Cited
250, 133A(2A), 201(1), 201(1A), 197A(1B)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE KAND
आदेश /O R D E R
PER GEORGE GEORGE K, VICE PRESIDENT:
This appeal filed by the assessee/deductor is directed against the order of the Additional/ Joint Commissioner of Income Tax (Appeals)- 10, Mumbai dated 18.03.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2013-14.
The order of the First Appellate Authority arises out of the order of the Deputy Commissioner of Income Tax, TDS Circle, Madurai passed u/s.201(1) & (1A) of the Act dated 15.10.2024.
The brief facts of the case are that assessee/deductor is a branch of Tamilnad Mercantile Bank Ltd., which is engaged in the business of banking. There was a survey u/s.133A(2A) of the Act on 07.06.2013 in the business premises of the assessee/deductor to verify the TDS/TCS compliances by the said branch by the then Assessing Officer, TDS. During the course of survey, it was found that assessee has not deducted TDS of Rs.7,00,072/- on the interest paid to twenty two parties where interest payments in each case had exceeded two lakhs. Further, it was found that there was reversal of the TDS credit of Rs.7,67,720/- on the ground that TDS was deducted on interest paid to senior citizens who has filed form 15H subsequently. The Assessing Officer has raised demand of Rs.14,67,792/- (Rs.7,00,072/- + Rs.7,67,720/) in the order passed u/s.201(1) of the Act on 21.03.2014. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) and ld. CIT(A) confirmed the order of the Assessing Officer on 29.10.2014. The assessee/deductor filed an appeal before the Tribunal. The Tribunal had set aside the issue back to the file of the Assessing Officer vide order its dated 19.02.2016 in ITA No.3093/2014.
Subsequent to the remand by the Tribunal, the Assessing Officer completed the set aside assessment on 31.03.2017 raising the demand of Rs.11,43,9769/- (Rs.7,00,072/- + Rs.4,43,904/-) as assessee/deductor has furnished form 15H in respect of payment of interest of Rs.3,23,816/- out of the above reversal of TDS amount of Rs.7,67,720/-. The assessee/deductor filed an appeal before the First Appellate Authority who vide his order dated 30.01.2020 dismissed the appeal. The assessee/deductor filed an appeal before the Tribunal in ITA No.605/Chny/2020. The Tribunal in restored the issue back to the file of the Assessing Officer.
Subsequent to the remand by the Tribunal, the Assessing Officer passed an order on 15.10.2024 u/s.201/201(1A) of the Act. The AO held that assessee has not deducted TDS on twenty two deductees whose income exceeded two lakh rupees per year. It was further held by the Assessing Officer that inspite of several opportunities given to the assessee/deductor, it was unable to produce proof that twenty two deductees had disclosed interest income in their return of income filed and had paid due taxes on the same. Further, in respect of reversal entry made by the assessee/dedutor in respect of Rs.7,67,720/-, it was stated by the Assessing Officer that only for a sum of Rs.3,23,816/-, assessee has produced proof in the earlier set aside assessment proceedings. Accordingly, the AO held that the balance of Rs.4,43,904/- has to be raised as demand u/s.201(1) of the Act in the hands of the assessee/deductor. The Assessing Officer has also calculated interest u/s.201(1A) of the Act amounting to Rs14.52,753/-.
Aggrieved, by the above order of the Assessing Officer passed u/s.201(1) &(1A) of the Act, assessee/deductor filed an appeal before the First Appellate Authority. The First Appellate Authority (FAA) confirmed the action of the Assessing Officer vide impugned order dated 18.03.2025 passed u/s.201(1) & (1A) of the Act. The FAA held that assessee/deductor did not submit corrected form No.15H/15G even during the Appellate proceedings. Further, it was held by the First Appellate Authority that in the case of twenty two deductees assessee/deductor ought to have deducted the tax at source, since in these cases, income exceeded the amount which is not chargeable to tax in the relevant assessment year.
Aggrieved, by the order of the FAA dated 18.03.2025, the assessee is in appeal before the Tribunal. The assessee/deductor has raised twelve grounds in appeal. However, during the course of hearing, the Ld.AR’s limited prayer was that assessee/deductor could be given one more opportunity before the AO to furnish corrected/complete form Nos. 15H and 15G in respect of reversal of TDS.
Per contra, the ld. Departmental Representative supported the orders of the AO and the FAA.
We heard the rival contentions and perused the material on record. As per provisions of section 197A(1B) of the Act, there has to be TDS deducted by the deductor when the aggregate amount of such income paid during the relevant assessment year exceeds the maximum amount which is not chargeable to tax. The maximum amount that is not chargeable to income-tax in respect of assessment year 2013-14 is Rs.2 lakhs. In the case of 22 deductees, it is an admitted position that the interest amount paid by the assessee deductor exceeded Rs.2 lakhs in each case. Hence, nil deduction of TDS by way of filing Form 15G/15H does not have application. Further, the assessee did not provide the necessary proof that the said deductees had disclosed the interest receipts in their return of income and had paid the due taxes thereon, inspite of several opportunities given by the AO and the FAA. Therefore, we see no reason to interfere with the order passed u/s.201 of the Act with regard to sum of Rs.7,72,000/- for non-deduction of tax from 22 number of deductees.
Further, as regards the reversal entries made by the assessee for a sum of Rs.7,67,720/-, the assessee deductor had not furnished any supporting evidence. In the earlier set aside assessment proceedings, the assessee deductor had furnished the correct Form 15G/15H in respect for a sum of Rs.3,23,860/-. Accordingly, the balance of Rs.4,43,904/- has been brought to tax u/s.201 of the Act. Since this appeal is arising out of set aside matter and pertaining to assessment year 2013-14, we see no reason for giving another opportunity to the assessee for filing corrected/complete Form 15/15G. Accordingly, the grounds raised by the assessee are rejected. The interest u/s.201(1A) of the Act is consequential and no dispute has been raised during the course of hearing as regards to the calculation of interest u/s.201(1A) of the Act.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on 11th August, 2025 at Chennai.