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Facts
The appellant bank was found by the DCIT (TDS) to have failed to deduct tax on interest paid on fixed deposits for FY 2014-15, accepting Form 15H from ineligible persons, thus being an assessee in default under Section 201. The CIT(A) dismissed the bank's appeal as infructuous, citing a mistake in the assessment year (2014-15 instead of 2015-16) mentioned in Form 35, which the CIT(A) deemed incurable.
Held
The Tribunal condoned a 59-day delay in filing the appeal, attributing it to the income tax portal displaying only the financial year, and found the CIT(A)'s approach to be hyper-technical. The case was remanded to the AO for a de novo adjudication to verify the declarations and determine any default in TDS deduction under Section 197A.
Key Issues
Whether the CIT(A) erred in dismissing the appeal as infructuous due to a technical error in mentioning the assessment year, and whether the appellant was in default of TDS deduction under Section 194A requiring verification of declarations.
Sections Cited
194A, 201, 201(1A), 10, 297(C), 197A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI GEORGE GEORGE K., VP & SHRI INTURI RAMA RAO, AM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-4, Kolkata [CIT(A)], dated 23.08.2024 for Assessment Year (AY) 2015-16.
Brief facts of the case are that the appellant is a scheduled bank. The DCIT (TDS) Thiruvananthapuram (hereinafter called "TDS Officer") on verification of the declaration uploaded by the appellant bank in TRACES for FY 2014-15 observed that he appellant bank had failed to deduct tax on interest paid on fixed deposits. Accordingly formed an opinion that the appellant bank had failed to deduct tax on interest payments to fixed deposits as required u/s. 194A of the Act after accepting Form 15H form the persons who are not eligible to submit the same. Accordingly, the appellant bank was asked to explain as to why it should not be treated as assessee in default u/s. 201 of the Act. In response to the show cause notice the appellant filed a detailed explanation. Finally, after considering the explanation of the appellant the TDS officer held that in respect of the following parties the appellant had failed to deduct TDS: -
SI. PANs for PANs for which Amount of Remarks Short No which TDS TDS was not Interest deduction was not made made Paid 1 AWHPB7056L G 4,19,988 Form 15H submitted. No 41,999/- BHASKARAN proof submitted claiming exemption from TDS 2 AAATF0888P PROVINCIAL 29,60,017 26A furnished for FY: 2014- 206,932/- & BURSAR 15 shows that Rs.890,694/- only was taken as interest income from SIB. The deductor claimed that the remaining amount of Rs.20,69,323/- was shown in FY: 2015-16. However, neither the computation nor the 26A for FY: 2015-16 is clear on the fact that this amount has been offered for taxation. 3 AAETS9556K IDFC CASH 62,32,877 26A furnished, Return of 623,288/- FUND income not filed claiming that the deductee's income is exempted. Non-deduction of tax not acceptable as IDFC Cash Fund does not come under the institutions whose income is unconditionally exempt under Section 10 as per CBDT's Circular The South Indian Bank Ltd. No.4/2002 in F.No.153/127/2002-TPL dated 16/07/2002 regarding TDS in case of entities whose income is exempt under Section 10 of the IT Act. 5 AAAAL0822C LBS CENTRE 64,44,687 No proof submitted for non- 644,469/- FOR SCIENCE deduction of Tax at source. AND TECHNOLOG Y Total 15,16,688/- Accordingly demanded TDS of Rs. 15,16,688/- along with interest u/s. 201(1A) of the Act of Rs. 13,22,784/- vide order dated 14.02.2022.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order dismissed the appeal as infructuous on the ground that in Form 35, the assessment year is mentioned as 2014- 15 and held that the mistake in the assessment cannot be cured.
Being aggrieved, the appellant is in appeal before us in the present appeal.
At the outset, we find that there is a delay of 59 days in filing the present appeal. The appellant filed a petition along with an affidavit seeking condonation of delay in filing the appeal, wherein it is stated that the appellant could not file the appeal mentioning the assessment year as the portal only displayed the financial year. As the appeal was dismissed by the ld. CIT(A) for the reason that the same should be filed for the assessment year, the bank raised a The South Indian Bank Ltd. grievance and had sent a mail for resolving the issue. The bank was honestly of the belief that the issue would be resolved. This caused the delay in filing the appeal. Therefore, the delay is not willful or deliberate. Therefore it is prayed that the delay in filing the appeal may be condoned and the appeal may be admitted for adjudication. On a perusal of the averments made in the condonation petition, it is evident that the appellant is prevented by reasonable cause from filing the appeal. Therefore, we condone the delay and admit the appeal for adjudication.
The learned counsel for the assessee submitted that the CIT(A) had failed to appreciate that the login through the TAN in the income tax portal do not provide for the assessment year and provided only for the financial year. He further submitted that no deduction of tax is required to be made in terms of provisions of section 297(C) of the Act if the deductor firms file Form 15H.
On the other hand the learned Sr. DR submits that the CIT(A) had passed a reasoned order and not interference is called for.
We have heard the rival contentions and perused the material available on record. At the outset, we find that the CIT(A) has dismissed the appeal by adopting hyper technical approach without appreciating that in the TDS Login only financial year can be mentioned. However, in order to verify whether there is any default in deduction of tax at source in terms of section 197A of the Act it The South Indian Bank Ltd. requires verification of the declaration filed. Therefore, the matter is remanded to the file of the AO for de novo adjudication of the matter in accordance with law after affording reasonable opportunity of hearing to the appellant.
In the result, appeal filed by the assessee stands partly allowed.
Order pronounced in the open court on 16th May, 2025.