M/S.PRAGATHI KRISHNA GRAMIN BANK,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME-TAX, BELLARY

PER LALIT KUMAR, JUDICIAL MEMBER :

ITA.1860/Bang/2016 Page - 2 2.1 The assessee is a regional rural bank formed under the Regional Banks Act, 1976. The Assessing Officer on verification in respect of TDS on interest payments made by the assessee, determined a sum of Rs.61,14,41,704/- as TDS liability u/s 201(1) along with interest u/s 201(1A) of the Income-tax Act, 1961 2.2 Aggrieved by the orders u/s 201(1)/201(1A) of the Act passed by the AO, the assessee preferred appeal before the CIT(A).

2.3 The CIT(A) dismissed the assessee’s appeal vide the impugned orders dated 29.08.2016.

3.1 Aggrieved by the order of the CIT(A), the assessee has preferred appeal before the Tribunal, wherein it has raised the following grounds :

ITA.1860/Bang/2016 Page - 3 3.2 We have heard rival contentions of the ld AR for the assessee in support of the grounds raised and the ld DR in support of the impugned order of the CIT(A). The grounds raised (Supra) are in respect of the treatment of the assessee by the authorities below as an assessee in default u/s 201(1) of the Act for failure on its part to deduct tax at source on interest payments as required u/s 194A of the Act. While disposing the assessee’s appeal, the CIT(A) considered the issue and held as under at paras 5 to 6 thereof.

5.0. It is clear from the above that the AO completed the TDS assessment and passed order u/ s 201/201 (1A) of the Act without giving sufficient time and opportunity. In the case of appellant bank having 325 branches it could not collect the information with regard to TDS deducted, paid and other relevant information in time and submitted before the AO during the TDS proceedings. The AO has not considered the Form no. 15G/H since they have not filed before jurisdictional CIT in prescribed time. 5.1. The CIT(A), Hubli in assessee's own case on the same issues for A.Y.2010-11after considering the submissions of assessee and the assessment order held as “Hence, the AO is directed to verify the branch wise and deductee wise details of ITA.1860/Bang/2016 Page - 4 the interest payments and filling of the Form 15G/H, before respective CIT's, in time and after giving a reasonable opportunity to the assessee, the claim of the assessee has to be considered accordingly.

6.0. It can be observed from the order of CIT(A), Hubli in assessee’s own case for A.Y.2010-11 on the same issue, the assessee had not submitted the required information in time during the TDS verification by the jurisdictional AO. in the A.Y.2011-12 also the assessee has not submitted the information in time for TOS verification. Since the time is getting barred to complete the TDS verification process and to pass the order u/s 201(1)/201(1A) of the Act, the AO cannot wait for information and passed the order u/s 201(1)/201(1A) of the Act. It can be seen that this has become the assessee's regular practice for not producing information in time stating the practical problems of the assessee bank for collecting the information from all its branches. It is assessee's duty to comply with the TDS provisions and to keep the information ready which is mandatorily to be maintained as per the TDS provisions. Whenever jurisdictional AO calls for information for TOS verification it is the assessee's duty to co-operate and provide the information viz complete particulars of interest payments branch wise and deductee wise and filing of the Form I5G/15H which has to be filed before jurisdictional CITs within prescribed time. In this case the assessee has failed to provide the information in time to complete the TDS verification process and to pass the order u/s 201(1)/201(IA) of the Act. Hence the disallowance made by the AO is in order and is upheld. The grounds of appeal of the assessee are dismissed.

3.2.2 From a perusal of the observations and findings rendered by the CIT(A) at para 5 and 6 of the impugned order (Supra), it is amply clear that the AO completed the TDS assessment, and passed the orders u/s 201(1)/201(1A) of the Act ITA.1860/Bang/2016 Page - 5 for this year, admittedly without affording the assessee sufficient time and opportunity to collect the information from its 325 branches in respect of TDS deducted on interest payments and other relevant information for his consideration. It is further observed by the CIT(A) that in similar circumstances, the CIT(A) while disposing off the assessee’s appeal for asst. year 2010-11 on identical issues had, after considering the assessee’s submissions, directed the AO to verify the branch wise and deductee wise details of the interest payments and filing of Form 15G/15H before the respective CIT in time and to consider the assessee’s claims after affording reasonable opportunity to the assessee. After admittedly observing as above, the CIT(A) has strangely proceeded to uphold orders of the AO stating that the assessee is in the regular practice of not providing information required for TDS verification before the AO and since the matter was getting barred by limitation, the AO’s action in passing the orders u/s 201(1)/201(1A) of the Act was upheld. In our considered view on an appraisal of the material on record, we find that the coordinate bench of the Tribunal in the assessee’s own case for AYs. 2011-12 and 2012-13 had an occasion to deal with identical facts similar to that prevailing in the asst. years 2011-12 and 2012-13, where the AO was directed by CIT(A) to verify and examine the issue afresh and consider the assessee’s claim after affording the assessee adequate opportunity of being heard. In the case of hand it is not clear from the record as to ITA.1860/Bang/2016 Page - 6 how many cases of payment of interest the assessee was having Form No.15G/15H and whether these Forms were at all submitted with the jurisdictional CIT. In this factual matrix of the case, as discussed above, we are of the opinion that the impugned order of the CIT(A) rejecting the assessee’s claimss which are presently before us for consideration, cannot be sustained in view of the observations by the CIT(A) of the lacuna and shortcomings of the AO in carrying out proper verification in the TDS made on interest payments. In this view of the matter, we, therefore, in the interest of equity and justice, set aside the impugned order of the CIT(A) for asst. year 2013-14 and restore the matter to the file of the AO for denovo adjudication of this matter, with the directions to verify the assessee’s TDS liability branch wise and deductee wise details of interest payments on the point of availability of Form No.15G/15H only in respect of cases when such Forms were before the respective CIT even though belatedly. The assessee will get the benefit of availability of Form No.15G/15H only in respect of cases where such Forms are available with the assessee and submitted with the jurisdictional CIT concerned. Needless to add that the AO will adjudicate the matter denovo only after affording the assessee adequate opportunity of being heard in the matter and to file details/submissions required in this regard. Consequently, the assessee’s grounds are treated as allowed for statistical purposes.

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