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Income Tax Appellate Tribunal, “D”, BENCH KOLKATA
Before: SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM
सुनवाईक�तारीख/ Date of Hearing : 04/10/2018 घोषणाक�तारीख/Date of Pronouncement : 28/11/2018 आदेश / O R D E R Per Dr. A. L. Saini: The captioned seven appeals filed by the assessee, pertaining to Assessment Years2009-10 to 2015-16, are directed against the separate orders passed by the Ld. Commissioner of Income Tax (Appeals), Jalpaiguri which in turn arise out of assessment orders passed by the Assessing Officer u/s 201(1)/201(1A) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
Since these seven appeals relate to the same assessee, common and identical issues are involved therefore, these have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. The assessee’s appeal in for Assessment Year 2014-15 is taken as the lead case.
The grievances raised by the assessee in its lead case (ITA No.2536/Kol/2017, for Assessment Year 2014-15),are as follows:
“1 For that the order passed by the ld. Assessing Officer u/s 201 and section 201(1A) is bad in law and is liable to be quashed.
Allahabad Bank to 2537/Kol/2017 Assessment Years: 2009-10 to 2015-16 2. For that on the facts and in the circumstances of the case, the ld. CIT(A) ought to have quashed the demand raised on account of short deduction of TDS and levy of interest thereon u/s 201 and section 201(1A). 3. That the appellant craves leave to add, alter or delete all or any of the grounds of appeal
.”
4. The facts of the case which can be stated quite shortly are as follows: The assessee(deductor) is a branch of a nationalized bank, engaged in banking activities. In the assessee`s case under consideration, the spot verification on TDS compliance was conducted in the deductor’s branch office on 22.03.2016. As per deductor’s record and the information which were furnished by Shri Biswajit Saha, (the Sr. Manager of assessee`s Bank), during the course of verification,it was noticed that in the following cases, deductions of taxes on the interests paid/credited to the customers were not made, even though those amounts exceeded the threshold limit of Rs.10,000/- as provided u/s 194A(3) of the I.T. Act. The part-wise details are given as under:
Sl Name of the Payee Interest paid without TDS No. 1 Pradip Kumar Chanda Rs.84,126/- 2 Arkya Roy Rs.77,609/- 3 Anil Kumar Mandal Rs.25,455/- No explanation was offered to the ld AO, when the above discrepancies were brought to the notice of the deductor. Nevertheless, the deductor was provided another opportunity of being heard on 28.03.2016 and in the above connection, a show cause notice before passing order u/s 201(1)/(1A) was also served upon the deductor. In response, the assessee submitted that the relevant documents in support of his claim, were not traceable.
Therefore, considering the above facts and the circumstances of the case, the ld AO held that the deductor was deemed to be an assessee in default u/s 201(1) of the Act, for non-deduction of TDS on interests paid to the customers, therefore, the total demand of Rs.26,212/- was being raised u/s 201(1) and 201(1A) of the Act as per the following computations:
Allahabad Bank to 2537/Kol/2017 Assessment Years: 2009-10 to 2015-16 Sl No. Name of the Payee Interest paid TDS deductible Interest payable Total payable without TDS u/s 194A/short u/s 201(1A) deductions 1 Pradip Kumar Chanda Rs.84,126/- Rs.6,413/- Rs.2309/- Rs.8,722/- 2 Arkya Roy Rs.77,609/- Rs.7,761/- Rs.2,794/- Rs.10,555/- 3 Anil Kumar Mandal Rs.25,455/- Rs.5,099/- Rs.1,836/- Rs.6,935/- Aggregate of short deductions and interests payable u/s Rs.19,273/- Rs.6,939/- Rs.26,212/- 201(1A)
Against the demand of Rs. 26,212/-, raised u/s 201(1) and 201(1A) of the Act, and aggrieved by the stand so taken by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A) who has confirmed the order passed by the Assessing Officer and treated the bank as a defaulter for non-deduction of TDS.
Aggrieved by the order of ld CIT(A), the assessee is in appeal before us.
The ld. Counsel for the assessee submitted before us a brief chart showing the Assessment Years, name of parties, their pan number and addresses, and addition
Allahabad Bank to 2537/Kol/2017 ITA Nos.2531 to 2537/Kol/2017 Assessment Years: 2009 Assessment Years: 2009-10 to 2015-16 made u/s 201(1)& 201(1A) of the Act, which which is is given given below: below:
As mentioned in the above chart, t As mentioned in the above chart, the ld. Counsel begins by pointing out that some begins by pointing out that some assessees have furnished assessees have furnished Form No.15G and Form No.15H. Some assessees . Some assessees furnished PAN numbers. furnished PAN numbers. In case of other few assessees, where the amount is very the amount is very negligible, the PAN number was not available, but the assessee has furnished the negligible, the PAN number was not available, but the assessee has furnished the negligible, the PAN number was not available, but the assessee has furnished the complete postal address. The ld. Counsel for the assessee submitted that in the complete postal address. The ld. Counsel for the assessee submitted that in the complete postal address. The ld. Counsel for the assessee submitted that in the assessee’s case under consideration, payee has paid the tax on the income re assessee’s case under consideration, payee has paid the tax on the income re assessee’s case under consideration, payee has paid the tax on the income received from bank therefore, assessee should not be treated as a defaulter and it was the from bank therefore, assessee should not be treated as a defaulter and it was the from bank therefore, assessee should not be treated as a defaulter and it was the duty of the Assessing Officer to ascertain whether the payee has paid the tax on duty of the Assessing Officer to ascertain whether the payee has paid the tax on duty of the Assessing Officer to ascertain whether the payee has paid the tax on Page | 4
Allahabad Bank to 2537/Kol/2017 Assessment Years: 2009-10 to 2015-16 the income so received from the bank. Therefore, the assessee should not be treated as a defaulter u/s 201 (1)/201(1A) of the Act.
On the other hand, the ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and is not being repeated for the sake of brevity.
We have given a careful consideration to the rival submissions and perused the materials available on record, we note that in the assessee`s (Bank) case under consideration, a survey was conducted by the TDS wing and it was noticed that the assessee-bank has not deducted TDS in case of Pradip Kumar Chanda, Arkya Roy & Anil Kumar Mandal. During the assessment proceedings the assessee-bank submitted before the ld assessing officer that the documents were not available in respect of Form 15G/H. We note that assessee is a Nationalized Bank engaged in Banking & Financial activities. The Branch is the Head Branch in Jalpaiguri and is a very busy branch due to huge Govt. transactions with huge scarcity of staffs. And due to this scarcity of staffs and other regular banking compliances, the documentation work relating to TDS and collection of Form No. 15G/H from customers could not be done properly and therefore it has resulted into non- compliance of TDS or collection of Form No. 15G/H. Moreover, previously the branch was located at Thana More area and has been shifted to DBC Road area since last few years. During this branch transfer, the assessee-bank claimed that many documents have lost and missed. On 22.03.2016 during the spot verification of TDS compliance, the assessee-bank was not able to furnish proper Form 15G/H certificates of the individuals who have been paid interest beyond the threshold limit, with no TDS deduction. The Banking Software works on CBS, where the software automatically deducts TDS if applicable and do not deduct TDS if proper forms like 15G/H/ filed. At appellate stage, the assessee has submitted the forms of 15G/H in respect of aforesaid persons claiming that it has been traced by the assessee.
However, ld CIT(A) did not accept the Form No. 15G/H so submitted by the assessee as these forms did not contain date,however, these forms contain the Page | 5
Allahabad Bank to 2537/Kol/2017 Assessment Years: 2009-10 to 2015-16 signature of the respective customer of the bank. The ld CIT(A) also noted that Forms 15G/H, so submitted in case of different persons for A.Y. 2009-10 to 2015- 16,were filled by same person in single handwriting which goes to say that it was filled up much after the assessment and back dating had been done just to overcome from the default committed by the bank.
Considering the above narrated factual position, we note that the onus is on the Revenue to demonstrate that the taxes have not been recovered from the person who had the primary liability to pay tax, and it is onlywhen the primary liability is not discharged that vicarious recovery liability can be invoked. Once all the details of the persons to whom payments have been made are on record, it is for the Assessing Officer, who has all the powers to requisition the information from such payee and from the Income-tax Authorities, to ascertain whether or not taxes have been paid by the persons in receipt of the amounts from which taxes have not been withheld. We note that assessee submitted before us a brief chart showing the Assessment Years, name & Address of parties and their PAN numbers. Some assessees furnished PAN numbers only and not Form No.15G/H. In case of other few assessees, where the amount is very negligible and the PAN number was not available, but the assessee has furnished the complete postal address. We note that pertaining to assessment year 2014-15, in case of Mr. Pradip Kumar Chanda, and Mr. Arkya Roy, the assessee-bank submitted PAN Numbers andin case of Mr. Anil Kumar Mandal, the amount was negligible but assessee-bank has submitted the complete postal address to the ld AO. The assessee bank claimed that payee has paid the tax on the income received from bank therefore, assessee should not be treated as a defaulter and it was the duty of the Assessing Officer to ascertain whether the payee has paid the tax on the income so received from the bank. We note that the Assessing Officer ought to have assumed jurisdiction only after satisfying the jurisdictional fact as laid by the Hon’ble High Court of Allahabad in the case of M/s Jagran Prakashan Ltd Vs.DCIT-345 ITR 288(All),wherein it was held that deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly.Our views are further fortified by the judgment ofthe Coordinate Bench of Delhi in the case of The Branch Manager Page | 6
Allahabad Bank to 2537/Kol/2017 Assessment Years: 2009-10 to 2015-16 vs. ITO in ITA Nos.5992,5993 & 5994/Del./2012, for Assessment Year 2002-03, 2003-04 & 2004-05), order dated 04.03.2016,wherein it was held as follows:
“3. Though the impugned order of the AO is after the direction of the ITAT, we take note that the Hon'ble jurisdictional High Court (Allahabad High Court) has settled the law, in respect to the issue before us in the case of M/s. Jagran Prakashan Ltd. vs. DCIT - 345 ITR 288 (All.) held as under :- "...........it is clear that deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly. In the present case, the Income tax authorities had not adverted to the Explanation to Section 191 nor had applied their mind as to whether the assessee has also failed to pay such tax directly. Thus, to declare a deductor, who failed to deduct the tax at source as an assessee in default, condition precedent is that assessee has also failed to pay tax directly. The fact that assessee has failed to pay tax directly is thus, foundational and jurisdictional fact and only after finding that assessee has failed to pay tax directly, deductor can be deemed to be an assessee in default in respect of such tax....." The law in respect of initiation of proceedings u/s 201/201(1A) have been settled only after the aforesaid pronouncement of the order in year 2012 and the ITAT order in the first round to the AO was way back, so now we are bound to follow the law laid by the Hon'ble jurisdictional High Court in M/s. Jagran Prakashan Ltd. (supra) In assessee's own case in a similar matter the Agra Bench of the Tribunal observed after taking note of the law laid in M/s JagritiPrakashan Ltd (supra) held as under : "6. It is thus clear that the onus is on the revenue to demonstrate that the taxes have not been recovered from the person who had the primarily liability to pay tax, and it is only when the primary liability is not discharged that vicarious recovery liability can be invoked. Once all the details of the persons to whom payments have been made are on record, it is for the Assessing Officer, who has all the powers to requisition the information from such payers and from the income tax authorities, to ascertain whether or not taxes have been paid by the persons in receipt of the amounts from which taxes have not been withheld. As a result of the judgment of Hon'ble Allahabad High Court in Jagran Prakashan's case (supra), there is a paradigm shift in the manner in which recovery provisions under section 201(1) can be invoked. As observed by Their Lordships, the provisions of Section 201(1) cannot be invoked and the "tax deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly". Once this finding about the non- payment of taxes by the recipient is held to a condition precedent to invoking Section 201(1), the onus is on the Assessing Officer to demonstrate that the condition is satisfied. No doubt the assessee has to submit all such information about the recipient as he is obliged to maintain under the law, once this information is submitted, it is for the Assessing Officer to ascertain whether or not the taxes have been paid by the recipient of income. This approach, in our humble understanding, is in consonance with the law laid down by Hon'ble Allahabad High Court." From a reading of the AO's order, it is clear that AO has not made any exercise to ascertain whether the deductee / payee assessee has failed to pay taxes directly before initiation of proceedings u/s 201/201(1A) of the Act, thus assumption of jurisdiction itself stands vitiated and all subsequent proceedings are null in the eyes of law. Therefore, we quash the initiation of proceedings of the AO at the outset itself. The AO ought to have assumed jurisdiction only after satisfying the jurisdictional fact as laid by the Hon'ble Allahabad Bank to 2537/Kol/2017 Assessment Years: 2009-10 to 2015-16 Jurisdictional High Court which as stated before is obviously absent. So, we quash the impugned assessments itself.”
Considering the factual position discussed above, we are of the view that from a reading of the AO's order, it seems to us that assessing officer has not made any exercise to ascertain whether the deductee/payee assessee has failed to pay taxes directly before initiation of proceedings u/s 201/201(1A) of the Act, thus assumption of jurisdiction itself stands vitiated and all subsequent proceedings are null in the eyes of law. Hence, assessee-bank should not be treated as an assessee in default and therefore, we quash the order passed by the Assessing Officer u/s 201(1)/201(1A) of the Act.
In the result, all the seven appeals filed by the assessee are allowed.
Order is pronounced in the open court on 28.11.2018.