M/S STATE BANK OF PATIALA,PATIALA vs. ITO, (TDS), PATIALA
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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘B’, CHANDIGARH
Before: SHRI A.D. JAIN & DR KRINWANT SAHAY
आयकर अपील�य अ�धकरण,च�डीगढ़ �यायपीठ, च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘B’, CHANDIGARH BEFORE SHRI A.D. JAIN, VICE PRESIDENT & DR KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 1/CHD/2020 �नधा�रण वष� / Assessment Year : 2016-17 State Bank of India, Vs. The ITO (TDS), बनाम Patiala (Earlier known as State Bank of Patiala),Treasury Branch, Chotti Baradari, Patiala �थायी लेखा सं./PAN No: AAACS8571K ��यथ�/Respondent अपीलाथ�/Appellant �नधा�रती क� ओर से/Assessee by : Sh. Vibhore Garg, CA राज�व क� ओर से/ Revenue by : Shri Dharam Vir, JCIT, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 15.04.2023 उदघोषणा क� तार�ख/Date of Pronouncement : 22.04.2023 आदेश/Order Per Dr. Krinwant Sahay, A.M.:
This appeal is filed by the Assessee against the order of the ld. Commissioner of Income Tax, Patiala [herein referred to as ‘CIT(A),] dated 22.11.2019, for the Assessment Year 2016-17.
The grounds taken by the Assessee are as under:
That the impugned appellate order is bad in law and facts to the extend the additions are confirmed. 2. That the Ld. CIT(A) wrongly and illegally confirmed the demand of Rs. 21,47,188/- u/s 201(1) and interest of Rs. 3,17,042/- u/s 201(1A) ignoring the
1-Chd-2023 – State Bank of India, Patiala 2 material on record, pleading , submissions, against the facts and circumstances of case and the judgement of Hon'ble Supreme Court in the case of Hindustan Coco Cola Beverages Pvt Ltd reported in 293 ITR 226. 3. That the appellant craves permission to amend, add, delete and elaborate the ground of appeal 3. Ground Nos. 1 and 3 are general in nature.
The main contention of the Assessee is that the Assessing Officer has wrongly given the findings treating the Assessee as ‘assessee in default’ for failing to deduct tax at source on interest payment made to deductee organization. The ld. CIT(A) has confirmed the order of the ITO (TDS) and treated the Assessee bank as ‘assessee in default’ as per the proviso to section 201(1) of the Income Tax Act, 1961.
The facts of the case are that the Assessee, i.e., State Bank of India, earlier known as State Bank of Patiala had deposits in the form of FDRs/TDR/RD/Saving Account of the deductee company, i.e., M/s Rajiv Gandhi National University of Law, Patiala. There was an amendment in the Finance Bill 2015 w.e.f. 1.4.2015 wherein, it was made mandatory to deduct TDS on payment of interest to an organization whose income is exempted u/s 10(23C)(iiiab) of the Income Tax Act, 1961 (in short 'the Act'). A survey u/s 133A of the Act was carried on 13.2.2017 at the office premises / branch of the
1-Chd-2023 – State Bank of India, Patiala 3 deductor branch and on examination of records for A.Y. 2015-16, it was noticed that the duductor bank had credited interest of Rs. 2,14,71,883/- to M/s Rajiv Gandhi National University of Law, Patiala during the F.Y. 2015-16. The Assessee deductor had failed to deduct TDS of Rs. 21,47,188/- u/s 194A of the Act and had failed to deposit the TDS amount in the Central Government account within the time prescribed u/s 200 of the I.T.Act,1961 read with Rule 30 of the I.T. Rules, 1962. It was also found that the deductor had not filed its TDS return in Form No. 26Q for second, third and fourth quarter of F.Y. 2015-16 within the stipulated time period u/s 200(3) read with Rule 31A of the I.T. Rules,1962. On the basis of this fact, the Assessing Officer treated the Assessee bank as ‘assessee in default’.
These findings of the ITO (TDS) were accepted and confirmed by the ld. CIT(A), Patiala in his order dated 24.4.2017.
Aggrieved with this order of the ld. CIT(A), the Assessee company has filed this appeal before the Tribunal. During the course of hearing, the ld. Counsel for the Assessee has reiterated that the deductor was not aware of any such amendment in Finance Bill 2015 w.e.f. 1.4.2015 because it was the very first year of this amendment. The ld. counsel also contended that there is no mala fide intention on the part of the Assessee deductor bank as it is a Public Sector Bank and has no personal interest in any such non-deduction / under
1-Chd-2023 – State Bank of India, Patiala 4 deduction of TDS. In fact, the deductor bank was under this bona fide belief that M/s Rajiv Gandhi National University of law, Patiala was exempt u/s 10(23C) (iiiab) of the Act in F.Y. 2015-16 also like earlier years before the amendment in Finance Bill 2015. The Assessee dudcutor has later on produced a Certificate before the Assessing Officer as well as before the ld. CIT(A) dated 8.3.2017 which is on a later date than the survey conducted u/s 133A of the Act on 13.2.2017.
The ld. DR relied on the orders of the ITO (TDS) & CIT(A).
We have considered the findings of the ld. CIT(A) on this issue. There is no denying the fact that there is some delay on the part of the Assessee bank in deducting TDS and depositing it in the Government account but at the same time it has also been accepted that the Assessee bank is a Public Sector Bank and no mala fide intention can be ascribed to it for late deducting TDS and late deposit of the same in the Government account. More importantly these provisions were amended w.e.f. 1.4.2015 only and there is very possibility that the Assessee bank might be under the bona fide belief that TDS is not to be deducted from Assessee’s income as in earlier years. Even section 201 of the I.T. Act, 1961 considers consequences of failure to deduct or pay TDS. It is reproduced as under:-
1-Chd-2023 – State Bank of India, Patiala 5 “201. (1) Where any person, including the principal officer of a company,—
(a) who is required to deduct any sum in accordance with the provisions of this Act; or
(b) referred to in sub-section (1A) of section 192, being an employer,
does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax:”
Here it is important to note that in this case, the Assessee bank has deducted TDS and deposited it in the Government account and filed a Certificate of the same before both the Assessing Officer and CIT(A), therefore, in our considered view, although because of delay in deducting TDS and depositing it in the Government account is delayed, so technically speaking the Assessee bank branch of SBI, Patiala for that limited period may be called ‘assessee in default’. But as the entire TDS amount along with penal interest has already been deposited in the Government account later on so, there is no loss to Revenue in any manner. As it was the first year after the amendment in the Finance Bill / Act w.e.f. 1.4.2015, and it has not been proved beyond doubt the mala fide intention of the Assessee (i.e., SBI,
1-Chd-2023 – State Bank of India, Patiala 6 Patiala), which is a Public Sector Bank) for late deduction of TDS and its deposit in the Government account, so, the Assessee bank should not be treated as ‘assessee in default’, however, the Assessee bank has to pay the interest and any other amount leviable under the provisions of this Act. Ordered accordingly.
In the result, the appeal is allowed.
Order pronounced on 22.04.2024.
Sd/- Sd/- ( A.D. JAIN ) (DR KRINWANT SAHAY) Vice President Accountant Member “आर.के.” आदेश क� ��त�ल�प अ�े�षत / Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar
